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USCA1 Opinion
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
____________________
No. 94-2044
KEY BANK OF MAINE,
Plaintiff - Appellee,
v.
TABLECLOTH TEXTILE COMPANY
CORPORATION, ET AL.,
Defendants - Appellants.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. Morton A. Brody, U.S. District Judge] ___________________
____________________
Before
Torruella, Chief Judge, ___________
Lynch, Circuit Judge, _____________
and Stearns,* District Judge. ______________
_____________________
Eric A. Deutsch, with whom Testa, Hurwitz & Thibeault, _________________ ____________________________
Peter G. Cary and Mittel, Asen, Eggert, Hunter & Altshuler were _____________ _________________________________________
on brief for appellants.
Thomas A. Cox, with whom Jennifer S. Begel and Friedman & ______________ _________________ __________
Babcock were on brief for appellee. _______
____________________
January 30, 1996
____________________
____________________
* Of the District of Massachusetts, sitting by designation.
TORRUELLA, Chief Judge. Defendants-Appellants TORRUELLA, Chief Judge. ______________
Tablecloth Textile Company Corp., ("Tablecloth"), Post & Sherman
Textile Company, Inc. ("P&S") and Stuart Sherman ("Sherman")
(collectively referred to as the "Appellants") appeal the denial
of their motion to set aside a default judgment and for leave to
file a late responsive pleading. We reverse, holding that
because the notice requirement of Rule 55(b)(2) of the Federal
Rules of Civil Procedure was not observed, and because Appellants
provided strong evidence that the damage award was erroneously
calculated, the default judgment must be set aside and the case
remanded for further proceedings consistent with this opinion.
I. BACKGROUND I. BACKGROUND __________
The record in the present action reveals the following.
The dispute underlying this appeal arose out of the sale of
assets, particularly the licenses and inventory of a Maine
corporation which was in default on its obligations to Plaintiff-
Appellee Key Bank of Maine ("Key Bank" or the "Appellee"). O n
December 27, 1993, Key Bank commenced an action against the
Appellants by filing a complaint in the U.S. District Court for
the District of Maine, alleging that Tablecloth breached its
obligations to Key Bank under various contracts and promissory
notes and that Sherman and P&S were jointly and severally liable
along with Tablecloth pursuant to an executed guaranty dated
January 13, 1992. On December 30, 1993, service was made on the
Appellants. The answer to the complaint was due on January 19,
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1994, a date which came and passed with Appellants filing neither
an answer nor a formal appearance.
On January 10, 1994, Key Bank's Maine counsel, Laurie
B. Perzley, received a telephone call from Appellants' then-
counsel in New York, Stephen Brown, indicating that Appellants
wanted to pursue settlement negotiations. Perzley received a
similar telephone call on January 20, 1994, from Sherman's
brother, Tom Sherman, Esq. Stuart Sherman was subsequently
informed by his brother that Appellants were already in default,
at which point Sherman transferred the matter to the attention of
corporate counsel for P&S and Tablecloth in New York, Ronit
Fischer. Sherman implored Fisher to contact Key Bank's counsel
and Vice President, Michael Lugli, to request additional time to
respond to the complaint and to see if the parties could
negotiate a settlement. During the last week of January 1994,
Fischer and Lugli spoke by telephone. The substance of their
conversation was memorialized in Fischer's letter to Lugli dated
February 1, 1994 (the "February 1 letter"). The February 1
letter evidences Appellants' understanding (i) that it served to
commence settlement negotiations; (ii) that Key Bank would not
request a default judgment unless and until it was determined
that settlement negotiations had failed; (iii) that prior to
seeking a default judgment, Key Bank would notify Fischer so that
Appellants could seek Maine counsel and file the appropriate
pleadings; and (iv) that, if negotiations failed, the letter's
settlement offer would not prejudice either party's position in
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litigation. The February 1 letter also discussed "behind the
scenes"circumstances thatprovided groundsfor Appellants'defenses.
In response, Lugli penned a letter dated February 4,
1994 (the "February 4 letter"), indicating Appellee's willingness
to enter into negotiations, if they "could be accomplished
quickly." The letter requested financial information, enclosed
Key Bank forms to be used, provided a February 16, 1994 deadline,
and stated that Lugli would "instruct counsel to continue with
the legal proceeding" were the deadline not met. Appellants did
not submit the financial information by the deadline. Fischer
maintains that although she received the financial questionnaire
meant to be completed and submitted by Sherman, she "do[es] not
recall" whether the package contained "a demand letter from Key
Bank" dated February 4, 1994, indicating that a default would be
sought unless all requested information was presented to Key Bank
by February 16, 1994.
