Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_17-cv-01954/USCOURTS-casd-3_17-cv-01954-2/pdf.json

Nature of Suit Code: 370
Nature of Suit: Other Fraud
Cause of Action: 28:1332fr Diversity-Fraud

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

FRED HAWKINS,

Plaintiff,

Case No. 17-cv-01954-BAS-AGS

ORDER: 

(1) GRANTING DEFENDANT 

BERYL HAWKINS’ EX PARTE

MOTION TO SET ASIDE THE 

ENTRY OF DEFAULT;

[ECF No. 31]

(2) DENYING PLAINTIFF’S 

MOTION FOR DEFAULT 

JUDGMENT AGAINST 

DEFENDANT HAWKINS;

[ECF No. 28]

AND

(3) TERMINATING AS MOOT 

PLAINTIFF’S MOTION TO 

EXPEDITE

[ECF No. 36]

v.

BANK OF AMERICA, N.A., et al.,

Defendants.

I. BACKGROUND

Plaintiff Fred Hawkins brought this suit against Defendants Beryl Hawkins and 

Bank of America, N.A., on September 26, 2017, alleging that his daughter stole 

nearly $600,000 of his life savings from his Bank of America accounts. (ECF No. 

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1.) On April 4, 2018, the Court authorized Plaintiff to effectuate service on Defendant 

Hawkins, a resident of Japan, by serving her U.S.-based attorney after Plaintiff 

showed that he had been unable to effectuate service through other methods. (ECF 

No. 17.) Plaintiff filed proof of service on Defendant Hawkins’ U.S.-based attorney, 

which shows service was effected on April 21, 2018. (ECF No. 22.) Three weeks 

later, Plaintiff requested entry of default against Defendant Hawkins, which was 

entered by the Clerk of the Court on May 16, 2018. (ECF Nos. 23, 25.) A week later, 

Plaintiff filed an ex parte motion for default judgment against Defendant Hawkins, 

which is pending before the Court. (ECF No. 28.)

Before the Court is also an ex parte motion to set aside the entry of default 

against Defendant Beryl Hawkins, which includes a motion to dismiss1, filed on June 

14, 2018. (ECF No. 31.) At the Court’s instruction, Plaintiff Fred Hawkins has filed 

an opposition solely to the ex parte motion to set aside the entry of default as a 

threshold issue the Court must resolve. (ECF Nos. 33, 34.) Plaintiff has filed a 

motion to expedite ruling on Defendant Hawkins’ ex parte motion to set aside entry 

of default. (ECF No. 36.) For the reasons herein, the Court grants Defendant 

Hawkins’ ex parte motion, denies Plaintiff’s ex parte motion for default judgment, 

and terminates as moot Plaintiff’s motion to expedite ruling.

II. LEGAL STANDARD

“[J]udgment by default is a drastic step appropriate only in extreme 

circumstances; a case should, whenever possible, be decided on the merits.” Falk v. 

Allen, 739 F.2d 461, 463 (9th Cir. 1984). Under Federal Rule of Civil Procedure 

55(c), a court may set aside an entry of default for “good cause shown.” Fed. R. Civ. 

 

1 The purported motion to dismiss lacks a hearing date, which is necessary for 

setting a briefing schedule. (See ECF No. 31.) Although filed with the ex parte

motion to set aside entry of default, the motion to dismiss lacks the exigency that 

necessitates ex parte relief and the Court will not address the merits of the motion at 

this time. Rather, the Court construes the motion to dismiss as a proposed motion that 

bears upon whether default should be set aside. 

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P. 55(c). A district court has “especially broad” discretion to determine whether good 

cause has been shown when “it is entry of default that is being set aside, rather than 

a default judgment.” Mendoza v. Wight Vineyard Mgmt., 783 F.2d 941, 945 (9th Cir. 

1986); Joe Hand Promotions, Inc. v. Williams, No. 2:14-cv-02663-JAM-AC, 2015 

WL 592361, at *2 (E.D. Cal. Oct. 9, 2015) (quoting Cracco v. Vitran Exp., Inc., 559 

F.3d 625, 631 (7th Cir. 2009)) (noting that although the “same test applies for motions 

seeking relief from default judgment under both Rule[s] 55(c) and 60(b), the test is 

more liberally applied in the Rule 55(c) context.”). The court’s exercise of its 

discretion is guided by three disjunctive factors: (1) whether the defendant engaged 

in culpable conduct leading to the default; (2) whether the defendant has a meritorious 

defense; or (3) whether setting aside the default would prejudice the plaintiff. 

