Royal & Sun Alliance Insurance PLC v. Castor Transport, LLC et al, No. 3:2013cv01811 - Document 39 (S.D. Cal. 2014)
Court Description: ORDER granting Defendant Transportes Castores de Baja S.A. de C.V.'s 31 Motion to Set Aside Default; terminating as moot Plaintiff's 29 Motion for Default Judgment. Plaintiff shall serve Defendant within 30 days of the date this Order. Signed by Judge Cynthia Bashant on 11/13/2014. (jah)
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Royal & Sun Alliance Insurance PLC v. Castor Transport, LLC et al Doc. 39 1 2 3 4 5 6 7 8 9 10 UNITED STATES DISTRICT COURT 11 SOUTHERN DISTRICT OF CALIFORNIA 12 13 ROYAL & SUN ALLIANCE INSURANCE PLC, 14 15 16 17 Plaintiff, Case No. 13-cv-01811-BAS(DHB) ORDER: (1) GRANTING MOTION TO SET ASIDE DEFAULT (ECF NO. 31); AND v. CASTOR TRANSPORT, LLC, et al., (2) TERMINATING AS MOOT MOTION FOR DEFAULT JUDGMENT (ECF NO. 29) Defendants. 18 19 20 21 22 23 24 25 26 27 28 On November 18, 2013, the Clerk of the Court entered default against Defendant Transportes Castores de Baja California S.A. de C.V. (“Defendant”) (ECF No. 12.) On May 30, 2014, Plaintiff Royal & Sun Alliance Insurance, Plc (“Plaintiff”) filed a motion for default judgment against Defendant. (ECF No. 29.) Defendant now moves to set aside the entry of default. (ECF No. 31.) Plaintiff opposes. (ECF No. 34.) The Court finds these motions suitable for determination on the papers submitted and without oral argument. See Civ. L.R. 7.1(d)(1). For the following –1– 13cv1811 Dockets.Justia.com 1 reasons, the Court (1) GRANTS Defendant’s motion to set aside the default; and 2 (2) TERMINATES AS MOOT Plaintiff’s motion for default judgment. 3 I. BACKGROUND 4 Plaintiff commenced this action on August 6, 2013 against Defendant and 5 Castor Transport, LLC (“Castor Transport”) alleging non-delivery of cargo, 6 negligence, breach of contract, and breach of bailment. (ECF No. 1 (“Compl.”.) 7 On September 10, 2013, a summons was returned executed by Plaintiff as to 8 Defendant. (ECF No. 6.) The Proof of Service of Summons stated that Plaintiff 9 served Defendant on August 29, 2013 by means of substituted service by leaving 10 the documents with or in the presence of Jonathan Arias. (Id. at 2.) Thereafter, 11 Plaintiff mailed copies of the summons, complaint, civil case cover sheet, and 12 notice of party with financial interest to Defendant c/o Jose L. Sanchez, 10031 13 Marconi Drive 3F, San Diego, CA 92154. (Id. at 2-3.) Defendant did not file a 14 responsive pleading. 15 On November 14, 2013, Plaintiff requested that the Clerk of the Court enter 16 default against Defendant. (ECF No. 11.) The Clerk entered default on November 17 18, 2013. (ECF No. 12.) On May 30, 2014, Plaintiff filed a motion for default 18 judgment against Defendant. 19 Defendant moved to set aside the default. (ECF No. 31.) 20 II. (ECF No. 29.) Thereafter, on July 17, 2014, LEGAL STANDARD 21 A federal court does not have jurisdiction over a defendant unless the 22 defendant has been served properly under Rule 4 of the Federal Rules of Civil 23 Procedure. Direct Mail Specialists, Inc. v. Eclat Computerized Techs., Inc., 840 24 F.2d 685, 688 (9th Cir. 1988). “However, ‘Rule 4 is a flexible rule that should be 25 liberally construed so long as a party receives sufficient notice of the complaint.’” 26 Id. (quoting United Food & Commercial Workers Union v. Alpha Beta Co., 736 27 F.2d 1371, 1382 (9th Cir. 1984). “Nonetheless, without substantial compliance 28 with Rule 4 neither actual notice nor simply naming the defendant in the complaint –2– 13cv1811 1 will provide personal jurisdiction.” Id. (citation and internal quotations omitted). 2 “A general appearance or responsive pleading by a defendant that fails to dispute 3 personal jurisdiction will waive any defect in service or personal jurisdiction.” 4 Benny v. Pipes, 799 F.2d 489, 492 (9th Cir. 1986). 