The opinion of the court was delivered by: TERRENCE McVERRY, District Judge
Before the Court for consideration and disposition are
DEFENDANTS' MOTION TO SET ASIDE ENTRY OF DEFAULT PURSUANT TO RULE
55(c) (Document No. 17) and PLAINTIFF'S REPLY IN OPPOSITION TO
DEFENDANTS' MOTION TO SET ASIDE DEFAULT (Document No. 18).
Plaintiff filed a Complaint against Defendants on July 27,
2005. Defendants were served with a summons and a copy of the
Complaint on August 2, 2005. Defendants failed to timely file an
Answer, and on August 29, 2005, another member of this Court
instructed Plaintiff to take a default judgment against
Defendants on or before September 7, 2005. Plaintiff did so, and
on August 30, 2005, the Clerk of Court entered a default judgment
against Defendants. See Document No. 6. On September 6, 2005,
Plaintiff filed a Motion to Enter Default Judgment and Schedule
Hearing to Determine Damages Pursuant to Rule 55(b)(2). See
Document No. 8. By Order of Court dated September 13, 2005, the
Court scheduled a hearing on the matter and ordered that
Defendants be served with a copy of said Order of Court. Exactly
one month later, on October 13, 2005, Plaintiff filed a
Certificate of Service which indicated that Defendants had been
served with copies of the September 13, 2005 Order of Court. At
that point, Defendants had not been served with any other filings
(besides the Complaint), including Plaintiff's request for a default judgment. Shortly thereafter, counsel for Defendant
entered their appearances and filed, inter alia, an Answer to
Complaint and the instant Motion to Set Aside Entry of Default
("Motion"). The matter was subsequently re-assigned to this
member of the Court as the former Judge recused.
Federal Rule of Civil Procedure 55(c) provides that an entry of
default may be set aside "for good cause shown." That
determination is made in the sound discretion of the district
court. United States v. $55,518.05 in U.S. Currency,
728 F.2d 192, 194-95 (3d Cir. 1984). When exercising that discretion, a
district court must consider whether: (1) the plaintiff will be
prejudiced if the default is set aside; (2) the defendant has a
meritorious defense; and (3) the default was a product of the
defendant's culpable or inexcusable conduct. Accu-Weather, Inc.
v. Reuters Ltd., 779 F. Supp. 801, 802 (M.D. Pa. 1991).
Moreover, the entry of a default is not favored, and the district
court should employ a "standard of liberality" that resolves all
doubts in favor of the defaulting party. Gross v. Stereo
Component Sys., 700 F.2d 120, 122 (3d Cir. 1983). Indeed, courts
enjoy the inherent power to ignore minor procedural defects
because they should, whenever practicable, reach the merits of a
case. See, e.g., Jorden v. National Guard Bureau, 877 F.2d 245,
251 (3d Cir. 1989).
In the instant case, the three factors which the Court must
consider require setting aside the entry of default against
Defendants. First, setting aside the entry of default will not
result in any appreciable prejudice to Plaintiff. Under Rule 55,
the prejudice requirement compels Plaintiff to demonstrate that
her claim would be materially impaired because of the loss of
evidence, an increased potential for fraud or collusion,
substantial reliance on the entry of default, or other
substantial factors. Duncan v. Speach, 162 F.R.D. 43, 45 (E.D.
Pa. 1995). None of these factors are present here. Second, Defendants appear to have at least facially meritorious
defenses to the claims against them. See Answer to Complaint,
Affirmative Defenses (Document No. 16). Rule 55 does not
require the defaulting party "to prove beyond a shadow of a doubt
that it will win at trial, but merely to show that it has a
defense to the action which at least has merit on its face."
Emcasco Ins. Co. v. Sambrick, 834 F.2d 71, 74 (3d Cir. 1987).
The defenses asserted by Defendants in their Answer (e.g.,
governmental immunity) appear to be facially meritorious and,
accordingly, militate in favor of setting aside the entry of
default against them.
Finally, the conduct of Defendants does not rise to the level
of culpable conduct. The Declaration of Wesley Johnson
("Johnson"), Borough Manager of the Borough of Wilkinsburg,
states that he was served with the Complaint on August 2, 2005,
and that he forwarded the Complaint to the insurance carrier for
the Borough, which he believed would retain counsel and respond
to the Complaint on behalf of all defendants. Motion, exh. A. The
Declaration also reflects that upon receipt of the September 13,
2005 Order of Court, Johnson immediately contacted the Solicitor
and retained defense counsel. Id. For the purpose of Rule 55,
culpable conduct is "dilatory behavior that is willful or in bad
faith." Gross, 700 F.2d at 124. Defendants' explanation for its
failure to answer Plaintiff's Complaint arguably may demonstrate
some inadvertence, lack of communication or, at worst, negligence
that had a dilatory result, but it does not demonstrate dilatory
intent or bad faith. The Court accepts the explanation of
Defendants as valid, especially because evidence of dilatory
intent must appear independently in the record. See Spurio v.
Choice Sec. Sys., Inc., 880 F. Supp. 402, 404 (E.D. Pa. 1995).
Plaintiff presented no such evidence as part of the record, and,
even if she had presented some evidence, the Court would
nonetheless be required at this stage of the proceeding to
resolve all doubts in favor of the defaulting party. Gross,
700 F.2d at 122. Therefore, the Court finds that the conduct of
Defendants was not willful or in bad faith.
NOW THEREFORE, this 23rd day of November, 2005, it is hereby
ORDERED, ADJUDGED and DECREED that Defendants' Motion to Set
Aside Entry of Default Pursuant to Rule 55(c) is GRANTED and the Clerk's Entry of Default entered
August 30, 2005 is hereby VACATED. Plaintiff's Motion to Enter
Default Judgment and Schedule Hearing to Determine Damages
Pursuant to Rule 55(b)(2) is DENIED AS MOOT.
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