On February 25, 1994, Key Bank filed a response to the
court's order to show cause why the action should not be
dismissed for lack of prosecution along with an application to
the district court clerk for entry of the default. Although Key
Bank was aware that Appellants were represented by counsel who
had requested notice before Key Bank sought to have default
entered, it chose not to serve Appellants with those papers. On
February 28, 1994, the clerk entered a default in favor of Key
Bank under Fed. R. Civ. P. 55(a) because of Tablecloth's failure
to file a responsive pleading. On April 1, 1994, Appellee filed
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a motion for a default judgment, once again choosing not to serve
Appellants. On April 8, 1994, the district court entered the
default judgment ex-parte in the amount of $693,871.44, based on
the affidavits and the unanswered request for admissions
submitted by Key Bank.
During oral argument counsel for Key Bank admitted that
Key Bank never sent Appellants notice of, or copies of any
pleadings filed in connection with, these court actions. Key
Bank further conceded that Appellants only learned of the entry
of the default and of the default judgment in July 1994, when Key
Bank's counsel, David Burke, contacted Fischer (who no longer was
involved in the matter) to discuss execution of the judgment.
Burke was referred to John Stahl, the controller for Post &
Sherman, and they conducted settlement discussions through the
remainder of July. Burke rejected a settlement offer on July 12,
1994, and informed Stahl that if a satisfactory settlement was
not reached by August 1, 1994, Appellee would enforce the
judgment. On July 25, 1994, Lugli received the financial
information requested in February 1994 from Sherman.
The parties failed to reach a settlement by August 1,
1994. Accordingly, on August 15, 1994, Appellants filed a motion
to set aside the default judgment and a motion to allow a late
answer, along with supporting affidavits that detailed the
inaccuracies of the damages as established by the unanswered
request for admissions. On September 2, 1994, the district court
denied Tablecloth's motion to set aside the default judgment and
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for leave to file a late responsive pleading (the "motion"). The
district court stated that Appellants failed to meet their burden
under Fed. R. Civ. P. 60(b), because their conduct did not
constitute excusable neglect and they did not provide sufficient
elaboration permitting the district court to determine that they
had a meritorious defense (the "Order"). This appeal was filed
on September 29, 1994. We have jurisdiction pursuant to 28
U.S.C. 1291.
II. DISCUSSION II. DISCUSSION __________
Despite the additional issues raised, disposition of
this appeal begins and ends with the inquiry into whether the
district court erred when it denied Appellants' motion to set
aside the default judgment entered against them. We review the
denial of a motion to set aside a default judgment for an abuse
of discretion.1 Cotto v. United States, 993 F.2d 274, 277 (1st _____ _____________
____________________
1 Fed. R. Civ. P. 55(c) states:
For good cause shown, the court may set
aside an entry of default and, if
judgment by default has been entered,
likewise set it aside in accordance with
Rule 60(b).
Fed. R. Civ. P. 60(b) provides in part:
On motion and upon such terms as are
just, the court may relieve a party or
party's legal representative from a final
judgment, Order, or proceeding for the
following reasons: (1) mistake,
inadvertence, surprise, or excusable
neglect; . . . (3) fraud, . . .
misrepresentation, or other misconduct of
an adverse party; . . . or (6) any other
reason justifying relief from the
operation of the judgment. The motion
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Cir. 1993) (discussing motion for Rule 60(b) relief); LeShore v. _______
County of Worcester, 945 F.2d 471, 472 (1st Cir. 1991) _____________________
(explaining motion for Rule 55(c) relief); U.S. v. One Urban Lot ____ _____________
Located at 1 Street A-1, 885 F.2d 994 (1st Cir. 1989) (noting ________________________
that review of motions for relief under Rule 55(c) is less
demanding than that governing those seeking relief under Rule
60(b)); see also In Re Roxford Foods, Inc., 12 F.3d 875 (9th Cir. ________ _________________________
1993).
In their appeal of the denial of their motion to set
aside default judgment, Appellants argue that they "appeared" in
the action below for purposes of Rule 55(b)(2)2 and, thus, were
entitled to written notice3 three days prior to the entry of the
default judgment. Appellants contend that because Appellee
failed to satisfy the notice requirement of Rule 55(b)(2), the
____________________
shall be made within a reasonable time,
and for reasons (1), (2), and (3) not
more than one year after the judgment,
Order, or proceeding was entered or
taken.
