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WO

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Sales Force Won! Limited,

Plaintiff, 

v. 

Teixidor Enterprises Incorporated, Capital 

Core Investments LLC, Eduardo Teixidor, 

and Marta Teixidor, 

Defendants. 

No. CV-17-04730-PHX-DLR

ORDER 

 

Defendants Teixidor Enterprises Incorporated, Capital Core Investments LLC, and 

Eduardo and Marta Teixidor move to set aside an entry of default against them. (Doc. 

23.) The issue is fully briefed. (Docs. 24, 27, 28.) Also before the Court is Plaintiff’s 

motion for expedited consideration of the motion to set aside. (Doc. 30.) For the 

following reasons, Defendants’ motion is denied and Plaintiff’s motion is granted. 

I. Background 

 On November 13, 2017, Plaintiff filed a complaint against Defendants, the Small 

Business Association (“SBA”), and Wells Fargo National Bank, N.A. (“Wells Fargo”), 

seeking to quiet title against any claim those parties might assert on certain real property 

that Plaintiff purchased at a sale noticed by the Maricopa County Sheriff’s Office. On 

February 20, 2018, Plaintiff resolved its claim against the SBA. (Docs. 12, 14.) As of 

the date of this order, Wells Fargo has not appeared in this matter, and Plaintiff’s motion 
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for entry of default judgment against it is currently pending. (Doc. 20.) 

 Defendants were served on February 12, 2018, but failed to timely answer. 

Accordingly, on March 6, 2018, Plaintiff filed an application for an entry of default 

against Defendants. (Doc. 15.) The Clerk of Court entered default against Defendants 

the next day. (Doc. 18.) Defendants now move to set aside that default. 

II. Legal Standard 

 Federal Rule of Civil Procedure 55(c) allows the Court to set aside an entry of 

default for good cause. When evaluating whether good causes exists, the Court considers 

three factors: (1) whether the party seeking to set aside the default engaged in culpable 

conduct that led to the default; (2) whether the party had no meritorious defense; and (3) 

whether setting aside the default would prejudice the other party. Franchise Holding II, 

LLC v. Huntington Restaurants Grp., Inc., 375 F.3d 922, 925-26 (9th Cir. 2004). 

Because these factors are disjunctive, “[a] sufficient finding against the movant on any 

one factor negates good cause.” FOC Fin. Ltd. P’ship v. Nat’l City Commercial Capital 

Corp., 612 F. Supp. 2d 1080, 1082 (D. Ariz. 2009). 

III. Discussion 

Defendants did not engage in culpable conduct leading to the default. A 

defendant’s conduct is “culpable for purposes of the [good cause] factors where there is 

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

failure to respond.” TCI Grp. Life Ins. Plan v. Knoebber, 244 F.3d 691, 697 (9th Cir. 

2001), overruled on other grounds by Egelhoff v. Egelhoff ex rel. Breiner, 532 U.S. 141 

(2001). Nothing about Defendants’ failure to timely answer suggests they acted willfully 

or in bad faith. 

 After Defendants were served, they tendered the claim to their insurance carrier, 

Farmers Insurance. On March 5, 2018, counsel for Farmers Insurance contacted Plaintiff 

to request two days to determine whether it would accept Defendants’ tender. Plaintiff 

rejected this request. On March 7, 2018, Farmers Insurance assigned Defendants 

counsel. The next day, Defendants’ counsel notified Plaintiff’s counsel of their retention 
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and requested the entry of default be set aside. Plaintiff rejected this request, as well. 

Defendants have not indicated what coverage issue existed, why it took two days to 

resolve or why an answer could not have been filed before the coverage issue was 

decided. Although the Court has not found that Defendants engaged in culpable conduct, 

their failure to file a timely answer knowing that Plaintiff was poised to seek a default 

judgment if they did not, is curious. 

 Nevertheless, Defendants have not shown good cause for setting aside the default 

because they fail to offer a meritorious defense. “All that is necessary to satisfy the 

‘meritorious defense’ [factor] is to allege facts that, if true, would constitute a defense.” 

U.S. v. Signed Pers. Check No. 730 of Yubran S. Mesle, 615 F.3d 1085, 1095 (9th Cir. 

2010). Plaintiff brings a quiet title action, which seeks to determine whether Defendants 

actually have an interest in the real property that is adverse to its own. A.R.S. § 12-1101. 

Defendants offer a series of potential defenses, all but one of which relate to potential 

claims against the SBA and have no bearing on the quiet title action that Plaintiff has 

brought. The only defense offered that relates to the quiet title action is that “discovery 

could show that [Defendants] ha[ve] other rights to the Property, for example, if Plaintiff 

failed to properly perfect its lien.” (Doc. 28 at 6.) But Defendants articulate no facts 

that, if true, would show that Plaintiff failed to do so. Although the burden to 

demonstrate a meritorious defense is “not extraordinarily heavy,” Defendants cannot 

meet this burden with rank speculation. TCI Grp., 244 F.3d at 700. In the absence of a 

reasonable, articulable basis for believing that Plaintiff failed to perfect its lien or that 

they have other rights to the property, Defendants have not met their minimal burden. 

 Because Defendants fail to offer a meritorious defense, the Court “need not 

consider . . . whether [P]laintiff would suffer prejudice if the [default] were set aside.” 

Alan Neuman Prods., Inc. v. Albright, 862 F.2d 1388, 1392 (9th Cir. 1988). Accordingly, 

// 

// 

// 
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IT IS ORDERED that Plaintiff’s motion to expedite (Doc. 30) is GRANTED and 

Defendants’ motion to set aside the default (Doc. 23) is DENIED. 

 Dated this 27th day of April, 2018. 

Douglas L. Rayes 

United States District Judge