Tesillo v. Emergency Physician Associates, Inc.
230 F.R.D. 287, 2005 WL 2450201, 2005 U.S. Dist. LEXIS 22538 (2005)
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Rule of Law:
For good cause shown under Fed. R. Civ. P. 55(c), a court may set aside an entry of default by considering whether the default was willful, whether setting it aside would prejudice the non-defaulting party, and whether the defaulting party has a meritorious defense.
Facts:
- The underlying facts of the dispute between Manuel Tesillo and Emergency Physician Associates, Inc. are not detailed in this opinion, which solely addresses procedural matters.
Procedural Posture:
- Manuel Tesillo commenced an action against Emergency Physician Associates, Inc. (EPA) in the U.S. District Court.
- EPA filed a motion to dismiss in lieu of an answer.
- The District Court denied EPA's motion to dismiss.
- EPA failed to file an answer within the 10-day period required after the denial.
- Tesillo requested an entry of default from the Clerk of Court.
- The Clerk entered a default against EPA on August 19, 2005.
- Tesillo filed a motion for a default judgment.
- EPA filed a cross-motion to vacate the entry of default and for leave to serve its answer.
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Issue:
Does a defendant's failure to file a timely answer due to an attorney's inadvertent mistake constitute 'good cause' to set aside a clerk's entry of default under Fed. R. Civ. P. 55(c)?
Opinions:
Majority - Larimer, District Judge
Yes, a defendant's failure to file a timely answer due to an attorney's inadvertent mistake constitutes good cause to set aside an entry of default. The court applied a three-factor test to determine if 'good cause' existed. First, the court found the default was not willful, as the defendant's attorney 'inadvertently and innocently forgot' to file the answer, and mere negligence or carelessness does not constitute willfulness. Second, the court found no prejudice to the plaintiff, as a two-month delay without evidence of lost evidence, discovery difficulties, or potential for fraud is insufficient to establish prejudice. Third, the court concluded that a meritorious defense existed, reasoning that its prior denial of the defendant's motion to dismiss was based on the existence of significant factual issues that needed to be resolved by a factfinder. The court also emphasized the strong preference for resolving cases on their merits and noted that the standard for vacating an entry of default is less rigorous than for a default judgment.
Analysis:
This decision reinforces the Second Circuit's strong judicial policy favoring the resolution of disputes on their merits rather than through procedural defaults. It clarifies that 'willfulness' in the context of a default requires more than mere attorney negligence or carelessness, setting a high bar for refusing to vacate a default on this ground. The opinion also underscores that delay alone does not constitute legal prejudice and that the 'meritorious defense' requirement is a low threshold, merely requiring the presentation of a triable issue of fact. This case serves as a practical guide for attorneys on the factors courts weigh when considering motions to set aside an entry of default.
