Wilbourn v. Caravan Facilities Mgmt., LLC
| Decision Date | 01 December 2020 |
| Docket Number | Case No. 20-cv-10766 |
| Parties | VENUS WILBOURN, Plaintiff, v. CARAVAN FACILITIES MANAGEMENT, LLC, Defendant. |
| Court | U.S. District Court — Eastern District of Michigan |
OPINION AND ORDER: (1) GRANTING DEFENDANT'S MOTION TO SET ASIDE DEFAULT PURSUANT TO FED. R. CIV. P. 55(C) (ECF NO. 9); (2) SETTING ASIDE THE CLERK'S JUNE 16, 2020 ENTRY OF DEFAULT (ECF NO. 5); (3) DENYING AS MOOT PLAINTIFF'S MOTION FOR ENTRY OF DEFAULT JUDGMENT AND PLAINTIFF'S AMENDED MOTION FOR ENTRY OF DEFAULT JUDGMENT (ECF NOS. 6, 7); AND (4) ORDERING THIS MATTER REFERRED TO FACILITATIVE MEDIATION PURSUANT TO E.D. MICH. L.R. 16.4
This matter is before the Court on Defendant Caravan Facilities Management, LLC's Motion to Set Aside Default (ECF No. 9), and Plaintiff Venus Wilbourn's Motion for Entry of Default Judgment and Amended Motion for Entry of Default Judgment (ECF Nos. 6, 7). Defendant's Motion to Set Aside Default has been fully briefed. The Court does not believe that oral argument will aid in its disposition of the motions; therefore, it is dispensing with oral argument pursuant to Eastern District of Michigan Local Rule 7.1(f)(2). For the reasons stated below, the Court GRANTS Defendant's Motion to Set Aside Default, DENIES AS MOOT Plaintiff's Motion for Entry of Default Judgment and Amended Motion for Entry of Default Judgment, and ORDERS this matter referred to facilitative mediation pursuant to E.D. Mich. L.R. 16.4.
On March 23, 2020, Plaintiff Venus Wilbourn ("Plaintiff") filed a Complaint against her former employer, Defendant Caravan Facilities Management, LLC ("Defendant"), asserting claims for violation of the Family and Medical Leave Act ("FMLA"), 29 U.S.C. § 2601 et seq., and the Americans with Disabilities Act ("ADA"), 42 U.S.C. § 12101 et seq. (ECF No. 1, Complaint.) On or about May 21, 2020, Plaintiff served Defendant's resident agent, Cogency Global, Inc., via personal service. (ECF No. 3) Accordingly, Defendant's answer was due on or before June 11, 2020. (Id.)
According to Defendant, it "misidentified the Complaint as an Order for Garnishment for an employee and routed it to the payroll department for processing." (ECF No. 9, Def.'s Mot. Set Aside at p. 2, PgID 65.) Defendant's payroll department "was unclear as to the nature of the document and it continued to be re-routed through company departments." (Id.)
Defendant did not timely file an answer to Plaintiff's Complaint, and on June 16, 2020, Plaintiff filed a Request for Clerk's Entry of Default (ECF No. 4), which was granted that same day. (ECF No. 5, Clerk's Entry of Default.)
Plaintiff filed a Motion for Entry of Default Judgment Against Defendant Caravan Facilities Management, LLC Pursuant to Rule 55(b) on July 3, 2020. (ECF No. 6, Pl.'s Mot. Def. J.) Plaintiff then filed an Amended Motion for Entry of Default Judgment Against Defendant Caravan Facilities Management, LLC Pursuant to Rule 55(b) on July 7, 2020. (ECF No. 7, Pl.'s Amended Mot. Def. J.) In Plaintiff's Amended Motion, she specifies the damages she is seeking pursuant to her FMLA claim and her ADA claim, recognizing that there are statutory caps placed on claims filed pursuant to the ADA. (Id. at pp. 14-15, PgID 55-56.)
On July 27, 2020, counsel for Defendant entered an appearance in this matter. (ECF No. 8.) Defendant then filed a Motion to Set Aside Default Judgment on August 10, 2020. (ECF No. 9, Def.'s Mot. Set Aside.) Plaintiff responded in opposition to Defendant's motion on August 25, 2020, arguing that Defendant has failed to demonstrate good cause to set aside the default. (ECF No. 10, Pl.'s Resp.) On September 1, 2020, Defendant filed a reply brief in support of its Motion (titled a "Response to Plaintiff's Opposition to Defendant's Motion to Set Aside Default"),arguing that it has established good cause to set aside the default. (ECF No. 11, Def.'s Reply.)
Federal Rule of Civil Procedure 55(b)(2) provides that a party that has obtained a Clerk's Entry of Default must apply to the Court for a default judgment in all cases other than cases seeking a sum certain or a sum that can be made certain by computation. Fed. R. Civ. P. 55(b)(2). Upon entry of a default, all well-pleaded allegations of the complaint regarding liability are accepted as true. See Ford Motor Co. v. Cross, 441 F. Supp. 2d 837, 846 (E.D. Mich. June 9, 2006).
