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Wuertzer v. Stadium International Trucks, Inc.

United States District Court, D. South Dakota, Southern Division

July 25, 2016

CURTIS WUERTZER AND CURTIS WUERTZER d/b/a C&L TRUCKING, Plaintiffs,
v.
STADIUM INTERNATIONAL TRUCKS, INC., Defendant.

          ORDER DENYING PLAINTIFFS’ MOTION FOR DEFAULT JUDGMENT AND GRANTING DEFENDANT’S MOTION TO SET ASIDE ENTRY OF DEFAULT

          KAREN E. SCHREIER UNITED STATES DISTRICT JUDGE

         Plaintiffs, Curtis Wuertzer and Curtis Wuertzer d/b/a C&L Trucking, brought this lawsuit against defendant, Stadium International Trucks, Inc. Plaintiffs move for a default judgment after the Clerk’s entry of default. Defendant moves to set aside the entry of default. For the reasons stated below, the court denies plaintiffs’ motion for default judgment and grants defendant’s motion to set aside the entry of default.

         BACKGROUND

         Plaintiffs Curtis Wuertzer and Curtis Wuertzer d/b/a C&L Trucking (collectively referred to as Wuertzer) are a South Dakota public entity engaged in the trucking business. Docket 1 at ¶ 3. Wuertzer owned a 2006 International Truck, Model 94001 (the Truck). Docket 1 at ¶ 7. The Truck was recalled due to an issue with the engine compartment. Docket 1 at ¶ 8.

         Defendant Stadium International Trucks is a New York corporation and authorized dealer of International trucks. Docket 1 at ¶ 4. Stadium also performs repair work on International trucks. Id. at ¶ 4. On June 15, 2007, Stadium repaired the Truck’s engine compartment. Id. at ¶ 9.

         On June 9, 2014, a fire stared in the Truck’s engine compartment. Docket 1 at ¶ 10. Wuertzer alleges that Stadium’s inadequate repair work caused the fire. Id. at ¶ 11. Wuertzer’s loss from the fire exceeds $400, 000. Docket 1 at ¶ 20.

         On September 14, 2015, Wuertzer filed suit against Stadium alleging negligence, breach of express and/or implied warranties, and breach of contract. Docket 1. When Stadium received the complaint, Stadium’s president, Gary Devennie, forwarded the email to Shephard Insurance. Docket 22. The email failed. Id. Because of that failure, Stadium did not answer. Id. On January 21, 2016, Wuertzer moved for default judgment. Docket 11. The Clerk made an entry of default that same day. Docket 12. Wuertzer then moved for default judgment on February 11, 2016. Docket 13. That same day, Stadium answered and filed a motion to set aside the entry of default. Docket 20, 21. Wuertzer opposes the motion to set aside the default. Docket 26.

         DISCUSSION

         “Entry of a default under Federal Rule of Civil Procedure 55(a) is not, as such, entry of a judgment; it merely permits the plaintiff to move for a default judgment under Rule 55(b)(2), assuming that the default is not set aside under Rule 55(c).” Inman v. Am. Home Furniture Placement, Inc., 120 F.3d 117, 118 n.2 (8th Cir. 1997). Here, the Clerk entered the default of Stadium pursuant to Rule 55(a), and the court must now decide whether to set aside the default under Rule 55(c).

         Rule 55(c) of the Federal Rules of Civil Procedure provides that the district court may set aside a clerk’s entry of default “[f]or good cause.” “When examining whether good cause exists, the district court should weigh ‘whether the conduct of the defaulting party was blameworthy or culpable, whether the defaulting party has a meritorious defense, and whether the other party would be prejudiced if the default were excused.’ ”[1] Stephenson v. El-Batrawi, 524 F.3d 907, 912 (8th Cir. 2008) (quoting Johnson v. Dayton Elec. Mfg. Co., 140 F.3d 781, 784 (8th Cir. 1998)).

         Stadium alleges that it can show good cause for its failure to answer the complaint in a timely manner. Wuertzer argues that Stadium cannot show good cause.

         I. Culpability or Blameworthiness

         When the default is the result of inadvertence or mistake, and not an intentional disregard of procedural rules, the default is set aside. Union Pac. R. Co. v. Progress Rail Servs. Corp., 256 F.3d 781, 782 (8th Cir. 2001). Mistakes such as faulty record-keeping, forwarding the complaint to the incorrect person, poor communication, or believing that the insurance agency was handling the case have all been excused. Union Pac. R. Co, 256 F.3d at 782 (8th Cir. 2001) (record-keeping); U.S. ex rel. Shaver v. Lucas W. Corp., 237 F.3d 932, 933 (8th Cir. 2001) (incorrect person); Johnson, 140 F.3d at 784 (8th Cir. 1998) (poor communication); Myers v. Oury, No. CIV. 12-5072-KES, 2014 WL 458124, at *2 (D.S.D. Feb. 4, 2014) (insurance agency). The Eighth Circuit has also recognized that “it is likely that a party who promptly attacks an entry of default, rather than waiting for grant of a default judgment, was guilty of an oversight and wishes to defend the case on the merits.” Johnson v. Dayton Elec. Mfg. Co., 140 F.3d 781, 784 (8th Cir. 1998).

         Here, Stadium had actual notice of the lawsuit. The summons notified Stadium that it had 21 days to answer. Stadium forwarded the summons and complaint via email to its insurance agency. This was the usual practice Stadium, so it believed the matter was being handled by the insurance agency. The email never reached the insurance agency, however. When Stadium received notice of the entry of default, it again promptly contacted its insurance agency. This time, the email was successful, and the agency then contacted legal counsel. The court finds that Stadium’s actions were not an intentional disregard of the procedural rules, but instead, a ...


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