Franchise Holding II, LLC v. Huntington Restaurants Grp., Inc., 375 F.3d 922, 925–

26 (9th Cir. 2004). A district court may deny a motion to set aside an entry of default 

if any factor weighs against setting the default aside. Id. at 926.

III. DISCUSSION

A. Culpability

Determining whether a party’s culpability led to the entry of default under Rule 

55(c) is a similar inquiry as to whether a party has shown “excusable neglect” under 

Rule 60(b)(1). See TCI Group Line Ins. Plan v. Knoebber, 244 F.3d 691, 695–97 

(9th Cir. 2001). Only intentional conduct is sufficiently culpable to deny a motion to 

set aside default. Id. at 698; FOC Fin. Ltd. P’ship v. Nat’l City Commercial Capital 

Corp., 612 F. Supp. 2d 1080, 1082 (D. Ariz. 2009). Such conduct occurs when the 

party “has received actual or constructive notice of the filing of the action and 

intentionally failed to answer.” TCI Grp. Line Ins. Plan, 244 F.3d at 697 (emphasis 

in original). Nonappearance of the party following receipt of notice of the action is 

insufficient to constitute conduct sufficiently culpable to preclude setting aside entry 

of default. Id. at 698 (“‘culpability’ involves ‘not simply nonappearance following 

receipt of notice of the action, but rather conduct which hindered judicial 

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proceedings’”) (quoting Gregorian v. Izvestia, 871 F.2d 1515, 1525 (9th Cir. 1989)); 

see also United States v. Signed Personal Check No. 730 of Yubran S. Mesle, 615 

F.3d 1085, 1089 (9th Cir. 2010) (“[T]o 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, interfere with judicial decisionmaking, or otherwise manipulate the 

legal process.”). 

Defendant Hawkins contends that the entry of default against her resulted from

excusable neglect. (ECF No. 31 at 2.) She claims that (1) she was not properly served 

with the Complaint and (2) she had no notice of the matter until she was contacted 

her counsel around June 1, 2018. (Id.) Defendant claims that she gave counsel 

authority to accept service of the complaint on her behalf at that point and that she is 

now “acting promptly and does not wish to delay matters.” (Id. at 3.) Insofar as 

Defendant Hawkins contends that service was not proper because it was served on 

her U.S.-based attorney, Michael Kusnir, the Court rejects that argument. The Court 

expressly authorized Plaintiff to effectuate service on Defendant Hawkins through 

service on her U.S.-based attorney, Michael Kusnir, under Federal Rule of Civil 

Procedure 4(f)(3). (ECF No. 17.) The Court determined that, based on the facts 

presented to the Court, service on Attorney Kusnir was reasonably calculated to 

provide her with notice of this action. (Id.) Thus, service on Attorney Kusnir 

constituted service on Defendant Hawkins, so long as it otherwise comported with 

the requirements to effectuate service—an issue Defendant Hawkins apparently seeks 

to dispute. 

Even so, the Court finds that Defendant Hawkins’ failure to timely respond to 

the Complaint after service on Attorney Kusnir resulted from excusable neglect. 

Attorney Kusnir states that he was away from his office for “much of April and May 

of 2018,” during which time Plaintiff served the Complaint. (ECF No. 31 ¶ 20 

(“Kusnir Decl.”).) Attorney Kusnir contacted Defendant Hawkins on June 1, 2018 

when he discovered a proof of service of the Complaint in his mail and informed her 

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of the legal proceedings in this case. (Id. ¶ 22.) Defendant Hawkins “eventually 

contacted” Attorney Kusnir and requested that he represent her in this current matter. 

(Id. ¶ 24.) Thereafter, Attorney Kusnir sought to have Plaintiff’s counsel “dismiss 

the clerk’s entry of default,” and filed the present ex parte motion on June 14, 2018. 

(Id. ¶ 29–30.) Based on these facts, the Court does not find that Defendant Hawkins 

engaged in intentional conduct to hinder the proceedings in this case. See, e.g., 

Abbate Family Farms Ltd. P’ship v. Leo L. Cotella & Co., No. C 09-04836 JSW, 

2010 WL 694230, at *2 (N.D. Cal. Feb. 23, 2010) (noting that although defendant 

did not file responsive pleading within time allowed by the law due to failure to retain 

legal counsel, defendant obtained counsel within a reasonable time after discovery of 

entry of default). Rather, after she received actual notice of the lawsuit, Defendant 

Hawkins filed the present motion to set aside the entry of default within a reasonable 

period of time and has shown that she is prepared to defend against the claims 

Plaintiff asserts.2 Thus, this factor does not weigh against setting aside default.