2 Fed. R. Civ. P. 55(b)(2) reads, in pertinent part:
If the party against whom judgment by
default is sought has appeared in the
action, the party (or, if appearing by
representative, the party's represen-
tative) shall be served with written
notice of the application for judgment at
least 3 days prior to the hearing on such
application.
3 We note that although written notice is contemplated under the
Rule, it need not necessarily be in any particular form. "The
major consideration is that the party is made aware that a
default judgment may be entered against him." Wilson, 564 F.2d ______
at 369 (quoting 10 C. Wright & A. Miller, Federal Practice and ____________________
Procedure 2687 (1973)). _________
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district court abused its discretion when it denied their motion,
because, in so doing, it implicitly held that Appellee was not
required to provide them with notice.4 Predictably, Appellee
disputes that Appellants appeared below and maintains that, under
Rule 5(a), it was not required to provide Appellants with notice
of the default pleadings.5
Although appearance in an action typically involves
some presentation or submission to the court -- a feature missing
here -- we have held that a defaulting party "has appeared" for
Rule 55 purposes if it has "indicated to the moving party a clear
purpose to defend the suit." Mu iz v. Vidal, 739 F.2d 699, 700 _____ _____
(1st Cir. 1984) (quoting H.F. Livermore Corp. v. ________________________
Aktiengesellschaft Gebruder Loepfe, 432 F.2d 689, 691 (D.C. Cir. __________________________________
1970)). Our review of both the case law we cited in Mu iz and _____
the decisions since Mu iz reveals there is ample support for our _____
finding that Appellants' "informal contacts" with Key Bank
____________________
4 We note that the district court's Order does not include a
discussion of why Appellants failed to satisfy the requisite
showing of excusable neglect and meritorious defenses for relief
under Rule 60(b). Although absence of record indication that
proper standards were applied in refusing to set aside a default
has been held sufficient by itself to justify reversal, we need
not decide this case on that limited basis. Keegal v. Key West & ______ __________
Caribbean Trading Co., Inc., 627 F.2d 372, 374 (D.C. Cir. 1980) ___________________________
(citing Medunic v. Lederer, 533 F.2d 891 (3d Cir. 1976)). _______ _______
5 Rule 5(a) provides that:
No service need be made on parties in
default for failure to appear except that
pleadings asserting new or additional
claims for relief against them shall be
served upon them in the method provided
for service of summons in Rule 4.
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demonstrated a clear intent to defend, and thus that they
"appeared" in the action below.6
Here, Appellants "indications" of their intent are
primarily evidenced by the February 1 letter from Fischer to
Lugli. The letter, supplemented by affidavits on record,
demonstrates that Fischer explained to Lugli that, because both
P&S and Sherman had limited access to funds and were considering
bankruptcy, available funds were better spent on the business,
repaying Key Bank, and negotiating a settlement, than on
litigating the matter. More importantly, the February 1 letter
made clear Appellants' understanding that (i) the letter served
to commence settlement negotiations; (ii) during the negotiations
Key Bank "will forbear from filing a default motion based on
[P&S's] failure to answer [in the action below]"; (iii) if "at
____________________
6 See, e.g., Lutomski v. Panther Valley Corn Exchange, 653 F.2d ___ ____ ________ ____________________________
270, 271 (6th Cir. 1981) (finding appearance where defendants
contacted plaintiffs and made clear that the damages sought were
excessive); H.F. Livermore, 432 F.2d at 691 (finding appearance _______________
where exchanges between parties were normal effort to see if
dispute could be settled and neither party doubted that suit
would be contested if efforts failed); Dalminter v. Jesse _________ _____
Edwards, 27 F.R.D. 491, 493 (S.D. Tex. 1961) (finding appearance _______
where defendant contacted plaintiff's counsel by letter); see ___
also Keegal v. Key West & Caribbean Trading Co., Inc., 627 F.2d ____ ______ _______________________________________
373, 374 (D.C. Cir. 1980) (finding, inter alia, that assurances __________
upon which defendants relied were part of, and grew out of,
settlement negotiations which courts seek to encourage); Liberty _______
National Bank and Trust Co. v. Yackovich, 99 F.R.D. 58 (W.D.Penn. ___________________________ _________
1982) (setting aside default judgment because failure to answer
was based upon reliance on agreement with plaintiff's counsel
that notice would be provided prior to seeking default judgment).