5 If a complaint is properly served, failure to make a timely answer or 6 otherwise defend will justify entry of default. Fed. R. Civ. P. 55(a). Under Rule 7 55(c) of the Federal Rules of Civil Procedure, the court “may set aside an entry of 8 default for good cause.” Fed. R. Civ. P. 55(c). The court’s good cause analysis 9 considers the following three so-called “Falk factors”: “(1) whether the plaintiff 10 will be prejudiced, (2) whether the defendant has [no] meritorious defense, and (3) 11 whether culpable conduct of the defendant led to the default.” Brandt v. Am. 12 Bankers Ins. Co. of Fla., 653 F.3d 1108, 1111 (9th Cir. 2011) (quoting Falk v. 13 Allen, 739 F.2d 461, 463 (9th Cir. 1984)). These factors are disjunctive and a 14 district court may deny a motion to set aside default if any of the three factors is 15 true. Franchise Holding II, LLC v. Huntington Rests. Grp., Inc., 375 F.3d 922, 926 16 (9th Cir. 2004). Nonetheless, a district court is not, as a matter of law, required to 17 deny a motion to set aside entry of default upon a finding of any of the factors. See 18 Brandt, 653 F.3d at 1111. The defendant moving to set aside default bears the 19 burden of showing that any of these factors favor setting aside default. Id. 20 Notably, “[j]udgment by default is a drastic step appropriate only in extreme 21 circumstances; a case should, whenever possible, be decided on the merits.” Falk, 22 739 F.2d at 463. Thus, “[w]here timely relief is sought from a default . . . and the 23 movant has a meritorious defense, doubt, if any, should be resolved in favor of the 24 motion to set aside the [default] so that cases may be decided on their merits.” 25 Mendoza v. Wight Vineyard Mgmt., 783 F.2d 941, 945-46 (9th Cir. 1986) (quoting 26 Schwab v. Bullock’s Inc., 508 F.2d 353, 355 (9th Cir.1974)). The court has broad 27 discretion in setting aside entry of default. Id. at 945. 28 /// –3– 13cv1811 1 III. ANALYSIS 2 A. Jurisdiction 3 Defendant first argues that it was not validly served with the summons and 4 complaint, and therefore this Court has no jurisdiction over Defendant and the 5 default should be set aside. (ECF No. 31-2 at pp. 2, 5.) In its opposition, Plaintiff 6 does not specifically address this contention. 7 Defendant and Castor Transport are closely related companies and Defendant was 8 well aware of this lawsuit as early as September 11, 2013. (ECF No. 34 at pp. 1, 5- 9 6.) Rather, Plaintiff argues that 10 A court may set aside an entry of default because of improper service under 11 Rule 4. See S.E.C. v. Internet Solutions for Bus. Inc., 509 F.3d 1161, 1165 (9th Cir. 12 2007) (“Internet Solutions”). However, a defendant moving to set aside entry of 13 default based on improper service of process, where the defendant had actual notice 14 of the original proceeding but delayed in bringing the motion until after entry of 15 default, bears the burden of proving that service did not occur. Id. 16 1. General Appearance 17 As an initial matter, “[a] general appearance or responsive pleading by a 18 defendant that fails to dispute personal jurisdiction will waive any defect in service 19 or personal jurisdiction.” Benny, 799 F.2d at 492. “An appearance ordinarily is an 20 overt act by which the party comes into court and submits to the jurisdiction of the 21 court. This is an affirmative act involving knowledge of the suit and an intention to 22 appear.” Id. (citation omitted). 23 Prior to entry of default, Plaintiff contends that individuals “representing 24 themselves to be from [Defendant],” including Jose L. Sanchez, his son Luis 25 Antonio Sanchez, and Defendant’s Mexico counsel, Victor Manuel Sanchez 26 Quiroz, attended a meeting at his counsel’s office in Long Beach, California in 27 which everyone in attendance discussed the facts of the case and other matters 28 relevant to the litigation on September 11, 2013. (ECF Nos. 34 at pp. 2, 5-6; 34-2 –4– 13cv1811 1 at ¶ 3.) While informal contacts have sufficed to constitute an appearance, this is 2 true only when the party demonstrates a clear purpose to defend the suit. See 3 Wilson v. Moore & Assocs., Inc., 564 F.2d 366, 368-69 (9th Cir. 1977). 