Duggan v. Olson et al, No. 3:2012cv00005 - Document 38 (S.D. Cal. 2013)
Court Description: ORDER Denying 28 Motion to Set Aside Default Judgment. Signed by Judge Barry Ted Moskowitz on 7/8/2013. (rlu)
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Duggan v. Olson et al Doc. 38 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 ANDREW DUGGAN, an individual, Case No. 12cv0005 BTM(WMc) Plaintiff, 12 ORDER DENYING MOTION TO SET ASIDE DEFAULT JUDGMENT v. 13 14 EARL KOPRIVA, et al., Defendants. 15 16 17 18 Defendant Earl Kopriva (“Defendant” or “Kopriva”) has filed a motion to set aside default judgment. For the reasons discussed below, Defendant’s motion is DENIED. 19 20 21 22 23 24 25 26 27 28 I. BACKGROUND This action arose out of an unsuccessful business venture. Plaintiff Andrew Duggan, one of the managing members of Causeway Ventures, LLC (“Causeway”), brought this action against Defendants, investors in the venture, seeking (1) a declaratory judgment that mutual releases that the investors signed were valid and effective; and (2) an injunction enjoining Defendants from filing any action against Plaintiff relating to their investments in Causeway. On January 3, 2012, Plaintiff filed his initial complaint against defendants Paul Olson, John Scott, Lynn Scott, Jared Rothenberger, Charles Sorensen, 1 12cv0005 BTM(WMc) Dockets.Justia.com 1 and Jim Boo. On January 5, 2012, the Scotts, Rothenberger, Sorensen, and 2 Boo were served with the Summons and Complaint via certified mail return 3 receipt requested in compliance with Cal. Civ. Proc. Code § 415.40, governing 4 service of persons outside of the state. 5 On January 25, 2012, Plaintiff filed his First Amended Complaint (“FAC”), 6 adding Earl Kopriva as a defendant. Like the original complaint, the FAC 7 asserted causes of action for (1) declaratory relief; and (2) preliminary and 8 permanent injunction. On January 26, 2012, Plaintiff served Kopriva with the 9 FAC and Summons via certified mail return receipt requested under Cal. Civ. 10 Proc. Code § 415.40. 11 On March 9, 2012, the Court granted a joint motion to extend the time for 12 Defendants to respond to the FAC to March 27, 2012. On April 2, 2012, the 13 Court granted a joint motion to further extend the time for the Scotts, Olson, 14 and Sorensen to respond to the FAC to May 11, 2012. 15 default was entered against defendants Boo and Rothenberger. On April 30, 16 2012, default was entered against Kopriva. On July 10, 2012, Plaintiff voluntarily dismissed the Scotts, Olson, and 17 18 Sorensen with prejudice. On August 28, 2012, Plaintiff filed a motion for default judgment against 19 20 On April 3, 2012, Rothenberger, Boo, and Kopriva. 21 In an order filed on November 6, 2012, the Court granted in part and 22 denied in part Plaintiff’s motion for default judgment. The Court granted default 23 judgment in favor of Plaintiff and against Jim Boo and Earl Kopriva on Plaintiff’s 24 declaratory relief claim. The Court denied default judgment with respect to 25 Plaintiff’s declaratory relief claim against Rothenberger and Plaintiff’s claim for 26 injunctive relief. The instant motion to set aside default judgment was filed on April 16, 27 28 2013. 2 12cv0005 BTM(WMc) II. DISCUSSION 1 2 Kopriva moves to set aside the default judgment on the ground that the 3 judgment was entered against him as a result of “mistake, inadvertence, 4 surprise or excusable neglect.” Fed. R. Civ. P. 60(b)(1). Upon review of the 5 papers, however, it appears that “excusable neglect” is the only ground that 6 arguably applies – i.e., Kopriva negligently failed to answer the FAC, even 7 though he was served with the FAC, because he was busy in his role as CFO 8 for an LLC (unrelated to Causeway). As discussed below, the Court is not 9 convinced that there was excusable neglect. Moreover, Kopriva has failed to 10 allege facts establishing a meritorious defense to Plaintiff’s claim. Therefore, 11 the Court denies Kopriva’s motion. 12 Fed. R. Civ. P. 55(c) provides that a court may set aside the entry of 13 default “for good cause shown.” Factors to be considered when deciding 14 whether to set aside an entry of default for “good cause” include: (1) whether 15 the defendant’s “culpable conduct” led to the default; (2) whether the plaintiff 16 would be prejudiced by a set-aside; and (3) whether the defendant can present 17 a meritorious defense to the claim. Falk v. Allen, 739 F.2d 46, 463 (9th Cir. 18 1984); American Ass’n of Naturopathic Physicians v. Hayhurst, 227 F.3d 1104, 19 1108 (9th Cir. 2000). If any one of these factors weighs against the defendant, 20 the district court may refuse to set aside the default. Franchise Holding II v. 21 Huntington Rests. Group, Inc., 375 F.3d 922, 925-26 (9th Cir. 2004). However, 22 “judgment by default is a drastic step appropriate only in extreme 23 circumstances; a case should, whenever possible, be decided on the merits.” 24 Falk, 739 F.2d at 463. 