Federal Rule of Civil Procedure 55(c) provides that "[t]he court may set aside an entry of default for good cause, and it may set aside a default judgment under Rule 60(b)." Fed. R. Civ. P. 55(c). Rule 60(b) provides that a court may set aside a final judgment, order or proceeding for certain enumerated reasons including "mistake, inadvertence, surprise, or excusable neglect." Fed. R. Civ. P. 60(b)(1).
The Sixth Circuit has explained that courts must consider the following three factors under both Rules to determine whether good cause exists: (1) whether culpable conduct of the defendant led to the default, (2) whether the defendant has any meritorious defenses, and (3) whether the plaintiff will be prejudiced by setting aside the default. See Burrell v. Henderson, 434 F.3d 826, 831-32 (6th Cir. 2006)(citation omitted); United Coin Meter Co. v. Seaboard Coastline R.R., 705 F.2d 839, 844 (6th Cir. 1983). Even so, "the standard for applying [the three factors] to a motion to set aside a final judgment under Rule 60(b) is more demanding than their application in the context of a motion to set aside an entry of default under Rule 55(c)." Dassault Systemes, SA v. Childress, 663 F.3d 832, 839 (6th Cir. 2011). The Sixth Circuit has explained the differences between the Rule 55(c) "good cause" standard and Rule 60(b) standard as follows:
Once a defendant fails to file a responsive answer, he is in default, and an entry of default may be made by either the clerk or the judge. A default judgment can be entered by the clerk only if a claim is liquidated, or if a claim is unliquidated, by the judge after a hearing on damages. A default can be set aside under rule 55(c) for "good cause shown," but a default that has become final as a judgment can be set aside only under the stricter rule 60(b) standards for setting aside final, appealable orders.
Dassault Systemes, 663 F.3d at 839 (quoting Shepard Claims Serv. Inc. v. William Darrah & Assocs., 796 F.2d 190, 194 (6th Cir. 1986)) (emphasis in original)). The more stringent Rule 60(b) standard does not apply unless "the court has determined damages and a judgment has been entered." Dassault Systemes, 663 F.3d at 839 (quoting O.J. Distrib., Inc. v. Hornell Brewing Co., 340 F.3d 345 (6th Cir. 2003)). Here, there has been neither a final judgment entered nor any moneydamages awarded. The Court will therefore evaluate the three factors under the less strict "good cause" standard of Rule 55(c).
"Rule 55(c) leaves to the discretion of the trial judge the decision whether to set aside an entry of default." Shepard Claims Serv., 796 F.2d at 193; SEC v. Merkilinger, 489 F. App'x 937, 939 (6th Cir. 2012) (). As a general rule, Sixth Circuit decisions on Rule 55(c) motions to set aside default are "extremely forgiving to the defaulted party and favor a policy of resolving cases on the merits instead of on the basis of procedural missteps." United States v. $22,050.00 U.S. Currency, 595 F.3d 318, 322 (6th Cir. 2010) (collecting cases). "Any doubt should be resolved in favor of the petition to set aside the judgment so that cases may be decided on their merits," United Coin, 705 F.2d at 846, and the Court must "'construe[] all ambiguous or disputed facts in the light most favorable to the defendant[],' resolving any doubts in his favor." Deasault Systemes, 663 F.3d at 841 (citing INVST Fin. Grp., Inc. v. Chem-Nuclear Sys., Inc., 815 F.2d 391, 398 (6th Cir. 1987)) (alternations in original)).
Defendant contends that this Court should set aside the Clerk's entry of default because it did not act in bad faith or engage in culpable conduct, it has meritorious defenses to Plaintiff's claims, and that setting aside the default will not prejudice Plaintiff. (Def's. Mot. Set Aside at pp. 5-11, PgID 68-74.) Plaintiff argues in response that Defendant was properly served and that it has failed to show good cause to set aside the default and has made only conclusory, unsupported assertions in support of its motion. (Pl.'s Resp. at pp. 3-10, PgID 88-94.)
The Court starts with the understanding that "[j]udgment by default is a drastic step which should be resorted to only in the most extreme cases," and that there is a strong preference for deciding cases on the merits rather than by default. United Coin, 705 F.2d at 845-46; Shepard Claims Serv., 796 F.2d at 193. With that principle in mind, the Court turns to the three factors to be considered in determining whether to set aside an entry of default.
Turning to the first factor that must be considered - whether the default is the result of culpable conduct - a defendant's conduct leading to a default is willful or culpable if the defendant "display[s] either an intent to thwart judicial proceedingsor a reckless disregard for the effect of its conduct on those proceedings." See Dassault Systemes, 663 F.3d at 841 (citing Shepard Claims Serv., 796 F.2d at 194). "[M]ere negligence or failure to act reasonably is not enough to sustain a default." $22,050.00 U.S. Currency, 595 F.3d at 327.
Defendant argues that it did not act in bad faith or with conduct justifying entry of default. (Def's. Mot. Set Aside at pp. 7-8, PgID 70-71.) Defendant contends that it is "a victim of [its] own legal ineptness" and that its failure to respond to the Complaint "was due to a...
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