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Beebe v. Onemain Financial

Superior Court of Maine, Cumberland

April 3, 2018

ONEMAIN FINANCIAL f/k/a CitiFinancial, Inc.

          Plaintiff's Counsel: Christopher Keach, Esq. Molleur Law Office

          Defendant's Counsel: Sigmund Schutz, Esq. Preti Flaherty Beliveau Pachios


          A. M. HORTON, JUSTICE

         Before the court are Plaintiffs Motion for Default Judgment; Defendant's Motion to Set Aside Clerk's Entry of Default, and Plaintiffs Motion to Strike the Late-Filed Answer of Defendant, together with the parties' respective oppositions and reply memoranda. Oral argument on the motions was held April 3, 2018.


         In this case, Plaintiff Andrew Beebe contends that Citifinancial, Inc. wrongfully recorded an execution lien against his primary residence, which he says is exempted, statute from being levied against by reason of its value and the balance of a principal mortgage. See 14 M.R.S. § 4422(1)(B). His complaint alleges that Citifinancial, Inc. has failed or refused to discharge its lien, and is therefore liable to him under 14 M.R.S. §4651-A(8).

         His complaint names OneMain Financial as the Defendant, on the ground that OneMain Financial was formerly known as Citifinancial, Inc. The record includes a return of service indicating that the summons and complaint were served on CT Corporation, designated agent for OneMain Financial on December 26, 2017. Accordingly, Defendant's answer was due January 15, 2018. See MR. Civ. P. 12(a). On February 12, 2018, Plaintiff filed a request for entry of default and default judgment based on OneMain Financial's failure to answer or otherwise plead. On February 13, 2018, Plaintiff filed Motion for Entry of Default Judgment. The Clerk entered default on February 14, 2018.

         On February 20, 2018, more than a month after the due date, OneMain Financial filed an Answer to the Complaint, and on February 23, 2018, it filed a Motion to Set Aside Clerk's Entry of Default. Plaintiff opposes the Motion and has filed his Motion to Strike.


         The resolution of Plaintiffs two motions-for default judgment and to strike late answer-depends on the resolution of Defendant's motion to set aside the default. Under Rule 55(c) of the Maine Rules of Civil Procedure, Defendant's burden is to show "good cause" for setting aside the default.

         The Maine Law Court has said that a defaulted party's showing of good cause for purposes of Rule 55(c) has two elements: "a good excuse for his or her untimeliness and a meritorious defense." Truman v. Browne, 2001 ME 182, P 9, 788 A.2d 168, 170. The Law Court has also noted that "[t]he good excuse and the meritorious defense requirements are two distinct components, both of which must be satisfied in order to prevail on a Rule 55(c) motion." Levine v. KeyBank National Association, 2004 ME 131, ¶20, 861 A.2d 678, quoting Hart v. Terry L. Hopkins, Inc., 588 A.2d 1187, 1190 (Me. 1991). Although the defaulted party bears the burden of showing good cause, there is a strong judicial preference for adjudicating cases on their merits.

         In this case, OneMain Financial has met the meritorious defense component of "good cause," because its Motion to Set Side Clerk's Entry of Default presents evidence that it is not, in fact, formerly known as Citifinancial, Inc., and that another entity is the successor in interest to Citifinancial, Inc. This evidence is not conclusive, and Plaintiff has pointed to misleading information on OneMain Financial's website that undercuts OneMain's contention. However, to the extent Plaintiff contends that OneMain Financial has to prove that it is not a successor to CitiFinancial, that contention overstates OneMain's burden. On the merits, it would likely be Plaintiffs burden, not OneMain's, to prove that OneMain is liable for CitiFinancial's alleged wrongdoing. OneMain has generated an issue as to its liability that is sufficient to satisfy the meritorious defense component of "good cause."

         OneMain's showing of a good excuse for its untimely response is not as strong. The filings do show that OneMain was in touch with Plaintiffs counsel early in January 2018, before the due date of OneMain's answer, and that around the middle of January 2018, OneMain sent material to Plaintiffs counsel that OneMain contends supports its contention that Plaintiff has named the wrong entity as Defendant.

         However, more than a month went by after that. OneMain apparently contends that it was waiting to hear back from Plaintiffs counsel, but Plaintiffs counsel correctly point out that they were not required to respond or to concede to OneMain's contention that it is not a successor to ...

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