Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_06-cv-01094/USCOURTS-casd-3_06-cv-01094-0/pdf.json

Nature of Suit Code: 820
Nature of Suit: Copyright
Cause of Action: 28:1331 Fed. Question

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

SALVADOR ROBERTO TORRES

Plaintiff,

v.

ESTATE OF STEPHEN RAY HILL,

GEORGE RAYMOND HILL, individually

and as Administrator of the Estate of

Stephen Ray Hill, DAVID HILL,

NATIONAL BRAKE SERVICE, INC.,

and DOES 1 through 10, inclusive,

Defendants. 

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Civil No. 06cv1094 J (BLM)

ORDER: 

(1) GRANTING DEFENDANTS’

MOTION TO SET ASIDE ENTRY

OF DEFAULT [DOC. NO. 18]; and

(2) DENYING PLAINTIFF’S

MOTION FOR DEFAULT

JUDGMENT [DOC. NO. 12].

Before the Court is Defendants Estate of Stephen Ray Hill, George Raymond Hill, David

W. Hill, and National Brake Service, Inc.’s (“Defendants”) Motion to Set Aside Entry of

Default. [Doc. No. 18.] Plaintiff Salvador Roberto Torres (“Plaintiff”) opposes Defendants’

Motion to Set Aside Entry of Default. [Doc. No. 26.] In addition, Plaintiff has filed a Motion for

Default Judgment. [Doc. No. 12.] The issues presented herein are decided without oral

argument. See S.D. Cal. Civ. R. 7.1.d.1 (2006). For the reasons stated below, the Court

GRANTS Defendants’ Motion to Set Aside Entry of Default and DENIES Plaintiff’s Motion

for Default Judgment.

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Procedural Background

On May 19, 2006, Plaintiff filed a Complaint alleging that Defendants violated his rights

of artistic integrity under the Visual Artists Rights Act of 1990. (Compl. ¶ 1.) On August 11,

2006, the Court’s Clerk entered default against Defendants. [Doc. No. 10.] On October 25,

2006, Plaintiff filed and served a Motion for Default Judgment against Defendants, and the

Court ordered supplemental briefing on this Motion. [Doc. Nos. 12, 13.] In response, Plaintiff

filed a supplemental brief. [Doc. No. 14.] Before the Court ruled on Plaintiff’s Motion for

Default Judgment, Defendants filed a Motion to Set Aside Entry of Default on January 10, 2007. 

[Doc. No. 17.] On February 20, 2007, Plaintiff filed an Opposition to Plaintiff’s Motion to Set

Aside Default. [Doc. No. 26.] On February 26, 2007, Defendants filed a Reply. [Doc. No. 28.]

Factual Background

This matter arises out of the alleged defacement of a mural Plaintiff painted on the side of

a building owned by Defendant Estate of Stephen R. Hill (“Estate”). (See Defs.’ Mot. at 1;

Compl. ¶ 3.) The mural was painted with Defendants’ permission. (David W. Hill Decl. ¶ 12.)

Defendant National Brake Service’s business is located in the building. (Defs.’ Mot. at 1.) The

remaining Defendants are named in their capacity as having an interest in the property as either

heirs of the Estate or as the administrator thereof. (Id.)

Stephen Ray Hill, owner of the property on which the mural at issue was painted, died in

May 2005. (David W. Hill Decl. ¶ 4.) Defendants hired attorney Linda Wesson Greenberg, who

is also a real estate broker, to handle the probate proceedings. (Id.) Defendant David W. Hill

states that Stephen Ray Hill had “given Ms. Greenberg the listing for the property” before his

death. (Id. ¶ 5.) After Stephen Ray Hill’s death, however, Defendants contacted Ms. Greenberg

and told her that they no longer wanted to sell the property. (Id.) Ms. Greenberg told Defendants that she had turned over the listing to her brother, Vann Wesson, who is also a real estate

broker. (Id.) According to Defendants, Ms. Greenberg stated that they had to sell the property,

or they would be sued by the investors who had agreed to buy it. (Id.) On June 18, 2005, the

mural was painted over, apparently at Mr. Wesson’s direction. (See id. ¶ 11; Pl.’s Opp’n to

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1

 Mr. Sulzner later assisted Defendants in preparing complaints against Ms. Greenberg with the

California Bar Association and the Department of Real Estate. (See David W. Hill Decl. ¶ 10.) 

