Atlanta Gas Light Co. v. Semaphore Advertising

• Decision Date: 16 August 1990
• Docket Number: Civ. A. No. CV189-058.
• Parties: ATLANTA GAS LIGHT COMPANY, Plaintiff, v. SEMAPHORE ADVERTISING, INC., and Central Electric Power Cooperative, Inc., Defendants.
• Court: U.S. District Court — Southern District of Georgia

747 F. Supp. 715

ATLANTA GAS LIGHT COMPANY, Plaintiff, v. SEMAPHORE ADVERTISING, INC., and Central Electric Power Cooperative, Inc., Defendants.

Civ. A. No. CV189-058.

United States District Court, S.D. Georgia, Augusta Division.

August 16, 1990.

COPYRIGHT MATERIAL OMITTED

Fred K. Harvey, Jr., Louisville, Ga., Albert G. Norman, Jr., John L. Watkins, Paula Marie Rafferty Miller, Long, Aldridge & Norman, Atlanta, Ga., for Atlanta Gas Light Co.

Stanley J. Jackson, Augusta, Ga., Paul H. Dunbar, III, E. Freddie Sanders, Augusta, Ga., for Central Elec. Power Co-op, Inc., J. Patrick Claiborne, Augusta, Ga., Jay Bender, Belser, Baker, Barwick, Ravenel & Bender, Columbia, S.C., for Semaphore Advertising, Inc.

ORDER

BOWEN, District Judge.

Plaintiff, Atlanta Gas Light Company, has alleged in both its original and amended complaints that defendant Semaphore Advertising, Inc. ("Semaphore") contracted with television stations broadcasting in Augusta and Savannah, Georgia, on behalf of defendant Central Electric Power Cooperative, Inc. ("Central") to telecast a false, misleading and deceptive television commercial which caused damage to plaintiff in violation of federal and state law. Plaintiff's original and amended complaints are almost identical except that they involve two separate television commercials. Both of the commercials are part of defendant Central's "peace of mind" advertising campaign. Each commercial suggests that electricity is safer than natural gas for use as a household fuel source. Plaintiff's complaints seek to hold defendants jointly and severally liable for damages it alleges it has suffered.

Plaintiff's original complaint was filed with the Court on March 30, 1989. On August 15, 1989, the clerk of court made an entry of default, pursuant to Rule 55(a) of the Federal Rules of Civil Procedure, against defendant Semaphore due to its failure to appear, plead or otherwise defend as provided in the Federal Rules of Civil Procedure.¹ Plaintiff subsequently amended its complaint on February 5, 1990. Currently pending before the Court are two motions filed by defendant Semaphore: a motion to dismiss, or in the alternative, for a change of venue, filed on March 1, 1990, and a motion to set aside the entry of default, filed on June 19, 1990. I will address defendant Semaphore's motion to set aside the entry of default before reaching its motion to dismiss.

The entry of default does not constitute an entry of a default judgment. Arango v. Guzman Travel Advisors, 761 F.2d 1527 (11th Cir.1985). Federal Rule of Civil Procedure 55(c) provides that for "good cause shown" an entry of default may be set aside. "The disposition of motions made under Rules 55(c) and 60(b) is a matter which lies largely within the discretion of the trial judge ..." Consolidated Masonry & Fireproofing, Inc. v. Wagman Construction Corporation, 383 F.2d 249, 251 (4th Cir.1967). Federal district courts seem more willing to set aside an entry of default and with a lesser showing than they are in the case of a default judgment. Broder v. Charles Pfizer & Co., 54 F.R.D. 583 (D.C.N.Y.1971). However, federal courts should not abrogate the purposes served by Rule 55(a) by setting aside entries of default as a matter of course.

Both the default entry and judgment play an important role in the maintenance of an orderly, efficient judicial system. They are significant weapons for enforcing compliance with the rules of procedure and therefore facilitate the speedy determination of litigation. The default procedure offers a useful remedy to a good faith litigant who is confronted by an obstructionist adversary. It also represents a means of encouraging an unwilling or uncooperative party to honor the rules established for litigation in the federal courts and provides the non-defaulting party an expeditious path to follow when his adversary does not do so or simply abandons the contest. But if default is to be an effective sanction, relief under Rule 55(c) cannot be granted too readily.

Wright, Miller & Kane, Federal Practice and Procedure: Civil 2d § 2693 (citations omitted).

