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National Security Fire & Casualty Insurance Co. v. Townsend

United States District Court, N.D. Mississippi, Greenville Division

September 17, 2018

NATIONAL SECURITY FIRE & CASUALTY INSURANCE COMPANY PLAINTIFF
v.
JEFFERY TOWNSEND, DEMETRIUS NELLUM, and NINA OLUGU DEFENDANTS

          OPINION AND ORDER

          DEBRA M. BROWN UNITED STATES DISTRICT JUDGE.

         This declaratory judgment action is before the Court on National Security Fire & Casualty Insurance Company's motion for default judgment against Demetrius Nellum. Doc. #37.

         I Relevant Background

         On May 11, 2017, National Security Fire & Casualty Insurance Company filed a complaint for declaratory judgment against Jeffery Townsend, praying for a judgment declaring a homeowner's insurance policy it issued on property in Greenwood, Mississippi, “void ab initio” due to material misrepresentations in the application for insurance.[1] Doc. #1. On September 21, 2017, with leave of the Court, National Security filed an amended complaint adding as defendants Demetrius Nellum and Nina Olugu. Doc. #18. Nellum was personally served on September 25, 2017. Doc. #22.

         On December 20, 2017, the Clerk of the Court issued a notice that Nellum's answer was past due. Doc. #32. The next day, National Security filed a motion for entry of default against Nellum. Doc. #33. On December 26, 2017, the Clerk entered default against Nellum. Doc. #34. National Security then moved for a default judgment against Nellum on February 21, 2018. Doc. #37. Nellum never responded to the motion.

         II Analysis

         “Under Rule 55 of the Federal Rules of Civil Procedure, federal courts have the authority to enter a default judgment against a defendant who has failed to plead or otherwise defend upon motion of the plaintiff.” J & J Sports Prods., Inc. v. Morelia Mexican Rest., Inc., 126 F.Supp.3d 809, 813 (N.D. Tex. 2015); see Fed. R. Civ. P. 55(a). Fifth Circuit law provides “three steps to obtaining a default judgment: first, default by the defendant; second, clerk's entry of default; and third, entry of a default judgment.” Gray v. MYRM Holdings, L.L.C., No. A-11-cv-180, 2012 WL 2562369, at *3 (W.D. Tex. June 28, 2012) (citing N.Y. Life Ins. Co. v. Brown, 84 F.3d 137, 141 (5th Cir. 1996)) (emphases omitted). Here, the first and second steps have been satisfied. Thus, the only issue left to consider is whether default judgment should be entered.[2] In making this determination, courts conduct a three-question analysis: (1) “whether the entry of default judgment is procedurally warranted;” (2) “whether there is a sufficient basis in the pleadings for the judgment;” and (3) “what form of relief, if any, the plaintiff should receive.” J & J Sports, 126 F.Supp.3d at 814.

         A. Procedural Justification

         In determining whether a default judgment is procedurally warranted, a court should consider (1) “whether material issues of fact are at issue;” (2) “whether there has been substantial prejudice;” (3) “whether the grounds for default are clearly established;” (4) “whether the default was caused by a good faith mistake or excusable neglect;” (5) “the harshness of a default judgment;” and (6) “whether the court would think itself obliged to set aside the default on the defendant's motion.” Lindsey v. Prive Corp., 161 F.3d 886, 893 (5th Cir. 1998).

         First, where as here, a party fails to respond to or answer the complaint, there are no material facts at issue. See Nishimatsu Constr. Co., Ltd. v. Hous. Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975) (“The defendant, by his default, admits the plaintiff's well-pleaded allegations of fact ….”).

         Second, a failure to respond causes substantial prejudice because “failure to respond … threatens to bring the adversary process to a halt, effectively prejudicing Plaintiff's interests.” Ins. Co. of the W. v. H & G Contractors, Inc., No. C-10-390, 2011 WL 4738197, at *3 (S.D. Tex. Oct. 5, 2011).

         Third, as mentioned above, the grounds for default-actual default and entry of default- have been clearly established here. See Doc. #32; Doc. #34.

         Fourth, there is no evidence before the Court that the default was caused by a good faith mistake or excusable neglect.

         Fifth, Nellum has had more than seven months to attempt to set aside the default. And, “while default judgment is a harsh remedy, any harshness is mitigated where, as here, the defendant has had substantial time to correct the default.” Helena Chem. Co. v. ...


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