United States District Court, M.D. Georgia, Athens Division
ORDER ON DEFENDANT'S MOTION TO SET ASIDE ENTRY OF DEFAULT
C. ASHLEY ROYAL, District Judge.
Before the Court is Defendant Credit One Bank's Motion to Set Aside Entry of Default [Doc. 5]. On August 29, 2014, Plaintiff moved for the Clerk to enter default as to Defendant, and on September 3, 2014, they did so. Defendant now files this instant Motion requesting that the Court set aside the Entry of Default. For the following reasons, the Court GRANTS Defendant's Motion [Doc. 5].
Plaintiff filed her Complaint on July 17, 2014, claiming that Defendant violated the Telephone Consumer Protection Act ("TCPA") by using an automatic dialing system to repeatedly call her about an alleged auto loan debt that she owed Defendant. The Complaint was served on July 22, 2014, and Defendant's answer was due on August 12, 2014.
The parties spoke on August 7, 2014 regarding Plaintiff's claims. At that time, Defendant told Plaintiff that it did not service auto loans, and Plaintiff's counsel sent a confirmation email to Defendant that Plaintiff would file an amended complaint removing the auto-loan-related language. Defendant believed that it did not need to file an answer to the Complaint because an amended complaint was forthcoming. Plaintiff never filed an amended complaint.
On August 18, 2014, Defendant inquired why Plaintiff had not filed an amended complaint. At that time, despite the fact that Defendant's answer was already overdue, Plaintiff's counsel gave Defendant two weeks in which to submit a settlement offer. Defendant emailed a settlement offer to Plaintiff, and Plaintiff did not respond to Defendant's offer. Instead, Plaintiff motioned the Court to enter default for Defendant's failure to timely file an answer. Default was entered.
I. Legal Standard
Generally, a party must serve an answer within twenty-one (21) days of being served with the summons and complaint. Under Federal Rule of Civil Procedure 55(a), when a defendant has failed to plead or otherwise defend an action, the clerk shall enter a default judgment against the defendant. Once default is entered, however, it can be set aside upon a showing of good cause. The good cause standard used in setting aside an entry of default is less rigorous than the excusable neglect standard used in setting aside a default judgment. A court has discretion in deciding whether to set aside an entry of default.
The Eleventh Circuit has recognized that good cause is not susceptible to a precise formula, although some general guidelines are commonly applied. "Courts have considered whether the default was culpable or willful, whether setting it aside would prejudice the adversary, and whether the defaulting party presents a meritorious defense." Moreover, in the Eleventh Circuit, judgments by default are viewed with disfavor. As such, courts are instructed to consider a default judgment as "a drastic remedy which should be used only in extreme situations, " and encouraged to "respect the usual preference that cases be heard on the merits rather than resorting to sanctions that deprive a litigant of his day in court."
After reviewing the parties' briefs, the Court finds that Defendant establishes good cause to set aside the entry of default. The purpose of the entry of default is to give notice to a party that unless they engage in the litigation process, they could lose their right to do so. It is not meant, however, as a tactical device to be used to avoid litigation of a claim on the merits. Here, it is clear that the parties had open lines of communication and were engaged in active negotiations.
Defendant failed to timely file its answer based on Plaintiff's representations that she would file an amended complaint. Plaintiff does not dispute that her counsel said she would file an amended complaint. Indeed, based on Defendant's representations that it would submit a settlement offer, Plaintiff confirms that she "granted" an extension after Defendant's deadline to answer had expired. Defendant made an offer to Plaintiff, but she found the settlement offer "insulting" and responded by filing a Motion for Default with this Court. Although it seems the parties believed such communication between each other was sufficient and that there was no need to file a motion with this Court-they were mistaken.
The Court notes that parties cannot grant extensions to each other without motioning the Court. However, a good faith procedural error is not considered willful. Therefore, Defendant's misguided reliance on communications with Plaintiff cannot serve as a reason for default where there is evidence that the failure was based on a miscommunication between parties that are both active in the litigation process. Moreover, not only Defendant, but both ...