United States District Court, M.D. Florida, Tampa Division
ARNOLD SANSONE UNITED STATES MAGISTRATE JUDGE.
Winter Haven Realty, LLC, 2055 Palmetto Realty, LLC, 703
South 29th Street Realty, LLC, 1650 Fouraker
Realty, LLC, Auburndale Oaks Care Acquisition, LLC, Laurel
Point Care Acquisition, LLC, West Jacksonville Care
Acquisition, LLC, Atlantic Care Acquisition, LLC
(collectively, the defendants) request the court set aside
the clerk's entry of default. (Doc. 41). 1650 Fouraker
Road, SPE, LLC, 2055 Palmetto Street, SPE, LLC, 3663 15th
Avenue, SPE, LLC, 703 South 29th Street, SPE, LLC, 919 Old
Winter Haven Road, SPE, LLC, Atlantic Care and Rehabilitation
Center, LLC, Auburndale Oaks Care and Rehabilitation Center,
LLC, Clear Water Care and Rehabilitation Center, LLC, Laurel
Point Care and Rehabilitation Center, LLC, West Jacksonville
Care and Rehabilitation Center, LLC. (collectively the
plaintiffs) oppose the defendants' motion. (Doc. 42).
plaintiffs initiated this action on June 21, 2019, and the
clerk issued summonses the following day. (Docs. 1, 18). On
June 26, 2019, the plaintiffs served the summons and
complaint on the defendants' registered agent, VCorp
Services (VCorp). (Doc. 26). VCorp forwarded an email
containing the summons and complaint to Samuel Gutman, the
Chief Operations Officer of Citadel Consulting Group, LLC
(Citadel), who is responsible for receiving all notices that
are served via registered agent on the defendants. (Doc. 41,
to the defendants, Mr. Gutman forwarded the notices from
VCorp on July 26, 2019 to the defendants and their counsel.
(Doc. 41, ¶7). Mr. Gutman avers he did not know of the
deadline to respond and did not immediately forward the
notices until the defendants' counsel contacted him.
(Doc. 41, Ex. A).
24, 2019, after the defendants failed to timely answer or
otherwise defend this action, the plaintiffs moved for entry
of clerk's default. (Doc. 25). On July 25, 2019, the
clerk entered a default against the defendants. (Docs.
the defendants learned of the entry of clerk's default,
the defendants conferred with the plaintiffs about their
intentions to move to set aside the clerk's entry of
default. (Doc. 41, ¶8). The plaintiffs advised that the
motion would be opposed. The defendants immediately moved to
set aside the default. (Doc. 41). The plaintiffs oppose the
motion. (Doc. 42).
may set aside entry of a clerk's default for good cause.
Fed.R.Civ.P. 55(c). “Good cause” under Rule 55(c)
is a liberal standard. Sherrard v. Macy's Sys. and
Tech., Inc., 724 Fed.Appx. 736, 738 (11th Cir. 2018)
(quotation and citation omitted); see also Jones v.
Harell, 858 F.2d 667, 668-69 (11th Cir. 1988) (affirming
the district court's holding that “a bare minimum
showing” will justify relief under Rule 55(c)). The
following factors determine whether a defendant has met the
good cause standard of Rule 55(c): “(1) whether the
default was the result of culpable conduct of the defendant,
(2) whether the plaintiff would be prejudiced if the default
should be set aside, and (3) whether the defendant presented
a meritorious defense.” U.S. v. Nalls, 177
F.R.D. 696, 697 (S.D. Fla. 1997) (citing Compania
Interamericana Export-Import v. Compania Dominicana de
Aviacion, 88 F.3d 948, 951 (11th Cir. 1996)). If a party
willfully defaults by displaying either an intentional or
reckless disregard for the judicial proceedings, a court may
decline to set aside a clerk's default. Burgos v.
Valleycrest Golf Course Maintenance, No.
2:10-cv-194-FtM-29SPC, 2010 WL 2243805, (M.D. Fla. June 4,
2010). However, courts generally view defaults with disfavor
due to our “strong policy of determining cases on their
merits.” In re Worldwide Web Sys., Inc., 328
F.3d 1291, 1295 (11th Cir. 2003).
plaintiffs argue that the default was the result of culpable
conduct by the defendants. The plaintiffs contend that it is
difficult to understand how a person who is designated to
receive notice would not understand the importance of the
summons. (Doc. 42 at 4). Specifically, the plaintiffs infer
that the same company who received service here, Citadel, for
whom Mr. Gutman also is the registered agent, had no issues
with responding to a prior summons in a different case.
plaintiffs provide persuasive argument that Mr. Gutman did
understand the required court procedures. But the
defendants' quick response by attempting to confer with
the plaintiffs and filing a motion to set aside the
clerk's entry of default within four days of the
clerk's entry of default indicates that the lack of
response was not intentional but merely a mistake within the
defendants' communication circle. Since the mistake
appears to be unintentional, the defendants' conduct did
not rise to a culpable level.
defendants argue the plaintiffs are not prejudiced by the
court setting aside the clerk's default. The plaintiffs
do not argue that they would be prejudiced. (Doc. 42 at 3).
The defendants attempted to confer with the plaintiffs the
same day they found out about the entry of default. (Doc. 41,
¶ 7). The defendants filed the opposed motion to set
aside the clerk's default within four days of the entry
and no default judgment has been filed or entered. (Doc. 41,
¶7, 12). Therefore, the plaintiffs will not be
prejudiced by setting aside the clerk's entry of default.
the defendants contend that there is a meritorious defense in
that this court lacks subject matter jurisdiction. The
defendants argue that Mr. Leopold, an individual defendant in
this suit, is a New York resident who “directly or
indirectly wholly-owns all of the limited liability companies
that are defendants in this action.” (Doc. 41,
¶22). Based upon the complaint, the plaintiffs are
citizens of New York with this court's jurisdictional
basis being diversity jurisdiction. (Doc. 1, ¶1-10, 23).
The defendants filed a motion to dismiss for lack of subject
matter jurisdiction that is currently pending. (Doc. 43). The
plaintiffs made no response to their meritorious defense
argument. (Doc. 42 at 3). Based on the record and the facts
in the motion, the defendants may have a meritorious defense.