Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_13-cv-02611/USCOURTS-azd-2_13-cv-02611-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Breach of Contract

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WO 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Yolanda Denise Smith, 

Plaintiff, 

v. 

Joseph Leynard Smith, 

Defendant.

No. CV-13-02611-PHX-DGC

ORDER 

 Before the Court are Plaintiff’s motion for default judgment (Doc. 9) and 

Defendant’s motion to vacate the clerk’s entry of default (Doc. 11). The Court will 

construe Defendant’s motion as a response to Plaintiff’s motion and as a motion to set 

aside the entry of default under Federal Rule of Civil Procedure 55(c). The Court will 

grant Defendant’s motion and deny Plaintiff’s motion for default judgment as moot. 

I. Background. 

 On December 20, 2013, Plaintiff Yolanda Smith filed a complaint for breach of 

contract. Doc. 1. On February 4, 2014, Plaintiff requested that the Clerk enter default 

against Defendant pursuant to Rule 55(a) for failing to plead or otherwise defend the 

action. Doc. 7. The Clerk entered default on February 5, 2014. Doc. 8. That same day, 

Plaintiff filed a motion for default judgment. Doc. 9. On March 3, 2014, Defendant filed 

a notice of appearance and motion to vacate default judgment. Doc. 10. On March 25, 

2014, he filed an amended notice of appearance and motion to vacate the clerk’s entry of 

default. Doc. 11. 

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II. Legal Standard.

 Federal Rule of Civil Procedure 55(c) allows a court to “set aside an entry of 

default for good cause[.]” Fed. R. Civ. P. 55(c). Courts consider three factors in 

deciding whether good cause exists: (1) whether the moving party engaged in culpable 

conduct; (2) whether the moving party has a meritorious defense; and (3) whether setting 

aside the default will prejudice the non-moving party. TCI Grp. Life Ins. Plan v. 

Knoebber, 244 F.3d 691, 696 (9th Cir. 2001) (citations omitted). The moving party bears 

the burden of proving that the three factors weigh in favor of setting aside default. 

Franchise Holding II, LLC. v. Huntington Rest. Grp., 375 F.3d 922, 926 (9th Cir. 2004). 

This burden, however, is not “extraordinarily heavy.” TCI Grp., 244 F.3d at 700. “A 

case should, whenever possible, be decided on the merits.” Id. at 697. 

III. Analysis. 

 A. Culpable Conduct. 

“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 (citations 

omitted). 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. Defendant asserts that he failed to 

respond to Plaintiff’s complaint because he was unaware that a breach of contract claim 

had been filed against him in this Court. Doc. 11 at 1-2. Proceeding pro se at the time, 

Defendant asserts that all previous legal matters between him and Plaintiff had occurred 

in state court. Id. at 2. Thus, when he received an envelope from Plaintiff containing 

legal documents, he failed to distinguish between the Petition for Modification of 

Custody and Child Support filed in state court and the breach of contract claim filed in 

this Court. Id. at 1-3. Defendant therefore filed a response only in state court. Id. at 4. 

Defendant asserts that he did not learn about the complaint filed in this Court until after 

he had secured legal counsel on February 25, 2014. Id. at 4-5. Because nothing about 

Defendant’s conduct suggests a “devious, deliberate, willful, or bad faith failure to 

respond,” the Court finds that his conduct was not culpable. TCI Grp., 244 F.3d at 698. 

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B. Meritorious Defense. 

“All that is necessary to satisfy the ‘meritorious defense’ requirement is to allege 

sufficient facts that, if true, would constitute a defense[.]” United States v. Signed 

Personal Check No. 730 of Yubran S. Mesle, 615 F.3d 1085, 1094 (9th Cir. 2010) 

(citation omitted). Plaintiff alleges that she entered into a contract with Defendant 

regarding the division of certain property, including the disposition of a residence in 

Scottsdale. Doc. 1, ¶¶ 6, 7, 9. Plaintiff alleges that Defendant breached the contract by 

failing to participate in the refinancing of the residence and by failing to pay for repairs. 

Doc. 1, ¶¶ 13, 16. Defendant asserts that did not breach the contract because he signed 

and transferred all the documents pertaining to the refinancing of the residence. Doc. 11 

at 4. Defendant also contends that he has not received repair estimates, request for 

reimbursement, or a demand for payment from Plaintiff. Id. at 4-5. These allegations, 

accepted as true, satisfy the meritorious defense requirement. 

C. Prejudice. 

 “To be prejudicial, the setting aside of a judgment must result in greater harm than 

simply delaying resolution of the case.” TCI Grp., 244 F.3d at 701. “[T]he standard is 

whether [Plaintiff's] ability to pursue [her] claim will be hindered.” Id. (citations 

omitted). Plaintiff asserts that, absent a default judgment, Plaintiff will have “no means 

of pursuing Defendant for his violations of the Contract.” Doc. 9 at 5-6. Plaintiff can 

pursue Defendant for the alleged breach of contract by proving the merits or her claim. 

 This Circuit’s “rules for determining when a default should be set aside are 

solicitous towards movants,” especially where, as in this case, the “actions leading to the 

default were taken without the benefit of legal representation.” Mesle, 615 F.3d at 1089. 

Whenever possible, a case should be decided on the merits and judgment by default is 

“appropriate only in extreme circumstances[.]” Id. Because extreme circumstances do 

not exist here, the Court will set aside default. 

 IT IS ORDERED: 

 1. The motion to set aside default (Doc. 11) is granted. 

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 2. Plaintiff's motion for default judgment (Doc. 9) is denied as moot. 

 3. Defendant shall file his answer on or before May 9, 2014. 

 Dated this 23rd day of April, 2014. 

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