United States Court of Appeals FOR THE EIGHTH CIRCUIT

___________ No. 97-2586

___________ Melissa Johnson, individually and as * Executor of the Estates of Marissa * and Shari Williams, and as next friend * of Antonio, Sherice, and Michael * Williams, minors; Mildred Jackson, as * next friend of Tamica Jackson, a minor, * * Appeal from the United States Plaintiffs - Appellees, * District Court for the * Eastern District of Arkansas.
v. * * Dayton Electric Manufacturing * Company, * * Defendant - Appellant. *

___________ Submitted: December 12, 1997 Filed: April 3, 1998

___________ Before BOWMAN, WOLLMAN, and LOKEN, Circuit Judges.

___________ LOKEN, Circuit Judge. Dayton Electric Manufacturing Company (“Dayton Electr ic”) appeals the district court’s order refusing to set aside an entry of default. Concluding there is good cause-2-

to set a side a default caused by Dayton Electric’s negligent failure to file a timel y answer, we reverse.
In Augu st 1994, a fire killed and injured children at Melissa Johnson’s home in Little Rock. The fire apparently started in a window fan. In March 1996, Johnson’ s att orney, Barry Bryant, wrote Dayton Electric suggesting settlement of a product s liabilit y claim that Dayton Electric had manufactured the defective fan’s motor. Hi s letter was referred to Jane Hinton-Kedo, an in-house attorney for Dayton Electric’ s parent company, W.W. Grainger, Inc., located in Lincolnshire, Illinois. Hinton-Kedo contac ted Bryant and later asked him to provide “the report of your produc t identificationexpert.” She contacted the Little Rock fire marshal and arranged for a Grainger product support spe cialist to examine the window fan and motor on April 17. The product specialist reported to her that the motor he examined was not a Dayto n Electric/Grainger product. She also initiated contac t with possible manufacturers of the fan, including Lasko Metal Products, Inc., which reported in July that the fan in the fire was at least twenty-five years old and was not manufactured by Lasko.

OnAugust 12, Bryant sent Hinton-Kedo a copy of a complaint against Dayton Electric and Lasko. He filed th e complaint on August 15 and served Dayton Electric’s agent for service in Arkansas. In Septe mber, Hinton-Kedo informally asked Bryant for

a six-month extension to file Dayton Electric’s answer. Bryant wrote confirming a thirty-day extension to October 18. On November 4, with no answer filed, Bryant filed

a moti on for default judgment against Dayton Electric, serving only local counsel fo r Lask o. Hinton-Kedo first learned of this motion on November 25 when she calle d Bryant t o “make sure we . . . do not have a default problem.” Bryant refused t o wit hdraw the motion. Dayton Electric retained local counsel and filed an answer th e next day, one day after the district court entered an order granting “the motion fo r default judgment.” The court deferred a hearing on damages until after trial of the claim against Lasko. Johnson immediately filed a motion for non-suit as to Lasko.-3-

OnJanuary 2, 1997, Dayton Electric filed a motion to set aside the defaul t judgment. It first argued that the court’s order should be considered an entry of default under Fed. R. Civ. P. 55(a) that may be set aside “[f]or good cause shown” under Rule 55(c ). Turning to the merits, Dayton Electric argued that Johnson was not prejudiced by the r elatively brief delay and that Dayton Electric had evidence of a meritoriou s defense, namely, that it did not manufacture the fan or motor in question. Dayto n Electric furt her argued that the default was not willful or culpable. It explained tha t Hinton-Ke do notified Grainger’s product liability insurer of Johnson’s claim in Apri l 19 96, kept the insurer informed of Grainger’s investigation, and notified the insure r when Bryant granted an extension of time to answer to October 18. On October 11, the insurert endered Dayton Electric’s defense to Lasko, which refused the tender o n October 22. Hinton-Kedo assumed the insurer would hire local counsel who would file

a time ly answer, based upon her experience under long-standing guidelines for th e insure r’s handling of lawsuits against Grainger and its subsidiaries. However, th e insurer had recently been acquired, and this file was assigned to a technical specialist fro m the acquiring insurer’s work force who thought his work was done when he told Hinton-Kedo that Lasko had refused the tender of defense. Hinton-Kedo did not realize Dayton Electric had defaulted until her November 25 phone call to Bryant.
The district court denied Dayton Electric’s motion to set aside. The court agreed its initial order should be construed as an entry of default. But the court concluded that Dayton Electric “showed a su fficient disregard of a deadline to constitute willfulness,” that setting aside the default would prejudice plaintiffs because of “their expectations concerning the default [and] their belief in the integrity of the system,” and that these facto rs outweighed Dayton Electric’s showing of a meritorious defense. The court grantedplaintiffs’ motion to non-suit Lasko and advised that it would schedule a jury tri al of damages against Dayton Electric. We granted Dayton Electric permission t o take this interlocutory appeal on the default issue under 28 U.S.C. § 1292(b).-4-

