STATE OF MAINE SUPERIOR COURT
Cumberland, ss. STP:TEOFihlA NE C, !trih.M~"lnrl ~~ (;{~rk's Off,ce APR 03 2D1a ..,).. Lt I PM ANDREW BEEBE
Plaintiff RECEIVED v. Docket No. PORSC-CV-17-0508
ONEMAIN FINANCIAL f /k/a CitiFinancial, Inc.
ORDER ON PENDING MOTIONS
Before the court are Plaintiffs Motion for Default Judgment; Defendant's
Motion to Set Aside Clerk's Entry ofDefault, and Plaintiffs Motion to Strike the Late
Filed Answer ofDefendant, together with the parties' respective oppositions and reply
memoranda. Oral argument on the motions was held April 3, 2018.
Background
In this case, Plaintiff Andrew Beebe contends that Citifinancial, Inc. wrongfully
recorded an execution lien against his primary residence, which he says is exempted,
statute from being levied against by reason of its value and the balance of a principal
mortgage. See 14 M.R.S. § 4422( 1)(B). His complaint alleges that Citifinancial, Inc.
has failed or refused to discharge its lien, and is therefore liable to him under 14 M.R.S.
§ 4651-A(s).
His complaint names OneMain Financial as the Defendant, on the ground that
OneMain Financial was formerly known as Citifinancial, Inc. The record includes a
return of service indicating that the summons and complaint were served on CT Corporation, designated agent for OneMain Financial on December 26, 2017.
Accordingly, Defendant's answer was due January 15, 2018. See M.R. Civ. P. 12(a).
On February 12, 2018, Plaintiff filed a request for entry of default and default
judgment based on OneMain Financial's failure to answer or otherwise plead. On
February 13, 2018, Plaintiff filed Motion for Entry of Default Judgment. The Clerk
entered default on February 14, 2018.
On February 20, 2018, more than a month after the due date, OneMain
Financial filed an Answer to the Complaint, and on February 23, 2018, it filed a
Motion to Set Aside Clerk's Entry of Default. Plaintiff opposes the Motion and has
filed his Motion to Strike.
Analysis
The resolution of Plaintiffs two motions-for default judgment and to strike
late answer-depends on the resolution ofDefendant's motion to set aside the default.
Under Rule 55( c) of the Maine Rules of Civil Procedure, Defendant's burden is to show
"good cause" for setting aside the default.
The Maine Law Court has said that a defaulted party's showing of good cause
for purposes of Rule 55(c) has two elements: "a good excuse for his or her untimeliness
and a meritorious defense." Truman v. Browne, 2001 ME 182, P 9, 788 A.2d 168, 170.
The Law Court has also noted that "[t]he good excuse and the meritorious defense
requirements are two distinct components, both of which must be satisfied in order to
prevail on a Rule 5 5 (c) motion." Levine v. KeyBank National Association, 2004 ME 13 1,
,20, 861 A.2d 678, quoting Hart v. Terry L. Hopkins, Inc.,_588 A.2d 1187, 1190 (Me.
2 1991). Although the defaulted party bears the burden of showing good cause, there
is a strong judicial preference for adjudicating cases on their merits.
In this case, OneMain Financial has met the meritorious defense component of
"good cause," because its Motion to Set Side Clerk's Entry ofDefault presents evidence
that it is not, in fact, formerly known as Citifinancial, Inc., and that another entity is
the successor in interest to Citifinancial, Inc. This evidence is not conclusive, and
Plaintiff has pointed to misleading information on OneMain Financial's website that
undercuts OneMain's contention. However, to the extent Plaintiff contends that
OneMain Financial has to prove that it is not a successor to CitiFinancial, that
contention overstates OneMain's burden. On the merits, it would likely be Plaintiffs
burden, not OneMain's, to prove that OneMain is liable for CitiFinancial's alleged
wrongdoing. OneMain has generated an issue as to its liability that is sufficient to
satisfy the meritorious defense component of "good cause."
OneMain's showing of a good excuse for its untimely response is not as strong.