4 Here, it is uncertain whether any of the individuals at the meeting actually 5 represented Defendant. Plaintiff’s counsel contends that although he was not 6 provided with their business cards, each of the four attendees indicated they were 7 with Defendant. (ECF No. 34-2 at ¶ 3.) However, Defendant asserts that Jose L. 8 Sanchez is a member of Castor Transport,1 an entirely separate company, and is 9 not, and has never been, an officer or director of Defendant. (ECF No. 31-1 10 (“Sesma Decl.”)2 at ¶¶ 4-5.) Moreover, Defendant does not mention the meeting in 11 support of its motion to set aside default. 12 declaration from its corporate attorney and Secretary of the Counsel, contends that 13 it first became aware of the lawsuit by means of a communication from Mr. 14 Sanchez shortly prior to the Early Neutral Evaluation Conference (“ENE”), which 15 occurred in March 2014. (Id. at ¶¶ 4-5; 23, 24.)3 Carlos Villgran Cervantes, a Rather Defendant, by means of a 16 17 18 19 20 21 22 23 24 25 26 27 28 1 The Court notes that Jose L. Sanchez has filed a declaration in this case stating that he was the owner of Castor Transport, which is a separate entity from Defendant and has a separate owner. (ECF No. 14 at Exh. 1.) The Court further notes that in the Order following the ENE held on March 17, 2014, Mr. Sanchez appeared as a representative of Castor Transport and not of Defendant. (ECF No. 24.) 2 Plaintiff filed an objection to Mr. Sesma’s declaration (ECF No. 35) and argued in its opposition that Mr. Sesma does not have firsthand knowledge of the facts asserted and that “[n]owhere in the declaration is any assertion that Mr. Sesma has firsthand knowledge of the facts asserted.” (ECF No. 34 at p. 9.) However, Mr. Sesma states in paragraph 1 of his declaration that he has “personal knowledge of the facts stated in this declaration.” (Sesma Decl. at ¶ 1.) He further states that in preparing the declaration he relied upon his knowledge and review of Defendant’s business records, which he uses “in the normal course of [his] duties as attorney for [Defendant].” (Id. at ¶ 2.) The Court will therefore consider Mr. Sesma’s declaration and give it the weight the Court deems appropriate. 3 Defendant erroneously refers to May 2014, which the Court will construe as a mistake because Defendant affirmatively states it was aware of the lawsuit prior –5– 13cv1811 1 corporate lawyer for Defendant, thereafter travelled to San Diego and observed the 2 hearing. (Id.) Thus, who, if anyone, represented Defendant at the September 2013 3 meeting is unclear. Regardless, there is no indication that Defendant demonstrated 4 a clear purpose to defend the suit during this meeting. There is no indication 5 settlement discussions occurred. See Wilson, 564 F.2d at 368-69. Accordingly, the 6 Court declines to find that Defendant made an appearance in this matter by 7 attending this meeting thereby waiving any defects in service or personal 8 jurisdiction. 9 As noted above, Mr. Cervantes, a representative of Defendant appeared at the 10 ENE, thus indicating actual knowledge of the lawsuit at least as early as March 17, 11 2014. (See ECF Nos. 23, 24.) By this time, however, default had already been 12 entered against Defendant. Nonetheless, in determining whether there has been 13 waiver of service, the Court also finds that Mr. Cervantes’ attendance at the ENE 14 did not constitute an appearance. Defendant asserts that Mr. Cervantes participated 15 in the ENE simply as an observer and, although “the judge was gracious enough to 16 provide him with a copy of the complaint,” Mr. Cervantes “made himself clear 17 enough that he was not authorized to accept service of process on behalf of the 18 corporation.” (Sesma Decl. at ¶ 10.) There is no assertion to the contrary. The 19 Court therefore finds that Mr. Cervantes’ attendance did not manifest a clear 20 purpose to defend the suit. See Benny, 799 F.2d at 492-93 (finding that contacts 21 with the court, including filing motions to extend time to defend a suit, which do 22 not manifest a clear purpose to defend do not constitute an appearance). 23 Accordingly, the Court turns to whether service was properly effectuated pursuant 24 to Rule 4. 