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Harrington v. Tackett

United States District Court, D. Nevada

April 27, 2018

DANIEL HARRINGTON and PAMELA HARRINGTON, Husband and Wife, Plaintiffs,
v.
DAVID TACKETT, an individual, and DOES 1-10, inclusive, Defendants.

          ORDER RE: ECF NO. 8

          WILLIAM G. COBB, UNITED STATES MAGISTRATE JUDGE

         Before the court is defendant David Tackett's Motion to Set Aside Entry of Default. (ECF Nos. 8, 8-1 to 8-3.) Plaintiffs Daniel Harrington and Pamela Harrington filed a response. (ECF Nos. 13, 13-1 to 13-7.) Tackett filed a reply. (ECF No. 15.)

         I. BACKGROUND

         The Harringtons, initially representing themselves, filed their complaint against Tackett for breach of contract on January 17, 2018, based on diversity jurisdiction. (ECF No. 1.) The complaint alleges that the parties met in Crescent Valley, Nevada, on August 25, 2017, to negotiate a contract for the purchase of turquoise ore, with ownership of the turquoise claimed by each party. The meeting culminated in the parties executing a handwritten agreement. According to the Harringtons, Tackett agreed to pay the them $300, 000 for all of the turquoise in their possession, and then he would make payments of ten percent of total ore sales at a rate of $20 per pound, as sales occurred. They allege that Tackett immediately transferred possession of the turquoise to three semi-tractors. A payment of $20, 000 was made the following day. The Harringtons claim Tackett failed to pay the remaining amount due. They estimate the current market value of the turquoise to be $1, 300, 000. The Harringtons request $1, 300, 000, or alternatively, that Tackett return the full amount of turquoise removed from their possession.

         The summons and complaint were served on Tackett on January 19, 2018. (ECF No. 4.) Under Federal Rule of Civil Procedure 12, Tackett had twenty-one days, or until February 9, 2018, to file and serve an answer. Fed.R.Civ.P. 12(a)(1)(A)(i).

         On March 2, 2018, the Harringtons filed an application for entry of default against Tackett. (ECF No. 5.) The Clerk entered default on March 2, 2018. (ECF No. 6.) The Harringtons filed a certificate of service on March 14, 2018, indicating that the filing was personally served on Tackett, on March 2, 2018. (ECF No. 7.)

         On March 23, 2018, Tackett filed his motion to set aside the entry of default through counsel, Nathan J. Aman, Esq., and Jeremy B. Clark, Esq., of the Reno law firm Fahrendorf, Viloria, Oliphant & Oster L.L.P. (ECF No. 8.) Kenneth K. Ching entered a notice of appearance on behalf of the Harringtons on April 3, 2018 (ECF No. 12), and filed their response to the motion the following day (ECF No. 13). Tackett filed his reply brief on April 13, 2018. (ECF No. 15.)

         The court held a hearing on the motion on April 24, 2018, where argument was heard from counsel. The court took the matter under submission, and issues the instant Order.

         II. LEGAL STANDARD

         Federal Rule of Civil Procedure 55(a) provides that “[w]hen a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defendant, and that failure is shown by affidavit or otherwise, the clerk must enter the party's default.” Fed.R.Civ.P. 55(a). This was done here.

         “The court may set aside an entry of default for good cause….” Fed.R.Civ.P. 55(c). “To determine ‘good cause, ' a court must ‘consider[ ] three factors: (1) whether [the party seeking to set aside the default] engaged in culpable conduct that led to the default; (2) whether [it] had [no] meritorious defense; or (3) whether reopening the default judgment would prejudice' the other party.” U.S. v. Signed Personal Check No. 730 of Yubran S. Mesle, 615 F.3d 1085, 1091 (9th Cir. 2010) (citation omitted, alteration original) (Mesle). “A finding that any one of these factors is true is sufficient reason for the district court to refuse to set aside the default.” Id. (citation omitted). That said, the “rules for determining when a default should be set aside are solicitous towards movants, especially those whose actions leading to the default were taken without the benefit of legal representation.” Id. at 1089 (citations omitted).

         “[J]udgment by default is a drastic step appropriate only in extreme circumstances; a case should, whenever possible, be decided on the merits.” Id. (citations omitted).

         III. DISCUSSION

         Tackett does not dispute that he failed to timely respond to the complaint, but contends that good cause exists to set aside the Clerk's entry of default because: his failure to respond was not the result of culpable or intentional conduct; he has meritorious defenses to the complaint; and, the Harringtons will not be prejudiced by the setting aside of the default. The court will address each of these factors, in turn.

         A. Culpable Conduct

         “[A] defendant's conduct is culpable if he has received actual or constructive notice of the filing of the action and intentionally failed to answer.” Mesle, 615 F.3d at 1092 (citations omitted, emphasis original). “[I]n this context the term ‘intentionally' means that a movant cannot be treated as culpable simply for having made a conscious choice not to answer; rather, to treat a failure to answer as culpable, the movant must have acted with bad faith, such as an ‘intention to take advantage of the opposing party, interfering with judicial decisionmaking, or otherwise manipulate the legal process.'” Id. (citation omitted). Courts have “‘typically held that a defendant's conduct was culpable for purposes of the [good cause] factors where there is no explanation of the default inconsistent with a devious, deliberate, willful, or bad faith failure to respond.'” Id. (citation omitted). “[S]imple carelessness” is typically not sufficient. Id. (citations omitted). If the party failing to respond is a legally sophisticated party, “an understanding of the consequences of [the ...


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