Cf. J. Slotnick Co. v. Clemco Industries, 127 F.R.D. 435, 438-39 ___ _______________ _________________
(D.Mass. 1989) (finding defendant did not appear where defendant
was served with copy of plaintiff's motion for default, received
notice from court clerk of entry of default, failed to respond to
either plaintiff's motion or clerk's notice, and never displayed
a clear purpose to defend).
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any time [Key Bank] determines that the negotiations are not ________
proceeding to a positive conclusion," it would notify Appellants
so that they could retain Maine counsel to enter "the appropriate
pleadings" (emphasis original); and (iv) reiterated that
Appellants' "settlement offer was made without prejudice to each
party's respective positions in litigation should the parties be
unable to reach an amicable solution." The February 1 letter, in
its review of the facts involved and the bases for Appellants'
settlement offer, also detailed Appellants' defenses and
counterclaims in the event settlement negotiations failed.
Contrary to Appellee's assertions, once Appellants
"appeared" for Rule 55 purposes they were entitled to notice of
the application for default judgment under Rule 55(b)(2). We
disagree with Appellee's argument that they were not required to
provide notice under Rule 55(b)(2) because their February 4
letter effectively cancelled the intent to defend demonstrated in
Appellants' February 1 letter. Specifically, Appellee argues
that when the February 4 letter is considered together with
Appellants' failure to respond by the February 16, 1994 deadline,
it becomes clear that Appellee was not itself "on notice" in
February 1994 that Appellants had a clear intent to defend.
Appellants' failure to meet the deadline, Appellee maintains, was
but another example of their "history of non-responsiveness."
We find Appellee's argument thoroughly unpersuasive, if
not disingenuous. Appellants only two weeks before communicated
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a clear intent to defend.7 Appellee also knew that Appellants ____
were represented by counsel. Moreover, Appellee was well aware
of Appellants' need to retain Maine counsel and of Appellants'
understanding that notice would precede Appellee's seeking entry
of default. It was Appellee's duty when seeking entry of default
and judgment by default to apprise the district court of
Appellants' February 1 letter and to give notice as contemplated
under Rule 55(b)(2).
In addition, we are unpersuaded by Appellee's attempt
to distinguish this case from Mu iz. Appellee argues that, _____
unlike in Mu iz, the February 4 letter specifically put _____
Appellants on notice that "if [Lugli] does not receive this
[financial] information prior to [February 16, 1994], [Lugli]
will instruct counsel to continue with the legal proceeding."
Appellee relies on a case we distinguished in Mu iz, Wilson v. _____ ______
Moore & Associates, Inc., 564 F.2d 366, 369 (9th Cir. 1977) __________________________
(finding defendant's "informal contacts" insufficient to
constitute an appearance because "plaintiff's 'informal contacts'
provided actual, unqualified notice that delay would result in
default"). Even assuming receipt of Key Bank's February 4
letter,8 we do not find that Appellee's February 4 letter, which
____________________
7 We note that during oral argument, counsel for Appellee
conceded that the February 1 letter, viewed on its own,
demonstrated Appellants' intent to defend.
8 We resolve the factual question as to Fischer's receipt of the
February 4 letter in favor of Appellants because of the strong
policy favoring resolving disputes on the merits. LeShore, 945 _______
F.2d at 472 (quoting Coon, 867 F.2d at 76). ____
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referred to "instruct[ing] counsel to continue with the legal
proceeding," to amount to "actual, unqualified, notice that delay
would result in default." As we noted in Mu iz, in Wilson the _____ ______
defendant there neither filed a paper in court nor contacted
opposing counsel. Mu iz, 739 F.2d at 701; see Charlton L. Davis _____ ___ _________________
& Co., P.C. v. Fedder Data Center, Inc., 556 F.2d 308, 309 (5th ___________ ________________________
Cir. 1977) (noting that cases where actual notice of impending
default judgment was given do not provide guiding precedent for
situations in which no notice of any sort was given). While
Appellants here did not file any court documents, because of the
agreement to pursue settlement negotiations and the need to
retain Maine counsel, they did contact opposing counsel,
explicitly communicated their intent to defend and their
understanding that Appellee would provide notice prior to seeking
default so that they could retain Maine counsel.
