United States District Court, W.D. Louisiana, Lafayette Division
Rebecca F. Doherty, Judge
B. WHITEHURST, UNITED STATES MAGISTRATE JUDGE
the Court is a Motion To Reconsider Order Setting Aside
Default filed by Plaintiff, Coastal Commerce Bank
(“Coastal”) [Rec. Doc. 66] and a Memorandum in
Opposition filed by Defendant, Richard J. Scully Jr.
(“Scully”) [Rec. Doc. 71].
“the Federal Rules of Civil Procedure do not recognize
a general motion for reconsideration, ” St. Paul
Mercury Ins. Co. v. Fair Grounds Corp., 123 F.3d 336,
339 (5th Cir.1997), Plaintiff's Motion for
reconsideration invokes the “good cause” standard
under Federal Rule of Civil Procedure 55(c). Federal Rule of
Civil Procedure 55(c) provides that a district court may set
aside an entry of default “for good cause shown.”
Fed.R.Civ.P. 55(c). Good cause, for purposes of Rule 55(c),
“is not susceptible of precise definition, and no
fixed, rigid standard can anticipate all of the situations
that may occasion the failure of a party to answer a
complaint timely.” Dierschke v. O'Cheskey,
975 F.2d 181, 183 (5th Cir. 1992). In determining whether
good cause exists to set aside an entry of default, the Court
considers “(1) whether the failure to act was willful;
(2) whether setting the default aside would prejudice the
adversary; and (3) whether a meritorious claim has been
presented.” Effjohn Int'l Cruise Holdings, Inc.
v. A & L Sales, Inc., 346 F.3d 552, 563 (5th Cir.
2003). These factors are, however, nonexclusive, and the
Court should consider all relevant circumstances against the
background principles that cases should be resolved on the
merits. See Lacy v. Sitel Corp., 227 F.3d 290, 292
(5th Cir. 2000) (“[F]ederal courts should not be
agnostic with respect to the entry of default judgments,
which are generally disfavored in the law and thus should not
be granted on the claim, without more, that the defendant had
failed to meet a procedural time requirement.”);
see also Amberg v. Fed. Deposit Ins. Corp., 934 F.2d
681, 686 (5th Cir. 1991) (“Federal Rules are
diametrically opposed to a tyranny of technicality; ...
[s]trict enforcement of defaults has no place in the Federal
Rules....”). Further, setting aside an entry of default
is not subject to the strict standards of setting aside a
final judgment under Rule 60. See 2015 Amendment to
Fed.R.Civ.P. 55 (“The demanding standards set by Rule
60(b) apply only in seeking relief from a final
resolution of cases on the merits is preferable, the willful
failure of a party to answer the complaint may provide
sufficient justification to deny a motion to set aside an
entry of default. See Dierschke, 975 F.2d at 184;
CJC Holdings, Inc. v. Wright & Lato, Inc., 979
F.2d 60, 63 (5th Cir. 1992); Hargray v. City of New
Orleans, 12 F.3d 1099 (5th Cir. 1999) (stating that a
willful failure to answer indicates a lack of good cause). A
failure to file an answer that results from excusable neglect
is not willful. See American Airlines, Inc. v.
Reinis, 21 F.3d 1107 (5th Cir. 1994); see also CJC
Holdings, 979 F.2d at 64; Parker v. Bill Melton
Trucking, Inc., 2016 WL 5704172, at *2 (N.D. Tex. Oct.
3, 2016) (“Willfulness is determined by applying the
excusable neglect standard.”).
contends the Court should reconsider its order setting aside
the entry of default against Scully “because his
default was willful and he has no meritorious
defenses.” R. 66, p. 1. Coastal represents
that “Scully's attorney was advised that Scully
would be defaulted, and he was sent a copy of the Request for
Default, and did nothing for six months.” Id.
Scully refutes Coastal's representation and states that
Coastal never disclosed its intent to default Scully. R.
record of this matter provides that Coastal's counsel,
Joseph Briggett, communicated extensively with Scully's
civil counsel, Jeff Coreil, and Scully's bankruptcy
attorney, Kent Aguillard, from October 14, 2016 to November
28, 2016.On October14, 2016, attorney Coreil
informed attorney Briggett that Scully revoked and disputed
the validity of the Commercial Guarantee he had executed on
March 31, 2014. R. 71-3. The communications also
included Coastal's informal extensions for Scully to
respond to the Complaint. R. 71, Exh. B, emails between
Coreil and Brigget.
record further reflects that during this period, the parties
were engaged in the process of arranging the sale of the
Vessels which were the subject of Coastal's Promissory
Notes. In a November 8, 2016 email from Coreil to Aguillard,
Coreil stated that Coastal had given Scully “an
informal extension to answer while the parties continue to
negotiation resolution. . . [and] agreed no answer necessary
until these negotiations are complete.” Id. at Exh.