25 26 2. Service Federal Rule of Civil Procedure 4(h)(1) provides that a foreign corporation4 27 28 to the ENE which occurred in March 2014. 4 Plaintiff’s Complaint alleges that Defendant “was a foreign corporation –6– 13cv1811 7 may be served: (1) in a judicial district of the United States: (A) in the manner prescribed by Rule 4(e)(1) for serving an individual; or (B) by delivering a copy of the summons and of the complaint to an officer, a managing or general agent, or any other agent authorized by appointment or by law to receive service of process and—if the agent is one authorized by statute and the statute so requires—by also mailing a copy of each to the defendant…. 8 Fed. R. Civ. P. 4(h)(1). “A signed return of service constitutes prima facie evidence 9 of valid service which can be overcome only by strong and convincing evidence.” 10 Internet Solutions, 509 F.3d at 1166 (citation and quotations omitted). The burden 11 cannot be met with a mere conclusory denial of service. Id. at 1167. 1 2 3 4 5 6 12 Federal Rule of Civil Procedure 4(e)(1) provides that an individual may be 13 served in any judicial district of the United States by “following state law for 14 serving summons in an action brought in courts of general jurisdiction in the state 15 where the district is located or where service is made.” Fed. R. Civ. P. 4(e)(1). 16 California law allows a party to effect service on a corporation by serving the 17 person designated as agent for service of process or the “president, chief executive 18 officer, or other head of the corporation, a vice president, a secretary or assistant 19 secretary, a treasurer or assistant treasurer, a controller or chief financial officer, a 20 general manager, or a person authorized by the corporation to receive service of 21 process” by personal delivery or by “leaving a copy of the summons and complaint 22 during usual office hours in his or her office or, if no physical address is known, at 23 his or her usual mailing address . . . with the person who is apparently in charge 24 thereof, and by thereafter mailing a copy of the summons and complaint . . . to the 25 person to be served at the place where a copy of the summons and complaint were 26 27 28 organized under the laws of Mexico.” (Compl. at ¶ 3.) Defendant affirms that it is a business entity incorporated under the federal laws of Mexico and the State of Guanajuato, Mexico. (Sesma Decl. at ¶ 3.) –7– 13cv1811 1 left.” Cal. Code Civ. P. §§ 416.10, 415.10, 415.20(a). Rule 4(h)(1)(B) sets forth a 2 similar standard. See Fed. R. Civ. P. 4(h)(1)(B). 3 Despite the language of Rule 4, however, service of process may also “be 4 made upon a representative so integrated with the organization that he will know 5 what to do with the papers. Generally, service is sufficient when made upon an 6 individual who stands in such a position as to render it fair, reasonable and just to 7 imply the authority on his part to receive service.” Direct Mail Specialists, Inc., 8 840 F.2d at 688 (quotations and citation omitted). 9 It does not appear Plaintiff has complied with these requirements. According 10 to the Proof of Service of Summons, Plaintiff served the summons and complaint 11 by leaving a copy of the summons and complaint at the office of Castor Transport 12 in San Diego in the presence of Jonathan Arias and thereafter mailing a copy to Mr. 13 Sanchez at the same office address in San Diego. (ECF No. 11.) Defendant asserts 14 that Mr. Sanchez and Mr. Arias have never been agents for service of process for 15 Defendant, never been officers or directors of Defendant, and have never been 16 authorized to accept service on behalf of Defendant. 17 Defendant’s only registered agents for service of legal documents are Mario Cesar 18 Guillen Sesma and/or Claudia Ivette Anzaldo Gallegos at Boulevard Jose Maria 19 Morelos #2975, Colonia Alfaro, Leon, Guanajuato, Mexico. 