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4 IN THE SUPERIOR COURT OF GUAM 'K , » -..,<.,
6 YI-HUNG KUO and CHUN-CHIEH LIAO, CIVIL CASE NO.: CV0249-19
7 PLAINTIFFS, 8 DECISION AND ORDER vs. 9 (Plaintiff' s Request to Enter Default DAVID J. RILLERA, JR., Judgment and Defendant's Motion to Set 10 Aside Entry of Default) 11 DEFENDANT.
14 INTRODUCTION
15 This matter came before the Honorable Benjamin C. Sison Jr., on Plaintiffs Yi-Hung Kuo
16 and Chun-Chieh Liao ("Plaintiffs") Request to Enter Default Judgment and David J Rillera Jr.'s
17 ("Defendant") Motion to Set Aside Entry of Default entered by the Clerk of Court on June 25, 2019.
18 Plaintiffs are represented by Michael J. Berman, Esq., and Defendant is represented by Charles H.
19 McDonald II, Esq. Upon review of the written arguments submitted by the parties, the Defendant's
20 Motion to Set Aside the Entry of Default in this Matter is hereby GRANTED. The Entry of Default,
21 entered on the docket in this matter by the Clerk of Court on June 25, 2019, is hereby VACATED.
22 Because the Court has set aside the Entry of Default, the Court finds the Plaintiffs Request for
23 Default Judgment is MOOT.
25 BACKGROUND
26 The Complaint in this matter was filed on March 12, 2019. Under the Complaint the
27 Plaintiffs seek back rent and damages pursuant to a breach of a lease agreement between the parties.
CV0249-19 Kuo v Rillera Page 1 of 6 DECISION AND ORDER (re Plaintiffs Request to Enter Default Judgment and Defendant's Motion to Set Aside Entry of Default) 1 The Summons and Complaint was served on the Defendant at his place of business on March 13,
2 2019 and again at his place of residence on April 22, 2019. On May 14, 2019, twenty-two (22) days
3 after service of process on Defendant's Place of Residence, Plaintiffs filed a Request for Entry of
4 Default. On June 25, 2019, an Entry of Default against Defendant was issued by the Clerk of Court.
5 A Notice of Hearing on the Request for Entry of Default was scheduled before Magistrate Benjamin
6 C. Sison Jr., on September 5, 2019. Defendant filed an answer to the Complaint on July 12, 2019.
7 On September 4, 2019, Defendant filed a Motion to Set Aside the Entry of Default. At the hearing
8 on September 5, 2019, the Court instructed Plaintiffs to file any opposition to Plaintiffs Motion by
9 October 3, 2019 and for Defendant to file any reply by October 10, 2019. Oral arguments on the
10 Motion was scheduled on October 24, 2019. On October 24, 2019, the Parties informed the judge
11 that they were willing to waive oral argument and submit the matter on the pleadings.
12 The Defendant concedes he received the Summons and Complaint in this matter on March
13 13, 2019. However, the Defendant claims that he did meet with present counsel soon thereafter and
14 after that meeting was under the mistaken belief that he had retained legal counsel who was tasked
15 to timely file an answer to the Complaint. Defendant was later informed by his prospective counsel
16 however that he did not officially retain his attorney until payment to the attorney was made.
17 Defendant subsequently made payment to his attorney but only after the time for filing an answer to
18 the complaint had expired.
20 DISCUSSION
21 The Defendant argues the entry of default in this matter should be set aside for good cause
22 under Rule 55(c) of the Guam Rules of Civil Procedure because defaults are disfavored forms of
23 remedy and deciding cases on their merits is preferred. See Def' s Mot. Set Aside Entry Default
24 (Sept. 4, 2019) and Dens Reply to Plaintiffs Opp. to Motion (Oct. 24 2019).
