Court Opinion

ID: 2664421
Source: CourtListenerOpinion
Date Created: 2014-04-04 03:59:18.799594+00
Date Added: 2024-06-11T09:17:51.268852
License: Public Domain

UNITED STATES DISTRICT COURT
                            FOR THE DISTRICT OF COLUMBIA

RICHARD LUNA,

        Plaintiff,
               v.                                         Civil Action No. 09-02331 (JEB)
RONALD RAMBO,

        Defendant.

                                             ORDER

        Plaintiff Richard Luna hired SCS and Defendant Ronald Rambo to perform construction

work on his house. A dispute as to the terms of the contract, the quality of the work performed,

and the licensing status of the contractors arose, leading to this lawsuit. Defendant failed to

respond to the complaint within the required amount of time, and default was therefore entered

by the Clerk in January 2010. Defendant has now filed the instant Motion to Set Aside Entry of

Default and to Dismiss on the grounds that service was not properly effectuated and that

litigation is precluded by a prior settlement agreement between the parties.

        The Court has reviewed Defendant’s Motion, Plaintiff’s Opposition thereto, and

Defendant’s Reply.

   I.      Factual and Procedural Background

        The Complaint sets out that Plaintiff hired a company called SCS in December 2006 to

perform extensive renovations on his home. Work began on January 19, 2007, but a dispute

arose soon thereafter, and the project was halted on March 16, 2007. During that time, Plaintiff

claims to have made payments to Defendant, who was the project manager and supervised the

work performed in the home, and Defendant’s associates in the amount of $108,500. In
addition, Plaintiff also seeks compensation for the $203,162.79 he has allegedly spent to return

his home to a habitable condition after the contract was breached.

         Plaintiff filed the Complaint in this Court against Defendant on December 8, 2009. He

notified the Court that Defendant had been served on December 21, 2009, and he filed for an

entry of default when Defendant failed to respond. The Clerk entered default as to Defendant on

January 13, 2010. On November 17, 2010, Judge Kennedy, to whom this case was previously

assigned, issued an Order to Show Cause as to why the Complaint should not be dismissed

without prejudice for failure to prosecute. Plaintiff then filed a Motion for Default Judgment on

December 3, 2010, which precipitated Defendant’s instant Motion.

         In his Opposition, Defendant alludes to further history not set out in Plaintiff’s complaint.

According to Defendant, Plaintiff brought suit in the Superior Court of the District of Columbia

against SCS Contracting Group, LP; SCS Contracting Group; Christopher Petito, a

representative of SCS; and Stephen C. Sieber, the President and CEO of SCS, on April 11, 2007.

Meanwhile, in November 2007, Sieber filed for protection under Chapter 11 of the Bankruptcy

Code in Maryland. Defendant further states that the Superior Court litigation was ultimately

resolved in October 2009, when the parties entered into a settlement agreement.

   II.      Legal Standard

         Under the Federal Rules of Civil Procedure, “the court may set aside an entry of default

for good cause.” Fed. R. Civil. P. 55(c).

         Rule 12(b)(6) provides for the dismissal of an action where a complaint fails “to state a

claim upon which relief can be granted.” When the sufficiency of a complaint is challenged

under Rule 12(b)(6), the factual allegations presented in it must be presumed true and should be

liberally construed in plaintiff’s favor. Leatherman v. Tarrant Cty. Narcotics & Coordination

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Unit, 507 U.S. 163, 164 (1993). The notice pleading rules are “not meant to impose a great

burden on a plaintiff,” Dura Pharm., Inc. v. Broudo, 544 U.S. 336, 347 (2005), and he or she

must thus be given every favorable inference that may be drawn from the allegations of fact.

Twombly, 550 U.S. at 584. Although "detailed factual allegations" are not necessary to

withstand a Rule 12(b)(6) motion, Twombly, 550 U.S. at 555, “a complaint must contain

sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face."

Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) ((internal quotation omitted). Plaintiff must put

forth “factual content that allows the court to draw the reasonable inference that the defendant is

liable for the misconduct alleged." Iqbal, 129 S. Ct. at 1949. Though a plaintiff may survive a

12(b)(6) motion even if “recovery is very remote and unlikely,” Twombly, 550 U.S. at 555

(citing Scheuer v. Rhodes, 416 U.S. 232, 236 (1974), the facts alleged in the complaint “must be

enough to raise a right to relief above the speculative level.” Id. at 555.