2

 The declaration signed by the process server indicates that Defendant George Raymond Hill,

the administrator of the Estate, accepted service on behalf of Defendant Estate and on behalf of

Defendant National Brake Service. 

3 06cv1094 J (BLM)

Defs.’ Mot. at 3.) Defendants assert that they took no part in painting over the mural. (David

W. Hill Decl. ¶ 11.) 

Defendants eventually discovered that Ms. Greenberg had made arrangements to sell the

property to her brother, Mr. Wesson. (Id. ¶¶ 8-9.) In October 2005, they retained attorney Bruce

Sulzner to investigate the manner in which Ms. Greenberg was handling the Estate. (Id. ¶¶ 1, 8-

9.) Mr. Sulzner advised Defendants that because Ms. Greenberg had made arrangements to sell

the property to her brother, there was a possibility that she had a conflict of interest as their

counsel, and they should consult another probate attorney.1

 (See id. ¶ 9.) Because he did not

practice probate law, Mr. Sulzner referred Defendants to probate attorney Bradley Nemeth, and

Mr. Nemeth agreed to represent Defendants in matters relating to the Estate. (Id.) Thereafter,

Mr. Wesson filed a motion to compel the Estate to sell the property to him. (Id. ¶ 10.) 

On December 12, 2005, Pablo Manga, counsel for Plaintiff, sent Mr. Nemeth a demand

letter setting forth the details of Plaintiff’s Visual Artists Rights Act claim and requesting a

response from Mr. Nemeth. (Manga Decl. ¶ 2.) Mr. Nemeth never responded to this letter. (Id.) 

Mr. Manga sent Mr. Nemeth a second letter on January 10, 2006, and Mr. Nemeth again did not

respond. (Id. ¶ 3.) On January 20, 2006, Mr. Manga called Mr. Nemeth to discuss Plaintiff’s

claim. (Id. ¶ 5.) Mr. Manga states that it appeared that Mr. Nemeth had not investigated

Plaintiff’s claim, and Mr. Nemeth suggested that Plaintiff should file a claim against Defendants. 

(Id.) 

On May 19, 2006, Plaintiff filed his Complaint. [Doc. No. 1.] On June 14, 2006,

declarations of service were executed by Plaintiff’s process server as to Defendants Estate,

David W. Hill, National Brake Service, and George Raymond Hill.2

 [Doc. Nos. 4, 5, 6, 7.] 

Shortly thereafter, Defendant David W. Hill contacted Mr. Sulzner to inform him that he had

been served with a lawsuit, and he sent Mr. Sulzner a copy of the Complaint. (Sulzner Decl. ¶

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 The Court later took the matter under submission, and no appearances were required on

December 18, 2006. [Doc. No. 15.]

4 06cv1094 J (BLM)

14.) Mr. Sulzner then contacted Mr. Nemeth. (Id.) According to Mr. Sulzner, Mr. Nemeth

advised him that he had contacted Plaintiff’s counsel and proposed that Plaintiff’s suit be joined

with the pending probate action involving the Estate. (Id. ¶ 15.) The Court notes, however, that

Plaintiff’s counsel categorically denies that Mr. Nemeth contacted him and proposed that the two

actions be joined. (See Pl.’s Opp’n to Defs.’ Mot. at 16 n.2.) 

Mr. Sulzner also asserts that Mr. Nemeth told him that it was likely that Plaintiff’s action

would be barred because it had been filed too late in relation to the probate proceedings. 