B. Prejudice

Prejudice to a non-moving party “must result in greater harm than simply 

delaying resolution of the case[,] [r]ather, the standard is whether [the non-movant’s] 

ability to pursue his claim will be hindered.” TCI Grp. Life Ins. Plan, 244 F.3d at 

701; Bateman v. United States Postal Serv., 231 F.3d 1220, 1225 (9th Cir. 2000). 

 

2 Plaintiff argues that Defendant Hawkins’ conduct is culpable because 

Attorney Kusnir “fail[ed] to remain active with his legal practice and/or inquire with 

the [office] staff as to incoming documentation” after the Complaint was served at his

office on April 10, 2018. (ECF No. 34 at 11.) This argument, however, focuses on 

Attorney Kusnir’s conduct, rather than that of Defendant Hawkins. Plaintiff identifies 

no intentional conduct by Defendant Hawkins that would counsel against setting aside

the entry of default. Without more, the Court will not impute intentional conduct to 

Defendant Hawkins based on Attorney Kusnir’s oversights. See, e.g., Hoch v. 

Mayberg, No. 1:10-cv-2258-DLB-PC, 2012 WL 1158860, at *3 (E.D. Cal. Apr. 6, 

2012) (finding good cause to set aside procedural default where it was “evident from 

the record that the delay in responding to Plaintiff’s complaint was due to error by 

Defendants’ counsel”). 

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“[M]erely being forced to litigate on the merits cannot be considered prejudicial for 

purposes of lifting a default judgment.” TCI Grp. Life Ins. Plan, 244 F.3d at 701; 

see also Abbate Family Farms Ltd. P’ship, 2010 WL 694230, at *2 (observing that 

the “[p]laintiff still would have had to prosecute the case if default had not been 

entered” and thus having to expend additional time and money was not prejudicial). 

Although Defendant Hawkins does not expressly argue Plaintiff would not 

face prejudice from setting aside the entry of default, she contends that the denial of 

a “quick recovery” through a default judgment is not sufficient to preclude relief 

from the entry of a default. (ECF No. 31 at 2.) In opposition, Plaintiff contends that 

he will suffer prejudice because setting aside the entry of default will result in “more 

delay” and “force him to incur substantially more attorney’s fees.” (ECF No. 34 at 

12.) Plaintiff’s contentions are unavailing. 

For one, incurring additional time and expense in litigating a case on the 

merits is not prejudice that precludes setting aside a procedural default. See Abbate 

Family Farms Ltd. P’ship, 2010 WL 694230, at * 2 (incurring litigation fees is not 

prejudicial). As for Plaintiff’s assertion of delay, “delay alone does not constitute 

the sort of prejudice cognizable upon a Rule 55(c): ‘it must be shown that delay will 

result in the loss of evidence, create increased difficulties of discovery, or provide 

greater opportunity for fraud and collusion.’” Apache Nitrogen Prods., Inc. v. 

Harbor Ins. Co., 145 F.R.D. 674,682 (D. Ariz. 1993) (quoting Davis v. Musler, 713 

F.2d 907, 916 (2d Cir. 1983)); see also Tamburri v. Suntrust Mortg., Inc., No. C-11-

2899-EMC, 2011 WL 6294472, at *23 (N.D. Cal. Dec. 15, 2011) (identifying same 

grounds as necessary for delay to constitute prejudice). These considerations 

underscore that prejudicial delay exists when a plaintiff’s ability to litigate his claim 

will be hindered. Plaintiff does not identify any such prejudice in his opposition to 

Defendant Hawkins’ motion.

Rather, the principal harm from delay Plaintiff asserts concerns his need for

recovery of the damages he seeks in this case, for reasons unrelated to this litigation. 

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Plaintiff contends that he is “in dire need of the $600,000 in life savings his daughter 

stole from him two years ago” because of the deterioration of his health since the 

filing of this lawsuit.3 (ECF No. 34 at 12; ECF No. 34-2 ¶12 (“Hill Decl.”).) 

Plaintiffs reiterates concerns about his physical health and related financial needs in 

his motion for an expedited ruling. (ECF No. 36.) Although the Court is not 

insensitive to Plaintiff’s assertion about his financial needs, “[d]efault is an 

inappropriate method of adjudication when it appears that defendant intends to 

contest” the allegations. Hart v. Parks, No. CV-00-07420 ABC (RNBx), 2001 WL 

636444, at *4 (C.D. Cal. June 1, 2001). Default judgments are the exception to 

securing recovery for the claims a party asserts—not the rule. Despite Plaintiff’s 

assertions of his deteriorating health, those assertions also do not establish legal 

prejudice that precludes setting aside the entry of a procedural default. See, e.g.,

Kim v. Wilmington Trust Co., No. 17-cv-528-WQH-AGS, 2017 WL 6541139, at *4 

(S.D. Cal. Dec. 21, 2017) (rejecting plaintiff’s assertion that “he will be prejudiced 

because the prolonged litigation is challenging considering his health and age” and 

setting aside procedural default); Snow v. Shwe, No. 1:15-cv-01606-SAB (PC), 2016 

WL 7384001, at *2 (E.D. Cal. Dec. 20, 2016) (plaintiff’s assertion of deteriorating 

vision not sufficient preclude setting aside procedural default). Accordingly, the 

Court does not find that this factor precludes setting aside the entry of default.

