United States District Court, N.D. West Virginia
OPINION AND ORDER DENYING DEFENDANT'S MOTION FOR DEFAULT
JUDGMENT ON ITS COUNTERCLAIM, GRANTING PLAINTIFFS' MOTION
TO SET ASIDE CLERK'S ENTRY OF DEFAULT AND GRANTING
PLAINTIFFS' MOTION FOR LEAVE TO FILE ANSWER TO
FREDERICK P. STAMP, JR. UNITED STATES DISTRICT JUDGE.
defendant removed this civil action to this Court after the
plaintiffs originally filed their complaint in the Circuit
Court of Ohio County, West Virginia. The complaint arises out
of a fire that burned the plaintiffs' house to the
ground. The plaintiffs allege that the defendant, in bad
faith, failed to pay the plaintiffs' homeowners claim
even though there have not been any criminal charges filed
against the plaintiffs. The defendant filed an answer and
counterclaim in this Court. The defendant's counterclaim
seeks a declaration from the Court that it properly rescinded
an insurance policy, such that the defendant has no further
duty to investigate and potentially pay for the
plaintiffs' underlying insurance claim.
defendant served its counterclaim on the plaintiffs on
September 18, 2017. The plaintiffs failed to respond within
the time provided by the Federal Rules of Civil Procedure.
Thus, pursuant to Federal Rule of Civil Procedure 55(a), the
Court entered default against the plaintiffs on the
counterclaim on October 12, 2017. On October 16, 2017, after
the entry of default, the plaintiffs filed their answer to
the counterclaim. On October 30, 2017, the defendant filed a
motion to strike the plaintiffs' answer to the
defendant's counterclaim. The motion to strike
represented that the defendant has been prejudiced by the
plaintiffs' disregard and unresponsiveness. The motion
further represented that, by not striking the untimely
answer, the Court would further prejudice the defendant by
requiring it to continue to defend this action against the
plaintiffs who have, to date, cost the defendant much time
and resources due to their inaction. This Court found that
the defendant would be unfairly prejudiced if it did not
enforce the entry of default. Accordingly, the Court granted
the defendant's motion to strike the plaintiffs'
answer to the defendant's counterclaim and directed the
Clerk to strike the plaintiffs' answer to the
defendant's counterclaim from the docket.
defendant has now filed a motion for default judgment on its
counterclaim pursuant to Federal Rule of Civil Procedure
55(b)(2). The plaintiffs have also filed a motion to set
aside the clerk's entry of default and a motion for leave
to file an answer to the defendant's counterclaim. All
three of the motions are fully briefed and ripe for review.
For the following reasons, this Court denies the
defendant's motion for default judgment on its
counterclaim, grants the plaintiffs' motion to set aside
entry of default, and grants the plaintiffs' motion for
leave to file answer to defendant's counterclaim.
Motion for Default Judgment
obtain a default judgment, a party must first seek an entry
of default under Federal Rule of Civil Procedure 55(a). Under
Rule 55(a), an entry of default is appropriate “[w]hen
a party against whom a judgment for affirmative relief is
sought has failed to plead or otherwise defend . . . .”
Fed.R.Civ.P. 55(a). Once default is entered by the clerk, the
party may seek a default judgment under Rule 55(b)(1) or (2),
depending on the nature of the relief sought. If the
plaintiff's claim is for “a sum certain” or a
“sum that can be made certain by computation, ”
the plaintiff may seek entry of default judgment from the
clerk under Rule 55(b)(1). However, in cases in which the
plaintiff seeks a form of relief other than liquidated
damages, Rule 55(b)(2) requires plaintiff to seek an entry of
default judgment from the court.
well-established in the United States Court of Appeals for
the Fourth Circuit that default judgments are to be granted
sparingly. See, e.g., Lolatchy v. Arthur Murray,
Inc., 816 F.2d 951, 954 (4th Cir. 1987). “[T]rial
judges are vested with discretion, which must be liberally
exercised, in entering such judgments and in providing relief
therefrom.” United States v. Moradi, 673 F.2d
725, 727 (4th Cir. 1982).
Motion to Set Aside Entry of Default
Rule of Civil Procedure 55(c) provides that a court may set
aside an entry of default for good cause or pursuant to Rule
60(b). The United States Court of Appeals for the Fourth
Circuit has established the following factors for district
courts to consider when ruling on motions to set aside an
entry of default: “whether the moving party has a
meritorious defense, whether it acts with reasonable
promptness, the personal responsibility of the defaulting
party, the prejudice to the party, whether there is a history
of dilatory action, and the availability of sanctions less
drastic.” Payne ex rel. Estate of Calzada v.
Brake, 439 F.3d 198, 204-05 (4th Cir. 2006) (citing
Consol. Masonry & Fireproofing, Inc. v. Wagman
Constr. Corp., 383 F.2d 249, 251 (4th Cir. 1967);
Lolatchy v. Arthur Murray, Inc., 816 F.2d 951, 953
(4th Cir. 1987)).
Fourth Circuit “has also ‘repeatedly expressed a
strong preference that, as a general matter, defaults be
avoided and that claims and defenses be disposed of on their
merits.'” Redden v. Monitoronics Int'l,
Inc., No. 5:14-CV-27757, 2015 WL 12859350, at *1 (S.D.
W.Va. Feb. 19, 2015) (quoting Colleto ...