Opinion
Case No. 02-4146-SAC.
September 23, 2004
MEMORANDUM AND ORDER
This case comes before the court in an unusual procedural posture. Defendant UCB Films, Inc. filed a praecipe for a clerk's entry of default against Super Film Turkey for the latter's failure to timely answer, but for reasons not known to the court, the clerk did not enter default. That same day, counterclaim defendant Super Film Sanayi Ve Ticaret A.S, ("Super Film Turkey") filed a motion for leave to file its answer out of time, but instead of attaching its proposed answer to its motion for leave, also filed its answer. Thereafter, UCB Films filed a motion for default judgment against Super Film Turkey. Super Film Turkey asks the court to set aside the entry of default and permit it to file its answer out of time. The parties have thus filed their motions based upon the premise that entry of default has been made, and that Super Film Turkey's answer has not yet been filed. Although neither of these propositions is factually accurate, the court will do the same.
The court first addresses UCB Films' contention that this matter is governed by D. Kan. Rule 6.1, which requires a showing of "excusable neglect" for motions of extension of time filed after the original deadline, rather than Federal Rule of Civil Procedure 55(c), which permits the court to set aside an entry of default "on good cause shown." The court finds that in this case, the provisions of the specific rule for setting aside entry of default control over the court's local and general rule for motions for extension of time. See United States v. Castro-Rocha, 323 F.3d 846, 851 (10th Cir. 2003) (it is a fundamental canon of statutory construction "that, when there is an apparent conflict between a specific provision and a more general one, the more specific one governs").
Federal Rule of Civil Procedure 55(c) provides: "For good cause shown the court may set aside an entry of default . . ."
Three criteria are generally used to establish the "good cause" required under Rule 55(c): (1) whether the default was willful; (2) whether the moving party has presented a meritorious defense; and (3) whether setting aside the default would prejudice the party who secured the entry of default. Marzilizano v. Heckler, 728 F.2d 151, 156 (2d Cir. 1984).Ficken v. Henry Gordy Intern., Inc. 1991 WL 127084, *4 (D. Kan. 1991) quoting First Interstate Bank of Oklahoma, N.A., v. Service Stores of America, Inc., 128 F.R.D. 679, 680 (W.D. Okla. 1989). See Hunt v. Kling Motor Co., 841 F. Supp. 1098, 1105-1106 (D. Kan. 1993), aff'd sub nom Hunt v. Ford Motor Co., 65 F.3d 178 (10th Cir. 1995). The court examines these criteria in turn.
Super Film Turkey states that its failure to timely answer was based upon counsel's failure to properly calendar the answer date. Although a party's failure to timely answer is not to be condoned, no allegation is made that Super Film Turkey's default was merely a delay tactic, or was done for any other strategic reason. It is difficult for the court to believe that any party would intentionally fail to file its answer "merely to gain but a few days in light of the risk of default." Ficken v. Henry Gordy Intern., Inc., 1991 WL 127084, *4 (D. Kan. 1991). The court finds that the default was not willful.
The burden to show a meritorious defense is light. The party moving to set aside default must make "a sufficient elaboration of facts to permit the trial court to judge whether the defense, if movant's version were believed, would be meritorious." In re Stone, 588 F.2d 1316, 1319 (10th Cir. 1978) (re: default judgment). Super Film Turkey has met this burden by asserting facts to defeat or mitigate their liability via the statements of Turgut Selbasti dated July 21, 2004. This document, coupled with Super Film Turkey's answer, creates a possibility that the outcome of the suit after a full trial would be contrary to the result achieved by the default.
Although the statement is in letter form, and is not an affidavit, UCB does not challenge it on this basis, and relies upon the same letter in its motion. See Dk. 121 129, Exh. 2. Accordingly, the court will not consider it to be objectionable because of the means by which it has become part of the moving papers. See In re Stone, 588 F.2d at 1316, 1319 (10th Cir. 1978).
The court thus examines whether setting aside the default will prejudice UCB Films.
In general, "prejudice" in this context refers to acts done by the moving party or events that have occurred which have in some way impaired or thwarted the non-moving party's ability to litigate or defend the case. See Intern. Broth., 130 F.R.D. at 529; Federal Practice and Procedure § 2699 (2d ed. 1983).Ficken, 1991 WL 127084, *5 (D. Kan. 1991). Although UCB Films has alleged prejudice by virtue of Super Film Turkey's "obstructionist behavior" throughout discovery and prior to its answer date, it has not shown prejudice to its ability to litigate the case because of Super Film Turkey's failure to timely answer. Compare Porter v. Brancato, 171 F.R.D. 303, 304-305 (D. Kan. 1997). Super Film Turkey acted swiftly to set aside default, and it does not appear that the delay caused by the default will substantially delay the trial of the case.
In light of the findings above, and cognizant that the preferred disposition of any case is upon its merits and not by default judgment, see Meeker v. Rizley, 324 F.2d 269, 271-272 (10th Cir. 1963), the court will permit the answer to be filed late and deny the motion for default judgment.
IT IS THEREFORE ORDERED that Super Film Turkey's motion for leave to file its answer out of time (Dk. 117) is granted, and that UCB Film's motion for default judgment (Dk. 121 and 129) is denied.