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Davis v. Metropolitan Life Insurance Co.

United States District Court, M.D. Pennsylvania

February 11, 2015

ELIZABETH DAVIS, Plaintiff,
v.
METROPOLITAN LIFE INSURANCE COMPANY, Defendant.

MEMORANDUM

CHRISTOPHER C. CONNER, Chief District Judge.

Plaintiff Elizabeth Davis ("Davis") filed the above-captioned action against defendant Metropolitan Life Insurance Company ("MetLife"), stating claims for breach of contract, breach of the implied covenant of good faith and fair dealing, and bad faith under the Pennsylvania Unfair Insurance Practices Act ("UIPA"), 40 PA. CONS. STAT. § 1171.1 et seq., pursuant to 42 PA. CONS. STAT. ANN. § 8371, and, alternatively, denial of benefits under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq., breach of fiduciary duty under ERISA, and attorneys' fees and costs under ERISA, all in connection with MetLife's termination of Davis's long-term disability benefits. Presently before the court are MetLife's motion (Doc. 25) to set aside the default that the Clerk of Court entered against MetLife and Davis's motion (Doc. 15) for default judgment. For the reasons that follow, the court will grant MetLife's motion and deny Davis's motion.

I. Factual Background and Procedural History

At all times relevant to this action, Elizabeth Davis worked at Penn State Milton S. Hershey Medical Center ("the Medical Center") as a cardiovascular technician. During her employment, Davis participated in the Medical Center's Cafeteria and Welfare Benefit Plan ("the plan"), which provided long-term disability ("LTD") benefits under an insurance policy that MetLife administered. On June 10, 2010, Davis submitted a claim for LTD benefits under the policy due to idiopathic hypersomnia. MetLife approved her claim and remitted LTD benefits until December 6, 2012. As required by the insurance policy, Davis applied for social security disability benefits from the Social Security Administration ("SSA"). The SSA determined that Davis was entitled to disability benefits as of December 2010. (Doc. 45-2, Ex. A at 1). As a result of this determination, MetLife reduced Davis's LTD benefits by the amount of her social security disability award. (Doc. 28-3, Ex. C). On December 6, 2012, MetLife concluded that Davis no longer satisfied the definition of disability under the plan and terminated Davis's LTD benefits. (See Doc. 28-5, Ex. E). Davis administratively appealed MetLife's denial of benefits, and MetLife upheld its decision on April 30, 2013. (Doc. 28-8, Ex. H).

On November 7, 2013, Davis commenced the instant action. (Doc. 1). She claims that the Medical Center is a state-controlled entity and therefore is not subject to ERISA. (Id. ¶ 53). Davis brings state law causes of action for breach of contract, breach of the implied covenant of good faith and fair dealing, and bad faith under the UIPA. (Id. ¶¶ 57-71). She alleges, inter alia, that MetLife improperly denied her LTD benefits, failed to conduct a physical examination, used medical opinions from unlicensed physicians, ignored conflicting medical evidence from the SSA and Davis's own physician, and misrepresented that ERISA governs Davis's benefits claims. (Id. ¶¶ 58, 67). In the event that her insurance policy is subject to ERISA, Davis states alternative claims for violation of ERISA, breach of fiduciary duty under ERISA, and attorneys' fees and costs under ERISA. (Id. ¶¶ 72-80). Davis served MetLife with the complaint and summons on December 19, 2013. (Doc. 6). MetLife failed to respond to the complaint within the time prescribed by the Federal Rules of Civil Procedure. On March 13, 2014, the court instructed Davis's counsel to file a request for entry of default. (Doc. 8). Counsel did so on March 20 (Doc. 9), and the Clerk of Court entered default against MetLife on March 26 (Doc. 11). Davis served both documents on MetLife. (Docs. 12-13). On September 5, 2014, Davis moved for default judgment. (Doc. 15). In connection with her state law claims, Davis seeks liquidated damages in the amount of $716, 544.75, $1, 041.29 in costs, unliquidated damages in the amount of $3, 582, 723.75, and interest calculated at a statutory rate. (Id.)