20 Defendant further asserts that Mr. Sanchez is a member of Castor Transport, 21 Defendant has neither used nor maintained any office in California, and all of 22 Defendant’s officers, directors, and employees live and work in Mexico. (Id. at ¶¶ 23 5, 10.) (Sesma Decl. at ¶ 4.) (Id. at ¶¶ 3, 7.) 24 Plaintiff does not dispute these assertions. Rather, Plaintiff contends that Mr. 25 Sanchez represented himself as being “from” or “with” Defendant at the meeting in 26 September 2013 (ECF Nos. 34 at p. 1; 34-2 at ¶ 3), used an email address 27 purportedly associated with Defendant (ECF No. 34-2 at ¶¶ 8-9), and his signature 28 block on an email identifies him as being with “Castores Tijuana” (id. at ¶ 9). This –8– 13cv1811 1 is insufficient to establish Mr. Sanchez as an agent, officer or director, or person 2 otherwise authorized to accept service on behalf of Defendant. While the Court 3 recognizes the potential for Plaintiff’s confusion, there is nothing confirming that 4 Mr. Sanchez is even an employee of Defendant, much less that it was fair, 5 reasonable and just to imply Mr. Sanchez had the authority to receive legal service 6 on behalf of Defendant. Accordingly, the Court finds that Defendant has not been 7 served pursuant to Rule 4 and entry of default should be set aside. An analysis of 8 the Falk Factors below further supports setting aside entry of default. 9 10 B. Falk Factors 1. Culpability 11 A defendant’s conduct is culpable if it has “received actual or constructive 12 notice of the filing of the action and intentionally failed to answer.” TCI Grp. Life 13 Ins. Plan v. Knoebber, 244 F.3d 691, 697 (9th Cir. 2001) (emphasis in original) 14 (citation omitted), overruled in part on other grounds by Egelhoff v. Egelhoff ex rel. 15 Breiner, 532 U.S. 141 (2001). The term “intentionally” does not mean a court can 16 treat a defendant as culpable “simply for having made a conscious choice not to 17 answer; rather, to treat a failure to answer as culpable, the movant must have acted 18 with bad faith, such as an intention to take advantage of the opposing party, 19 interfere with judicial decisionmaking, or otherwise manipulate the legal process.” 20 United States v. Signed Pers. Check No. 730 of Yubran S. Mesle, 615 F.3d 1085, 21 1092 (9th Cir. 2010) (“Mesle”) (internal quotations omitted). “Neglectful failure to 22 answer as to which the defendant offers a credible, good faith explanation negating 23 any intention to take advantage of the opposing party, interfere with judicial 24 decision-making, or otherwise manipulate the legal process is not ‘intentional.’” 25 TCI Grp., 244 F.3d at 697–98. 26 inexcusable, although it may be “once the equitable factors are considered.” Id. Such conduct is not necessarily culpable or 27 Defendant argues its conduct is excusable because it was not aware of the 28 lawsuit until March 2014. (ECF No. 31-2 at p. 5.) As discussed above, there is no –9– 13cv1811 1 confirmation that Defendant received a copy of the complaint and summons prior to 2 the entry of default. Moreover, Defendant states that it was not aware that it was a 3 defendant in this lawsuit prior to being informed of the ENE in early 2014. (Sesma 4 Decl. at ¶ 10.) While Defendant was indisputably aware of the lawsuit, as well as 5 the entry of default, in March 2014, and did not move to set aside the default until 6 after a motion for default judgment was filed in May 2014, Defendant has 7 maintained the reasonable position that it was never served. Arguably, Defendant 8 should have sought to set aside the entry of default shortly after the ENE. 9 However, there is no indication that Defendant has acted with bad faith or 10 attempted to avoid service or otherwise manipulate the legal process. Accordingly, 11 the Court finds Defendant’s conduct did not lead to the default. 2. 