The opinion of the court was delivered by: Spatt, District Judge.
U.S. DISTRICT COURT EASTERN DISTRICT OF NEW YORK LONG ISLAND OFFICE MEMORANDUM OF DECISION AND ORDER 5/7/2013 3:56 pm
On October 18, 2012, the Plaintiff HICA Education Loan Corporation ("the Plaintiff") commenced this action against the Defendant Eric H. Feintuch a/k/a Eric Hal Feintuch ("the Defendant"), seeking enforcement of an indebtedness arising under the United States Health Education Assistance Loan ("HEAL") Program (42 U.S.C. §§ 292/294 et seq. and the Federal Regulations set forth in 42 C.F.R. Part 60). In this regard, the Plaintiff alleges that the Defendant failed to make the payments that are due and owing under the terms of three promissory notes, which the Defendant signed in the 1980s pursuant to the provisions of the HEAL statutes and regulations. The Plaintiff further asserts that despite its demand for payment, the Defendant has not repaid the sums that are due and owing under the notes in accordance with their terms.
On December 14, 2012, based on the Defendant's failure to timely answer or otherwise respond to the Complaint, the Plaintiff requested a Certificate of Default, which was subsequently entered by the Clerk of the Court on December 17, 2012. Presently before the Court is the Defendant's unopposed motion pursuant to Federal Rule of Civil Procedure ("Fed. R. Civ. P.") 55(c) to vacate the Certificate of Default in this action. For the reasons discussed below, the Defendant's motion is granted.
The Plaintiff, a corporation, is organized, chartered and existing under the laws of South Dakota. (Compl., ¶ 1.) Sallie Mae is the Plaintiff's duly appointed and acting servicing agent. (Compl., ¶ 1.) Of relevance to the present action, the Plaintiff is the transferee and/or assignee of the Student Loan Marketing Association ("SLMA"). The Defendant is a citizen of the state of New York and resides within the Eastern District of New York. (Compl., ¶ 2.)
In the 1980s, the Defendant signed three promissory notes pursuant to the provisions of the HEAL statutes and regulations. (Compl., ¶ 5.) Specifically, the Defendant signed (1) a promissory note for the amount of $10,417 on June 12, 1985; (2) a promissory note for the amount of $7,327 on July 5, 1984; and (3) a promissory note for the amount of $8,140 on February 6, 1986. (Compl., ¶ 5.) The payee for all three promissory notes was BayBank Norfolk County Trust Co. (Compl., ¶ 5.) "The sums described in the [n]otes were loaned and advanced to [the] Defendant." (Compl., ¶ 6.)
At some point not specified in the Complaint, the three notes at issue were sold, transferred and assigned to the Plaintiff by SLMA. (Compl., ¶ 7.) As such, the Plaintiff is now the owner and/or holder of the notes. (Compl., ¶ 7.) According to the Plaintiff, at some point again not specified in the Complaint, the "Defendant failed to make the payments that are due and owing under the terms of the [n]otes, and, despite demand for payment, [the] Defendant has not repaid the sums that are due and owing under the [n]otes in accordance with the terms of the [n]otes." (Compl. ¶ 8.) The Defendant, however, contends that in or around May 2012, at the direction of a Sallie Mae Representative, he called an automated phone system for Sallie Mae, "proceeded through the prompts and understood by the end of the call that he had obtained a forbearance on all student loans so that no payment would be necessary for at least several months." (Feintuch Decl., ¶¶ 19--24.)
The Plaintiff commenced the instant action against the Defendant on October 18, 2012. Based on the Defendant's alleged default on the promissory notes, the Plaintiff seeks a judgment against the Defendant for actual damages, including (1) unpaid principal, (2) accrued, unpaid, prejudgment interest calculated in accordance with the terms of the notes and (3) accrued, unpaid late charges as applicable, with post-judgment interest on these amounts at the variable rate set forth in the notes. (Compl., "WHEREFORE" ¶.)
On November 6, 2012, the Defendant was properly served with the summons and Complaint. (Tate Affidavit, ¶ 3.) Specifically, the Plaintiff left the summons and Complaint at the Defendant's residence or usual place of abode with Penni Snyder and mailed a copy to the Defendant's last known address. The Defendant admits to having received the Complaint in November 2012. (Feintuch Decl., ¶ 14.) However, the Defendant explains that while he intended to either contact a lawyer or else determine how he could represent himself, he inadvertently failed to take any action to respond to the Complaint on a timely basis due to issues involving the health of one of his daughter's and the recent death of his father. (Feintuch Decl., ¶ 14.)
In this regard, on April 11, 2009, the Defendant's wife, then age 50, gave birth to identical triplets. (Feintuch Decl., ¶ 8.) According to the Defendant, the pregnancy was unplanned. (Feintuch Decl., ¶ 8.) Two of the triplets returned home from the hospital several months after their birth. (Feintuch Decl., ¶ 8.) However, the third triplet, Evienne, suffered from Bronchopulmonary dysplasia and other life-threatening conditions, and thus, did not return home until more than three years later, on August 6, 2012. (Feintuch Decl., ¶¶ 8--10.) Since she was born, Evienne has required the Defendant's full attention and, as a result, the Defendant spent most of the last three years at the hospital and other medical facilities where Evienne was being treated. (Feintuch Decl., ¶ 9.)
Evienne is now approximately four-years old. (Feintuch Decl., ¶ 8.) Although she is home, Evienne breathes with a respirator, is unable to walk or eat on her own and requires constant care and attention. (Feintuch Decl. ¶ 10.) Furthermore, since returning home, Evienne was hospitalized three times for different medical issues and life-threatening emergencies. (Feintuch Dec., ¶ 11.) "These hospitalizations occurred in October, November and December of 2012." (Feintuch Decl., ...