The opinion of the court was delivered by: Stengel, J.
Defendants David Hopfer, Linda Lee Hopfer, and Kevin Hopfer's motions to set aside a default judgment justify their failure to respond on their reliance of their attorney's misstatements that he would "take care of the matter." They also note their motions were filed approximately two weeks after default was entered. For the following reasons, I will grant the motions.
Allstate Insurance Company filed the pending complaint seeking declaratory judgment regarding its duty to defend and indemnify David, Linda Lee, Kevin, and Timothy Hopfer in an underlying state court personal injury action. Allstate's potential liability flows from a homeowners policy it issued to David and Linda Lee Hopfer, who are husband and wife. Although the other defendants answered, David, Linda Lee, and Kevin Hopfer (collectively, the defaulted defendants) failed to respond. Upon Allstate's request, default was entered against them on March 18, 2009. The defaulted defendants now move to stay or vacate the entry of default against them.*fn1 (See Defs.' Mot. to Stay or Vacate (Documents #18--20).)*fn2
The underlying state court action is based on events that took place at the Hopfer home in December 2005. On December 7, 2005, Abigail Tagert was a guest in the Hopfer residence.*fn3 (See Compl. ¶ 16.) Timothy Hopfer allegedly injected Ms. Tagert three times with Dilaudid, a Schedule II Controlled Substance he illicitly took from Chester County Hospital.*fn4 (Id.) Tagert began to show signs of "labored breathing, discoloration, vomiting, and loss of consciousness." (Id.) Despite these signs, the Hopfers waited two hours before contacting emergency medical services. (Id.) Unfortunately, Tagert could not be revived, and she was pronounced dead as a result of drug toxicity. (Id.)
On December 4, 2007, Tagert's parents, Darlene Pfeiffer and Thomas Tagert,*fn5 individually and as co-administrators of their daughter's estate, filed a civil complaint sounding in negligence and wrongful death in the Court of Common Pleas of Chester County against David, Linda Lee, Kevin, and Timothy Hopfer. (See Compl. Ex. C (state court complaint).) Pursuant to the homeowners policy on the residence, Allstate provided an attorney-Gerard Bradley, Esquire-to defend the Hopfers and itself. (See Pl.'s Resp. to Defs.' Mot. to Stay or Vacate ¶ 1 (Documents #27--29) (admitting that Allstate "provided Defendant[s] with counsel" in connection with the state court proceedings against them); see also Compl. Ex. I (letter from Allstate to the Hopfers stating that an attorney had been assigned).) This representation was conditional, as explained in a Reservation of Rights letter sent to each Hopfer family member. (See Compl. Exs. E, F, J, K, L.) Those letters stated that Allstate was "reserv[ing] [its] rights to timely investigate . . . without an admission of coverage" because it believed it might not be required to defend or indemnify the Hopfers under the terms of the plan. (See, e.g., Compl. Ex. E.) The decision to provide an attorney was not to be construed as a waiver of the policy's conditions. (See, e.g., id.)
On September 18, 2008, Allstate filed the pending complaint for a declaratory judgment that it had no duty or liability to defend or indemnify the Hopfers in the state court proceedings. Upon receiving the complaint, the defaulted defendants contacted Mr. Bradley to find out what they needed to do. (Defs.' Mot. to Stay or Vacate ¶ 5.) Bradley allegedly told them "not to worry" and that "he would take care of it" as their attorney. (Id.) He filed no response, however, on their behalf. On March 19, 2009, default was entered upon Allstate's request. On April 1, 2009, the defaulted defendants filed the instant motions.*fn6
Federal Rule of Civil Procedure 55(c) is applied when a defaulted party seeks judicial review of an entry of default. Under the rule, default may be set aside in the court's discretion for "good cause." FED. R. CIV. P. 55(c). When considering whether to exercise discretion, district courts are directed to consider four factors: "(1) whether lifting the default will prejudice the plaintiff; (2) whether the defendant has a prima facie meritorious defense; (3) whether the defaulting defendant's conduct is excusable or culpable; and (4) the effectiveness of alternative sanctions." EMCASCO Ins. Co. v. Sambrick, 834 F.2d 71, 74 (3d Cir. 1987). Given the Third Circuit Court of Appeals' stated preference of resolving cases on the merits when possible, the entry of default should be set aside if there is any doubt as to its appropriateness. Farnese v. Begnasco, 687 F.2d 761, 764 (3d Cir. 1982).
I will set aside the default as my review of the defendants' motions leads me to believe default is inappropriate under these circumstances.
Prejudice exists if, after default was entered, the plaintiff's ability to pursue its claim was seriously affected or if relevant evidence was lost or unavailable. EMCASCO, 834 F.2d at 74. Mere delay in satisfying a claim "rarely serves to establish the degree of prejudice sufficient to prevent the opening [of] a default judgment entered at an early stage of the proceeding." Feliciano v. Reliant Tooling Co., 691 F.2d 653, 657--588 (3d Cir. 1982). In other words, the prejudice factor requires significant potential injury to the plaintiff's ability to litigate his or her claim.
I find that Allstate has suffered no prejudice. Allstate has not demonstrated it will not be able to pursue its claim or that necessary evidence has been lost. Default was entered in the early stages of litigation before any formal proceedings had taken place. Additionally, the motion to vacate was filed about two weeks after default was entered. See, e.g., EMCASCO, 834 F.2d at 74 (finding no prejudice to the plaintiff where the motion to vacate was filed two weeks after the default judgment was entered); Quarles v. Lineberger, 2002 WL 461684, at 1 n.7 ...