Furthermore, Appellants presented strong evidence that
the figures upon which the default judgment is premised are
erroneous.9 While Appellants' evidence does not indicate they
possess an "ironclad claim or defense which will guarantee
success at trial," Teamsters, 953 F.2d 17, 21, the evidence _________
regarding the damages "does establish that [Appellants] possess a
____________________
9 We note that the fact that P&S and Sherman have sought and
received protection under the United States Bankruptcy Code does
not affect our consideration of the issue of damages. Even
though all actions in this appeal are stayed as respect to P&S
and Sherman pursuant to 11 U.S.C. 362 (1994); see ___
Commerzanstalt v. Telewide Systems, Inc., 790 F.2d 206, 207 (2d ______________ _______________________
Cir. 1986); Association of St. Croix Condominium Owners v. St. ____________________________________________ ___
Croix Hotel, 682 F.2d 446, 449 (3d Cir. 1982), they are not ___________
stayed as respect to Tablecloth.
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potentially meritorious claim or defense which, if proven, will
bring success in its wake," at least as to the amount of damages.
Id. The amount of damages involved is substantial, and the __
record suggests that the damage award is possibly erroneous by as
much as $611,870. Thus, Appellants have given us good reason to
believe that setting aside the judgment will not be a futile
gesture. Id. at 20 (stating that a litigant, as a precondition __
to relief under Rule 60(b), must give the trial court reason to
believe that vacating the judgment will not be an empty
exercise); Swink v. City of Pagedale, 810 F.2d 791, 792 n.2 (8th _____ ________________
Cir. 1987) ("There is a strong public policy, supported by
concepts of fundamental fairness in favor of trial on the merits,
particularly when the monetary damages sought are substantial.");
Lutomski, 653 F.2d at 271 (remanding case for a damages hearing ________
where defendants conceded liability yet presented strong
arguments that damages awarded were excessive).
Finally, contrary to Appellee's claim, there is nothing
in the record to suggest that Appellants would not defend the
suit once settlement negotiations failed.10 We also note that
Appellants' motion to set aside the default judgment (dated
August 15, 1994) was reasonably timely, considering that they
____________________
10 We note that in addition to the February 1 letter, which
discussed the grounds for Appellants' defenses, Key Bank was
aware of potential defenses and counterclaims as early as
December 1992 when it received a letter sent by Fischer, dated
December 11, 1992, discussing why P&S was not in default on the
notes.
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only learned of the default and the default judgment in July 1994
and that negotiations continued until August 1, 1994.
In sum, because we find that Appellants presented
sufficient evidence of their intent to defend, they "appeared" in
the action below, such that they were entitled to notice under
Rule 55(b)(2) of Appellee's application seeking the default
judgment.11 We consider Appellee's failure to provide the
requisite notice a grave error, we hold that the lack of notice,
coupled with Appellants' showing of the existence of a
potentially meritorious defense (at least as to the amount of
damages), requires that the default judgment be set aside.12
See Rule 60(b)(4), (6) (permitting judgment to be set aside where ___
judgment is shown to be "void" or for "any other reason
justifying relief"). The district court abused its discretion
____________________
11 By thus holding, we do not suggest that district courts
should be compelled to vacate default judgments whenever a
defendant communicates with the plaintiff after service of the
complaint. See Wilson, 564 F.2d 370-71 (Wright, J., dissenting) ___ ______
("I do not share the majority's fear that reversal here would
compel district court's to vacate default judgments whenever a
defendant communicates with the plaintiff after service of the
complaint."). Instead, we simply re-affirm our rule that
defendants who "appear" through informal contacts demonstrating a
clear intent to defend are entitled to notice under Rule
55(b)(2). Cf. Taylor v. Boston and Taunton Transportation Co., ___ ______ ______________________________________
720 F.2d 731, 733 (1st Cir. 1983) (discussing that not every act
addressed to the court or related to the litigation will be
deemed an appearance); North Central Illinois Laborers' District __________________________________________
Council v. S.J. Groves & Sons Co., Inc., 842 F.2d 164, 168-70 _______ _____________________________
(noting that Rule 55(b)(2)'s plain language, "has appeared in the
action," evidences intent to impose a notice requirement only in
limited circumstances).
12 Accordingly, we need not discuss the parties' remaining
arguments regarding the existence of excusable neglect or whether
the district court abused its discretion when it awarded damages
ex-parte based largely on the unanswered request for admissions.