(Sulzner Decl. ¶ 16.) Mr. Sulzner then advised Defendants not to worry about the suit because

Mr. Nemeth was handling it. (Id.) Mr. Sulzner states that he contacted Mr. Nemeth periodically

to inquire whether Plaintiff had agreed to join his claim in the probate action. (Id. ¶ 18.) 

According to Mr. Sulzner, Mr. Nemeth stated that he still had not heard from Plaintiff’s attorney. 

(Id.) Mr. Sulzner passed this information on to Defendants. (See id.; David W. Hill Decl. ¶¶ 12-

13.) 

On August 11, 2006, the Court’s Clerk entered default against Defendants after they

failed to file a responsive pleading. [Doc. No. 10.] The Court’s Clerk sent Mr. Nemeth notice

of the entry of default against Defendants. [See Doc. No. 11.] On August 14, 2006, Mr. Manga

also mailed Mr. Nemeth notice of the entry of default and informed him that if Defendants did

not file a motion to set aside the entry of default, then Plaintiff would file a Motion for Default

Judgment. (Manga Decl. ¶ 15.) Mr. Nemeth never responded to this letter. (Id.) On October

25, 2006, Plaintiff filed a Motion for Default Judgment. [Doc. No. 12.] Plaintiff served the

Motion for Default Judgment on Mr. Nemeth. (Mot. for Default J. Ex. E.) 

Mr. Sulzner asserts that he and Defendants heard nothing about the developments in the

case, including the entry of default and Plaintiff’s Motion for Default Judgment, until November

6, 2006. (Sulzner Decl. ¶¶ 18-24.) On that date, Defendant David W. Hill received a letter from

Plaintiff’s attorney stating that “Plaintiff’s Motion for Final Default Judgment is currently

pending before the Court and will be heard on December 18, 2006 at 10:30 a.m.”3

 (Id. Ex. 5.) 

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Because Mr. Hill was unaware that a hearing had been scheduled, he called Mr. Sulzner “to find

out if I had missed something.” (David W. Hill Decl. ¶ 18.) Mr. Sulzner was also unaware of

the hearing, and he attempted to contact Mr. Nemeth’s office, but was unable to speak with him

because he had left work due to illness. (Sulzner Decl. ¶ 26.) Mr. Sulzner states that throughout

the rest of November, he had difficulty contacting Mr. Nemeth regarding the status of the default

because Mr. Nemeth had become very ill and was not at his office. (Id. ¶¶ 26-33.) Mr. Sulzner

states that when he eventually reached Mr. Nemeth in late November, Mr. Nemeth confirmed

that he had been very ill. (Id. ¶ 30.) According to Mr. Sulzner, Mr. Nemeth stated that he had

retained an attorney with experience in federal court matters to look over the default issue, and

that he would have more information shortly. (Id.) Mr. Sulzner asserts that in early December,

he had heard nothing further from Mr. Nemeth, and he attempted to contact him again, but Mr.

Nemeth remained ill and was not at work. (Id. ¶ 31.) On December 18, 2006, Mr. Sulzner

received a call from Mr. Nemeth’s paralegal stating that Mr. Nemeth had suffered what appeared

to be a heart attack and had been hospitalized. (Id. ¶ 33.) That same day, Mr. Sulzner contacted

Plaintiff’s attorney and attempted to persuade Plaintiff’s counsel to stipulate to setting aside the

default, but the parties were unable to reach an agreement. (Id. ¶¶ 39-40.) On January 10, 2007,

Mr. Sulzner filed the instant Motion to Set Aside Entry of Default on behalf of Defendants. 

[Doc. No. 18.] 

Legal Standard 

Setting aside an entry of default is governed by Federal Rule of Civil Procedure 55(c),

which provides that a default may be set aside for “good cause.” See Fed. R. Civ. P. 55(c). 

