prevented Cal Spas from learning of the litigation. At this
point, the misfiling of this material may have constituted
excusable neglect. However, Cal Spas' subsequent actions
foreclosed that interpretation of Cal Spas' conduct and,
furthermore, showed culpability.
On January 6, 1998 Cal Spas finally became aware of the
litigation and the default judgment in spite of the best
efforts of Cal Spas' misfiling employee. With this knowledge,
Cal Spas requested insurance coverage and did nothing else. Cal
Spas assumed it was covered and never questioned this
assumption for approximately nine months. The assumption was
On January 14, 1998 Cal Spas' insurance company sent a letter
denying coverage. This letter and a court order dated January
23, 1998 were misfiled. Inexplicably, the actions of Cal Spas'
misfiling employee remained undetected for at least six months
after Cal Spas became aware of the Kauffman litigation. It
would seem that not even curiosity could inveigle Cal Spas into
investigating why it did not learn of the Kauffman litigation
On August 29, 1998 Cal Spas fired the misfiling employee on
grounds unrelated to the Kauffman litigation. These grounds did
not persuade Cal Spas to look for the employee's other
misdeeds. Cal Spas, thus, continued to falsely believe its
insurance carrier was handling the Kauffman litigation. This
mistaken belief was corrected when Kauffman levied on Cal Spas'
properties at Cal Spas' Chadds Ford facility on October 9,
After October 9, 1998 Cal Spas' representative, Wendt,
contacted Kauffman's counsel to get him to hold off on a
sheriff sale by telling him that a check would be sent as soon
as Cal Spas' president signed it. Kauffman's counsel waited.
Cal Spas obtained Philadelphia counsel and brought this present
This is not a case of excusable neglect, mistake or
inadvertence. Cal Spas was on notice, as of January 6, 1998,
and knowingly chose not to appear until Kauffman attempted to
collect the damages awarded in the default judgment on October
9, 1998. Wendt's efforts to stall Kauffman and his counsel also
show Cal Spas' conduct to be intentional. This factor,
therefore, favors refusing to set aside the default judgment.
D. Other Sanctions
The court also must evaluate the effectiveness of alternative
sanctions. See Grow Tunneling Corp. v. Conduit & Foundation
Co., Inc., Civ.A. No. 96-3127, 1996 WL 411658 at * 7 (E.D.Pa.
July 16, 1996). A default judgment should be a sanction of
"last, not first, resort." Emcasco, 834 F.2d at 75. This factor
may weigh in favor of opening the default if it was imposed as
an administrative act pursuant to Rule 55. See Reilly, 1998 WL
422037, at *6, 1998 U.S. Dist. LEXIS 11337 at *20.
Kauffman's default judgment, however, clearly was more than
an administrative act. The default judgment was not merely
entered by the clerk, but was ordered by the court. Alternative
sanctions such as the reimbursement of Kauffman's counsel fees
and costs would be a inappropriate sanction for a willfully
defaulting commercial party like Cal Spas. To preserve the
finality of the court's judgments and to secure "the just,
speedy and inexpensive determination of every action", Fed.
R.Civ.P. 1, this factor weighs in favor of refusing to set
aside the default judgment.
On balance, the inexcusable and culpable conduct of Cal Spas
and the absence of adequate alternative sanctions outweigh the
other factors favoring setting aside the default judgment.
Therefore, Cal Spas' motion will be denied.
AND NOW, this 2nd day of March, 1999, upon consideration of
Motion to Set Aside the Default Judgment and Plaintiff's
response thereto, it is hereby ORDERED that said motion is