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Harnden v. York Insurance Co. of Maine

United States District Court, D. Maine

February 6, 2019

PATRICIA HARNDEN, Plaintiff
v.
YORK INSURANCE COMPANY OF MAINE, et al., Defendants

          MEMORANDUM OF DECISION AND ORDER ON DEFENDANT'S MOTION TO SET ASIDE DEFAULT AND FILE LATE ANSWER

          Lance E. Walker United States District Judge.

         Defendant, Netherlands Insurance Company moves to set aside the default entered against it on March 23, 2018 and to file a late answer. The Plaintiff, Patricia Harnden, opposes that request. For the following reasons, the Court GRANTS Defendant's Motion to Set Aside Default and File Late Answer.

         PROCEDURAL BACKGROUND

         On January 10, 2018, Harnden filed a complaint against National General Insurance seeking a declaratory judgment and asserting claims for breach of contract, violation of the Maine Unfair Claims Settlement Practices Act, and violation of the Maine Unfair Trade Practices Act. Complaint (ECF No. 1). On February 6, 2018, Harnden filed her First Amended Complaint which removed National General Insurance as a defendant and named two new defendants: Netherlands Insurance Company and York Insurance Company of Maine. Amended Complaint (ECF No. 6). On March 23, 2018, Harnden moved for default against Netherlands and submitted a Proof of Service indicating that Netherlands had been served through its agent of service, Corporation Service Company (“CSC”), on February 8, 2018. Motion for Default (ECF No. 15, #45); Motion for Default, Ex. A, 2 (ECF No. 15-1, #49). When no response was received from Netherlands, a clerk's default was entered on March 23, 2018. Order Granting Motion for Entry of Default (ECF No. 16). Harnden then moved for Default Judgment on April 13, 2018, and a damages hearing was scheduled for February 11, 2019. Motion for Default Judgment (ECF No. 19); Notice of Damages Hearing (ECF No. 41).

         Pursuant to this Court's order, Harnden served Netherlands with notice of the damages hearing on December 18, 2018, once again serving Netherlands through CSC. Proof of Service (ECF No. 46). On December 21, 2018, Netherlands filed the instant motion. Motion for Leave to File Late Answer (ECF No. 45). On January 3, 2019, Netherlands filed a memorandum in support of its motion asserting that it “did not receive notice of the complaint or the instant action when CSC was originally served.” Memorandum in Support of Defendant's Motion (“Motion Memo”), 2 (ECF No. 48, #115).

         DISCUSSION

         Under Federal Rule of Civil Procedure 55(a), the clerk must enter default against a party who has “failed to plead or otherwise defend.” However, in cases where “good cause” is shown, the Court may set aside the entry of default. Fed.R.Civ.P. 55(c).

         The phrase “good cause” is construed liberally[1] and Courts are not required to adhere to a rigid or “mechanical formula” when considering whether good cause exists. In re Game Tracker, Inc., 746 F.Supp.2d 207, 217 (D. Me. 2010). In this determination, courts are permitted to consider a variety of relevant factors, which often include: “(1) whether the default was willful, (2) whether setting it aside would prejudice the adversary, (3) whether the defaulting party presents a meritorious defense, (4) the explanation for the default, (5) the good faith of the parties, (6) the amount of money involved, and (7) the timing of the motion.” Lucerne Farms v. Baling Techs., Inc., 208 F.R.D. 463, 465 (D. Me. 2002) (citing Coon v. Grenier, 867 F.2d 73, 76 (1st Cir. 1989)). As the overriding philosophy of the federal rules is that “actions should ordinarily be resolved on their merits, ” I must “resolve doubts in favor of a party seeking relief from the entry of a default.” Coon, 867 F.2d at 76 (citations omitted).

         I. Justification for Default

         Three of the “good cause” factors-namely the proffered explanation for default, whether the default was “willful, ” and whether the defaulting party acted in “good faith”- concern whether Netherlands has offered an adequate “justification for its default” and I will consider them together. See Lucerne Farms, 208 F.R.D. at 465.

         In its motion, Netherlands asserts it was not aware of the instant lawsuit until it received notice of the damages hearing on December 18, 2018. Netherlands explains:

CSC is a Commercial Registered Agent (“CRA”) services provider in the State of Maine, and happens to be the CRA for Netherlands as well as for York, the other defendant in this matter. . . . CSC received via personal service a single copy of a summons and the complaint issued in this action on February 8, 2018. The copy of the summons received had both York and Netherlands underlined by hand. On February 9, 2018, CSC determined that the summons should be provided to York because it was York's CRA and York was the first defendant underlined. CSC processed the summons and Complaint as directed to York. . . . In accordance with its own policies, CSC did not send the summons and complaint to Netherlands or provide any type of notice to Netherlands.[2]

Motion Memo, 2 (ECF No. 48, #115) (record citations omitted). These assertions are supported by affidavits of representatives from CSC[3] as well as Liberty Mutual Group, Inc.[4] Affidavit of Caitlin Alaburda (ECF No. 48-1, #121), Affidavit of Janet Nolan (ECF No. 48-4, #151). Harnden denies Netherlands' “specious argument, ” instead asserting that “the proofs of service clearly indicate that each Defendant was served with separate process of the Amended Complaint.” Plaintiff's Objection, 4 (ECF No. 55, #247).

         Resolving doubts in favor of the movant, Netherland's proffered explanation provides “reasonable justification” for their initial lack of response. Snyder v. Talbot, 836 F.Supp. 26, 29 (D. Me. 1993) (citing Coon, 867 F.2d at 76). The circumstances leading to Netherlands' failure to respond-specifically CSC's failure to provide any form of notice to Netherlands pursuant to its internal protocols-were “out of [Netherlands'] control.” Winslow Marine, Inc. v. J. Supor & Son Trucking & Rigging, Inc., 2016 WL 7235670, at *2 (D. Me. Dec. 14, 2016) (granting a motion to vacate default judgment when a corporation ...


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