25 Rule 55(c) of the Guam Rules of Civil Procedure provides "[f]or good cause shown, the
26 court may set aside an entry of default ...." Guam R. Civ. P. 55(c) (2014). The Supreme Court of
27 Guam has held the same grounds are used to determine whether good cause exists to set aside an
CV0249-19 Kuo v Rillera Page 2 of 6 DECISION AND ORDER (re Plaintiffs Request to Enter Default Judgment and Defendant's 1 entry of default or a default judgment. See Adams v. Due fas, 1998 Guam 15 1] 5. However, the
2 "standard is less rigorous when examining a motion to set aside entry of default than for default
3 judgments ...." However, "default judgments are generally disfavored and deciding a case on its
4 merits is encouraged whenever possible."
5 The Supreme Court adopted the Ninth Circuit Court of Appeals test for whether to set aside
6 default judgments and by extension entries of default. See Midsea Industrial, Inc. v. HK
7 Engineering, Ltd., 1998 Guam 14 115 (citing Falk v. Allen, 739 F.2d 461 (9th Cir. 1984), see also,
8 Adams, 1998 Guam 15 at 11 5. Courts should set aside an entry of default if "(l) the defendant's
9 culpable conduct led to the default, (2) the defendant has no meritorious defense, or (3) the plaintiff
10 would be prejudiced if the judgment is set aside." Adams, 1998 Guam 15 at 'H 5. The three elements
11 are applied "disjunctively rather than as a balancing test." Due fas v. Bradv, 2008 Guam 27 11 28.
12 This means that if one of the three elements is present, then a denial of a motion to set aside is
13 appropriate. See Midsea Indus., 1998 Guam 14 at 11 6 (citing Cassidv v. Tenorio, 856 F.2d 1412,
14 1415-16 (9th Cir. l988)). Therefore, the Court will discuss each element separately below, keeping
15 in mind the Supreme Court's pronouncement that the standards for setting aside an entry of default
16 are less rigorous than for setting aside a default judgment.
17 i. Whether the Defendant's culpable conduct led to the entry of default.
18 Applying the culpable conduct element to a party's failure to answer a complaint, the Ninth
19 Circuit has found a defendant's conduct is culpable in leading to the entry of default when the
20 defendant "has received actual or constructive notice of the filing of the action and intentionally
21 failed to answer." Alan Neumann Productions Inc. v. Albright, 862 F.2d 1388, 1391-92 (9th Cir.
22 1988). A "[n]eg1ectful failure to answer as to which the defendant offers a credible, good faith
23 explanation negating any intention to take advantage of the opposing party, interfere with judicial
24 decision-making, or otherwise manipulate the legal process is not 'intentional' ... and is therefore
25 not necessarily-although it certainly may be, once the equitable factors are considered-culpable or
26 inexcusable." TCI Grp. Life Ins. Plan v. Knoebber, 244 F.3d 691, 697 (9th Cir. 2001), overruled on
27 other grounds by Egelhoff v. Egelhoff ex rel. Breiner, 532 U.S. 141 (2001).
CV0249-19 Kuo v Rillera Page 3 off DECISION AND ORDER (re Plaintiffs Request to Enter Default Judgment and Defendant's \l , \4 ' L 0-4 A 4.1- 1T...A.. . ,,L`T\ALI....1¢\ 1 Here, no argument has been put forward that the Defendant's conduct intended to take
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4 IN THE SUPERIOR COURT OF GUAM 'K , » -..,<.,
6 YI-HUNG KUO and CHUN-CHIEH LIAO, CIVIL CASE NO.: CV0249-19
7 PLAINTIFFS, 8 DECISION AND ORDER vs. 9 (Plaintiff' s Request to Enter Default DAVID J. RILLERA, JR., Judgment and Defendant's Motion to Set 10 Aside Entry of Default) 11 DEFENDANT.
14 INTRODUCTION
15 This matter came before the Honorable Benjamin C. Sison Jr., on Plaintiffs Yi-Hung Kuo
16 and Chun-Chieh Liao ("Plaintiffs") Request to Enter Default Judgment and David J Rillera Jr.'s
17 ("Defendant") Motion to Set Aside Entry of Default entered by the Clerk of Court on June 25, 2019.
18 Plaintiffs are represented by Michael J. Berman, Esq., and Defendant is represented by Charles H.
19 McDonald II, Esq. Upon review of the written arguments submitted by the parties, the Defendant's
20 Motion to Set Aside the Entry of Default in this Matter is hereby GRANTED. The Entry of Default,
21 entered on the docket in this matter by the Clerk of Court on June 25, 2019, is hereby VACATED.