12 Meritorious Defense 13 The underlying concern of this factor “is to determine whether there is some 14 possibility that the outcome of the suit after a full trial will be contrary to the result 15 achieved by the default.” Haw. Carpenters’ Trust Funds v. Stone, 794 F.2d 508, 16 513 (9th Cir. 1986). The party in default is therefore required to make “some 17 showing of a meritorious defense.” Id. Notably, “the standards for setting aside 18 entry of default under Rule 55(c) are less rigorous than those for setting aside a 19 default.” Id. 20 The Complaint seeks damages related to two truck accidents in Mexico 21 which occurred while the trucks were carrying irrigation systems owned by John 22 Deere Water, Inc. (“John Deere”) from the United States to Mexico. (Compl. at ¶¶ 23 6-12.) Plaintiff insured John Deere against the loss and, having paid the losses for 24 the cargo, is seeking recovery, as a subrogee, of the amounts it paid. (Id. at ¶ 1.) 25 Plaintiff alleges causes of action for non-delivery of cargo, negligence, breach of 26 contract, and breach of bailment. (Id. at ¶¶ 1-22.) 27 Defendant does not dispute that it was the carrier of the John Deere freight 28 damaged in Mexico. (Sesma Decl. at ¶ 13.) Rather, it asserts the following – 10 – 13cv1811 1 defenses: (1) no valid service of process; (2) no personal jurisdiction; (3) Mexican 2 law applies to this case; (4) John Deere was at fault for the accidents through its 3 negligent loading of the freight; and (5) John Deere apparently recovered its 4 merchandise so it is not clear whether it suffered any damages at all. (ECF No. 31- 5 2 at p. 7.) 6 In support of its first three defenses, Defendant contends that, as required by 7 law, it only operates in the country of Mexico and does not do business in 8 California. 9 Transport “in a symbiotic business relationship” whereby Castor Transport handles 10 transport in the United States and Defendant handles transport in Mexico. (Id.) 11 Defendant further argues, without citation, that all carriers transporting freight in 12 Mexico are subject to the laws and regulations of Mexico. (Id. at ¶ 13.) Defendant 13 also contends that “[i]t appears that improperly loaded containers were the cause of 14 both accidents” and John Deere loaded both truck containers. 15 Defendant contends that John Deere “apparently recovered some or all of their 16 freight,” thus the amount Plaintiff is seeking is too high. (Id.) (Sesma Decl. at ¶ 6.) Therefore, it works together with Castor (Id.) Lastly, 17 The Court finds at least some of these defenses to be potentially meritorious. 18 Notably, the Court previously granted a motion to dismiss the claims for non- 19 delivery of cargo under the Carmack Amendment, 49 U.S.C. § 14706, et seq., filed 20 by Castor Transport because the complaint “provides an insufficient factual basis to 21 reasonably draw an inference” that the Carmack Amendment applies. (ECF No. 22 16.) The Carmack Amendment provides jurisdiction over motor carrier liability for 23 transportation between “the United States and a place in a foreign country to the 24 extent the transportation is in the United States.” 49 U.S.C. § 13501(1)(E); see also 25 Project Hope v. M/V IBN SINA, 250 F.3d 67, 75 (2d. Cir. 2001) (“[I]f the final 26 intended destination at the time the shipment begins is a foreign nation, the 27 Carmack Amendment applies throughout the entire portion of the shipment taking 28 place within the United States, including intrastate legs of the shipment.”). – 11 – 13cv1811 1 2 3 4 5 6 7 8 Liability is imposed under the Carmack Amendment, in relevant part, as follows: [A] carrier and any other carrier that delivers … property and is providing transportation or service subject to jurisdiction under [49 U.S.C. § 13501] are liable to the person entitled to recover under the receipt or bill of lading. The liability imposed ... is for the actual loss or injury to the property caused by (A) the receiving carrier, (B) the delivering carrier, or (C) another carrier over whose line or route the property is transported in the United States or from a place in the United States to a place in an adjacent foreign country when transported under a through bill of lading …. 