United States District Court, S.D. New York
September 15, 2004.
REGINA LEWIS, PRO SE Plaintiff,
NISSAN NORTH AMERICA, INC., CORP., et al., Defendants.
The opinion of the court was delivered by: THEODORE KATZ, Magistrate Judge
MEMORANDUM OPINION AND ORDER
Plaintiff, Regina Lewis, proceeding pro se, brings this
action against Defendants Nissan North America, Inc., Corp.,
Newburgh Nissan Car Dealership (collectively "Nissan"), and
various employees of Nissan, claiming that she was misled in a
variety of ways with regard to the purchase and financing of a
Nissan automobile. The action was referred to this Court for
general pretrial supervision and reports and recommendations on
dispositive motions, pursuant to 28 U.S.C. § 636(b) (1) (A), (B),
In a decision, dated June 8, 2004, the Court granted in part
and denied in part a motion brought by some of the Defendants to
strike portions of the Complaint and for a more definite
statement, and recommended the dismissal of some of Plaintiff's
claims. The District Court (Kaplan, J.), accepted this Court's
recommendation and dismissed Plaintiff's claims under
42 U.S.C. §§ 1983, 1985, and 1986. (See Order, dated July 6, 2004 &
modified on July 7, 2004.) On June 30, 2004, Defendants Newburgh
Nissan, Inc., George Harte, Joseph DiRaffaele, Sebastian D'Amica,
William Birmingham, and Nelson Demeleo filed their Answer. On August 26, 2004, Defendants
Nissan North America, Inc., Nissan Motor Acceptance Corp., David
Inurriago, and John Brinegar ("the moving Defendants"), submitted
a proposed Answer, seeking leave to file it nunc pro tunc.
On August 31, 2004, Plaintiff Regina Lewis filed an application
for the entry of a default and default judgment against undefined
Defendants.*fn1 For the reasons that follow, Defendants'
application to file their Answer nunc pro tunc is granted,
and Plaintiff's application for a default judgment is denied.
Under the Federal Rules of Civil Procedure, an answer must be
filed within twenty days after a party is served with a
complaint, or if a motion asserting defenses under Federal Rule
of Civil Procedure 12 is filed in lieu of an answer, the answer
must be filed within ten days of notice of the court's action on
the motion. See Fed.R. Civ. P. 12(a) (1) (A), (4) (A). When a
motion for a more definite statement is made, pursuant to Rule
12(e), and the court grants the motion, the answer must be filed
within ten days after service of the more definite statement.
See Fed.R. Civ. P. 12(a) (4) (B). In this action, however,
while Defendants' motion was pending, the moving Defendants
stipulated with Plaintiff that their answer could be filed by
June 30, 2004, or five business days after the denial of the motion. Accordingly, there is no
claim, nor can there be, that Defendants Newburgh Nissan, Harte,
DiRaffaele, D'Amica, Birmingham, and Demeleo are in default,
since they filed their Answer on June 30.*fn2
However, the moving Defendants' Answer is untimely. At the
latest, it was due by July 21, ten business days after Judge
Kaplan dismissed portions of the Complaint. Defendants therefore
now seek leave to file their Answer, arguing that (1) they have
meritorious defenses; (2) their delay in filing their Answer was
not willful; (3) there is a reasonable excuse for their default;
and (4) their delay has not resulted in any prejudice to
Plaintiff. (See Letter from William H. Grae, Esq., dated Aug.
26, 2004 ("Grae Letter").*fn3
The Second Circuit has held that "[s]trong public policy favors
resolving disputes on [their] merits and that, [a]lthough courts
have an interest in expediting litigation, abuses of process may
be prevented by enforcing those defaults that arise from
egregious or deliberate conduct." Pecarsky v. Galaxiworld.com
Ltd., 249 F.3d 167, 172 (2d Cir. 2001) (quoting Am. Alliance
Ins. Co. v. Eagle Ins. Co., 92 F.3d 57, 61 (2d Cir. 1996)); see
also id. at 174 ("It is well established that default
judgments are disfavored. A clear preference exists for cases to
be adjudicated on the merits."); Enron Oil Corp. v. Diakuhara,
10 F.3d 90, 95-96 (2d Cir. 1993) ("[B]ecause defaults are
generally disfavored and are reserved for rare occasions, when
doubt exists as to whether a default should be granted or
vacated, the doubt should be resolved in favor of the defaulting
As provided in Federal Rule of Civil Procedure 55(c), "[f]or
good cause shown the court may set aside an entry of
default. . . ." In this action, a default has not even been
entered. See Fed.R. Civ. P. 55(a) ("When a party against whom
a judgment for affirmative relief is sought has failed to plead
or otherwise defend as provided by these rules and that fact is
made to appear by affidavit or otherwise, the clerk shall enter
the party's default."); see also Enron, 10 F.3d at 95. The
Court will nevertheless treat Defendants' motion as one to set
aside their default. See Meehan v. Snow, 652 F.2d 274, 276
(2d Cir. 1981) ("The omission of the entry of a default was
largely technical because the hearing on the appellees' motion
for the entry of a default judgment afforded the appellants the
same opportunity to present mitigating circumstances that they
would have had if a default had been entered and they had then
moved under Rule 55 to set it aside."). The factors to be considered in determining whether "good
cause" has been shown to relieve a party of its default are:
"whether the default was willful; (2) whether setting aside the
default would prejudice the adversary; and (3) whether a
meritorious defense is presented." Enron, 10 F.3d at 96; see
also Action S.A. v. Marc Rich & Co., Inc., 951 F.2d 504, 507
(2d Cir. 1991); Meehan, 652 F.2d at 277. "Other relevant
equitable factors may also be considered, for instance, whether
the failure to follow a rule of procedure was a mistake made in
good faith and whether the entry of default would bring about a
harsh and unfair result." Enron, 10 F.3d at 96.
