United States District Court, W.D. Kentucky, Bowling Green Division
ELITE LABOR SERVICES, LTD. PLAINTIFF
PCIJVKY, INC., et al. DEFENDANTS
MEMORANDUM OPINION AND ORDER
N. Stivers, Judge United States District Court
matter is before the Court upon Defendants Andrzej Zaniewski
(“Zaniewski”) and Polish Connection, Inc.'s
(“PCI”) Motion to Set Aside Order for Entry of
Default (DN 41). The motion has been fully briefed by the
parties and is ripe for adjudication. For the reasons
outlined below, the motion is GRANTED.
action arises out of a staffing agreement
(“Agreement”) which was allegedly breached by
Defendants. After filing this action, Plaintiff amended the
Complaint and has asserted claims against ten defendants
including Andrzej Zaniewski (“Zaniewski”) and
Polish Connection, Inc. (“PCI”) (collectively
service of process, Plaintiff moved for and was granted an
entry of default against these Defendants pursuant to
Fed.R.Civ.P. 55(a). (Order Entry Default, DN 36). Defendants
move to set aside that entry of default.
Fed.R.Civ.P. 55(c), “[t]he court may set aside an entry
of default for good cause . . . .” “When a
defendant seeks relief from a default . . . the district
court enjoys considerable latitude under the ‘good
cause shown' standard.” Waifersong, Ltd. v.
Classic Music Vending, 976 F.2d 290, 292 (6th Cir.
1992). “What constitutes good cause for setting aside
an entry of default is within the discretion of the
court.” Seye v. Cmty. Yellow Cab NK Mgmt.,
LLC, 2011 U.S. Dist. LEXIS 94477, at *6 (E.D. Ky. Aug.
2, 2011) (citing 10A Charles Alan Wright et al., Federal
Practice and Procedure § 2696 (2011)); see also
Krowtoh II LLC v. ExCelsius Int'l, Ltd., 330 F.
App'x 530, 534 (6th Cir. 2009) (“This Court reviews
a district court's decision to deny a motion to set aside
an entry of default for an abuse of discretion.”
(citation omitted)). In exercising this discretion, the Sixth
Circuit has instructed courts to consider three equitable
factors: “(1) whether culpable conduct of the defendant
led to the default, (2) whether the defendant has a
meritorious defense, and (3) whether the plaintiff will be
prejudiced.” Burrell v. Henderson, 434 F.3d
826, 831-32 (6th Cir. 2006) (internal quotation marks
omitted) (quoting Waifersong, Ltd., 976 F.2d at
292); see also United Coin Meter Co. v. Seaboard
Coastline R.R., 705 F.2d 839, 844-46 (6th Cir. 1983)
(setting forth the “good cause” standard in the
Sixth Circuit and finding that the district court erred in
reaching a determination of no good cause without considering
all three factors)). These factors are to be balanced and
will be addressed in turn. Waifersong, Ltd., 976
F.2d at 292.
the first factor, the Court must consider these
Defendants' behavior “in the general context of
determining whether a petitioner is deserving of equitable
relief.” Id. For a defendant's conduct to
be treated as culpable, “mere carelessness is not
enough; rather, there must be ‘either an intent to
thwart judicial proceedings or a reckless disregard for the
effect of its conduct on those proceedings.'”
S. Elec. Health Fund v. Bedrock Servs., 146 F.
App'x 772, 777 (6th Cir. 2005) (quoting Shepard
Claims Serv., Inc. v. William Darrah & Assocs., 796
F.2d 190, 194 (6th Cir. 1986)).
case, these Defendants have filed an affidavit by Zaniewski
that states, inter alia, that Zaniewski contacted
Defendant Templar Global Solutions, LLC
(“Templar”) immediately upon receipt of the First
Amended Complaint naming these Defendants and that Defendant
Joseph Morra (“Morra”) told him “that
Templar had hired counsel who was representing the entire
Defendant group” and assured Zaniewski that these
Defendants would be dismissed from the lawsuit “and
therefore would not have to take any further
actions.” (Defs.' Mot. Set Aside Order Entry
Default Ex. 1 ¶¶ 13-14, DN 41-2). The affidavit
disproves any intent to thwart judicial proceedings or
reckless disregard for the effect of these Defendants'
conduct on those proceedings; this factor therefore weighs in
favor of setting aside the default. See, e.g.,
Ticketron v. Greene, 92 F.R.D. 6, 7 (E.D. Pa. 1981)
(finding that an individual defendant who turned over the
complaint to codefendant's counsel and assumed counsel
would also represent him was reasonable “and did not
evidence a disregard for the judicial process).
the second factor, to assert a “meritorious
defense” these Defendants do not have to demonstrate a
likelihood of success, but simply must state a defense that
is “good at law . . . .” S. Elec., 146
F. App'x at 777 (citing United Coin Meter Co.,
705 F.2d at 845). The key to this inquiry focuses on
“the determination of ‘whether there is some
possibility that the outcome of the suit after a full trial
will be contrary to the result achieved by the
default.'” Id. (quoting INVST Fin.
Grp., Inc., 815 F.2d at 399). “[T]he test is not
whether the defendant will win at trial, but rather whether
the facts alleged by the defendant would constitute a
meritorious defense if true.” In re Park Nursing
Ctr., Inc., 766 F.2d 261, 264 (6th Cir. 1985).
Defendants allege several potential defenses, including
improper service of process upon PCI, lack of subject matter
jurisdiction due to incomplete diversity, and a defense on
the merits of Plaintiff's claim, namely that these
Defendants were not parties to the Agreement. (Defs.'
Mem. 7-9). Although Plaintiff disputes at least these
Defendants' subject matter jurisdiction argument
(Pl.'s Resp. 3), the facts alleged by these Defendants
would constitute one or more meritorious defenses if true.
This factor therefore weighs in favor of setting aside the
the third factor, mere delay is insufficient to establish
prejudice. INVST Fin. Grp., Inc., 815 F.2d at 398
(6th Cir. 1987). For prejudice to occur, the setting aside of
an entry of default “must ‘result in tangible
harm such as loss of evidence, increased difficulties of
discovery, or greater opportunity for fraud or collusion . .
. .'” S. Elec., 146 F. App'x at 778
(quoting Thompson v. Am. Home Assurance Co., 95 F.3d
429, 433-34 (6th Cir. 1996)). Plaintiff has not claimed that
it would be prejudiced by the setting aside of the entry of
default against these Defendants. Based on the Court's
review of the record, the opposite appears to be true given
that the Answer of Defendants Morra and Templar was only
filed on December 28, 2017. (DN 49).
all three factors weighed in favor of keeping the default in
place, the Court may still choose to overturn the default
“because these three factors are to be considered
equitably . . . as this Circuit highly favors giving each
party its turn in court.” New London Tobacco
Market, Inc. v. Ky. Fuel Corp., No. 12-91-GFVT, 2017
U.S. Dist. LEXIS 97338, at *13 (E.D. Ky. June 23, 2017)
(citing United States v. $22, 050.00 U.S. Currency,
595 F.3d 318, 322 (6th Cir. 2010)); see also
Shepard, 796 F.2d at 192 (noting our courts have a
“policy of favoring trials on the merits . . .
.”); United Coin, 705 F.2d at 845
(“Judgment by default is a drastic step which should be
resorted to only in the most extreme cases.”). Given
the balance of the factors and general preference for
disposition on the merits, the Court finds that setting aside
the entry of default against these Defendants is proper.