           Rule 12(d) reads: “If on a motion under Rule 12(b)(6) . . . matters outside the pleadings

are presented to and not excluded by the court, the motion must be treated as one for summary

judgment under Rule 56. All parties must be given a reasonable opportunity to present all the

material that is pertinent to the motion.”

    III.      Analysis

              A. Motion to Set Aside Default

           In deciding whether “good cause” has been shown to merit setting aside an entry of

default, courts must consider “whether (1) the default was willful, (2) a set-aside would prejudice

plaintiff, and (3) the alleged defense was meritorious.” Keegel v. Key West & Caribbean

Trading Co., Inc., 627 F.2d 372, 373 (D.C. Cir. 1980).

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        The first factor to consider is whether the default was willful. Defendant claims that his

default was not willful in this case because he was not properly served and thus was not on

notice of the instant litigation. Both parties spend considerable time discussing the particulars of

313 and 315 J.W. Williams Road and why service was or was not effected. The Court’s best

determination is that, while service ultimately may have been effected, Defendant certainly

presents valid arguments in favor of his position. Being mindful that “strong policies favor

resolution of disputes on their merits” rather than by default, Jackson v. Beech, 636 F.2d 831,

836 (D.C. Cir. 1980), the Court cannot find that Defendant willfully defaulted by failing to

answer a complaint that arguably was not properly served on him.

        Plaintiff’s arguments as to prejudice are weak, especially given that his Motion for

Default Judgment was filed almost a year after the clerk’s entry of default and only after Judge

Kennedy issued an Order to Show Cause. The prejudice to which he alludes, based on the length

of time that has passed since the filing of his complaint, is thus as much attributable to his own

failure to prosecute as it is to Defendant’s failure to respond. This factor thus also counsels

setting aside the default.

        Finally, the Court must decide whether Defendant has put forth any defense meritorious

enough to justify a trial on the merits rather than a decision by default judgment. In this analysis,

“[l]ikelihood of success is not the measure. [Instead,] Defendants' allegations are meritorious if

they contain even a hint of a suggestion which, proven at trial, would constitute a complete

defense.” Keegel, 627 F.2d at 374 (internal quotations and citations omitted). Defendant has

articulated potentially meritorious defenses, such as the applicability of the prior settlement in

this case, which could certainly constitute a bar to any recovery for Plaintiff if proven at trial.

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        As all three factors thus favor Defendant, the Court is convinced that good cause has been

shown and the default should be set aside.

           B. Motion to Dismiss

        Defendant seeks more than the vacating of default; he also asks the Court to dismiss the

complaint. In so moving, he relies on the alleged applicability of the prior settlement agreement

signed by Plaintiff and Defendant’s employer, SCS. This agreement, however, did not figure in

Plaintiff’s Complaint. In fact, no mention of the earlier Superior Court suit was made in the

Complaint. Under the Federal Rules of Civil Procedure, when a Court is presented with

materials outside the pleadings in a Rule 12(b)(6) motion, it may either exclude this extrinsic

evidence or convert the motion to one for Summary Judgment under Rule 56. Fed. R. Civ. P.

12(d); see, e.g., Benoit v. U.S. Dept. of Agriculture, 577 F.Supp.2d 12, 22 -23 (D.D.C. 2008). In

this case, the Court cannot entertain Defendant’s arguments regarding the settlement agreement

because Plaintiff has not been “given a reasonable opportunity to present all the material that is

pertinent to the motion.” Rule 12(d). The Court is thus unwilling to convert this Motion into one

for summary judgment.

        The Court, therefore, ORDERS that:

        1. The Motion to Set Aside Default is GRANTED;

        2. The Motion to Dismiss is DENIED; and

        3. Defendant shall answer by May 5, 2011.

        SO ORDERED.

                                                      /s/ James E. Boasberg
                                                      JAMES E. BOASBERG
                                                      United States District Judge
Date:   April 14, 2011

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