The court subsequently ordered MetLife to show cause by October 3, 2014 why it should not grant Davis's motion. (Doc. 17). On October 2, 2014, counsel first appeared on behalf of MetLife and moved for a one-week extension of time to respond to the show cause order. (Docs. 18-19). The court granted the extension. (Doc. 23). On October 10, 2014, MetLife responded to the order (Doc. 27), moved to set aside the entry of default (Doc. 25), and filed a brief in support of its motion and in opposition to Davis's motion for default judgment (Doc. 26). Davis's motion for default judgment and MetLife's motion to set aside the entry of default have been fully briefed and are ripe for disposition.

II. Legal Standard

Federal Rule of Civil Procedure 55(c) provides that a court may set aside an entry of default for "good cause." FED. R. CIV. P. 55(c). A district court must consider three[1] distinct factors when determining whether to set aside a default, to wit: "(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." World Entm't Inc. v. Brown, 487 F.Appx. 758, 761 (3d Cir. 2012) (nonprecedential) (quoting United States v. $55, 518.05 in U.S. Currency, 728 F.2d 192, 195 (3d Cir. 1984)).

These three factors also govern the court's review of a motion for entry of default judgment. Chamberlain v. Giampapa, 210 F.3d 154, 164 (3d Cir. 2000). The decision whether to grant default judgment or to allow the action to proceed on the merits lies within the sound discretion of the district court. Barclay Transp. v. Land O'Lakes, Inc., No. 1:07-CV-02065, 2008 WL 4491932, at *2 (citing $55, 518.05 in U.S. Currency, 728 F.2d at 194). The Third Circuit disfavors default judgments and encourages resolution of cases on the merits. Harad v. Aetna Cas. & Sur. Co., 839 F.2d 979, 982 (3d Cir. 1988). In a close case, therefore, "doubts should be resolved in favor of setting aside the default and reaching the merits." Zawadski de Bueno v. Bueno Castro, 822 F.2d 416, 420 (3d Cir. 1987) (citations omitted).

III. Discussion

A default judgment has not yet been entered in this action. Accordingly, the court must first consider MetLife's motion to set aside the entry of default pursuant to Federal Rule of Civil Procedure 55(c). See Olivia B. ex rel. Bijon B. v. Sankofa Acad. Charter Sch., No. 14-867, 2014 WL 5639508, at *3 (E.D. Pa. Nov. 4, 2014). The court will address each of the factors applicable to the Rule 55(c) analysis seriatim.

A. Prejudice

Setting aside an entry of default prejudices a party when "circumstances have changed since entry of the default such that plaintiff's ability to litigate its claim is now impaired in some material way or if relevant evidence has become lost or unavailable." Accu-Weather, Inc., 779 F.Supp. at 802; accord Dizzley v. Friends Rehab. Program, Inc., 202 F.R.D. 146, 148 (E.D. Pa. 2001) (finding that prejudice exists when plaintiff's claim would be materially impaired due to loss of evidence, increased potential for fraud or collusion, or substantial reliance on the entry of default). Requiring a party to litigate her claims on the merits does not constitute prejudice, Griffin v. Lockett, No. 1:CV-08-01120, 2009 WL 179780, at *2 (M.D. Pa. Jan. 26, 2009) (citing Accu-Weather, Inc., 779 F.Supp. at 802), nor does any delay or additional expense resulting from the denial of default judgment, see Olivia B., 2014 WL 5639508, at *6 (citations omitted).

Davis argues that she will be prejudiced if the court sets aside the default because she is no longer able to obtain current medical opinions to counter MetLife's physician consultants or to confirm the contents of her claim file. (Doc. 32 at 14-15). Davis does not explain in what manner she seeks to rebut MetLife's consultants or which specific documents from her claim file are no longer available. Assuming that Davis could still submit supporting medical information after the conclusion of her administrative appeals, she does not clarify how her ability to supplement or confirm her claim file has been materially impaired since the entry of default. See Paradise v. Commonwealth Fin. Sys., Inc., No. 3:13-CV-00001, 2014 WL 4717966, at *5 (M.D. Pa. ...


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