United States District Court, D. South Dakota, Southern Division
ORDER DENYING PLAINTIFF'S MOTION AND GRANTING
E. SCHREIER UNITED STATES DISTRICT JUDGE
Dean Cressman, brought this lawsuit against defendant,
National Union Fire Insurance Company of Pittsburgh, PA, for
underinsured motorist benefits after plaintiff's car
accident. Plaintiff moves for a default judgment after the
Clerk's entry of default. Docket 10. Defendant moves to
set aside the entry of default. Docket 14. For the reasons
stated below, this court denies plaintiff's motion and
grants defendant's motion.
2011, while driving an employer-owned vehicle, plaintiff was
in a motor vehicle accident. Docket 1 ¶ 5-8. He settled
with the other driver's insurance company for $80, 000
and sought to obtain additional insurance benefits from
defendant because defendant provided underinsured motorist
coverage to plaintiff's employer. Id. ¶ 11.
Plaintiff alleges that defendant has refused to pay the
underinsured motorist benefits to plaintiff. Id.
March 28, 2017, counsel for plaintiff sent a letter to David
Becker, the claims representative assigned to handle
plaintiff's claim, stating that he intended to serve the
summons and complaint in this case on defendant. Docket 18 at
1-2. This was also the date plaintiff's complaint was
filed. See Docket 1. In accordance with SDCL §
58-6-39, plaintiff's counsel transmitted the summons and
complaint to the South Dakota Division of Insurance for
service. Docket 7 at 1. The Division of Insurance executed an
admission of service on behalf of defendant on March 30,
2017. Docket 5.
Federal Rule of Civil Procedure 12(a)(1)(A), a defendant must
serve an answer within 21 days after being served with the
summons and complaint. Defendant did not file an answer or
another responsive pleading within 21 days of being served
with plaintiff's summons and complaint. In support of its
motion to set aside the default, defendant explained that the
summons and complaint were inadvertently overlooked. Docket
17. Specifically, on April 6, 2017, Anne Brenner, a claims
management analyst for AIG, the parent company of defendant,
received an email from AIG's legal department with
plaintiff's summons and complaint. Id. Ms.
Brenner testified that she “inadvertently failed to
read the email” and thus failed to inform Mr. Becker or
anyone at ESIS that service had been made. Id. Mr.
Becker also maintains that he never received confirmation
that the summons and complaint had actually been served.
Docket 18. On April 21, 2017, Mr. Becker emailed Ms. Brenner,
asking if service was made, but he did not receive a
response. Id. On April 27, 2017, Mr. Becker emailed
plaintiff's counsel to ask if service was completed.
3, 2017, plaintiff submitted an application for entry of
default. Docket 6. Under Federal Rule of Civil Procedure
55(a), the Clerk of Court filed an entry of default in
plaintiff's favor and against defendant (Docket 8), and
an amended entry of default on May 4, 2017. Docket 9. On May
4, 2017, plaintiff's counsel responded to Mr. Becker with
a copy of plaintiff's application for entry of default.
Becker states that immediately after he received this May 4
email, he retained local counsel and began investigating the
matter. Id. Plaintiff filed this motion for a
default judgment under Federal Rule of Civil Procedure
55(b)(2) on May 4, 2017. Docket 10. That same day, counsel
for defendant noted his appearance. Docket 12. On May 8,
2017, defendant filed its motion to set aside the clerk's
entry of default. Docket 14.
Rule of Civil Procedure 55(c) allows a court to set aside an
entry of default for good cause. To determine if good cause
exists, the court weighs “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.” Stephenson v. El-Batrawi, 524 F.3d
907, 912 (8th Cir. 2008) (quotation omitted). Setting aside
an entry of default requires a lesser showing of excuse than
setting aside a default judgment. Johnson v. Dayton Elec.
Mfg. Co., 140 F.3d 781, 783 (8th Cir. 1998) (citation
omitted). “[I]t is likely that a party who promptly
attacks an entry of default, rather than waiting for a grant
of a default judgment, was guilty of an oversight and wishes
to defend the case on the merits.” Id. at 784.
The court also has discretion to enter a default judgment
when a party moves for one. Fed.R.Civ.P. 55(b)(2). But there
is a judicial preference to adjudicate claims on their
merits. Johnson, 140 F.3d at 784.
Culpability or Blameworthiness
focusing on the culpability or blameworthiness factor, Eighth
Circuit precedent consistently “distinguish[es] between
contumacious or intentional delay or disregard for deadlines
and procedural rules, and a ‘marginal failure' to
meet pleading or other deadlines.” Johnson,
140 F.3d at 784.
court finds that defendant's actions were not an
intentional delay or disregard for court deadlines. Rather,
defendant had an internal communication error when Ms.
Brenner inadvertently failed to forward the email she
received regarding plaintiff's summons and complaint.
Plaintiff argues that Mr. Becker “was undeniably aware
that an action had been filed” by March 28, 2017.
Docket 20 at 7. The court disagrees. Mr. Becker received an
email from plaintiff's counsel on March 28, which stated
that he “was getting National Union served . . .
.” Docket 18-1. Nowhere in this letter did
plaintiff's counsel tell Mr. Becker that the action had
already been filed or would be filed that day. Mr. Becker
also attempted to follow up on this March 28 email twice by
asking if service had been made.
communication misstep was promptly remedied by defendant when
Mr. Becker received notice of the Clerk's entry of
default. He immediately hired local counsel, who noted his
appearance in this case the day after the Clerk's amended
entry of default was entered. Counsel for defendant then
filed a motion to set aside the default four days later,
which is more reason to construe defendant's failure to