C, Nov. 8, 2016 email from Coreil. The record
indicates that the ongoing “negotiations” were
related to Coastal's sale of the vessels which was
confirmed by the Court on May 8, 2017. R. 44.
Coastal along with Scully, who was represented by Aguillard,
and the corporate defendants, represented by their own
bankruptcy attorney, executed a November 23, 2016 Stipulation
in which Scully and the corporate defendants agreed to
conduct a private sale of the vessels and waive their right
to contest a “deficiency judgment” based on the
use of the private sale procedure. Coastal reserved all
claims against Scully and the corporate defendants for a
“deficiency judgment.” R. 66-2.
record indicates that attorney Briggett filed a
“Request To Enter Default Against Raymond J. Scully
Jr” with the Court on January 16, 2017. R. 30.
Briggett submitted notice of Coastal's motion for entry
of default only to attorney Aguillard, via U.S.
Mail. R. 66-4. On May 19, 2017, attorney Briggett
filed a Motion for Default Judgment, R. 45, and once
again submitted a notice of the motion only to
attorney Aguillard, via U.S. Mail. Id. In defending
the fact that its counsel provided notice of default to
attorney Aguillard (without providing notice to attorney
Coreil), Coastal cites an October 26, 2016 email by Aguillard
to Coastal's counsel, Briggett, stating, “I
represent Ray Scully personally, ” in support of his
decision to notify only Aguillard of Coastal's entry of
default against Scully.
on the previous communications cited above, Briggett was
aware that attorney Coreil was active legal counsel for
Scully in this case. Coastal's last communication with
Coreil indicated that Scully had an extension to answer in
light of the pending sale of the vessels. While Coastal
argues that it reserved its right in the November 23, 2016
Stipulation to file a “deficiency judgment”
against Scully-that in no way provided notice of
Coastal's entry of default against him. Attorney Briggett
never provided attorney Coreil with notice of his motion to
enter default or motion for default judgment. As an
experienced attorney, he knew or should have known that
attorney Coreil would receive no notice from the Court.
Additionally, providing notice to attorney Aguillard did not
assure that attorney Coreil or Scully would receive notice of
a civil case. The prior communications between the attorneys
included Aguillard, Scully's bankruptcy attorney,
and his civil attorney, Coreil. There is no
reason attorney Aguillard would have or should have believed
that he was the only one to receive notice of default in this
considering the facts and record of this case, this Court
concludes that defendant Scully has shown there was good
cause to set aside the entry of default against him.
Fed.R.Civ.P. 55(c). First, the Court finds that the
Scully's failure to file a timely answer in this matter
amounts to excusable neglect rather than willful conduct.
See Bona Fide Demolition & Recovery, LLC v. Crosby
Const. Co. of Louisiana, 2009 WL 4060192, at *3 (E.D.
La. Nov. 20, 2009) (setting aside default where failure to
respond was product of excusable neglect). The determination
of whether neglect is excusable is “at bottom an
equitable one, taking account of all relevant circumstances
surrounding the party's omission, including the danger of
prejudice to the non-movant, the length of the delay and its
potential impact on judicial proceedings, the reason for the
delay, including whether it was within the reasonable control
of the movant, and whether the movant acted in good
faith.” In re FEMA Formaldehyde Products Liability
Litigation, 2012 WL 458821, at *6 (E.D. La. Feb 13,
Court finds that Coastal has not been prejudiced by the
Court's setting aside the entry of default. This case
remains in the early stages of litigation; no trial date has
been set, and discovery has not commenced. The mere fact that
setting aside the default would require the plaintiff to
litigate the dispute is insufficient prejudice to require the
default to stand. See e.g., Broadwing Communications,
Inc. v. Harris, 2000 WL 1059863, at *2 (E.D.La., 2000).
While Coastal complains of previous transfers of personal
property by Scully as indications of fraud and collusion, the
Court notes that Coastal has filed a separate lawsuit
regarding these concerns which is pending in this Court.
See, Coastal Commerce Bank v. Scully et al,
6:17-CV-1011. To establish ...