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United States v. Patterson

United States District Court, Third Circuit

September 26, 2013

UNITED STATES OF AMERICA FOR THE USE OF CONSTRUCTION HARDWARE, INC.,
v.
RONALD D. PATTERSON, ET. AL.

MEMORANDUM

R. BARCLAY SURRICK, J.

Presently before the Court are Plaintiff’s Requests for Entry of Default against Defendants (ECF Nos. 11, 12, 13); Defendants’ Motion to Open and/or Strike the Default Judgment (ECF No. 20); Plaintiff’s Cross Motion to Enter Default Judgments Against Defendants (ECF No. 21); Defendants’ Petition to Stay the Above Action until the Resolution of the Two Court of Claims Actions (ECF No. 26); and Plaintiff’s Motion to Compel Discovery (ECF No. 28.) For the following reasons, Plaintiff’s Requests for Entry of Default will be denied; Defendants’ Motion to Open and/or Strike the Default Judgment will be granted; Plaintiff’s Cross Motion to Enter Default Judgment will be denied; Defendants’ Petition to Stay the Above Action until the Resolution of the Two Court of Claims Actions will be denied; and Plaintiff’s Motion to Compel Discovery will be granted.

I. BACKGROUND

A. Factual Background

Plaintiff Construction Hardware, Inc. (“Construction Hardware”), a subcontractor, and Defendant Aeroplate Corp. (“Aeroplate”), a general contractor, entered into a contract on December 30, 2010, for construction, alteration and/or repair of the Veterans Administration Medical Center (“VAMC”) Community Living Center located at University and Woodland Avenues in Philadelphia, Pennsylvania (the “Contract”). (Compl. ¶ 9, ECF No. 1.) Defendants Ronald Patterson (“Patterson”) and Redi-Corp of Central California (“Redi-Corp”) are the alleged sureties under a performance bond for the project. (Id. at ¶ 10.) Under the Contract, Plaintiff supplied doors, frames, and finished hardware to the project having a value of $411, 915.00. (Id. at ¶ 11.) The last time Plaintiff performed any of his obligations under the contract was on July 1, 2011. (Id. at ¶ 12.) The contract amount still owed to Plaintiff is $253, 752.90. (Id. at ¶ 13.) Despite repeated requests, Plaintiff has not been paid in full on the Contract. (Id. at ¶ 14.)

B. Procedural History

On June 11, 2012, Plaintiff filed a Complaint against Defendants in this Court. (Compl.) The Complaint asserts the following claims: (1) a claim under the Miller Act, 40 U.S.C. § 3131, et seq., against Patterson and Redi-Corp (Count I); (2) a breach of contract claim against Aeroplate (Count II); and (3) an unjust enrichment claim against Aeroplate (Count III). (Compl.) On August 22, 2012, default was entered against Aeroplate. (See ECF No. 5.) On September 7, 2012, default was entered against Patterson and Redi-Corp. (See ECF Nos. 6, 7.) On September 11, 2012, Defendants’ attorney entered his appearance on behalf of all Defendants (ECF No. 8) and filed an Answer to the Complaint (Answer, ECF No. 9). On September 13, 2012, Plaintiff requested default judgment against all three Defendants. (ECF Nos. 11-13.)

A status conference was held on September 21, 2012. At the status conference, the parties discussed striking the defaults entered against Defendants. On September 21, 2012, an order was entered setting a schedule for Defendants to file a motion to set aside the defaults. (ECF No. 19.) On September 28, 2012, Defendants’ filed the instant Motion to Open and/or Strike the Default Judgment. (Defs.’ Mot. Strike, ECF No. 20.)[1] On October 3, 3012, Plaintiff filed a response to Defendant’s Default Judgment Motion (Pl.’s Resp. Strike, ECF No. 21), and a Cross Motion to Enter Default Judgments against Defendants (Pl.’s Mot. Default Judgment, ECF No. 21.)[2] On October 23, 2012, Defendants’ filed the instant Petition to Stay the Above Action until the Resolution of the Two Court of Claims Actions. (Defs.’ Pet., ECF No. 26.) Plaintiff filed a response to the Petition on November 6, 2012. (Pl.’s Pet. Resp., ECF No. 27.) On November 16, 2012, Plaintiff filed a Motion to Compel Discovery. (Pl.’s Disc. Mot., ECF No. 28.) Defendants filed a response to Plaintiff’s Motion to Compel Discovery on January 7, 2013. (Defs.’ Disc. Resp., ECF No. 29.)[3]

II.DISCUSSION

A. Motion to Open and/or Strike the Default Judgment

Defendants contend that they were not served properly, and therefore, the entry of default should be set aside against each of them. (Defs.’ Mot. Strike 2.) Aeroplate asserts that the waiver of service Dated: its behalf was done by an unknown individual who may not even work for the company. (Id. at 1.) Patterson contends that both he and Redi-Corp were improperly served because his wife is not authorized to accept service on either his behalf or on behalf of the now defunct corporation. (Id. at 1-2.)[4]

Plaintiff counters that each Defendant was properly served, and that improper service was waived since Defendants failed to raise the defense in their Answers. (Pl.’s Resp. Strike 2.) Plaintiff asserts that Aeroplate’s designated agent for service signed and returned a waiver pursuant to Rule 4(d) of the Federal Rules of Civil Procedure, and therefore, properly waived service. (Id. at 5.)[5] In addition, Plaintiff maintains that Patterson’s wife, who was served with the Complaint, was a proper substitute for service under Rule 4(e). (Pl.’s Resp. Strike 6.)[6]Plaintiff argues that because Patterson was properly served under Rule 4(e), Redi-Corp was properly served as well. (Id. at 5-6.)

Pursuant to Rule 55(c), a court may set aside an entry of default “for good cause.” Fed.R.Civ.P. 55©. The Third Circuit “does not favor entry of defaults, ” preferring instead for cases to be “decided on their merits.” GE Med. Sys. Info. Techs., Inc. v. Ansar, Inc., No. 04-2775, 2004 WL 2988513, at *2 (E.D. Pa. Dec. 23, 2004) (quoting United States v. $55, 518.05 in U.S. Currency, 728 F.2d 192, 194-95 (3d Cir. 1984)). Courts should consider the following three factors when deciding whether to set aside an entry of default or default judgment: “‘(1) whether the plaintiff will be prejudiced; (2) whether the defendant has a meritorious defense; [and] (3) whether the default was the result of the defendant’s culpable conduct.’” Budget Blinds, Inc. v. White, 536 F.3d 244, 256 (3d Cir. 2008) (quoting $55, 518.05 in U.S. Currency, 728 F.2d at 195). Relief from a default entry is granted more readily than from a default judgment. Mike Rosen & Assocs., P.C. v. Omega Builders, ...


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