Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_19-cv-00726/USCOURTS-azd-2_19-cv-00726-5/pdf.json

Nature of Suit Code: 820
Nature of Suit: Copyright
Cause of Action: 17:101 Copyright Infringement

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Morgan Howarth,

Plaintiff,

v. 

Ryan Patterson, et al.,

Defendants.

No. CV-19-00726-PHX-ESW

ORDER 

On November 22, 2019, the Clerk of Court entered default against Patterson 

Remodeling, LLC (referred to herein as “Defendant Patterson Remodeling” or 

“Defendant”). (Doc. 90). Pending before the Court is Defendant’s “Motion to Set Aside 

an Entry of Default Under FRCP 55(c)” (Doc. 91). For the reasons explained herein, the 

Motion (Doc. 91) will be denied.

I. LEGAL STANDARDS

“[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. 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). In analyzing whether good cause has 

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been shown, courts consider the following three factors: (i) whether the defendant engaged 

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

defense; and (iii) 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). If any one of these three factors weighs against setting the default aside, the Court 

may refuse to set aside an entry of default. Id. at 926. A defendant bears the burden of 

proving that the default should be set aside. TCI Grp. Life Ins. Plan v. Knoebber, 244 F.3d 

691, 696 (9th Cir. 2001), overruled on other grounds by Egelhoff v. Egelhoff ex rel. 

Breiner, 532 U.S. 141 (2001). As explained in the following section, the Court finds that 

Defendant Patterson Remodeling’s conduct leading to the default was culpable and that 

Defendant has failed to show that it has a meritorious defense.

II. DISCUSSION

A. Defendant’s Conduct Leading to the Default was Culpable

“[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.” TCI Grp. Life Ins. Plan, 244 

F.3d at 697 (emphasis in original) (quoting Alan Neuman Productions, Inc. v. Albright, 862 

F.2d 1388, 1392 (9th Cir. 1988)). “The Ninth Circuit has established two separate 

standards for whether consciously failing to respond to a complaint fits the meaning of 

‘intentionally’ as used in the definition of culpability. Which standard is applicable 

depends on whether the party seeking to set aside default is considered ‘legally 

sophisticated.’” CWT Canada II LP v. Danzik, No. CV-16-00607-PHX-DGC, 2017 WL 

1437557, at *2 (D. Ariz. Apr. 24, 2017) (citing United States v. Signed Pers. Check No. 

730 of Yubran S. Mesle, 615 F.3d 1085, 1091 (9th Cir. 2010)). 

If a party is legally sophisticated, then a court may deem the party’s conduct 

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

and failed to answer[.]” Franchise Holding II, 375 F.3d at 926; Mesle, 615 F.3d at 1093

(“When considering a legally sophisticated party’s culpability in a default, an 

understanding of the consequences of its actions may be assumed, and with it, 

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intentionality.”); see also Direct Mail Specialists, Inc. v. Eclat Computerized Techs., Inc., 

840 F.2d 685, 690 (9th Cir. 1988) (holding a defendant’s conduct was culpable because he 

“had actual notice of the summons and complaint” soon “after it was served” and, “as a 

lawyer, presumably was well aware of the dangers of ignoring service of process”). If a 

party is not legally sophisticated, then “the term ‘intentionally’ means that a movant cannot 

be treated as culpable simply for having made a conscious choice not to answer; rather, to 

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.’” Mesle, 615 F.3d at 1092 (quoting TCI Grp. 

Life Ins. Plan, 244 F.3d at 697). “[A] defendant’s conduct [is] culpable . . . where there is 

no explanation of the default inconsistent with a devious, deliberate, willful, or bad faith 

failure to respond.” Id. 

Here, it is undisputed that Plaintiff effected service on Defendant Patterson 

Remodeling on October 15, 2019 by serving Defendant’s manager/member Curtis 

Patterson. It is undisputed that Curtis Patterson is the father of Defendant Ryan Patterson, 

who appeared on March 1, 2019. (Doc. 93 at 5; Doc. 14). As an explanation for failing to 

appear in this case until January 2020, Defendant Patterson Remodeling states that Curtis 

Patterson “had been retired for over six years, had no experience with intellectual property 

litigation, and was in the process of settling in a newly-adopted special-needs child, and 

was therefore unable to respond to Plaintiff until he was able to secure counsel . . . .” (Doc. 

91 at 4-5). The assertion that Curtis Patterson has been retired for six years conflicts with 

the Arizona Corporation Commission records, which reflect that Curtis Patterson took 

office as manager of Patterson Remodeling in March 2017. (Doc. 83-1 at 4). Further, 

Defendant acknowledges that “Patterson Remodeling had other managers and members 

. . . .” (Doc. 100 at 2). No explanation is given as to why those other managers/members 

could not have timely secured counsel on behalf of Patterson Remodeling. The Court finds 

that Defendant Patterson Remodeling has not offered a credible, good faith explanation for 

its failure to appear in this case approximately three months after service. See TCI Grp. 

