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Fifth Third Bank v. Revelation Energy, LLC

United States District Court, S.D. West Virginia, Huntington Division

April 18, 2018

FIFTH THIRD BANK, an Ohio Banking Corporation, Plaintiff,
v.
REVELATION ENERGY, LLC, a Limited Liability Company, and REVELATION ENERGY HOLDINGS, LLC, a Limited Liability Company, Defendants.

          MEMORANDUM OPINION AND ORDER

          ROBERT C. CHAMBERS, UNITED STATES DISTRICT JUDGE

         Now pending before the Court are Defendants' Motion to Set Aside Entry of Default, ECF No. 12, and Plaintiff's Motion to Strike Defendants' Answer and Counterclaim, ECF No. 15. For reasons set forth herein, Defendants' Motion is GRANTED and Plaintiff's Motion is DENIED.

         I. Background

         Plaintiff filed the present Complaint on February 6, 2018. ECF No. 1. Electronic summons was issued to Defendants on February 7, 2018. ECF No. 2. Summons was then served on Defendants on February 12, 2018. ECF Nos. 4, 5. Though Defendants' responsive pleadings were due by March 5, 2018, no answers or motions were filed on or before that deadline. Accordingly, the Clerk entered default against Defendants on March 12, 2018. ECF No. 9.

         On March 16, 2018, Defendants filed both an Answer to Plaintiff's Complaint and a Counterclaim against Plaintiff. ECF No. 11. On the same day, Defendants filed the present Motion to Set Aside Entry of Default. ECF No. 12. In the Motion, Defendants argue that they have a meritorious defense to the claims asserted against them, they responded promptly to the entry of default, and there was good cause for their failure to answer in a timely manner. ECF No. 13. Defendants also assert that, even if the Court finds the delay unwarranted, there are less drastic sanctions than default judgment available. Id. Defendants therefore ask this Court to vacate the entry of default. Id.

         Plaintiff objects to the Motion, arguing that Defendants have no meritorious defenses to Plaintiff's Complaint, Defendants did not act with reasonable promptness in responding to the present Complaint, Defendants are personally responsible for the delay, there is substantial prejudice to Plaintiff as a result of the delay, and no less drastic sanction can remedy that prejudice. ECF No. 16. Accordingly, Plaintiff asks the Court to sustain the entry of default. Id.

         II. Legal Standard

         A defendant is required to serve a responsive pleading within 21 days after being served with a summons and complaint. Fed.R.Civ.P. 12(a)(1). Failure to do so will result in the entry of default against the silent party. Fed.R.Civ.P. 55(a). After default has been entered, however, the Court may set aside the entry of default for good cause shown. Fed.R.Civ.P. 55(c). The decision as to whether to set aside the entry of default pursuant to Rule 55(c) “is a matter which lies largely within the discretion of the trial judge . . .” Consol. Masonry & Fireproofing, Inc. v. Wagman Constr. Corp., 383 F.2d 249, 251 (4th Cir. 1967).

         In considering a motion to set aside entry of default, the court should consider: “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, 204-205 (4th Cir. 2006).

         As a general matter, Rule 55(c) “must be liberally construed in order to provide relief from the onerous consequences of defaults and default judgments.” Lolatchy v. Arthur Murray, Inc., 816 F.2d 951, 954 (4th Cir. 1987) (internal quotation and citation omitted). The Fourth Circuit has “repeatedly expressed a strong preference that . . . defaults be avoided and that claims and defenses be disposed of on their merits.” Colleton Preparatory Acad., Inc. v. Hoover Universal, Inc., 616 F.3d 413, 417 (4th Cir. 2010).

         III. Discussion

         In considering Defendants' Motion, the Court addresses each Payne factor in turn, noting that no one factor is dispositive in the Court's analysis. See Colleton Prep. Acad., Inc., 616 F.3d at 420 (finding that the district court abused its discretion in denying motion to set aside default because it focused too heavily on one Payne factor).

         a. Meritorious Defense

          The first Payne factor, whether the moving party has presented a meritorious defense, weighs against setting aside default. To find a meritorious defense, the Court must be presented with evidence “which would permit a finding for the defaulting party or which would establish a valid counterclaim.” Augusta ...


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