“Good cause” to set aside an entry of default under Rule 55(c) is a lighter burden than that

required under Federal Rule of Civil Procedure 60(b) when a party seeks to set aside a default

judgment already entered. See Mendoza v. Wight Vineyard Mgmt., 783 F.2d 941, 945-46 (9th

Cir. 1986); Meehan v. Snow, 652 F.2d 274, 276 (2d Cir. 1981) (“[T]he standard for setting aside

the entry of a default pursuant to Rule 55(c) is less rigorous than the ‘excusable neglect’ standard

for setting aside a default judgment by motion pursuant to Rule 60(b).”). A “good cause”

determination requires the application of a three-factor test: “[A] district court may deny a

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motion to vacate a default judgment if: (1) the plaintiff would be prejudiced if the [entry of

default] is set aside, (2) defendant has no meritorious defense, or (3) the defendant’s culpable

conduct led to the default.” Am. Ass’n of Naturopathic Physicians v. Hayhurst, 227 F.3d 1104,

1108 (9th Cir. 2000) (quotations and citation omitted). A district court is free to deny the motion

if any of the three factors is true. Id.

In general, motions to set aside default should be liberally granted and are left to the

discretion of the court. See Falk v. Allen, 739 F.2d 461, 463 (9th Cir. 1984). “[J]udgment by

default is a drastic step appropriate only in extreme circumstances; a case should, whenever

possible, be decided on the merits.” Id. Any doubt should be resolved in favor of setting aside

the default in order to decide a case on its merits. Schwab v. Bullock’s, Inc., 508 F.2d 353, 355

(9th Cir. 1974). 

Discussion

To determine whether Defendants’ Motion to Set Aside Entry of Default should be

granted, this Court must examine three factors: (1) whether Plaintiff would be prejudiced if the

entry of default is set aside, (2) whether Defendants have a meritorious defense, and (3) whether

Defendants’ culpable conduct led to the default. See Hayhurst, 227 F.3d at 1108.

A. Prejudice to Plaintiff

 The Court first examines whether Plaintiff would be prejudiced if the entry of default is

set aside. Defendants argue that delay alone does not constitute prejudice, and that Plaintiff

cannot demonstrate any prejudice other than a delay of several months. (Defs.’ Mot. at 6.) In

opposition, Plaintiff argues that Defendants’ destruction of the mural has resulted in damage to

his reputation as an artist. (Opp’n to Defs.’ Mot. at 16.) According to Plaintiff, “[t]he longer the

damage goes unremedied, the more his reputation as an artist suffers.” (Id.) 

Delay alone is not a sufficient basis for establishing prejudice for purposes of opposing a

motion to set aside entry of default. See TCI Group Life Ins. Plan v. Knoebber, 244 F.3d 691,

695 (9th Cir. 2001); Berthelsen v. Kane, 907 F.2d 617, 621 (6th Cir. 1990); Davis v. Musler, 713

F.2d 907, 916 (2d Cir. 1983); Feliciano v. Reliant Tooling Co., 691 F.2d 653, 656-57 (3d Cir.

1982). The standard in determining prejudice is whether the plaintiff’s ability to pursue his claim

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will be hindered if the entry of default is set aside. See Falk v. Allen, 739 F.2d 461, 463 (9th Cir.

1984). If a delay will result in “tangible harm such as loss of evidence, increased difficulties of

discovery, or greater opportunity for fraud or collusion”, the delay is considered prejudicial. 

Knoebber, 244 F.3d at 701 (citing Thompson v. Am. Home Assurance Co., 95 F.3d 429, 433-34

(6th Cir. 1996)).

Plaintiff has failed to establish that setting aside the entry of default would result in

tangible harm affecting his ability to pursue his claim. Plaintiff does not assert that Defendants’

delay resulted in loss of evidence. Nor does Plaintiff argue that Defendants’ delay will make

discovery more difficult, or that his ability to recover on any eventual judgment or remedy has

been thwarted. If it is the case that the alleged harm to Plaintiff’s reputation has been exacerbated by Defendants’ delay, Plaintiff will have ample opportunity to seek compensation for the

additional harm as the case progresses. Accordingly, the Court FINDS that Plaintiff has failed

to demonstrate that he will be prejudiced if the entry of default is set aside. 