The filings do show that OneMain was in touch with Plaintiffs counsel early in
January 2018, before the due date of OneMain's answer, and that around the middle
of January 2018, OneMain sent material to Plaintiffs counsel that OneMain contends
supports its contention that Plaintiff has named the wrong entity as Defendant.
However, more than a month went by after that. OneMain apparently
contends that it was waiting to hear back from Plaintiffs counsel, but Plaintiffs
counsel correctly point out that they were not required to respond or to concede to
3 OneMain's contention that it is not a successor to Citifinancial. In fact, Plaintiffs
counsel still do not accept OneMain's contention.
Plaintiff through his counsel has acted reasonably-Plaintiff did not seek to
take immediate advantage of OneMain's failure to file a timely answer, and instead
gave OneMain almost a month beyond the deadline to file an answer before filing
Plaintiffs request for entry of default. Given that Plaintiff was not prepared to drop
the case against OneMain and given that OneMain did not do anything after sending
information to Plaintiffs counsel, Plaintiffs request for entry of default was an
appropriate way-perhaps the only way-to move this case forward.
On the other hand, OneMain did specifically ask Plaintiffs counsel to extend
the time for OneMain to respond, and it does not appear that Plaintiffs counsel ever
responded to that request.
Accordingly, this is a case where both sides have shown a reasonable basis for
their actions. Plaintiff delayed seeking default for almost a month and has expended
resources in motion practice since doing so. Defendant did respond in a timely
fashion, but the response was only to Plaintiffs counsel and not to the court.
The challenge presented by a motion to set aside default is how appropriately
to balance the interest of the Plaintiff in a timely resolution of his cause of action and
the interest of the Defendant in an opportunity to defend on the merits. On the one
hand, the court's resolution of the pending motions needs to promote and encourage
communication between counsel aimed at resolving disputes before litigation gets
4 underway-a consideration favoring OneMain, but also needs to promote and
encourage timely responses to summonses-a factor favoring Plaintiff.
In addressing such challenges under the counterpart federal Rule 55(c)1, the
federal courts have exercised inherent power to impose conditions on the setting aside
of a default:
In determining whether to exercise its discretion to set aside an entry of default, a district court has inherent power to impose reasonable conditions in order to avoid undue prejudice to the non-defaulting party. A court may use this inherent power to require a party to post security for payment of all or part of an eventual judgment. Another condition a court may impose is the payment of reasonable attorney's fees and costs incurred by the opposing party because of the default.
10-55 Moore's Federal Practice§ 55.70[6].
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STATE OF MAINE SUPERIOR COURT
Cumberland, ss. STP:TEOFihlA NE C, !trih.M~"lnrl ~~ (;{~rk's Off,ce APR 03 2D1a ..,).. Lt I PM ANDREW BEEBE
Plaintiff RECEIVED v. Docket No. PORSC-CV-17-0508
ONEMAIN FINANCIAL f /k/a CitiFinancial, Inc.
ORDER ON PENDING MOTIONS
Before the court are Plaintiffs Motion for Default Judgment; Defendant's
Motion to Set Aside Clerk's Entry ofDefault, and Plaintiffs Motion to Strike the Late
Filed Answer ofDefendant, together with the parties' respective oppositions and reply
memoranda. Oral argument on the motions was held April 3, 2018.
Background
In this case, Plaintiff Andrew Beebe contends that Citifinancial, Inc. wrongfully
recorded an execution lien against his primary residence, which he says is exempted,
statute from being levied against by reason of its value and the balance of a principal
mortgage. See 14 M.R.S. § 4422( 1)(B). His complaint alleges that Citifinancial, Inc.
has failed or refused to discharge its lien, and is therefore liable to him under 14 M.R.S.
§ 4651-A(s).
His complaint names OneMain Financial as the Defendant, on the ground that
OneMain Financial was formerly known as Citifinancial, Inc. The record includes a
return of service indicating that the summons and complaint were served on CT Corporation, designated agent for OneMain Financial on December 26, 2017.