22 Because the Court has set aside the Entry of Default, the Court finds the Plaintiffs Request for
23 Default Judgment is MOOT.
25 BACKGROUND
26 The Complaint in this matter was filed on March 12, 2019. Under the Complaint the
27 Plaintiffs seek back rent and damages pursuant to a breach of a lease agreement between the parties.
CV0249-19 Kuo v Rillera Page 1 of 6 DECISION AND ORDER (re Plaintiffs Request to Enter Default Judgment and Defendant's Motion to Set Aside Entry of Default) 1 The Summons and Complaint was served on the Defendant at his place of business on March 13,
2 2019 and again at his place of residence on April 22, 2019. On May 14, 2019, twenty-two (22) days
3 after service of process on Defendant's Place of Residence, Plaintiffs filed a Request for Entry of
4 Default. On June 25, 2019, an Entry of Default against Defendant was issued by the Clerk of Court.
5 A Notice of Hearing on the Request for Entry of Default was scheduled before Magistrate Benjamin
6 C. Sison Jr., on September 5, 2019. Defendant filed an answer to the Complaint on July 12, 2019.
7 On September 4, 2019, Defendant filed a Motion to Set Aside the Entry of Default. At the hearing
8 on September 5, 2019, the Court instructed Plaintiffs to file any opposition to Plaintiffs Motion by
9 October 3, 2019 and for Defendant to file any reply by October 10, 2019. Oral arguments on the
10 Motion was scheduled on October 24, 2019. On October 24, 2019, the Parties informed the judge
11 that they were willing to waive oral argument and submit the matter on the pleadings.
12 The Defendant concedes he received the Summons and Complaint in this matter on March
13 13, 2019. However, the Defendant claims that he did meet with present counsel soon thereafter and
14 after that meeting was under the mistaken belief that he had retained legal counsel who was tasked
15 to timely file an answer to the Complaint. Defendant was later informed by his prospective counsel
16 however that he did not officially retain his attorney until payment to the attorney was made.
17 Defendant subsequently made payment to his attorney but only after the time for filing an answer to
18 the complaint had expired.
20 DISCUSSION
21 The Defendant argues the entry of default in this matter should be set aside for good cause
22 under Rule 55(c) of the Guam Rules of Civil Procedure because defaults are disfavored forms of
23 remedy and deciding cases on their merits is preferred. See Def' s Mot. Set Aside Entry Default
24 (Sept. 4, 2019) and Dens Reply to Plaintiffs Opp. to Motion (Oct. 24 2019).
25 Rule 55(c) of the Guam Rules of Civil Procedure provides "[f]or good cause shown, the
26 court may set aside an entry of default ...." Guam R. Civ. P. 55(c) (2014). The Supreme Court of
27 Guam has held the same grounds are used to determine whether good cause exists to set aside an
CV0249-19 Kuo v Rillera Page 2 of 6 DECISION AND ORDER (re Plaintiffs Request to Enter Default Judgment and Defendant's 1 entry of default or a default judgment. See Adams v. Due fas, 1998 Guam 15 1] 5. However, the
2 "standard is less rigorous when examining a motion to set aside entry of default than for default
3 judgments ...." However, "default judgments are generally disfavored and deciding a case on its
4 merits is encouraged whenever possible."
5 The Supreme Court adopted the Ninth Circuit Court of Appeals test for whether to set aside
6 default judgments and by extension entries of default. See Midsea Industrial, Inc. v. HK
7 Engineering, Ltd., 1998 Guam 14 115 (citing Falk v. Allen, 739 F.2d 461 (9th Cir. 1984), see also,
8 Adams, 1998 Guam 15 at 11 5. Courts should set aside an entry of default if "(l) the defendant's
9 culpable conduct led to the default, (2) the defendant has no meritorious defense, or (3) the plaintiff
10 would be prejudiced if the judgment is set aside." Adams, 1998 Guam 15 at 'H 5. The three elements
11 are applied "disjunctively rather than as a balancing test." Due fas v. Bradv, 2008 Guam 27 11 28.