Willfulness requires a showing of bad faith or deliberate
default on the part of the defaulting party, and does not
"include careless or negligent errors." Am. Alliance,
92 F.3d at 62. There is no evidence of willfulness in this case.
Defendants' counsel has explained that he confused the
requirements of Federal Rule of Civil Procedure 12(e), with those
of Rule 12(f), and believed that after this Court granted
Defendants' motion to strike portions of the Complaint, Plaintiff
was required to filed an amended complaint, which would then
trigger the ten-day period for filing a responsive pleading.
See Fed.R. Civ. P. 12(a)(4)(B). Accordingly, this factor
weighs in Defendants' favor.
Meritorious Defenses In order to establish a meritorious defense, "the test . . . is
measured not by whether there is a likelihood that [the
defendant] will carry the day, but whether the evidence
submitted, if proven at trial, would constitute a complete
defense." Pecarsky, 249 F.3d at 173 (quoting Enron,
10 F.3d at 98); see also Am. Alliance, 92 F.3d at 61 ("[T]he defense
need not be ultimately persuasive at this stage. A defense is
meritorious if it is good at law so as to give the factfinder
some determination to make.") (internal quotation marks omitted).
Defendants assert several defenses to Plaintiff's claims which,
if proven, will preclude a finding of liability. For example, as
mere assignees of Plaintiff's automobile financing contract,
Defendants contend that they cannot be liable under the Truth in
Lending Act ("TILA") because they did not engage in any failure
to comply with the disclosure requirements of the Act.
Defendants also contend that Plaintiff's claims under TILA will
be time-barred. There is a one-year statute of limitations under
TILA, see 15 U.S.C. § 1640(e), which commences running on the
date of the alleged violation. In most cases involving
"closed-end credit" transactions, the violation occurs on the
date the plaintiff enters into the loan agreement. See
Boursiquot v. Citibank F.S.B., 323 F. Supp. 2d 350, 353 (D.
Conn. 2004); Cardiello v. The Money Store, Inc., No. 00 Civ.
7332 (NRB), 2001 WL 604007, at *3 (S.D.N.Y. June 1, 2001).
Moreover, absent fraudulent concealment, most courts which have addressed the issue have
concluded that the limitations period will not be equitably
tolled for mere nondisclosure of information. See Boursiquot,
323 F. Supp. 2d at 354; Cardiello, 2001 WL 604007, at *5. In
this case, Plaintiff took possession of her automobile and signed
the financing agreement in March 2002, and, after demanding
various financing documents, refused to make any further payments
for the car as of January 6, 2003, on the grounds that she had
been mislead about the financing and warranty terms. The
Complaint was filed on January 23, 2004, although, this Court
considers the filing date to be December 10, 2003, the date it
was received in the Court's Pro Se Office. See Toliver v.
County of Sullivan, 841 F.2d 41, 42 (2d Cir. 1988). The
Complaint was therefore filed more than one year after
Plaintiff's purchase of the automobile. Although the question
cannot be resolved absent factual discovery, there thus appears
to be a substantial possibility that Plaintiff's TILA claims will
In addition, Defendants contend that Plaintiff's claims under
the Magnuson-Moss Warranty Act, 15 U.S.C. § 2310, et seq.,
are facially defective, since the Act grants relief to a consumer
"who is damaged by the failure of a . . . warrantor . . . to
comply with any obligation . . . under a written warranty."
Wilbur v. Toyota Motor Sales, U.S.A., 86 F.3d 23, 26 (2d Cir.
1996); see also 15 U.S.C. § 2310(d)(1) (1994). The Complaint
recites a litany of grievances regarding misrepresentations that Nissan Newburgh made
about Plaintiff's automobile and the retail installment
agreement, but it does not appear to claim any violations of the
warranty applicable to the vehicle.
The Court therefore concludes that Defendants have demonstrated
that they do have meritorious defenses to the Complaint.
Plaintiff has not identified any prejudice as a result of
Defendants' failure to file their Answer, and the Court can
perceive none. Pretrial discovery is ongoing and its course has
not been impeded or delayed as a result of the failure of some of
the Defendants to file their Answer.
Because Defendants default was not willful, meritorious
defenses have been asserted, and no prejudice has resulted, the
Court concludes that Defendants have shown good cause to vacate
their default. It follows that Plaintiff's application for the
entry of a default judgment is denied. The moving Defendants
shall file their Answer promptly, and the remaining Defendants
are hereby granted leave to file an amended answer. The parties
shall complete pretrial discovery by the deadline previously set. SO ORDERED.