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Life Ins. Plan, 244 F.3d at 697-98 (“Neglectful failure to answer as to which the defendant 

offers a credible, good faith explanation negating any intention to take advantage of the 

opposing party, interfere with judicial decisionmaking, or otherwise manipulate the legal 

process is not ‘intentional.’”). The Court concludes that Defendant Patterson 

Remodeling’s conduct leading to the default was culpable regardless of whether or not it 

may be deemed a legally sophisticated party. Although this finding of culpability is 

sufficient to justify a denial of Defendant’s Motion (Doc. 91), the Court further finds that 

Defendant has failed to show that it has a meritorious defense. 

B. Defendant has Not Shown that it has a Meritorious Defense

In evaluating the meritorious defense factor, the primary inquiry is “whether there 

is some possibility that the outcome of the suit after a full trial will be contrary to the result 

achieved by default.” Hawaii Carpenters’ Trust Funds v. Stone, 794 F.2d 508, 513 (9th 

Cir. 1986). While the defendant’s burden under this factor “is not extraordinarily heavy,” 

he or she must “allege sufficient facts that, if true, would constitute a defense.” Mesle, 615 

F.3d at 1094.

Here, Defendant asserts that it “has meritorious defenses to Plaintiff’s unfounded 

and baseless accusations. . . . Throughout Plaintiff’s incoherent and inarticulate First 

Amended Petition, Defendant fails to see that Plaintiff has stated a claim upon which relief 

may be granted.” (Doc. 91 at 5). Defendant does not provide any argument or authority 

in support of its contention that the First Amended Complaint fails to state a claim. In its 

Order denying the Motion to Dismiss filed by Defendants Ryan Patterson and Patterson 

Homes, LLC, the Court found that the First Amended Complaint sufficiently states a claim 

for direct copyright infringement and vicarious copyright infringement against all 

Defendants. (Doc. 92 at 4-5). Although Defendant contends that “other defenses and 

affirmative defenses exist” (Doc. 91 at 5), Defendant has not articulated any specific facts 

that would constitute a potentially meritorious defense. As the Ninth Circuit has explained, 

“conclusory statements that a dispute exist[s]” or “mere general denials without facts to

support [the defense are] not enough to justify vacating a default or default judgment.” 

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Franchise Holdings II, 375 F.3d at 926 (internal quotations and citation omitted). “A 

defendant seeking to vacate [entry of] default . . . must present specific facts that would 

constitute a defense.” TCI Grp. Life Ins. Plan, 244 F.3d at 700; see also Madsen v. 

Bumb, 419 F.2d 4, 6 (9th Cir. 1969) (holding that district court did not abuse its discretion 

in declining to set aside the default where defendant offered “a mere general denial without 

facts to support it”); Gomes v. Williams, 420 F.2d 1364, 1366 (10th Cir. 1970) (stating “[i]n 

an attempt to determine the meritorious nature of a defense, the trial court must have before 

it more than mere allegations that a defense exists”); Sony Corp. v. Elm State Electronics, 

Inc., 800 F.2d 317, 320-21 (2d Cir. 1986) (“Although in an answer general denials 

normally are enough to raise a meritorious defense, the moving party on a motion to reopen 

a default must support its general denials with some underlying facts”); Breuer Electric 

Mfg. Co. v. Toronado Systems of America, Inc., 687 F.2d 182, 186 (7th Cir. 

1982) (“[D]efendants gave not the slightest indication of any specific defense on the 

merits. They merely tendered a general denial which asserts that they are not liable to 

plaintiff. The showing of a meritorious defense that is necessary to set aside a default 

requires more than the bare legal conclusions set forth in defendants’ proposed answer.”).

Defendant has failed to proffer any facts showing “some possibility that the outcome 

of the suit after a full trial will be contrary to the result achieved by the default.” Hawaii 

Carpenters’ Trust Funds, 794 F.2d at 513. The Court concludes that the second factor 

weighs against setting aside Defendant’s default. The Court need not address the third 

relevant factor, prejudice to Plaintiff. Franchise Holding II, LLC, 375 F.3d at 926 

(explaining that “the district court was free to deny the motion ‘if any of the three factors 

was true’”). Defendant’s Motion (Doc. 91) will denied. 

III. CONCLUSION

IT IS ORDERED denying Defendant Patterson Remodeling, LLC’s “Motion to 

Set Aside an Entry of Default Under FRCP 55(c)” (Doc. 91). 

Dated this 21st day of February, 2020.

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