Setting Aside Default Judgments
Default judgments are not favored in civil litigation. Not only are default judgments disfavored, but because cases should be decided on the merits, the trial court is vested with broad discretion to set them aside. The length of time that passes between the entry of a default judgment, and the motion asking the court to set it aside, is certainly a factor and the motion should be filed within a year. Beyond that, courts generally consider three factors in determining whether to set aside a default judgment. These are (1) valid excuse for default, (2) meritorious defense, and (3) absence of prejudice to the other party.
There are few published opinions where courts analyze what actually constitutes a valid
excuse sufficient to set aside a default judgment. One example of where courts will find that good cause exists for failure to respond to a complaint is when there is evidence that the defendant had been lulled by the plaintiff’s conduct into a good faith belief that filing an answer was not necessary. In one case, for example, one brother sued another over the publication of a book about their lives as adopted children. Approximately two months after default judgment was entered, the other party filed a motion to set aside the default judgment supported by an affidavit which stated that conversations with his brother made him believe that the lawsuit would be dismissed, and that he did not file a response to the complaint for that reason.On these facts, the Court found that a valid excuse existed and set aside the default judgment.
Similarly, a valid excuse would lie to set aside a default judgment where the plaintiff indicates to the defendant that it does not need to file a response. In these instances, courts generally find that the failure to answer a complaint demonstrates at most negligent reliance on the other party’s lulling statements, not intentional or reckless conduct designed to impede the legal process.
Under the federal rules, it is not absolutely necessary that the neglect or oversight offered as reason for the delay in filing a responsive pleading be excusable. Instead, for a defendant’s actions to constitute culpable conduct, the defendant must display either an intent to thwart judicial proceedings or a reckless disregard for the effect of its conduct on those proceedings, rather than negligent conduct. To be treated as culpable, the conduct of a defendant must display either an intent to thwart judicial proceedings or a reckless disregard for the effect of its conduct on those proceedings.
The second component of the three-part test looks to whether the party trying to set aside the default judgment has a meritorious defense on the merits such that setting aside the default judgment is not a waste of time and an exercise in futility. This prong essentially asks whether the defendant has a colorable defense to the merits of the plaintiff’s claim.… Colorable is defined as appearing to be true, valid, or right. A colorable defense is one that reasonably may be asserted, given the facts of the case and the current law. A defense need not be compelling, be proven to trial standards, or be supported by sworn evidence in order to qualify as a colorable defense. Rather, the defense must be a reasonable one.
The third component of the three-part test is whether there is an absence of prejudice to the party that obtained the default judgment. For the setting aside of a default judgment to be considered prejudicial, it must result in more than delay. Delay is inherent every time a default judgment is set aside and mere delay is clearly insufficient. Rather, the delay must result in tangible harm such as loss of evidence, increased difficulties of discovery, or greater opportunity for fraud or collusion. Having to respond to defenses and expending money to litigate also do not establish prejudice sufficient to deny a motion to set aside a default judgment.
If you’re facing challenges with a default judgment and need professional legal assistance, consult with a qualified personal injury lawyer who can guide you through the process of potentially setting it aside.
Thank you to our friends at Katz Law for the above blog.
