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Kuklachev v. Gelfman

February 26, 2009

YURI KUKLACHEV, DMITRI KUKLACHEV, PLAINTIFFS,
v.
MARK GELFMAN, GELFMAN INTERNATIONAL ENTERPRISES, INC., YANIS GELFMAN, TRIBECA PERFORMING ARTS CENTER, TICKETMASTER.COM, PALACE OF FINE ARTS, WILKINS THEATER AT KEAN UNIVERSITY, ONLINESEATS.COM, JOHN HANCOCK HALL, GWINNETT CENTER, NAPA VALLEY OPERA HOUSE, LA'S WILSHIRE EBELL'S THEATER, SEATTLE REPERTORY THEATER, DMITRY KRASSOTKINE, YURI POTOSKI, MICHAEL ZLOTNIKOV, ANDREW YANKOVIS, STANISLAV NEMOY, VLADIMIR KRASNOLOZHKIN, AND VLADIMIR ANISIMOV, DEFENDANTS.



The opinion of the court was delivered by: Sifton, Senior Judge

MEMORANDUM OPINION AND ORDER

Yuri Kuklachev and Dmitri Kuklachev ("plaintiffs") commenced this action against defendants Mark Gelfman, Gelfman International Enterprises, Inc. ("Gelfman, Inc."), Yanis Gelfman (the "Gelfmans"), various theater venues, various theater performers, Tribeca Performing Arts Center ("Tribeca"), and Tillinger's Concierge, Inc. ("Tillinger's"),*fn1 on June 2, 2008. Plaintiffs alleged trademark infringement under the Lanham Act, § 43(a), 15 U.S.C. § 1125(a), as well as other federal and state law claims, in connection with allegedly infringing performances conducted by Gelfman and Gelfman Inc. Now before the Court are motions by the Gelfmans to set aside the Clerk's entry of default against them in favor of Tillinger's and Tribeca, and a motion by Tillinger's, joined by Tribeca, seeking default judgments against the Gelfmans.*fn2 For the reasons stated below, the motions to set aside the entries of default are granted, and the motions for default judgment are denied.

BACKGROUND

The following facts are taken from the record the parties' submissions in connection with this motion.

Plaintiffs filed their complaint on June 2, 2008. On July 17, 2008, Tribeca answered the complaint and asserted cross-claims against the Gelfmans for contractual indemnification, common law indemnification, and contribution. On August 6, 2008, Tillinger's answered the complaint and asserted cross-claims against the Gelfmans for contractual indemnification, common law indemnification, and contribution. The defendants failed to timely answer or otherwise respond to the cross-claims by Tillinger's and Tribeca. On October 28, 2008, Tillinger's requested that the clerk enter default against the Gelfmans. On October 29, 2009, the Clerk entered a default in favor of Tillinger's. On October 30, 2008, Tribeca requested that a default be entered. On October 31, 2008, the Gelfmans answered Tribeca's cross-claims.

On January 29, 2009, three months after the Clerk's entry of default in favor of Tillinger's, the Gelfmans filed a motion for extension of time to file answers to cross-claims by several co-defendants, including Tillinger's, and simultaneously filed an answer to Tillinger's cross-claims. On February 6, 2009, the Clerk entered a default in favor of Tribeca. On February 11, 2009, Tribeca sought the Court's permission to join Tillinger's motion for default judgment against the Gelfmans.

In a letter dated August 8, 2008, counsel for Gelfman, Inc. stated to counsel for Tribeca that Gelfman, Inc. would defend and indemnify Tribeca in the present lawsuit "without any reservation of rights." Letter from Tribeca, February 9, 2009, Attachment 1. The letter further stated that Gelfman, Inc. had filed a motion to dismiss, and requested that Tribeca's counsel forward a letter authorizing attorneys for Gelfman, Inc. to represent Tribeca in this case. Id. The claims were submitted to Gelfman, Inc.'s insurance carrier, but there has yet to be a final determination from the carrier as to coverage for the defendant venues. Letter from the Gelfmans, January 29, 2009 ("Gelfman Letter").

In October and November of 2008, counsel for Tillinger's conducted preliminary discussions with James Woods, prior counsel for the Gelfmans, in an effort to resolve Tillinger's crossclaims and application for Certificate of Default. Sunshine Aff. at ¶ 6. By email of October 30, 2008, Mr. Woods acknowledged the entry of default by the Clerk. Id. No resolution was reached between Tillinger's and the Gelfmans. Id. The claims were submitted to Gelfman, Inc.'s insurance carrier, but there has yet to be a final determination from the carrier as to coverage for the defendant venues. Gelfman Letter.

DISCUSSION

The Gelfmans move to set aside the Clerk's entry of default in favor of Tillinger's and Tribeca. Tillinger's and Tribeca move for entry of default judgments against the Gelfmans. These applications will be considered in turn.

A. Motion to Vacate Clerk's Entry of Default

As a preliminary matter, the Gelfmans argue that the Clerk should not have entered the default in the first place. The Clerk must enter a default when the defaulting party has "failed to plead or otherwise defend." Fed.R.Civ.Pro. 55(a). The Gelfmans state that they have mounted a vigorous defense to plaintiffs' claims, including challenging the imposition of liability on defendant venues. The Gelfmans' efforts to defend themselves against plaintiffs' allegations do not constitute "defending" against cross-claims by Tillinger's and Tribeca, which is the focus of the rule.*fn3 There is no evidence that the Clerk's entry of default was improper.

The Court may set aside an entry of default for "good cause."*fn4 Fed.R.Civ.Pro. 55(c). To determine if good cause exists, a court must evaluate: "(i) the willfulness of the default, (ii) the prejudice to the adversary if the default is set aside, and (iii) whether the defendants present a meritorious defense." Holford USA v. Harvey, 169 F.R.D. 41, 44 (S.D.N.Y. 1996) (citing Traguth v. Zuck, 710 F.2d 90, 94 (2d Cir. 1983). There is a "strong polic[y] favoring the resolution of genuine disputes on their merits," and "doubts are to be resolved in favor of a trial on the merits." Traguth, 710 F.2d at 94. Even if one factor weighs against vacating the default, if the other factors support it, the presumption in favor of resolution on the merits requires that the court vacate the default. See Grant v. City of New York, 145 F.R.D. 325, 327 (S.D.N.Y. 1992). Prejudice to the party seeking the default is not required in order to deny a motion to vacate the ...


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