B. Meritorious Defense

The Court next examines whether Defendants have set forth a meritorious defense. 

Defendants argue that they are not liable for the destruction of Plaintiff’s mural because their

former attorney and her brother directed that the mural be covered with paint. (Defs.’ Mot. at 6.) 

Defendants also argue that Plaintiff’s claim “may be barred by the Probate Code.” (Id.) In

opposition, Plaintiff argues that his claims are not barred by the Probate Code because his claims

“are not ‘creditor’s claims’ against a decedent, but instead are claims that arose after the

decedent building-owner’s death.” (Pl.’s Opp’n to Defs.’ Mot. at 13.) Plaintiff also argues that

the Probate Court has no jurisdiction to hear claims arising under the Visual Artists Rights Act. 

(Id. at 15.) Finally, Plaintiff asserts that an executor is personally liable for any torts committed

by him or his agents in the course of administering an estate. (Id.) 

In considering whether a defendant has a meritorious defense, a court must determine

“whether there is 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 v. Stone, 794 F.2d 508, 513

(9th Cir. 1986). Because the preferred disposition of any case is upon the merits, the showing of

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a meritorious defense does not involve a heavy burden of proof. Tri-Continental Leasing Corp.,

Inc. v. Zimmerman, 485 F. Supp. 495, 497 (N.D. Cal. 1980). Thus, a party seeking to set aside a

default need not prove his defense by a preponderance of the evidence. Id. Rather, the

defaulting party must only produce evidence that establishes a factual or legal basis for the

tendered defense. Id. In other words, the defaulting party must set forth a defense “which at

least raises a serious question regarding the propriety of a default judgment and which is

supported by a developed legal and factual basis.” Jones v. Phipps, 39 F.3d 158, 165 (7th Cir.

1994). 

Defendants have not set forth a meritorious defense as to their claim that the Probate

Code bars Plaintiff’s action. Defendants fail to cite any provision of the Probate Code in support

of their defense. Defendants do not set forth the statute of limitations period for claims against

an estate, nor do they set forth facts indicating when the statute of limitations began to run. Nor

do they indicate when the statute of limitations expired. Defendants thus have failed to produce

competent evidence that establishes the factual or legal basis for their Probate Code defense. 

However, Defendants have set forth a meritorious defense as to their claim that they did

not participate in the mural’s destruction. Defendants have provided declarations stating that

they did not paint over the mural. (See David W. Hill Decl. ¶¶ 11, 14; George R. Hill. Decl. ¶¶

9-10.) Defendants also have provided declarations stating that they opposed the sale of the

property to Mr. Wesson, the party who allegedly ordered the mural’s destruction. (See David W.

Hill Decl. ¶¶ 5-6; George R. Hill. Decl.¶¶ 5-6.) There is no evidence in the record indicating

that Mr. Wesson was Defendants’ agent or was acting with their authorization when he allegedly

ordered the mural to be covered. Defendants thus have set forth a factual basis for their defense

that they did not destroy the mural. Because there is “some possibility that the outcome of the

suit after a full trial will be contrary to the result achieved by the default,” the Court FINDS that

Defendants have set forth a meritorious defense. See Stone, 794 F.2d at 513. 

 C. Culpable Conduct

The Court next examines whether Defendants’ culpable conduct led to the entry of

default. Defendants assert that they were not culpable because they “had no idea that the

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4

 The Court recognizes that Tani dealt with a defendant’s motion to set aside default judgment,

rather than a motion to set aside entry of default, as presented in the instant case. See 282 F.3d at 1168. 

However, when ruling on a motion to set aside entry of default, district courts are permitted to consider

and liberally interpret the standards for granting relief from a default judgment. See Hawaii Carpenters’

9 06cv1094 J (BLM)

required pleadings had not been filed or that a default had been taken.” (Defs.’ Mot. at 4.) 

