• Uninvolved Defendants Must Be Aware of Default Judgment
  • March 28, 2013 | Author: Ian Lambeets
  • Law Firm: Sands Anderson PC - Richmond Office
  • On February 22, 2013, Judge Michael Urbanski from the United States District Court for the Western District of Virginia—Harrisonburg Division, rendered his opinion in the case of Parks v. Discount Box and Pallet, et a.l, No. 5:12cv081 (W.D. Va. Feb. 22, 2013).  At issue in the case was whether to enter a default judgment against defendant Discount Box when the defendant’s delay in responding to the lawsuit was primarily caused by the actions of its insurer.

    The plaintiff served Discount Box through the Secretary of the Commonwealth in accordance with Virginia’s long-arm statute.  Five days after Discount Box’s responsive pleadings were due, the plaintiff filed a motion for entry of default judgment.  An hour before the Rule 55 evidentiary hearing on damages, and twenty-five days after their answer was due, Discount Box filed its responsive pleadings.  At the evidentiary hearing, plaintiff’s counsel testified about the difficulties he experienced when dealing with Discount Box’s insurer.  However, the plaintiff introduced no evidence to show that Discount Box itself was responsible for the delay.  Seventeen days after the evidentiary hearing, Discount Box filed its motion to set aside the verdict.

    From the outset, Judge Urbanski was clear that the Fourth Circuit “expressed a strong preference that, as a general matter, defaults be avoided and that claims and defenses be disposed of on the merits.”  Memorandum Opinion, at 8.  Judge Urbanski then outlined the various factors the court must consider when deciding whether to set aside a default judgment.  First, the court must determine whether a defendant’s affirmative defenses are meritorious.  This is an important consideration because vacating a default judgment against a defendant who does not have a meritorious defense to the allegations would merely be delaying the inevitable.  The court must then look to whether the defendant was reasonably prompt in responding to the entry of default.  Finally, the court must look to the defendant’s personal responsibility for defaulting and its history of dilatory action.  Although Judge Urbanski found Discount Box’s defenses were without merit, he believed that Discount Box was reasonably prompt in its response to the entry of default and was not primarily responsible for the delayed response.  The court also found that the plaintiff was not prejudiced by the defendant’s delay in responding because the delay did not interfere with their ability to gather evidence and conduct discovery. In light of these considerations, the court granted Discount Box’s motion to set aside the verdict.

    What is most important about this case is the court’s recognition that defendants are not relieved of their responsibility or obligation to timely respond to lawsuits because their insurers are handling their claims.  In this case, Discount Box was fortunate that it filed responsive pleadings and made an appearance at the evidentiary hearing before a default judgment was entered.  All defendants, whether a corporation or an individual, should be cognizant that they are personally liable in case of default even if another party is handling the case.  Defendants should communicate with their insurers and the attorneys hired to represent them in a prompt and continuing manner.  

    A full copy of the opinion is available at the Virginia Lawyers Weekly website:

    http://valawyersweekly.com/fulltext-opinions/2013/03/19/013-3-124-parks-v-discount-box-pallet-inc/