9 49 U.S.C. § 14706(a)(1). “A bill of lading is a contract between the carrier and the 10 shipper.” OneBeacon Ins. Co. v. Haas Indus., Inc., 634 F.3d 1092, 1098 (9th Cir. 11 2011). A through bill of lading is a bill of lading “that covers the entire shipment 12 from the point of origin to destination, even though different carriers may be used 13 to perform various segments of the shipment.” N. Marine Underwriters, Ltd. v. FBI 14 Express, Inc., 2009 WL 7326068, at *3 (S.D. Tex. Apr. 20, 2009) (citing 15 Commercial Union Ins. Co. v. Sea Harvest Seafood Co., 251 F.3d 1294, 1302 (10th 16 Cir. 2001); Mapfre Tepeyac, SA v. Robbins Motor Transp., Inc., 2006 WL 3694502, 17 at *3 (S.D.Tex. Dec.13, 2006)). Whether a particular document is a through bill of 18 lading is a question of fact. Union Pac. R.R. Co. v. Greentree Transp. Trucking 19 Co., 293 F.3d 120, 127 (3rd Cir. 2002). 20 Even if the Carmack Amendment applies, however, a carrier is not liable for 21 damages if it can show that the damage was caused by “(a) the act of God; (b) the 22 public enemy; (c) the act of the shipper himself; (d) public authority; (e) or the 23 inherent vice or nature of the goods.” Mo. Pac. Co. v. Elmore & Stahl, 377 U.S. 24 134, 137 (1964); see also Ward v. Allied Van Lines, Inc., 231 F.3d 135, 139-40 (4th 25 Cir. 2000). 26 27 28 Here, in granting Castor Transport’s motion to dismiss the Carmack Amendment claim, the Court noted as follows: Although the complaint does not foreclose an inference that Castor – 12 – 13cv1811 5 [Transport] is liable for the loss under the Carmack Amendment, it provides an insufficient factual basis to reasonably draw such an inference, as both Defendants are lumped together, and the involvement of each Defendant is not distinguished from the other with respect to such relevant facts as identity of the contracting parties, any bills of lading, cargo loading, or possession of cargo at the time of the accidents. 6 (ECF No. 16 at p. 3, lines 10-14.) These issues remain unclear. Accordingly, the 7 Court finds that Defendant has made some showing of a meritorious defense. 1 2 3 4 8 3. Prejudice 9 Prejudice is determined by whether Plaintiff’s ability to pursue its claim will 10 be hindered. See Knoebber, 244 F.3d at 701 (citing Falk, 739 F.2d at 463). “To be 11 prejudicial, the setting aside of a judgment must result in greater harm than simply 12 delaying resolution of the case.” Id. Rather, “the delay must result in tangible 13 harm such as loss of evidence, increased difficulties of discovery, or greater 14 opportunity for fraud or collusion.” Id. (quoting Thompson v. Am. Home Assurance 15 Co., 95 F.3d 429, 433-34 (6th Cir. 1996)). Being forced to litigate on the merits 16 cannot be considered prejudicial for purposes of removing entry of default. Id. 17 Vacating the entry of default “merely restores the parties to an even footing in the 18 litigation.” Id. 19 Plaintiff argues that it will be prejudiced because “[h]ad [Defendant] 20 appeared in the case, Plaintiff’s decision whether to amend its complaint or proceed 21 on its remaining causes of action may have been different.” (ECF No. 34 at p. 7, 22 lines 19-21.) Plaintiff further argues that it has had no opportunity to request 23 discovery from Defendant as the discovery cutoff date was October 31, 2014, and 24 the deadline to disclose expert witnesses was August 22, 2014. (Id. at pp. 7-8.) 25 Given that the Court is amenable to modifying the Scheduling Order issued in this 26 case to allow Plaintiff to amend its complaint and conduct discovery as necessary, 27 the Court finds that Plaintiff’s ability to pursue its claim will not be hindered and 28 therefore there will be no prejudice to Plaintiff caused by setting aside the entry of – 13 – 13cv1811 1 default. 2 IV. CONCLUSION 3 For the foregoing reasons, the Court GRANTS Defendant’s motion to set 4 aside the entry of default (ECF No. 31). The Court also TERMINATES AS 5 MOOT Plaintiff’s motion for default judgment (ECF No. 29). The Court further 6 ORDERS as follows: 7 8 9 1. Plaintiff shall serve Defendant within thirty (30) days of the date of this Order. IT IS SO ORDERED. 10 11 DATED: November 13, 2014 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 – 14 – 13cv1811
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