When a party “has failed to plead or otherwise defend” against a pleading listed in Rule 7(a), entry of default under Rule 55(a) must p recede grant of a default judgment under Rule 55(b). See generally10 Wright, M iller, and Kane, F EDERAL P RACTICE AND P ROCEDURE : C IVIL 2 D § 2682 (1983). Thus, Bryant was wrong to move for a default judgment and was rather underhanded to make that motion without notice to an attorney withwhom he had been in contact for seven months and to whom he had furnished a “courtesy” copy of the complaint. The district court properly construed its initial order as an entry of default.
Rule 55(c) provides that the district court may set aside an entry of default “[f]or good ca use shown,” and may set aside a default judgment “in accordance with Rul e 60(b).” Although the same factors are typically relevant in deciding wheth er to set aside entries of default and default judgments, “[m]ost decisions . . . hold that relief from a default judgment requires a stronger showing of excuse than relief from a mere default order.” Connecticut Nat’l Mortgage Co. v. Brandstatter , 897 F.2d 883, 885 (7th Cir. 1990); accord Shepard Claims Serv., Inc. v. William Darrah & Assocs. , 796 F.2d 190, 193 -94 (6th Cir. 1986); Meehan v. Snow , 652 F.2d 274, 276-77 (2d Cir. 1981). This is a sound distinction. There is a “judicial preference for adjudication on the merits,” Oberstar v. F.D.I.C. , 987 F.2d 494, 504 (8th Cir. 1993), a nd it is likely that a party who promptly attacks an entry of default, rather than w aiting for grant of a default judgment, was guilty of an oversight and wishes to defend the case on the merits. Dayton Electric is ent itled to the more lenient “good cause” standard in considering the denial of it s motion to set aside.
Traditionally, in deciding issues of t his kind, our court and others have looked at whether the conduct of the defaulting party was blameworthy or culpable, whether the de faulting party has a meritorious defense, and whether the other party would b e prejudiced if the default were excused. See Hoover v. Valley West D M , 823 F.2d 227, 230 (8th Cir. 1987). The Supreme Court recently addressed this subject in Pioneer Inv. Servs. v. Brunswick Assocs. Ltd. Partnership , 507 U.S. 380 (1993).Atissu e in Pioneer was Bankruptcy Rule 9006(b)(1), but the Court based it s 1 analysis in part on the parallel language in Rule 60(b)(1). See 507 U.S. at 391-94. -5- Applying the more str

ingent standard in Rule 60(b)(1), the Court held: (i) “excusable 1 neglect” includes “late filings caused by inadvertence, mistake or c arelessness” (thereby resol ving a conflict in the circuits by overruling decisions of this court requiring proof of ci rcumstances beyond the moving party’s control); and (ii) whether conduct i s
exc usable is an equitable determination that “tak[es] account of all relevan t circumsta nces surrounding the party’s omission.” 507 U.S. at 388, 395; see Fink v

. Union Ce ntral Life Ins. Co. , 65 F.3d 722, 723-24 (8th Cir. 1995). The Cour t specifically enumerated some factors, which we applied in In re Jones Tru ck Lines, Inc. , 63 F.3d 685, 687 (8th Cir. 19 95): “the danger of prejudice to the [plaintiff], the length of the delay and its potential impact on judicial proceedings, the reason for the delay, including whether it was wit hin the reasonable control of the [Rule 60(b)] movant, and whether the movant acted in good faith.” 507 U.S. at 395. In addition, we believe the existence of a meritorious defense continu es to be a relevant factor after Pioneer . Such a showing “undersco re[s] the potential injustice of allowing the case to be disposed of by default,” 10 Wright, Miller, and Kane at § 2697, thus triggering “the incessan t command of a court’s conscience that justice be done in light of all the facts.’” Hoover , 823 F.2d at 230, quoting Rosebu d Sioux Tribe v. A & P Steel, Inc. , 733 F.2d 509, 515 (8th Cir.), cert denied , 469 U.S. 1072 (1984).