Accordingly, Defendant's answer was due January 15, 2018. See M.R. Civ. P. 12(a).
On February 12, 2018, Plaintiff filed a request for entry of default and default
judgment based on OneMain Financial's failure to answer or otherwise plead. On
February 13, 2018, Plaintiff filed Motion for Entry of Default Judgment. The Clerk
entered default on February 14, 2018.
On February 20, 2018, more than a month after the due date, OneMain
Financial filed an Answer to the Complaint, and on February 23, 2018, it filed a
Motion to Set Aside Clerk's Entry of Default. Plaintiff opposes the Motion and has
filed his Motion to Strike.
Analysis
The resolution of Plaintiffs two motions-for default judgment and to strike
late answer-depends on the resolution ofDefendant's motion to set aside the default.
Under Rule 55( c) of the Maine Rules of Civil Procedure, Defendant's burden is to show
"good cause" for setting aside the default.
The Maine Law Court has said that a defaulted party's showing of good cause
for purposes of Rule 55(c) has two elements: "a good excuse for his or her untimeliness
and a meritorious defense." Truman v. Browne, 2001 ME 182, P 9, 788 A.2d 168, 170.
The Law Court has also noted that "[t]he good excuse and the meritorious defense
requirements are two distinct components, both of which must be satisfied in order to
prevail on a Rule 5 5 (c) motion." Levine v. KeyBank National Association, 2004 ME 13 1,
,20, 861 A.2d 678, quoting Hart v. Terry L. Hopkins, Inc.,_588 A.2d 1187, 1190 (Me.
2 1991). Although the defaulted party bears the burden of showing good cause, there
is a strong judicial preference for adjudicating cases on their merits.
In this case, OneMain Financial has met the meritorious defense component of
"good cause," because its Motion to Set Side Clerk's Entry ofDefault presents evidence
that it is not, in fact, formerly known as Citifinancial, Inc., and that another entity is
the successor in interest to Citifinancial, Inc. This evidence is not conclusive, and
Plaintiff has pointed to misleading information on OneMain Financial's website that
undercuts OneMain's contention. However, to the extent Plaintiff contends that
OneMain Financial has to prove that it is not a successor to CitiFinancial, that
contention overstates OneMain's burden. On the merits, it would likely be Plaintiffs
burden, not OneMain's, to prove that OneMain is liable for CitiFinancial's alleged
wrongdoing. OneMain has generated an issue as to its liability that is sufficient to
satisfy the meritorious defense component of "good cause."
OneMain's showing of a good excuse for its untimely response is not as strong.
The filings do show that OneMain was in touch with Plaintiffs counsel early in
January 2018, before the due date of OneMain's answer, and that around the middle
of January 2018, OneMain sent material to Plaintiffs counsel that OneMain contends
supports its contention that Plaintiff has named the wrong entity as Defendant.
However, more than a month went by after that. OneMain apparently
contends that it was waiting to hear back from Plaintiffs counsel, but Plaintiffs
counsel correctly point out that they were not required to respond or to concede to
3 OneMain's contention that it is not a successor to Citifinancial. In fact, Plaintiffs
counsel still do not accept OneMain's contention.
Plaintiff through his counsel has acted reasonably-Plaintiff did not seek to
take immediate advantage of OneMain's failure to file a timely answer, and instead
gave OneMain almost a month beyond the deadline to file an answer before filing
Plaintiffs request for entry of default. Given that Plaintiff was not prepared to drop
the case against OneMain and given that OneMain did not do anything after sending
information to Plaintiffs counsel, Plaintiffs request for entry of default was an
appropriate way-perhaps the only way-to move this case forward.
On the other hand, OneMain did specifically ask Plaintiffs counsel to extend
the time for OneMain to respond, and it does not appear that Plaintiffs counsel ever
responded to that request.
Accordingly, this is a case where both sides have shown a reasonable basis for
their actions. Plaintiff delayed seeking default for almost a month and has expended
resources in motion practice since doing so. Defendant did respond in a timely
fashion, but the response was only to Plaintiffs counsel and not to the court.
