The opinion of the court was delivered by: ARTHUR SPATT, District Judge
On January 24, 2004, the United States of America ("Government"
or the "Plaintiff") commenced this action on the basis of federal
question jurisdiction against John Anthony Alongi ("Alongi" or
the "Defendant") seeking monetary damages for the Defendant's
alleged default on a student loan.
Because the Defendant failed to answer the complaint, a default
judgment was entered against him on April 20, 2004. Nine days
later, on April 29, 2004, the Defendant, appearing pro se,
filed an answer to the complaint and moved to vacate the default
judgment pursuant to Rules 55(c) and 60(b) of the Federal Rules
of Civil Procedure ("Fed.R.Civ.P."). In the papers, the
Defendant states that he sought advice from a law firm on
February 19, 2004, but states that nobody advised him to file
anything with the Court. Also, the Defendant states that he has
recently filed for bankruptcy and has no assets to pay the loan.
Rule 55(c) provides, "For good cause shown, the court may set
aside an entry of default and, if a judgment by default has been
entered, may likewise set it aside in accordance with Rule
60(b)." Fed.R.Civ.P. 55(c). Where a default judgment has
already been entered, Rule 60(b) authorizes a court to vacate the
judgment on the basis of, among other things, "mistake,
inadvertence, surprise or excusable neglect . . . [or if] the
judgment is void." Fed.R.Civ.P. 60(b)(1), (4). Whether to
grant a motion to vacate a default judgment is within the sound
discretion of the district court. State Street Bank and Trust
Co. v. Inversiones Errazuriz Limitada, 374 F.3d 158 (2d Cir.
In deciding a motion to vacate, a court is guided by three
principal factors: "(1) whether the default was willful, (2)
whether the defendant demonstrates the existence of a meritorious
defense, and (3) whether, and to what extent, vacating the
default will cause the nondefaulting party prejudice." Id.
(quoting S.E.C. v. McNulty, 137 F.3d 732, 738 (2d Cir. 1998));
see also American Alliance Ins. Co. v. Eagle Ins. Co.,
92 F.3d 57, 59 (2d Cir. 1996).
The first factor involves whether the default was willful. The
Defendant's failure to answer does not appear to be willful in
this case. The Defendant contacted a law firm on February 19,
2004 seeking advice on how to proceed. Apparently, the Defendant
was either given the wrong advice or did not understand the
advice that the law firm gave him. Upon his learning of the
default judgment, the Defendant took immediate action and filed
an answer nine days later. Thus, it appears the Defendant did not
willfully avoid responding to the lawsuit, but failed to respond
because of mistake, inadvertence, or excusable neglect.
The second factor requires the Court to analyze whether the
Defendant has demonstrated a viable defense. The Court is
required to liberally construe a pro se defendant's papers
"`and interpret them to raise the strongest arguments that they
suggest.'" Soto v. Walker, 44 F.3d 169, 173 (2d Cir. 1995)
(quoting Burgos v. Hopkins, 14 F.3d 787, 790 (2d Cir. 1990)).
In the Defendant's answer, he states that he filed for bankruptcy
under chapter 13 and that he is unable to pay the loans.
A brief overview of the Bankruptcy Code is required to
determine whether the Defendant has a meritorious defense.
Generally, student loans are excepted from discharge through
bankruptcy. See 11 U.S.C. § 523(a)(8)(B). However, student
loans may be discharged if the failure to discharge the loans
would cause undue hardship to the debtor and dependents of the
debtor. Id. In the instant case, it is unclear whether the
Defendant's loans were discharged or if they may be discharged
for undue hardship. The Defendant also claims that he has no
assets and cannot pay the loans. In liberally construing the
Defendant's answer, it appears that a meritorious defense may
The plaintiff opposes the instant motion but does not claim
that vacating the judgment will cause any prejudice. Based on the
foregoing, including the defendant's excusable mistake and the
existence of a meritorious defense, the Court finds that the
Defendant is entitled to defend this suit on the merits. The
Court therefore vacates the default judgment against the
Defendant on the ground that the Defendant defaulted by mistake,
inadvertence, or excusable under Fed.R.Civ.P. 60(b).
Accordingly, it is hereby
ORDERED, that the Defendant's motion to vacate the default
GRANTED; and it is further
ORDERED, that the parties are directed to report forthwith to
United States Magistrate Judge Michael L. Orenstein to set a
schedule for discovery.