Bryan v. Butler

163 F.R.D. 175, 33 Fed. R. Serv. 3d 1057, 1995 U.S. Dist. LEXIS 14697, 1995 WL 581245
CourtDistrict Court, N.D. New York
DecidedOctober 2, 1995
DocketNo. 94-CV-1565
StatusPublished
Cited by2 cases

This text of 163 F.R.D. 175 (Bryan v. Butler) is published on Counsel Stack Legal Research, covering District Court, N.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bryan v. Butler, 163 F.R.D. 175, 33 Fed. R. Serv. 3d 1057, 1995 U.S. Dist. LEXIS 14697, 1995 WL 581245 (N.D.N.Y. 1995).

Opinion

MEMORANDUM-DECISION AND ORDER

McAVOY, Chief Judge.

I. BACKGROUND

Defendant, MARY ANN SMITH, ESQ., brings this motion seeking to set aside a default judgment entered against her on January 24, 1994, in the above-entitled action. Plaintiff, DONNA R. BRYAN, opposes defendant Smith, Esq.’s motion, and cross moves for an order of this Court directing a hearing to be held for the assessment of damages pursuant to Fed.R.Civ.P. 55(b).

Defendant Smith, Esq., argues that the Court should vacate the default judgment entered against her because such default allegedly was not willful, vacating the default will not prejudice the plaintiff, and defendant Smith, Esq., has a meritorious defense. Briefly, defendant Smith, Esq., claims that at the time this action for legal malpractice was commenced, although she was no longer employed by the Butler, Allen law firm, whose principals are named defendants and performed legal services for the plaintiff, defendant Smith, Esq., believed in good faith that the law firm’s malpractice insurance carrier would defend the suit on her behalf. Accordingly, defendant Smith, Esq., did not file an answer in the action. Defendant Smith, Esq., also alleges that she did not learn of the default judgment against her until sometime in May, 1995. In addition, defendant Smith, Esq., claims that any damage caused to the plaintiff was as a result of the negligence of her immediate supervisor while employed at the Butler, Allen law firm.

The plaintiff argues that the motion to vacate should be denied. The plaintiff alleges that the failure to file an answer on behalf of defendant Smith, Esq., was the willful and deliberate action of the Butler, Allen malpractice insurance carrier, Home Insurance Company. The plaintiff also claims that the defendant Smith, Esq., has not made a showing that she has a meritorious defense.

II. DISCUSSION

A. Vacating A Default Judgment

As one means of ensuring compliance with time limits set out in the Federal Rules of Civil Procedure, the default rules serve the end of an orderly and efficient administration of justice. See Enron Oil Corp. v. Diakuhara, 10 F.3d 90, 96 (2d Cir. 1993). However, courts generally disfavor default judgments, particularly when the case presents issues of fact, Meehan v. Snow, 652 F.2d 274, 277 (2d Cir.1981). Courts should only order this extreme sanction as a penalty of last resort. Id. (citing Peterson v. Term Taxi Inc., 429 F.2d 888, 890-92 (2d Cir.1970)). When cases present disputed factual issues, the Federal Rules promote trial on the merits, and hence courts resolve doubts about whether to grant or vacate a default in favor of the defaulting party. Sony Corp. v. Elm State Elec., Inc., 800 F.2d 317, 320 (2d Cir.1986); Enron, 10 F.3d at 96; Meehan, 652 F.2d at 277; See also Klapprott v. United States, 335 U.S. 601, 615, 69 S.Ct. 384, 390-91, 93 L.Ed. 266 (1949), modified, 336 U.S. 942, 69 S.Ct. 384, 93 L.Ed. 1099.

The Court now turns to the relevant federal rules. Rule 55(a) provides that a clerk shall enter a default when presented with an affidavit stating that a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend. See, e.g., Enron, 10 F.3d 90 (2d Cir.1993); Hodges v. Jones, 873 F.Supp. 737, 742 (N.D.N.Y.1995). Rule 55(e) provides, however, that the court may set aside an entry of default “[f]or good cause shown.”

Courts in this circuit construe “good cause” broadly. Enron, 10 F.3d at 96; see also Meehan, 652 F.2d at 277. When determining whether a defaulting party has shown good cause sufficient to justify setting aside an entry of default, the Court considers three main factors: 1) whether the defaulting party defaulted wilfully, 2) whether setting aside the clerk’s entry of default would prejudice the defaulting party’s adversary, and 3) [177]*177whether the defaulting party has presented a meritorious defense. Hodges, 873 F.Supp. at 742 (citing Enron, 10 F.3d at 96). See also In Re Men’s Sportswear, Inc., 834 F.2d 1134, 1138 (2d Cir.1987); Meehan, 652 F.2d 274, 276 (2d Cir.1981). The Court may also consider other relevant equitable factors, such as whether the defaulting party failed to follow a procedural rule because of a mistake made in good faith and whether preserving the entry of default would produce a harsh or unfair result. Enron, 10 F.3d at 96.

1. Willfulness

Keeping in mind that the Court should resolve all doubts in favor of the defaulting party, the Court finds that the default by defendant Smith, Esq., was not willful. It is not unreasonable for defendant Smith, Esq., to assume that the insurance carrier for the Butler, Allen law firm would defend all the defendants to a malpractice suit concerning work that occurred during her employment at the firm. Clearly, the defense involves the filing of an answer, which defendant Smith, Esq., could reasonably assume would include her. Moreover, since she did not receive any indication of the default judgment until May, 1995, it would be reasonable for her to assume that an answer had in fact been filed, or that the case had been discontinued in some fashion. Upon learning of the default judgment, defendant Smith, Esq., moved to vacate within a very short period of time. The default was not willful. See Enron, 10 F.3d at 96 (facts in support of vacating default judgment should be construed broadly).

2. Prejudice

“[Djelay alone does not establish prejudice.” Id. at 98. Moreover, th'e non-defaulting party must show prejudicial delay by proving that the “delay will result in the loss of evidence, create difficulties of discovery, or provide greater opportunity for fraud and collusion.” Davis v. Musler, 713 F.2d 907, 916 (2d Cir.1983) (citation omitted). In view of the fact that the plaintiff has failed to present any arguments that setting aside the default would prejudice him in any way, the Court is reluctant to invent reasons for why it might. Nevertheless, the Court cannot find any facts in the record to show that by granting the defendant’s motion that the plaintiff will be prejudiced in any way.

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163 F.R.D. 175, 33 Fed. R. Serv. 3d 1057, 1995 U.S. Dist. LEXIS 14697, 1995 WL 581245, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bryan-v-butler-nynd-1995.