Defendants assert that they believed their probate attorney, Mr. Nemeth, was working with

Plaintiff’s counsel to combine Plaintiff’s claim with other claims against the Estate. (Id.) 

Defendants state that as soon as they discovered that default had been entered, they immediately

consulted Mr. Sulzner, who attempted to negotiate a stipulation with Plaintiff to set aside the

entry of default. (Id.) In opposition, Plaintiff points out that each Defendant received personal

service of the Summons and Complaint on June 14, 2006, well before the Clerk’s entry of

default on August 11, 2006. (See Pl.’s Opp’n to Defs.’ Mot. at 9.) Plaintiff asserts that Mr.

Nemeth refused to respond to correspondence from Plaintiff’s counsel stating that Plaintiff

would seek default judgment if Defendants did not respond to the Complaint. (Id.) Plaintiff

argues that Defendants’ conduct was intentional because they did not seek an extension of time

to file an Answer, did not enter into good faith negotiations regarding Plaintiff’s claim, and did

not initiate any contact with Plaintiff until the Court took Plaintiff’s Motion for Default

Judgment under submission in December 2006. (Id. at 10.) 

Because default judgments are generally disfavored, the Ninth Circuit has narrowly

defined conduct that will qualify as culpable. See TCI Group Life Ins. Plan v. Knoebber, 244

F.3d 691, 697 (9th Cir. 2001). To amount to culpable, a defendant’s conduct must be “ ‘willful,

deliberate, or evidence of bad faith.’ ” Id. (quoting Am. Alliance Inc. v. Eagle Ins. Co., 92 F.3d

57, 61 (2d Cir. 1996)). “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’ under

our default cases, and is therefore not . . . culpable or inexcusable.” See id. at 697-98. Additionally, the Ninth Circuit has held that where an attorney engages in grossly negligent or egregious

conduct that results in default, that default may be set aside. See Community Dental Servs. v.

Tani, 282 F.3d 1164, 1170 (9th Cir. 2002).4

 

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28 Trust Funds v. Stone, 794 F.2d 508, 513 (9th Cir. 1986). The Court thus is permitted to consider

whether Defendants’ counsel was grossly negligent as part of its analysis of the instant Motion. 

10 06cv1094 J (BLM)

In Tani, the defendant’s attorney ignored court orders, neglected motions, missed

hearings and other court appearances, failed to file pleadings or serve them on opposing counsel,

and otherwise “virtually abandoned his client by failing to proceed with his client’s defense,”

comprehensively amounting to “the client’s receiving practically no representation at all.” Id. at

1170-71. The situation was exacerbated because the attorney repeatedly represented to the

defendant that he was performing his responsibilities. Id. at 1171. The Ninth Circuit set aside

the default judgment against the defendant because his attorney’s conduct “depriv[ed] him of the

opportunity to take action to preserve his rights.” Id.

Like the attorney in Tani, Defendants’ probate attorney, Mr. Nemeth, made numerous

errors while handling Defendants’ case, and he assured Defendants’ other attorney, Mr. Sulzner,

that the case was proceeding as planned. Before Plaintiff’s action was filed, Mr. Nemeth failed

to respond to several letters and phone calls from Plaintiff requesting that the parties discuss

Plaintiff’s claims. (See Manga Decl. ¶¶ 2-5.) Once the Complaint was filed, Mr. Nemeth did

not file a responsive pleading, even though he assured Mr. Sulzner that Plaintiff’s suit likely

would be barred by the Probate Code. (See Sulzner Decl. ¶ 16.) Although Mr. Nemeth told Mr.

