Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-3_08-cv-08016/USCOURTS-azd-3_08-cv-08016-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1335 Interpleader Action

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Transamerica Annuity Service

Corporation; Transamerica Occidental Life

Insurance Company, 

Plaintiffs, 

vs.

Lester Williams Underhill, Sr.; Lester

Williams Underhill, Jr.; Merlyn Parker;

Angie Underhill; Sara Rourke, 

Defendants. 

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No. CV 08-8016-PCT-JAT

ORDER

Plaintiffs Transamerica Annuity Services and Transamerica Occidental Life Insurance

filed this interpleader action on January 31, 2008 (Doc. #1). On April 10, 2008, Plaintiffs

filed a Certificate of Service (Doc. #9) stating that Defendant Lester Williams Underhill Jr.

was personally served with the Complaint and Summons on March 19, 2008. Mr. Underhill

has not answered the Complaint. Plaintiffs filed for an Application for Entry of Default on

June 19, 2008 (Doc. #12). The Clerk of the Court entered default against Mr. Underhill Jr.

on June 20, 2008 (Doc. #15).

On July 25, 2008, Mr. Underhill Jr. sent a letter to this Court in which he requested

the Court reconsider the entry of default against him (Doc. #22). He stated that he had

received paperwork on March 19, 2008, but not a summons. He claimed that he was waiting

to receive information regarding a court date, so he did not respond.

Case 3:08-cv-08016-JAT Document 25 Filed 09/11/08 Page 1 of 3
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The Court may set aside the entry of default if good cause is shown. Fed. R. Civ. P.

55(c). In determining whether good cause has been shown, the Court considers: 1) whether

there was culpable conduct on the part of the defendant; 2) whether any meritorious defenses

are available, and 3) whether there is any prejudice to the plaintiff. See TCI Group Life

Insurance Plan v. Knoebber, 244 F.3d 691, 696 (9th Cir. 2001). "...[T]he party seeking to

vacate a default judgment bears the burden of demonstrating that these factors favor vacating

the judgment." Id. This burden, however, is not "extraordinarily heavy." Id. at 700.

“A defendant’s conduct is culpable if he has received actual or constructive notice of

the filing of the action and intentionally failed to answer.” Id. at 697. Intentional conduct,

in this context, must rise to the level of conduct which is willful, deliberate, or done in bad

faith. Id. at 697-98. No evidence exists that Mr. Underhill Jr. acted in bad faith when he

failed to file an answer. The first factor therefore weighs in favor of setting aside the entry

of default.

To establish that a meritorious defense exists, Defendant must allege specific facts that

would constitute a defense. Id. at 700. The Court need not conclude that the defendant will

prevail on the alleged defense to determine that this factor weighs in favor of setting aside

default. See Apache Nitrogen Products, Inc. v. Harbor Insurance Co., 145 F.R.D. 674, 682

(D. Ariz. 1993). Instead, the Court need only find that after a trial on the merits, the alleged

defense may cause a different result than default. Id. In his letter, Mr. Underhill Jr. has not

indicated what claim, if any, he might have to the annuity payments at issue in this case. So,

this factor does not weigh in his favor.

For the setting aside of a default to be prejudicial under the third factor, Plaintiffs’

ability to pursue their claim must be hindered. TCI, 244 F.3d at 700. Plaintiffs have

conceded that there “is not considerable prejudice to Plaintiffs, other than the cost of

renewing this litigation concerning Mr. Underhill Jr. if the entry of default is set aside.”

(Doc. #23, p. 4). Plaintiffs must still proceed to determine the proper beneficiary of the

annuity.

Case 3:08-cv-08016-JAT Document 25 Filed 09/11/08 Page 2 of 3
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Mr. Underhill Jr.’s lack of culpability and the lack of prejudice to Plaintiffs both

weigh in favor of setting aside the entry of default. Thus, based on those factors, and the

general preference for resolving cases on their merits, see e.g. O’Connor v. Nevada, 27 F.3d

357, 364 (9th Cir. 1994), the Court concludes that the entry of default against Mr. Underhill

Jr. should be set aside. 

Accordingly,

IT IS ORDERED GRANTING Mr. Underhill Jr.’s Motion to Set Aside Entry of

Default (Doc. #22).

IT IS FURTHER ORDERED that Mr. Underhill Jr. shall answer the Complaint or

otherwise defend by September 26, 2008. In his answer, Mr. Underhill Jr. shall state whether

he claims an interest in the interpleader funds at issue in this case.

DATED this 10th day of September, 2008.

Case 3:08-cv-08016-JAT Document 25 Filed 09/11/08 Page 3 of 3