25 When default judgment has been entered, relief is governed by Rule 26 60(b). Rule 60(b)(1) provides that the court may relieve a party from a final 27 judgment for “mistake, inadvertence, surprise, or excusable neglect.” “[F]or 28 purposes of Rule 60(b), ‘excusable neglect’ is understood to encompass 3 12cv0005 BTM(WMc) 1 situations in which the failure to comply with a filing deadline is attributable to 2 negligence.” Pioneer Inv. Serv. Co. v. Brunswick Assoc. Ltd. P’ship, 507 U.S. 3 380, 394 (1993). 4 determination that takes into account all of the relevant circumstances 5 surrounding the party’s omission. 6 seeks relief under Rule 60(b)(1) on the ground of “excusable neglect,” the court 7 applies the same three Falk factors to determine whether relief is warranted. 8 Brandt v. American Bankers Ins. Co. of Florida, 653 F.3d 1108, 1111 (9th Cir. 9 2011). Whether neglect is “excusable” involves an equitable Id. at 395. In cases where a defendant 10 11 A. Culpable Conduct 12 Typically, a defendant’s conduct is deemed “culpable” where “there is no 13 explanation of the default inconsistent with a devious, deliberate, willful, or bad 14 faith failure to respond.” TCI Group Life Ins. Plan v. Knoebber, 244 F.3d 691, 15 698 (9th Cir. 2001). “[S]imple carelessness is not sufficient to treat a negligent 16 failure to reply as inexcusable, at least without a demonstration that other 17 equitable factors, such as prejudice, weigh heavily in favor of denial of the 18 motion to set aside a default.” United States v. Signed Personal Check No. 19 730, 615 F.3d 1085, 1093 (9th Cir. 2010). 20 Looking at the course of Kopriva’s conduct throughout this litigation, the 21 Court concludes that the default judgment was the result of Kopriva’s willful 22 inaction. Kopriva admits that he received the FAC by certified mail, but 23 explains that the FAC got buried in a stack of other business documents and 24 remained unread until the summer of 2012, when he uncovered it. (Kopriva 25 Decl. ¶¶ 4-5.) Kopriva states that he was served with the motion for default 26 judgment at the end of August, but failed to take any action before the hearing 27 date of October 19, 2012, because he was again absorbed with his work as 28 CFO of an LLC. (Id. at ¶¶ 6-7.) According to Kopriva, he did not realize that 4 12cv0005 BTM(WMc) 1 the hearing date had passed until late November 2012, when he had completed 2 his work tasks. (Id. at ¶ 8.) 3 Plaintiff provides additional facts that lead the Court to believe that 4 Kopriva was not simply careless in failing to respond to the Complaint and then 5 failing to move to set aside the default after it had been entered. According to 6 John Smaha, Plaintiff’s attorney, Kopriva and his attorney, Veronica M. Aguilar, 7 had been in contact with Smaha in the months prior to entry of the default 8 judgment. (Smaha Decl. ¶ 4.) In or about June 2012, Kopriva began e-mailing 9 Smaha and making payment demands. Ms. Aguilar sent Smaha a settlement 10 demand letter dated October 10, 2012, in which she stated that she was “more 11 than confident that [Kopriva] will obtain an order to set aside the entry of default 12 judgment.” (Id.) This letter was sent a month before the default judgment was 13 actually entered by the Court. However, Kopriva’s motion to set aside default 14 judgment was not filed until April 16, 2013, five months after the fact. Kopriva 15 offers no explanation for the delay in seeking to set aside the default judgment. 16 Based on the facts before the Court, it appears that Kopriva willfully 17 ignored the lawsuit. Kopriva chose to take a path of inaction that led to default 18 judgment being entered against him. Thus, Kopriva’s conduct was “culpable.” 19 20 B. Prejudice 21 To be prejudicial, the setting aside of a default must result in greater 22 harm than simply delaying resolution of the case. TCI, 244 F.3d at 701. The 23 standard is whether the plaintiff’s ability to pursue his claim will be hindered. 24 Id. Plaintiff has not made any showing that he would suffer any prejudice from 25 the setting aside of the default and default judgment. Nonetheless, based on 26 the other Falk factors, relief from default judgment is not appropriate in this 27 case. 28 5 12cv0005 BTM(WMc) 1 2 3 C. Meritorious Defense A defendant seeking to set aside default must allege sufficient facts that, if true, would constitute a defense. TCI, 244 F.3d at 700. 4 In his motion, Kopriva states that he has viable defenses. (Def.’s Mem. 5 of P. & A. at 2:21-22.) However, Kopriva does not explain what the defenses 6 are and provides no facts in support thereof. 7 Because (1) the Court finds that the default judgment was the result of 8 culpable conduct; and (2) Kopriva has not shown that he can present a 9 meritorious defense, the Court denies Kopriva’s motion to set aside the default 10 judgment. 11 III. CONCLUSION 12 13 14 15 16 For the reasons discussed above, Kopriva’s motion to set aside default judgment is DENIED. IT IS SO ORDERED. DATED: July 8, 2013 17 18 BARRY TED MOSKOWITZ, Chief Judge United States District Court 19 20 21 22 23 24 25 26 27 28 6 12cv0005 BTM(WMc)
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