United States District Court, S.D. Illinois
MEMORANDUM AND ORDER
J. ROSENSTENGEL, United States District Judge
matter comes before the Court on the Motion to Set Aside
Default and Motion to Stay All Claims Against GRC Golf
Products, LLC, and Irish Capital, LLC, filed by Defendants
GRC Golf Carts, GRC Golf Products, LLC, and Irish Capital,
LLC (Doc. 51). For the following reasons, the motion is
granted in part and denied in part.
case arises from agreements between Plaintiff B&B Golf
Carts, Inc. (“B&B”), and GRC Golf Products,
LLC (“GRC”), for the purchase of golf carts (Doc.
1, ¶¶ 12, 41). During 2016, B&B placed numerous
orders for various types of golf carts from GRC. At the time
the Complaint was filed, GRC still owed B&B 34 golf carts
for which B&B had already paid (Id., ¶ 38).
Furthermore, 39 of the golf carts delivered to B&B had
worn tires and wheels, which GRC had agreed to replace
(Id., ¶ 39). In sum, B&B alleges GRC owes
it $108, 950 for the golf carts, tires, and wheels
(Id., ¶ 40).
September 19, 2016, B&B filed an 11-count Complaint
stating a variety claims against Defendants GRC, Irish
Capital, GRC Golf Carts, Richard Niblock, Gary Niblock, and
Chad Leiby (Doc. 1). Defendants GRC and Irish Capital were
served with the Complaint on December 6, 2016 (Docs. 16, 17),
and their responsive pleadings were due December 27, 2016.
Both entities failed to answer the Complaint or otherwise
plead. On February 21, 2017, B&B moved for an order of
default against GRC and Irish Capital (Docs. 41, 44). On
February 22, 2017, the Clerk of Court entered default against
GRC and Irish Capital pursuant to Rule 55(a) of the Federal
Rules of Civil Procedure (Doc. 48).
February 24, 2017, GRC and Irish Capital (herein,
“Defendants”) filed a motion to set aside
default, as well as to stay all claims against GRC (Doc. 51).
Defendants argue good cause exists to set aside the entry of
default because the Complaint contains no claims against
Irish Capital, LLC, and GRC is subject to the automatic
bankruptcy stay provided by 11 U.S.C. § 362(a).
Defendants assert that GRC is merely a “d/b/a” of
GRC Investments, LLC, which filed for Chapter 7 bankruptcy on
June 30, 2016.
from entry of a default requested prior to entry of judgment
is governed by Federal Rule of Civil Procedure 55(c), which
provides that “the court may set aside an entry of
default for good cause . . . .” Fed.R.Civ.P. 55(c). A
party wishing to have entry of default vacated prior to entry
of a default judgment must show: (1) good cause; (2) quick
action to correct the default; and (3) a meritorious defense
to the complaint. Sun v. Board of Trustees of University
of IL, 473 F.3d 799, 810 (7th Cir. 2007). “Rule
55(c) requires ‘good cause' for the judicial
action, not ‘good cause' for the defendant's
error.” Sims v. EGA Prods., 475 F.3d 865, 868
(7th Cir. 2007) (“Damages disproportionate to the wrong
afford good cause for judicial action, even though
there is no good excuse for the defendant's
inattention to the case.”). The standard is essentially
the same as that for vacating a default judgment under Rule
60(b); however, relief under Rule 55(c) is more readily
granted, where relief under Rule 60(b) is more “limited
and stringent.” Jones v. Phipps, 39 F.3d 158,
162 (7th Cir. 1994); see Cracco v. Vitran Exp.,
Inc., 559 F.3d 625, 631 (7th Cir. 2009).
Seventh Circuit Court of Appeals has repeatedly expressed a
policy of favoring trial on the merits over default judgment.
Cracco, 559 F.3d at 631; Sun, 473 F.3d at
811 (citing C.K.S. Eng'rs, Inc. v. White Mountain
Gypsum Co., 726 F.2d 1202, 1205 (7th Cir. 1984)). Thus,
a default should “only be employed in extreme
situations, or when less drastic sanctions have proven
unavailing, or when a party willfully disregards the
litigation.” Local No. 1118 Indiana Const. Trades
Health and Welfare Trust Fund Painters v. Forsey Const.
Inc., No. 3:11-CV-168, 2012 WL 12674, at *2 (N.D. Ind.
Jan. 3, 2012) (citing Sun, 473 F.3d at 811)).
Motion to Set Aside Entry of Default
Irish Capital, LLC
argue that good cause exists to set aside the entry of
default against Irish Capital because no claims have been
asserted against that defendant. Defendants aver that Irish
Capital is not named in the heading of any counts in the
Complaint, and the only claim where it is even mentioned
(Count X - Pierce the Corporate Veil) is directed at the
individual defendants, not at Irish Capital. In light of the
lack of claims against it, as well as its prompt response to
the entry of default, Irish Capital asks the Court to set
aside the default and grant it leave to file a responsive
response, B&B argues that Irish Capital has provided no
reasoning whatsoever for failing to respond to the Complaint
and, thus, it has not shown good cause. B&B also claims
that it has stated two causes of action against Irish
Capital: Count X - Piercing the Veil and Count XI - RICO.
Thus, Irish Capital's defense of failure ...