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when it denied Appellants' motion to set aside the default
judgment. Not only did it fail to recognize Appellants' clear
intent to defend evidenced in the February 1 letter (or
recognized it but decided, contrary to our holding in Mu iz, that _____
notice was not required), it also failed to recognize Appellants'
meritorious claim that the damage award was erroneously
calculated.
Although our conclusion that Key Bank's failure to
provide notice as required by Rule 55(b)(2) necessitates that the
default judgment be set aside, it is less clear whether there
exists a basis for setting aside the entry of default itself
under Fed. R. Civ. P. 55(c). We believe that, in the
circumstances, it was incumbent upon Key Bank to live up to its
representation that it would notify Appellants if it planned to
seek entry of default. It is a separate question whether there
exists "good cause" for Appellants' default within the meaning of
Fed. R. Civ. P. 55(c). See LeShore, 945 F.2d at 472. While the ___ _______
district court had occasion to consider this issue, its order
indicates that it declined to do so. We, however, are of the
opinion that this issue is more appropriately resolved by the
district court in the first instance on remand.
Although nothing more need be said, we nonetheless add
that it would have been a simple matter for Appellee to have
notified Appellants' counsel of the default proceedings. We find
the language of Charlton L. Davis particularly on point: _________________
If the plaintiff felt [the defendant] was
guilty of dilatory tactics and had no
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real defense, then notice under Rule 55
would have promptly resolved the matter.
Instead, plaintiff sought to reap
tactical advantage from [defendant's]
prior neglect by acquiring by stealth a
decision sheltered by the rules which
protect final judgments. Such practice
is what Rule 55 is designed to prevent.
Charlton L. Davis, 556 F.2d at 309. We reiterate that this rule _________________
rests upon the view that the Federal Rules of Civil Procedure are
designed to be fair, that Rule 55(b)(2) was promulgated to
protect "parties who, although delaying in a formal sense by
failing to file pleadings within the twenty-one day period, have
otherwise indicated to the moving party a clear purpose to defend
the suit," H.F. Livermore, 432 F.2d at 691, and our traditional ______________
preference for resolution of cases on the merits while giving due
consideration to practical requirements of judicial
administration. See Cotto, 993 F.2d at 277-80; Teamsters, 953 ___ _____ _________
F.2d at 19-21; LeShore, 945 F.2d at 472-73; see also In Re _______ _________ ______
Roxford Foods, Inc., 12 F.3d 875, 879-81 (9th Cir. 1993). ___________________
Before closing, we respond to an assertion raised by
Appellee's counsel during oral argument to the effect that any
appearance we found would apply only to P&S, because the
February 1 letter only referred to P&S. We disagree. Admittedly
the February 1 letter states that Appellee will forbear from
filing a default motion based on P&S' failure to answer, and ___
makes no mention of the failure to answer by Sherman or
Tablecloth. Nevertheless, we do not find Appellee's argument
persuasive. The record reveals that (i) Fischer launched the
settlement negotiations at Sherman's request; (ii) the February 1
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letter refers to Sherman as well in its discussion; (iii) Sherman
is the president of both Tablecloth and P&S; and (iv) Appellee's
Complaint grounds joint and several liability on Sherman and P&S
as guarantors of the promissory notes executed by Tablecloth,
which are the basis for Appellee's collection action below.
Accordingly, we find it reasonable to read the February 1 letter
which "serve[d] to commence settlement negotiations with [Key
Bank] in the [action below]" as being intended to speak for all
of the named defendants.
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III. CONCLUSION III. CONCLUSION __________
For the foregoing reasons, we reverse the district
court's Order, and vacate the default judgment. We leave to the
district court on remand to determine whether, in the
circumstances, there exists a basis for setting aside the entry
of default pursuant to Fed. R. Civ. P. 55(c), and whether
Appellants should accordingly be permitted to file a late
responsive pleading.13 While we disapprove of Appellee's
behavior, we note Appellants' apparent inattention to
negotiations and to the case below during the mid-February to
July hiatus in communications. Consequently, we decline to award
costs to Appellants.
Reversed and remanded. _____________________
____________________
13 Should the district court on remand find no basis for
removing the default under Rule 55(c), a new proceeding as to the
proper amount of damages would then be in order.
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Document Info
Docket Number： 94-2044
Filed Date： 1/30/1996
Precedential Status： Precedential
Modified Date： 9/21/2015