C. Meritorious Defense

Finally, “[a] party in default . . . is required to make some showing of a 

meritorious defense as a prerequisite to vacating an entry of default.” Hawaii 

Carpenters’ Tr. Funds v. Stone, 794 F.2d 508, 513 (9th Cir. 1986). To satisfy this 

 

3 Plaintiff repeatedly characterizes “delay” by referring to the amount of time 

that has lapsed since the conduct alleged in the Complaint—some two years. (ECF 

No. 34 at 1, 3, 12.) Yet, cognizable delay concerns the litigation itself. This case was 

filed less than a year ago and Defendant Hawkins received actual notice of the 

litigation, based on the method of service authorized by the Court, around June 2018. 

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standard, the movant must “present specific facts that would constitute a defense.” 

TCI Grp. Life Ins. Plan, 244 F.3d at 700. Whether the factual allegations are true is 

not determined by the court when it decides to set aside a default. Mesle, 615 F.3d at 

1094. “The ‘meritorious defense’ requirement is ‘not extraordinarily heavy.’” 

Livingston v. Art.com, Inc., No. 13-cv-03748-JSC, 2015 WL 4319851, at *4 (N.D. 

Cal. Apr. 17, 2015) (quoting TCI Grp. Life Ins. Plan, 244 F.3d at 700). But it is the 

“most important consideration.” Sorto v. Hannegan, Benson & Co., Inc., No. C08-

00189 HRL, 2009 WL 1393063, at *2 (N.D. Cal. May 14, 2009). 

Defendant Hawkins argues that her alleged conduct in this case was not 

unlawful because she had a power of attorney authorizing her to manager her father’s

bank accounts. (ECF No. 31 at 3.) She claims that her conduct was consistent with 

the power of attorney. (Id.) She has attached a motion to dismiss to her ex parte

motion to set aside default which makes these assertions. (ECF No. 31 at 23–25.) 

Plaintiff disputes the merits of Defendant Hawkins’ asserted defense, the resolution 

of which the Court does not deem to be proper when determining whether to set aside 

a procedural default. (ECF No. 34 at 13–14.) Given the strong interest in 

adjudicating cases on the merits and the fact that, if true, Defendant Hawkins’ 

assertion that her conduct was authorized by a power of attorney could affect the 

outcome of this case on the merits, Defendant Hawkins has identified a meritorious 

defense that warrants setting aside the entry of default.

4

 

4

In her motion to set aside default, Defendant Hawkins also argues that she 

does not waive any claim that service on her was improper and that the Court therefore 

lacks personal jurisdiction over her. (ECF No. 31 at 3.) Defendant Hawkins’ 

proposed motion to dismiss makes a similar assertion. (ECF No. 31 at 25.) To the 

extent that Defendant Hawkins intends to raise improper service as a basis for 

dismissal of the claims against her, Rule 12(b)(5) permits a party to raise that ground 

in moving to dismiss claims asserted against the party. Fed. R. Civ. P. 12(b)(5). 

Hawkins should assert such an objection in the motion to dismiss she files, or the 

Court will deem the challenge to service waived.

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IV. CONCLUSION & ORDER

For the foregoing reasons, the Court GRANTS Defendant Beryl Hawkins’ ex 

parte motion to set aside the entry of default. (ECF No. 28.) The Clerk of the Court 

is directed to SET ASIDE the default entered against Defendant Beryl Hawkins. 

(ECF No. 55.) The Court TERMINATES AS MOOT Plaintiff’s motion to expedite 

a decision on whether to aside the default. 

Because the default entered against Beryl Hawkins has been set aside, the 

Court DENIES Plaintiff’s motion for default judgment. (ECF No. 28.) Defendant 

Hawkins is ORDERED to file the proposed motion to dismiss attached to the ex 

parte motion to set aside default no later than Monday, July 30, 2018. The filed 

motion must include a proper hearing date for briefing purposes. Should Defendant 

Hawkins fail to comply with this deadline, the Court will reconsider the propriety of 

setting aside the procedural default.

IT IS SO ORDERED.

DATED: July 16, 2018

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