Opinion
Case No. 01-61406-T, Adv. Proc. No. 01-6044-T.
March 12, 2002
MEMORANDUM OPINION AND ORDER
Hearing was held February 27, 2002, on plaintiff's motion for default judgment on its complaint and on defendant's motion to dismiss or in the alternative to set aside default and grant leave to file late answer.
Facts and Procedural History.
Debtor defendant filed this chapter 7 bankruptcy case on August 16, 2001. In his filing he was represented by attorney William E. Seals.
On November 13, 2001, plaintiff initiated this adversary proceeding by filing its complaint to determine dischargeability of debt pursuant to 11 U.S.C. § 523(a)(2),(4)and (6). The clerk erroneously entered the filing date as November 14, 2001.
In making this determination, the court relies on a date stamped copy of the complaint showing a filing date of February 13, 2002, that was supplied by plaintiff at hearing on February 27, 2002.
On November 26, 2001, the clerk of court issued a summons and notice of the proceeding, which was duly served on debtor by counsel for plaintiff. The summons required debtor to file a motion or answer within thirty days of November 26 and also scheduled a pretrial conference for January 16, 2002.
Neither debtor nor his counsel appeared at the pretrial conference on January 16. At the time of the pretrial conference debtor had not filed any response to the complaint. The court continued the pretrial conference to February 27, 2002, and directed plaintiff's counsel to follow the procedures for default judgment on the complaint which was also set for February 27.
On February 4, 2002, plaintiff filed a motion for entry of default judgment pursuant to Fed.R.Civ.Proc. 55 based upon debtor's failure to file a motion or answer to the complaint and also due to debtor's failure to respond to discovery requests. An amended motion and amended supporting affidavit were filed on February 15.
On February 19, 2002, the clerk entered default due to debtor's failure "to plead or otherwise defend in this case as required by law."
On February 24, 2002, debtor by counsel filed a motion to dismiss, to set aside default and to file late answer along with an opposition to plaintiff's motion for default judgment. Although counsel's notice of hearing for these pleadings stated an incorrect date, he appeared at hearing on February 27, and plaintiff's counsel agreed for the court to hear all matters that had been pled.
Debtor's motion asserts that the complaint should be dismissed because it was time barred, having been filed on November 14, 2001, one day after the filing deadline of November 13. As an alternative, the motion requests the court to set aside the entry of default and allow the proceeding to continue on the merits. Debtor states that he has a defense to the complaint and that his failure to respond to the complaint was due to his inability to afford counsel. Debtor also filed an answer with his motion.
Conclusions of Law.
Plaintiff filed its complaint on November 13, 2001, and its motion for default judgment on February 4, 2002. The clerk entered default on February 19. Debtor filed his motion to set aside default and for leave to file answer on February 24, 2002, over sixty days after answer or response to the complaint was due.
Debtor's motion to dismiss the complaint must be denied. The final date for the filing of complaints to determine dischargeability of debt was November 13, 2001. Although the clerk entered the complaint on the docket on November 14, the plaintiff's date stamped copy of the complaint, received at hearing, demonstrates that the complaint was filed with the court on November 13.
Debtor moves the court to vacate the entry of default pursuant to Bankruptcy Rule 7055 and Fed.R.Civ.P. 55(c) which provides that "[f]or 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)." Fed.R. Cir. P. 55(c).
Good cause for the setting aside a default "is shown where the moving party (i) acts with reasonable alacrity to set aside the entry of default, and (ii) alleges a meritorious defense." Town and Country Kids, Inc., v. Protected Venture Investment Trust #1, Inc., 178 F.R.D. 453, 454 (E.D.Va. 1998) (citing Consolidated Masonry Fireproofing, Inc. v. Wagman Consr. Corp., 383 F.2d 249, 251 (4th Cir. 1967)). A meritorious defense may be shown when the party proffers evidence "which would permit a finding for the defaulting party . . . ." Id. (quoting Augusta Fiberglass Coatings, Inc. v. Fodor Contracting Corp., 843 F.2d 808, 812 (4th Cir. 1988)); see also Merrill Lynch Mortgage Corp. v. Narayan, 908 F.2d 246, 252(7th Cir. 1990) (requiring "(1)good cause for their default; (2)quick action to correct it; and (3)a meritorious defense to the plaintiff's complaint.").
In addition to a meritorious defense, other factors considered by court decisions include 1)whether plaintiff will be prejudiced by the setting aside of default and 2)whether "culpable conduct" by defendant led to the default. Shepard Claims Serv., Inc., v. William Darrah Assoc., 796 F.2d 190, 192 (6th Cir. 1986) (citations omitted).
At this time the court is unable to determine whether debtor has a meritorious defense. Although plaintiff has pled specific and detailed facts in its complaint, debtor's proposed answer contains only vague general denials. Debtor has thus failed to proffer evidence that would demonstrate to the court that debtor might prevail in a trial.
Accordingly, the court will defer ruling on the pending motions and allow debtor to demonstrate whether he has a meritorious defense to the complaint.
IT IS THEREFORE ORDERED that debtor defendant is granted a period of fifteen days from the entry of this order to file an amended answer or other appropriate proffer of specific evidence that will demonstrate to the court that debtor has a meritorious defense to the complaint.
IT IS FURTHER ORDERED that the clerk correct the docket to reflect that this adversary proceeding was filed on November 13, 2001.