1. In ap plying this standard, we focus heavily on the blameworthiness of th e defaulting party. The district c ourt found no bad faith but concluded Dayton Electric’s disregard of a deadline constituted willfulness. But “willful” is too ambiguous a term to define t his inquiry. Our cases have consistently sought to distinguish betwee n contumacious o r intentional delay or disregard for deadlines and procedural rules, and

a “marginal failure” to meet pleading or other deadlines. We have rarely, if ever , exc used the former. See Hall v. T.J. Cinnamon’s, Inc. , 121 F.3d 434 (8th Cir. 1997); Inman v. American Home Furniture Placement, Inc. , 120 F.3d 117 (8th Cir. 1997);-6-

McMillian/McMillian, Inc. v. Monticello Ins. Co. , 116 F.3d 319 (8th Cir. 1997); Ackra Direct Mktg. Corp. v. Fingerhut Corp. , 86 F.3d 852 ( 8th Cir. 1996). But we have often gran ted Rule 55(c) and Rule 60(b) relief for marginal failures when there wer e meritorious defenses and an absence of prejudice. See In re Jo nes Truck Lines, 63 F.3d at 687-88 (thirty-two day delay caused by a mistake; default judgment reversed); United States v. Harre , 983 F.2d 128, 130 (8th C ir. 1993) (marginal failure to meet a deadline; default judgment reversed); Hoover , 823 F.2d at 230; Swink v. City of Pagedale , 810 F.2d 791 (8th Cir.), cert. denied , 483 U.S. 1025 (1987).
In this case, we have a good faith, relatively brief default in the filing of an initial pleading, caused by poor communication between Dayton Electric and its insurer, and cured within one day once Dayton Electric learned of its mistake. Without attempting to fix blame, the combined conduct of Dayton Electric’s in-house attorney and it s insurer was careless, risking precisely the adverse result rendered by the district court. But it was not contumacious, it did not exhibit an inte ntional flouting or disregard of the court and its procedures, and it only briefly delayed the litigation. Thus, while we do not approv e of this sort of cavalier approach to litigation, we conclude that Dayto n Electric w as guilty of only a marginal failure for which relief from default should b e granted if it has a meritorious defe nse and Johnson will not suffer significant prejudice.

2. The district court concluded that Dayton Electric satisfied the meritoriou s defense factor w hen it presented an affidavit by the Grainger employee who inspected the fan and motor that alle gedly caused the fire opining they did not match Grainger or Dayton Electric parts. We agree. Johnson argues this conclu sion is contradicted by her expert, but t

he issue is whether the proffered evidence “would permit a finding for the defaulting p arty,” not whether it is undisputed. See Augusta Fiberglass Coatings, Inc. v. Fodor Contracting Corp. , 843 F.2d 808, 812 (4th Cir. 1988); 10 Wright, Miller, and Kane at § 2697.-7-

3. However, the district court concluded that the prejudice factor favors Johnson. Relyi ng on Widmer-Baum v. Chandler-Halford , 162 F.R.D. 545, 555-56 (N.D. Iow a 1995 ), the court concluded that granting Dayton Electric relief would prejudic e Johnson’s “expectations concerning the judgment” and her “belief in the integrity of the system and the court’s authority.” We reject this lega l standard. Entry of default raises no protectible expectation that a default judgment will fol low, and a party’s belief in the integrity of the system must include, to be reasonable, knowledge that a system o f integri ty makes exceptions “for good cause shown.” As numerous decisions mak e clear, prejudice may not be found from delay alone or from the fact that the defaulting party will be permitted to defend on the merits. See Swink , 810 F.2d at 792 n.2

. Setting aside a default must prejudice plaintiff in a more concrete way, such as “loss of evid ence, increased difficulties in discovery, or greater opportunities for fraud an d collusion.” Berthelsen v. Kane , 907 F.2d 617, 621 (6th Cir. 1990).
Attempting to identify more traditional prejudice, Johnson argues that settin g aside the default would prejudice h er because she has non-suited Dayton Electric’s codefendant, Lasko. But this “prejudice” was self-infli cted. When the district court ruled it would enter default judgment against Dayton Electric after trial of the claim against Lasko, Johnson’s attorneys decided she should not try to p rove Lasko manufactured the fan in q uestion. Since Johnson has shown no other prejudice from setting aside th e default, this factor favors Dayton Electric.
For the foregoing reasons, we conclude that the factors identified in Pioneer and

our prior cases weigh heavily in Dayton Electric’s favor. Although Rule 55(c) issues

arecommitted to the district court’s discretion, “when the grant of a default judgment pr ecludes consideration of the merits of a case, even a slight abuse of discretion ma y justify r eversal.” Shepard Claims , 796 F.2d at 193, quoting Williams v. New Orleans Pub. Serv., Inc. , 728 F.2d 730, 733-34 (5th Cir. 1984). Accordingly, the judgment of the dis trict court is reversed, and the case is remanded for further proceedings no t inconsistent with this opinion.-8-

A true copy.

Attest:

CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.