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Chavez v. Best Margarita's Mexican Grill

August 16, 2007


The opinion of the court was delivered by: John T. Elfvin S.U.S.D.J.



This Title VII claim was filed on October 19, 2006 against Best Margarita's Mexican Grill, doing business as Margarita's Restaurant, and alleges sexual harassment in the workplace and discrimination based on sex. It also specifically alleges that plaintiff was sexually assaulted and raped by a co-worker and that when plaintiff reported such to her employer, she was fired. A Summons was issued on October 20, 2006 and returned as executed on March 8, 2007, indicating that service of the Summons and Complaint was accomplished by service on the Secretary of State in accordance with New York law (Business Corporation Law §306)on January 16, 2007.*fn2 No Answer was filed or otherwise served and on March 8, 2007, plaintiff made a request for a Clerk's entry of default, which was entered on March 9, 2007 (Dkt. #5). No motion for default judgment has been made, hence, judgment has not been entered in this case. On April 6, 2007, defendant made this motion to vacate the Clerk's Entry of Default (Dkt. #6).*fn3

Defendant admits that it was aware that the lawsuit was imminent through the process of the EEOC and New York State Division of Human Rights proceedings. It is also undisputed that plaintiff's counsel requested that the attorney for the restaurant in the administrative proceedings accept service of the Summons and Complaint herein - which he refused. However, defense counsel claims that they never heard anything more about the matter until the client called and notified him of the entry of default. Defendant also claims that it never received notification of service from the Secretary of State.

Defendant further claims to have a meritorious defense in that plaintiff's allegations are false (i.e., the wrath of a woman scorned) and defendant has continually maintained such throughout the administrative proceedings.

Plaintiff's counsel replies that, although she does not believe there is cause to vacate, and that there is also cause to believe there was a conscious avoidance of service here*fn4 , she will not oppose it because her client is insistent on having her case heard by a judge and jury. At oral argument hereon, plaintiff appeared personally to reinforce her desire to have this matter proceed on its merits.


Rule 55(c) of the Federal Rules of Civil Procedure (FRCvP) provides that "[f]or good cause shown the court may set aside an entry of default". This "good cause" standard is broader and more liberal than the standards and considerations under FRCvP 60(b), which is not implicated herein because no final order or default judgment has been filed.*fn5

"The decision to set aside an entry of default is committed to the discretion of the district judge." Reiss v. Clark, 1990 WL 257275, *2 (W.D.N.Y. 1990)(Elfvin, J); see also Tesillo v. Emergency Physician Associates, Inc., 230 F.R.D. 287, 289 (W.D.N.Y. 2005)(Larimer, J.)("Decisions to vacate an entry of default are within the discretion of the court"). "Because there exist 'strong policies favoring the resolution of genuine disputes on their merits, %%% doubts are to be resolved in favor of a trial on the merits.'" Reiss, supra at 2 (internal citation omitted); see also, Tesillo, supra at 289 ("any doubts should be resolved in favor of a trial on the merits."). Further, "[a]lthough the factors to be considered are the same, the standard for deciding whether to vacate an entry of default is less rigorous than the standard which is applied when deciding whether to vacate a default judgment. Tesillo, supra at 289 (citing Pecarsky v. Ltd., 249 F.3d 167, 171 (2d Cir.2001) and American Alliance Insurance Co. v. Eagle Insurance Co., 92 F.3d 57, 59 (2d Cir.1996)); see also Reiss, supra at *2 ("the standard applied by a court for setting aside an entry of default pursuant to a Rule 55(c) motion is less rigorous than the standards for setting aside a default judgment, pursuant to Rule 60(b).")

In determining whether to vacate an entry of default, the Court must consider "(1) whether the default was willful; (2) whether setting aside the default judgment would prejudice the adversary; and (3) whether a meritorious defense is presented." See Powerserve Intern. Inc. v. Lavi, 239 F.3d 508, 514 (2d Cir.2001) *289 (quoting Enron Oil Corp. v. Diakuhara, 10 F.3d 90, 96 (2d Cir.1993)).

Tesillo, supra at 288. For the reasons that follow, the Court finds that the defendant has met the burden of showing good cause.

The first consideration - willfulness - is a close question and somewhat similar to the Court's considerations in the Reiss, case, above. In Reiss, it was found that, in allowing the default the attorney was "negligent to a reprehensible degree". Reiss, supra at *2. In the present case, the defendant's attorney, in refusing to accept service of the Complaint, appears to have been negligent in that such refusal resulted in the need to effect service on the Secretary of State, notice of which defendant claims it never got. While not legally obligated to accept service on behalf of his client, the Court equates counsel's refusal to accept service as an unreasonable and ill advised, perhaps even negligent, legal tactic. However, the willful refusal to accept service does not squarely equate to a finding of willfulness*fn6 under this consideration. See Jones v. Herbert, 2004 WL 3267285 at *2 (W.D.N.Y. 2004)(Elfvin, J) ("The Second Circuit looks for bad faith or for at least something more than mere negligence before rejecting a claim of excusable neglect based on an attorney's or a litigant's error."); see, e.g., American Alliance, supra, 92 F.3d at 61 (refusing to find willfulness in the default judgment context where defendant's failure to answer was due to a filing clerk's error in misplacing the complaint); Sims v. West, 2005 WL 2241066 at *2 (W.D.N.Y.2005)(Siragusa, J.) (refusing to find willfulness where defendant failed to answer the complaint because of a mistaken assumption that he was represented by the New York State Attorney General's office).

With respect to the considerations of prejudice and the merits of the defense, and in light of plaintiff's lack of objection to the motion and her specifically stated and expressed desire to have this matter litigated, the Court finds the prejudice to the plaintiff in granting the motion is negligible and the defense, as asserted by defendant in support of the motion, is sufficiently meritorious.*fn7 Therefore, the Clerk's entry of Default (Dkt. #5) shall be vacated.

However, costs shall be imposed upon the defendant pursuant to FRCvP 4(d) for counsel's refusal to accept service. In this regard, the Court finds that plaintiff complied with the requirements of FRCvP 4(d)(2) in her notice and request that defendant waive service and accept the Summons and Complaint. The rule states that "[i]f a defendant %%% fails to comply with a request for waiver made by a plaintiff %%% the court shall impose the costs subsequently incurred in effecting service on the defendant unless good cause for the failure be shown". FRCvP 4(d)(2)(emphasis added). Implicit in the Court's discussion, supra, regarding defense counsel's negligent tactic in refusing to accept service is a finding that no good cause exists for the failure to accept service herein. Further, "[t]he costs to be imposed %%% ...

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