The challenge presented by a motion to set aside default is how appropriately
to balance the interest of the Plaintiff in a timely resolution of his cause of action and
the interest of the Defendant in an opportunity to defend on the merits. On the one
hand, the court's resolution of the pending motions needs to promote and encourage
communication between counsel aimed at resolving disputes before litigation gets
4 underway-a consideration favoring OneMain, but also needs to promote and
encourage timely responses to summonses-a factor favoring Plaintiff.
In addressing such challenges under the counterpart federal Rule 55(c)1, the
federal courts have exercised inherent power to impose conditions on the setting aside
of a default:
In determining whether to exercise its discretion to set aside an entry of default, a district court has inherent power to impose reasonable conditions in order to avoid undue prejudice to the non-defaulting party. A court may use this inherent power to require a party to post security for payment of all or part of an eventual judgment. Another condition a court may impose is the payment of reasonable attorney's fees and costs incurred by the opposing party because of the default.
10-55 Moore's Federal Practice§ 55.70[6].
The authority of federal and Maine courts to impose such conditions in
granting relief from ajudgment is explicitly set forth in Fed. R. Civ. P. 60(b) and M.R.
Civ. 60(b) (relief from judgment may be granted "upon such terms as are just").
Although M .R. Civ. P. 55( c) does not include counterpart language regarding the
setting aside of a default, the imposition of reasonable conditions for the setting aside
of a default is likely well within this court's inherent authority, although the precise
question appears to be open under Maine law. The Maine Law Court has said that
1 The federal and Maine civil rules on setting aside default vary slightly in wording, but are substantively the same. Compare Fed. R. Civ. P . 55(c) ("The court may set aside an entry of default for good cause, and it may set aside a default judgment under Rule 60(b )") with M.R. Civ. P. 55(c) ("For good cause shown the court may set aside an entry of default and, if a judgment by default has been entered, may likewise set it aside in accordance with Rule 60(b)").
5 Maine civil rules are to be construed in the same manner as their counterpart federal
rules. See Bean ·v. Cummings, 2008 ME 18,, 11, 9.39 A.2d 676. Accordingly, the court
concludes that it may impose reasonable conditions under Rule 55(c) in setting aside
an entry of default. Without authority to impose such conditions, the court is faced
with an all-or-nothing choice in a situation of the kind presented here.
In this case, the fact that OneMain's answer was more than a month late
undercuts the sufficiency of its excuse, although the delay was plainly not willful or in
bad faith. Moreover, if Plaintiff had not requested default and moved for default
judgment, the court might still be waiting for OneMain to respond to the summons.
Thus, it may be that Plaintiff had to make his filings in order to prod OneMain into
action. Prejudice to the nondefaulting party is a factor in the exercise of the court's
discretion in deciding whether to set aside a default. See Thomas v. Thompson, 65.3 A.2d
417. 420 (Me. 1995).
On the other hand, ifOneMain is truly not a successor to CitiFinancial, it should
be entitled to defend on that ground. These factors persuade the court that the default
should be set aside, but only if Plaintiff is reimbursed by Defendant for his reasonable
attorney fees and costs in seeking default and default judgment.
IT IS HEREBY ORDERED AS FOLLOWS:
1. Defendant OneMain Financial's Motion to Set Aside Clerk's Entry of
Default is granted on condition that Defendant pay Plaintiffs reasonable
attorney fees and costs incurred thus far within SO days ofthe court's further
order establishing the amount Plaintiff is entitled to be paid. Plaintiffs
6 Motion for Default Judgment and Motion to Strike are denied on the same
condition.
2. Plaintiff may file a motion for approval of attorney fees and costs within 10
days of this Order. Briefing on the motion shall be pursuant to M.R. Civ. P.
7. The court will issue a further order establishing the amount to be paid,
without oral argument.
Pursuant to M.R. Civ. P. 79(a), the Clerk is hereby directed to incorporate this
Order by reference in the docket.
Dated April S, 2018
A. M. Horton, Justice