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Koerner v. Vigilant Insurance Co.

United States District Court, E.D. Louisiana

May 10, 2017

LOUIS R. KOERNER, JR
v.
VIGILANT INSURANCE COMPANY

         SECTION I

          ORDER AND REASONS

          LANCE M. AFRICK UNITED STATES DISTRICT JUDGE.

         Before the Court is a motion[1] filed by CMR Construction & Roofing, LLC to set aside the entry of default and to reconsider the partial default judgment that has been entered against it. For the following reasons, the Court grants the motion.

         I.

         Koerner's suit against Vigilant Insurance Company was removed to this Court on July 27, 2016. On November 14, 2016, Koerner filed a second amended complaint joining CMR as a defendant and alleging claims of breach of warranty, breach of contract, detrimental reliance, redhibition, and negligence.

         A summons was issued to CMR's registered agent in Louisiana on December 14, 2016, meaning that CMR's answer was due on January 4, 2017. After CMR failed to appear, Koerner obtained an entry of default from the Clerk on January 18, 2017. On February 21, 2017, Koerner and Vigilant entered a joint stipulation dismissing Koerner's claims against Vigilant without prejudice. On March 9, 2017, this Court granted in part Koerner's motion for entry of a default judgment against CMR. Judgment was entered against CMR for the sum of $497, 257.71, although no final judgment was entered.

         II.

         A.

         Rule 55(c) of the Federal Rules of Civil Procedure sets forth the standard for setting aside the Clerk's entry of default. It provides that “[t]he court may set aside an entry of default for good cause.” To determine whether good cause exists, courts consider a number of factors including: (1) whether the default was willful, (2) whether setting the default aside would prejudice the adversary, and (3) whether a meritorious defense is presented. Buckley v. Donohue Indus. Inc., 100 F. App'x 275, 278 (5th Cir. 2004). These three factors are not “exclusive” or “talismanic, ” and the Court can consider other factors including whether the “public interest was implicated, ” whether “there was a significant financial loss to the defendant, ” and whether “the defendant acted expeditiously to correct the default.” In re Dierschke, 975 F.2d 181, 183-84 (5th Cir. 1992).

         Federal courts disfavor resolving cases through default judgments and have a strong policy in favor of decisions on the merits. See Lindsey v. Prive Corp., 161 F.3d 886, 893 (5th Cir. 1998). “[E]ntries of default are serious; where there are no intervening equities, any doubt should be resolved in favor of the movant to the end of securing a trial upon the merits.” Effjohn Int'l Cruise Holdings, Inc. v. A&L Sales, Inc., 346 F.3d 552, 563 (5th Cir. 2003) (internal quotation marks omitted).

         B.

         Rule 54(b) of the Federal Rules of Civil Procedure sets forth the standard for reconsideration of interlocutory orders. See Austin v. Kroger Texas, L.P., No. 16-10502, 2017 WL 1379453, at *8 (5th Cir. Apr. 14, 2017). Because the Court only entered a partial default judgment against CMR, its order was interlocutory and must be considered under Rule 54(b). See Halliburton Co. Benefits Comm. v. Graves, 191 F.App'x 248, 250 (5th Cir. 2006) (partial judgment is an interlocutory order). “Under Rule 54(b), the trial court is free to reconsider and reverse its decision for any reason it deems sufficient, even in the absence of new evidence or an intervening change in or clarification of the substantive law.” Id. at 9 (internal quotation marks omitted).

         III.

         The Court first considers CMR's request to vacate the Clerk's entry of ...


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