12 This means that if one of the three elements is present, then a denial of a motion to set aside is
13 appropriate. See Midsea Indus., 1998 Guam 14 at 11 6 (citing Cassidv v. Tenorio, 856 F.2d 1412,
14 1415-16 (9th Cir. l988)). Therefore, the Court will discuss each element separately below, keeping
15 in mind the Supreme Court's pronouncement that the standards for setting aside an entry of default
16 are less rigorous than for setting aside a default judgment.
17 i. Whether the Defendant's culpable conduct led to the entry of default.
18 Applying the culpable conduct element to a party's failure to answer a complaint, the Ninth
19 Circuit has found a defendant's conduct is culpable in leading to the entry of default when the
20 defendant "has received actual or constructive notice of the filing of the action and intentionally
21 failed to answer." Alan Neumann Productions Inc. v. Albright, 862 F.2d 1388, 1391-92 (9th Cir.
22 1988). A "[n]eg1ectful failure to answer as to which the defendant offers a credible, good faith
23 explanation negating any intention to take advantage of the opposing party, interfere with judicial
24 decision-making, or otherwise manipulate the legal process is not 'intentional' ... and is therefore
25 not necessarily-although it certainly may be, once the equitable factors are considered-culpable or
26 inexcusable." TCI Grp. Life Ins. Plan v. Knoebber, 244 F.3d 691, 697 (9th Cir. 2001), overruled on
27 other grounds by Egelhoff v. Egelhoff ex rel. Breiner, 532 U.S. 141 (2001).
CV0249-19 Kuo v Rillera Page 3 off DECISION AND ORDER (re Plaintiffs Request to Enter Default Judgment and Defendant's \l , \4 ' L 0-4 A 4.1- 1T...A.. . ,,L`T\ALI....1¢\ 1 Here, no argument has been put forward that the Defendant's conduct intended to take
2 advantage of the opposing party, interfere with judicial decision-making, or otherwise manipulate
3 the legal process. What appears to have occurred is that the Defendant received the Summons and
4 Complaint in this matter and immediately met with his present counsel but was under the mistaken
5 impression that after that meeting that he had successfully retained counsel who would assist him in
6 this lawsuit. Thus, while the Court recognizes that the Defendant failed to timely answer the
7 Complaint in this matter, the Court concludes that the entry of default was not a result of the
8 Defendant's culpable conduct because the Defendant was active in addressing the claims under the
9 Complaint by immediately seeking assistance of counsel upon receipt of the Complaint.
11 Whether the Defendant has no meritorious defense.
12 The Ninth Circuit has held, in order to "demonstrate the existence of a meritorious defense, a
13 party must offer up more than mere conclusory assertions but must present specific facts that would
14 constitute a defense if the litigation was permitted to proceed." TCI Group, 244 F.3d at 700 (internal
15 citations omitted). The court "must determine whether there is some possibility that the outcome of
16 the suit after a full trial would be contrary to the result achieved by the default." Midsea Indus., 1998
17 Guam 14 11 10. While the burden is on the party seeking to vacate the default, the burden "is not
18 extraordinarily heavy; the only requirement is that a sufficient defense is assertive [sic] and
19 litigation of the claims would not be a wholly empty exercise." Put another way, "all that is
20 necessary is to allege sufficient facts that if true, would constitute a defense, the question of whether
21 the factual allegation is true is not to be determined by the court when it decides the motion to set
22 aside the default. Rather that question would be the subject of later litigation. Pacific Renewable
23 Solutions, WL 1352063 at *4-5, see also, Schwab v. Bullocks, Inc., 508 F.2d 353, 374 (9th Cir.
24 1974) (reasoning the success of the defense is not the standard and rather, "[d]efendants' allegations
25 are meritorious if they contain even a hint of a suggestion, which, if proven at trial, would constitute
26 a defense") .