Sulzner that he was waiting for Plaintiff to decide whether he wanted to join his suit with the

pending probate proceedings, Plaintiff categorically denies that Mr. Nemeth ever suggested that

the two actions be joined. (See id. ¶ 15; Pl.’s Opp’n to Defs.’ Mot. at 16 n.2.) Despite the fact

that Mr. Nemeth received notice of both the Clerk’s entry of default and Plaintiff’s Motion for

Default Judgment, he never informed Defendants of these developments. (See David W. Hill

Decl. ¶ 21.) After the Clerk of the Court entered default, Plaintiff sent Mr. Nemeth a letter

notifying him that Plaintiff would file a Motion for Default Judgment if Defendants did not file a

motion to set aside the default. (Manga Decl. ¶ 15.) However, Mr. Nemeth never responded to

this letter. (Id.) Nor did he file a motion to set aside the entry of default, even though he told

Mr. Sulzner that he had retained an attorney with experience in federal court matters to look over

the default issue. (See Sulzner Decl. ¶ 30.) Viewed in light of the totality of the circumstances,

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Mr. Nemeth’s conduct appears to be at least as negligent as that of the defendant’s attorney in

Tani. Mr. Nemeth’s failure to respond to Plaintiff’s correspondence or to file any document in

this case suggests that he “virtually abandoned his client by failing to proceed with his client’s

defense.” See Tani, 282 F.3d at 1170-71. His deficient representation of Defendants was

worsened by the fact that he failed to apprise Defendants of the developments in the case and

represented that he was performing his responsibilities, thereby “depriving [Defendants] of the

opportunity to take action to preserve [their] rights.” See id. at 1171. Because the facts indicate

that Defendants’ failure to file a responsive pleading resulted from counsel’s grossly negligent

conduct, the Court FINDS that Defendants’ conduct was not culpable. See id. at 1169

(“[W]here the client has demonstrated gross negligence on the part of his counsel, a default

judgment against the client may be set aside.”). 

Even if Mr. Nemeth’s conduct did not rise to the level of gross negligence, Defendants

have set forth facts demonstrating that their failure to file a responsive pleading was not

deliberate or willful. Defendants relied on the representations of Mr. Sulzner and Mr. Nemeth

that Plaintiff’s Complaint was being addressed. (See David W. Hill Decl. ¶ 12.) Mr. Nemeth

never informed Defendants that default had been entered against them or that Plaintiff had filed

a Motion for Default Judgment, and this deprived Defendants of the opportunity to take action to

preserve their rights until they learned of the entry of default in November 2006. (See id. ¶ 20.) 

Once Defendants learned from Plaintiff’s counsel that default had been entered, they immediately contacted Mr. Sulzner for advice. (See id. ¶ 18.) Mr. Sulzner attempted to negotiate with

Plaintiff’s counsel to set aside the default, and when his attempt was unsuccessful, he filed the

instant Motion to Set Aside Entry of Default. (See Sulzner Decl. ¶¶ 39-49.) The facts submitted

by Defendants support their explanation that they failed to respond to Plaintiff’s Complaint

because they thought that Mr. Nemeth was negotiating with Plaintiff and that he had filed the

required pleadings. The Court thus FINDS no indication that Defendants intentionally failed to

answer or that they sought to manipulate the legal process.

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12 06cv1094 J (BLM)

In sum, all three of the factors used to determine whether an entry of default should be set

aside weigh in Defendants’ favor. Accordingly, the Court GRANTS Defendants’ Motion to Set

Aside Entry of Default.

Conclusion

For the reasons set forth above, the Court GRANTS Defendants’ Motion to Set Aside

Entry of Default [Doc. No. 18], and the Court GRANTS Defendants leave to file their answer

within ten days of the date stamped “Filed” on this Order. Plaintiff’s Motion for Default

Judgment [Doc. No. 12] is DENIED.

IT IS SO ORDERED.

DATED: April 18, 2007

HON. NAPOLEON A. JONES, JR.

United States District Judge

cc: All Counsel of Record

Bruce Sulzner

Magistrate Judge Major

Case 3:06-cv-01094-BLM Document 29 Filed 04/18/07 Page 12 of 12