In support of its motion to set aside the entry of default, defendant Semaphore contends that its failure to enter a timely response to the suit was excusable, that a meritorious defense exists, that the plaintiff will not be prejudiced if the motion to set aside the entry of default is granted, and that the motion is timely in the context of the present status of the litigation. Semaphore's contention that its motion is timely is contrary to law and common sense. The clerk of court entered the entry of default against Semaphore on August 15, 1989. Semaphore did not file its motion to set aside the entry of default until June 19, 1990, over ten months after default was entered and four months after the amended complaint was filed. A cursory review of federal case law reveals that relief from an entry of default must be requested within a reasonable time. Consolidated Masonry & Fireproofing, Inc. v. Wagman Construction Corp., 383 F.2d 249 (4th Cir.1967); V.C. Rasmussen v. W.E. Hutton & Co., 68 F.R.D. 231 (D.C.Ga. 1975); United States v. Topeka Livestock Auction, Inc., 392 F.Supp. 944 (D.C.Ind. 1975); Walter E. Heller Western, Inc. v. Seaport Enterprises, Inc., 99 F.R.D. 36 (D.C.Or.1983). By no stretch of the imagination can it be said that defendant Semaphore's motion to set aside the entry of default was timely.

Moreover, the creative excuses advanced by defendant Semaphore for its failure to timely file an answer to plaintiff's initial complaint are also unpersuasive. Semaphore's president has filed an affidavit stating that the failure to respond to the summons and complaint was based on her misunderstanding of the status of the lawsuit. However, Semaphore is an advertising agency which profits from complex business dealings, often involving contracts and other legal procedures. Even corporate officers possessing below average business acumen should know enough to contact an attorney when service of a summons and complaint have been made against the corporation they serve. Consequently, I find that defendant Semaphore's failure to respond to plaintiff's original complaint is inexcusable. "But, when setting aside a default as opposed to vacating a default judgment, it is not always necessary that the neglect or oversight be excusable." Rasmussen v. W.E. Hutton & Co., 68 F.R.D. at 235 (citations omitted).

Based upon the record and briefs filed by the parties to the instant case, I conclude that defendant Semaphore took a significant and calculated risk in consciously choosing not to respond to plaintiff's original complaint. Apparently, Semaphore's refusal to respond was due to its belief that this Court did not possess in personam jurisdiction. If this were the true motivation behind Semaphore's failure to respond, a much more logical and safer course would have been for Semaphore to respond to plaintiff's original complaint by filing a motion to dismiss based upon lack of personal jurisdiction, much like it did in response to plaintiff's amended complaint.

Before announcing my holding with respect to defendant Semaphore's motion to set aside the entry of default, it is important to first discuss the effect of an entry of default within the context of the instant case. As previously discussed, plaintiff amended its complaint after the entry of default was rendered against Semaphore with respect to plaintiff's original complaint. Although Semaphore is currently in default as to plaintiff's original complaint, Semaphore has responded to plaintiff's amended complaint by filing a motion to dismiss. Therefore, under Rule 54(c) of the Federal Rules of Civil Procedure, the Court may not award a default judgment which is more than or different in kind from that requested in the plaintiff's original complaint. Marina B. Creation S.A. v. de Maurier, 685 F.Supp. 910 (S.D.N.Y. 1988); Wright, Miller & Kane, Federal Practice and Procedure: Civil 2d § 2663. Accordingly, Semaphore's default as to plaintiff's original complaint cannot be stretched to cover plaintiff's amended complaint.

Moreover, in Frow v. DeLaVega, 82 U.S. (15 Wall) 552, 21 L.Ed. 60 (1872), the United States Supreme Court established a rule for default cases involving multiple defendants, which is described as follows:

When one of several defendants who is alleged to be jointly liable defaults, judgment should not be entered against him until the matter has been adjudicated with regard to all defendants, or all defendants have defaulted.

Wright, Miller, Kane, Federal Practice and Procedure: Civil 2d § 2690. The purpose behind the Frow rule is to promote consistent verdicts. Hunt v. Inter-Globe Energy, Inc., 770 F.2d 145 (10th Cir.1985). Additionally, as stated by the Tenth Circuit, "... just as consistent verdict determinations are essential among joint tortfeasors, consistent damage awards on the same claim are essential among joint and several tortfeasors." Id. at 148.

Applying the Frow rule to the facts of the instant case renders the default entered against defendant Semaphore almost meaningless. Defendants Semaphore and Central are alleged to be jointly and severally liable for the damages sustained by plaintiff and caused by their television commercials. Under Frow, to collect damages against Semaphore with respect to the damages sought in its original complaint, plaintiff must establish liability against defendant Central during a trial on the merits. Essentially, plaintiff must prove its case with the same degree of sufficiency regardless of whether or not the default rendered against defendant Semaphore is set aside. The failure of plaintiff to establish liability against Central, with respect to its original complaint, will prevent the Court from entering a default judgment against defendant Semaphore. Moreover, as previously discussed, plaintiff still has the burden of establishing liability...