CV0249-19 Kuo V Rillera Page 4 of 6 DECISION AND ORDER (re Plaintiffs Request to Enter Default Judgment and Defendant's 1
1 Here, the Complaint seeks relief in the form of rental arrearages and damages resulting from
2 Plaintiffs claims of a breach of lease executed by the parties. In their Complaint Plaintiffs claim
3 $7,550.00 for damages done to the premises, $1,600.00 for unpaid rent, and $2,000.00 for missing
4 and damaged furniture. See Complaint 116,9. In his Motion to set aside the Entry of Default,
5 Defendant claims that costs for repairs claimed by Plaintiffs are unreasonably high as he performed
6 many of the needed repairs prior to moving out of the leased premises. Defendant also claims that
7 the request for $2,000.00 for missing and damaged furniture is unwarranted because most used
8 furniture that were in the premises at the time he moved in was removed because he had brought into
9 the leased premises his own furniture. See Def Decl. In Support of Motion 113. For purposes of
10 setting aside the Entry of Default, the Court finds the Defendant has sufficiently shown potential
11 meritorious defenses that could achieve a result different from the potential default sought here.
12 Thus, the Court finds the Defendant has satisfied the requirement of showing a meritorious defense.
14 ii. Whether the Plaintiff would be prejudiced if the entry of default is set aside.
15 Finally, as to whether setting aside the default prejudices the Plaintiff, the Court notes
16 prejudice is determined when the defaulting party moves to set aside. Midsea Indus., 1998 Guam 14
17 'H 14 (citing Cribb v. Matlock Communications, Inc., 768 P.2d 337, 340 (Mont. l989)). Further the 18 Plaintiff cannot simply "say that lapse of time resulted in prejudice, but instead there must be the
19 presentation of evidence to support those allegations. Midsea Indus., 1998 Guam 14 11 16. Similarly,
20 the Defendant may not just "sit back and claim that the delay in time was inconsequential and
21 presume no prejudice resulted." For a delay to be prejudicial, the delay must "result in tangible
22 harm such as loss of evidence, increased difficulties of discovery, or greater opportunity for fraud or
23 collusion ... [b]eing forced to litigate on the merits cannot be considered prejudicial because the
24 plaintiff would have had to litigate the merits of the case had there been no default." Pac. Renewable
25 Energy Sols., 2013 WL 1352063 at *6 (citing TCI Group, 244 F.3d at 701) (internal quotations
26 omitted). Prejudice also exists where the "non-defaulting party's ability to pursue the claim is
27 hindered by substantial reliance on the judgment." Falk, 739 F.2d at 463 .
CV0249-19 Kuo v Rillera Page 5 off DECISION AND ORDER (re Plaintiff's Request to Enter Default Judgment and Defendant's u
1 Here, the Plaintiffs did not offer any argument that they would be prejudiced were this Court
2 to set aside the Entry of Default. On the other hand, the Defendant informally engaged an attorney
3 soon after service of process on him of the Complaint. The Defendant has appeared, with such
4 attorney, before this Court entered judgment in favor of the Plaintiff by default. Thus, because no
5 default judgment has been entered, the Court finds the Plaintiff will not be prejudiced by setting
6 aside the Entry of Default. There has been no showing that the Plaintiff took any action in reliance
7 on the Entry of Default. Further, the Defendant acted promptly to set aside the Entry of Default.
8 Therefore the Court finds the prejudice to the Plaintiff element is no bar to this Court setting aside
9 the Entry of Default in this matter.
11 CONCLUSION
12 By preponderance of the evidence and based on the foregoing reasons, the Court
13 G R A N T S the Defendant's Motion to Set Aside Entry of Default in this Matter. The Entry of
14 Default, entered on the docket in this matter by the Clerk of Court on June 25, 2019, is hereby
15 V A C A T E D. Because the Court has set aside the entry of default, the Plaintiffs oral request for
16 entry of Default Judgment is found to be M O O T .
18 SO ORDERED novo 52019 * < 19 The honorable Behfimin C. Sison Jr., 20 Magistrate Judge, Superior Court of Guam 21
24 SERVICE VIA COURT BOX 25 I qcknowlsdgc that a copy of the orlglnil homo was planed in Me humof 26 ' / , w w w / 5/
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cvd249-19 Kuo v Rillera Page 6 off DECISION AND ORDER (re Plaintiffs Request to Enter Default Judgment and Defendant's