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Larson v. Securiguard, Inc.

United States District Court, D. Nebraska

August 18, 2017

MARK LARSON, Plaintiff,


          Laurie Smith Camp Chief United States District Judge.

         This matter is before the Court on the Motion to Set Aside Clerk's Entry of Default and Default Judgment, ECF No. 32, filed by Defendant Securiguard, Inc., Health and Welfare Plan (“Plan”). For the reasons stated below, the motion will be granted.


         Mark Larson, an employee of Securiguard, Inc., filed this action against the Plan and Defendant FCE Benefit Administrators, Inc. (“FCE”), the Plan's third-party administrator, on February 21, 2017, alleging violations of the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1001, et. seq. Larson alleged that due to a misclassification of his employee status under the Plan, he did not receive the full amount of benefits to which he was entitled. In his complaint, ECF No. 1, he pled claims for denial of benefits under 29 U.S.C. § 1132(a)(1)(B); failure to provide plan documents under 29 U.S.C. § 1132(c); failure to provide continuing coverage notice under 29 U.S.C. § 1132(c)(1); breach of fiduciary duty to act in accordance with plan documents under 29 U.S.C. § 1104(a)(1)(D); and breach of fiduciary duty to monitor under 29 U.S.C. § 1105.

         Securiguard's HR Director, Leslie Howard-Watts, became aware of the lawsuit on February 23, 2017. The same day, she sought assistance in addressing the suit from FCE. On February 24, 2017, Larson served FCE, which accepted service on behalf of the Plan. ECF No. 19. Thus, the Plan's answer was due on March 17, 2017. On March 16, 2017, Howard-Watts received an email from Denise Bethel of Trust Management Services (“TMS”), an entity that maintains the same physical address as FCE. The email stated “[w]e were served with this lawsuit, and wanted to check in with you about our plans for helping the plan defend this.” ECF No. 33-2, Page ID 699. The next day, Bethel sent another email to Howard-Watts that stated “[p]er our conversation we will proceed with hiring counsel to defend this legal matter against the plan.” Id. Howard-Watts understood this to mean that TMS would defend the Plan against Larson's suit.

         On March 29, 2017, an attorney who identified herself as counsel for the Plan left a voicemail for Larson's counsel, asking to discuss the law suit. Larson's counsel returned the call the next day, but did not reach the attorney and left a voicemail. Larson's counsel never received a return call from the attorney.

         On April 5, 2017, Howard-Watts became aware that TMS would not be defending the Plan in the present action. Howard-Watts immediately contacted FCE's Director of Account Management, who referred her to FCE's legal department. Several days later, Howard-Watts spoke with FCE's legal counsel, who informed Howard-Watts that the Plan would have to respond separately to the lawsuit. However, Howard-Watts “did not have enough experience with litigation to know to ask who would be responsible for obtaining counsel, and assumed that FCE would take care of it.” Supp. Brief, ECF No. 33, Page ID 686.

         On May 1, 2017, Larson filed a Motion for Clerk's Entry of Default, ECF No. 20, and a Motion for Default Judgment, ECF No. 23, against the Plan. That same day, the Clerk of the Court entered the Plan's default, ECF No. 22, and granted the default judgment, ECF No. 24, in the amount of $161, 326.08.

         On May 12, 2017, Howard-Watts received notice of the entry of default and default judgment while on vacation. Four days later, Howard-Watts contacted FCE to find out why FCE had not responded to the lawsuit. On May 19, 2017, Howard-Watts spoke with FCE's legal counsel, and learned that the Plan was responsible for finding its own counsel. That same day, Howard-Watts secured counsel to represent the Plan in this action. On May 30, 2017, the Plan filed its motion to set aside the entry of default and default judgment. ECF No. 32.


         “The court may set aside an entry of default for good cause, and it may set aside a final default judgment under Rule 60(b).” Fed.R.Civ.P. 55(c). “When examining whether good cause exists, the district court should weigh ‘whether the conduct of the defaulting party was blameworthy or culpable, whether the defaulting party has a meritorious defense, and whether the other party would be prejudiced if the default were excused.'” Stephenson v. El-Batrawi, 524 F.3d 907, 912 (8th Cir. 2008) (quoting Johnson v. Dayton Elec. Mfg. Co., 140 F.3d 781, 784 (8th Cir. 1998)).

         The parties appear to agree that relief from the entry of default should be evaluated under Rule 55(c), and relief from the default judgment under the more rigorous Rule 60(b) standard. See Grant v. City of Blytheville, Arkansas, 841 F.3d 767, 772 (8th Cir. 2016) (“Although the same factors are typically relevant in determining whether to set aside entries of default and default judgments, ‘[m]ost decisions . . . hold that relief from a default judgment requires a stronger showing of excuse than relief from a mere default order.'” (alteration in original) (quoting Johnson, 140 F.3d 781, 783 (8th Cir. 1998))). However, Rule 55(c) was amended in 2015 through the insertion of the word “final” before “default judgment.” Burger v. Engineered Paint Applications, LLC, No. 1:17-CV-1063-STA-EGB, 2017 WL 3431439, at *3 (W.D. Tenn. Aug. 9, 2017). As clarified by this amendment, “[t]he demanding standards set by Rule 60(b) apply only in seeking relief from a final judgment.” Fed.R.Civ.P. 55 advisory committee's note to 2015 amendment (emphasis added). “Until final judgment is entered, Rule 54(b) allows revision of the default judgment at any time.” Id.

         “A default judgment that does not dispose of all of the claims among all parties is not a final judgment.” Id.; see Fed. R. Civ. P. 54(b). “[I]f the default judgment . . . was not final because it did not dispose of all the claims of all the parties, then it is subject to revision under Rule 54(b). The party seeking relief does not need to satisfy Rule 60(b).” 10A Charles Alan Wright et al., Federal Practice and Procedure § 2692 (4th ed.) (internal footnote omitted).

         Here, the default judgment disposed of the claims against only one of the two defendants. Therefore, because the default judgment is not final, the Court will evaluate the motion under the criteria of Rule 55(c) and not the more rigorous standard of Rule 60(b). See Burger, 2017 WL 3431439, at *3 (holding that “the demanding standards” of Rule 60(b) did not apply to a motion to set aside a non-final default judgment). Should the Court determine that good cause ...

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