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Capital One Auto Finance v. Nabors, Inc.

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

March 22, 2019

CAPITAL ONE AUTO FINANCE, a division of Capital One N.A. PLAINTIFF
v.
NABORS, INC. DEFENDANT

          ORDER

          DEBRA M. BROWN UNITED STATES DISTRICT JUDGE

         Before the Court is Capital One Auto Finance's motion for default judgment against Nabors, Inc. Doc. #23.

         I Procedural History

         On December 9, 2016, Capital One Auto Finance filed a complaint against Nabors, Inc. in the United States District Court for the Northern District of Mississippi, alleging breach of contract, fraud, and conversion concerning its purchase of vehicle financing contracts from Nabors. Doc. #1 at 26-27. Service of the summons and complaint was executed on January 7, 2017. Doc. #3. On February 8, 2017, Capital One moved for entry of default against Nabors for failure to plead or otherwise defend. Doc. #5 at 1. The Clerk of the Court entered a default the next day. Doc. #6.

         On March 16, 2017, United States Magistrate Judge Jane M. Virden, concluding that the complaint “fail[ed] to satisfactorily allege the citizenship of Capital One, ” issued an order allowing Capital One seven days to correct the defect in its jurisdictional allegations by filing an amended complaint to avoid “dismissal of this case for lack of subject matter jurisdiction.” Doc. #7 at 2. Four days later, Capital One amended its complaint to allege that it is a division of Capital One, National Association, and that Capital One, National Association's articles of incorporation designate a main office in McLean, Virginia.[1] Doc. #8 at 1.

         After no activity in the case for over a year, on April 4, 2018, Judge Virden ordered Capital One to show cause, within five business days, “why this case should not be dismissed for failure to prosecute.” Doc. #9. Two days later, Capital One moved for entry of default against Nabors. Doc. #10. The Clerk of the Court entered a default on April 9, 2018. Doc. #11. On April 10, 2018, Capital One moved for an extension through April 25, 2018, to respond to the show cause order, which Judge Virden granted the following day. Doc. #12 at 3; Doc. #13.

         On April 20, 2018, Capital One filed a motion for leave to file a second amended complaint. Doc. #14. On April 25, 2018, Capital One filed a response to the show cause order stating, “[Capital One] does not anticipate Nabors will appear and defend the allegations. Thus, upon expiration of the time to respond [to the second amended complaint], [Capital One] will seek a Clerk's Default ….” Doc. #15 at 4. Judge Virden granted Capital One's motion for leave to amend on May 2, 2018. Doc. #16. The same day, Capital One filed a second amended complaint. Doc. #17. Service of the summons and second amended complaint was executed on May 15, 2018.[2] Doc. #20.

         On June 8, 2018, Capital One moved for entry of default against Nabors based on the second amended complaint. Doc. #21. Three days later, the Clerk of the Court entered a default. Doc. #22. On June 12, 2018, Capital One filed this motion for default judgment.[3] Doc. #23.

         II Analysis

         Pursuant to “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). “Under Fifth Circuit law, there are 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. 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). The first two steps have been satisfied here. See Docs. #21, #22. Thus, the only issue left to consider is whether default judgment should be entered. In making this determination, the Court conducts 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. Procedurally Warranted

         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 issues of fact at issue. See John Perez Graphics & Design, LLC v. Green Tree Inv. Grp., Inc., No. 3:12-cv-4194, 2013 WL 1828671, at *3 (N.D. Tex. May 1, 2013) (“Green Tree has not filed a responsive pleading or otherwise appeared in this case, and thus has not contested any facts presented in Plaintiff's Complaint.”).

         Second, Nabors' failure to respond causes prejudice to Capital One because it “threatens to bring the adversary process to a halt, effectively prejudicing [Capital One's] interests in pursuing its rights afforded by law.” Id.

         Third, as mentioned above, the grounds for default (default and entry of default) have been clearly established.

         Fourth, there is no evidence before the Court that “the default was caused by a good faith mistake or excusable neglect ….” Lindsey, 161 F.3d at 893.

         Fifth, Nabors has had more than eight months to attempt to set aside the default. “[W]hile default judgment is a harsh remedy, any harshness is mitigated where … the defendant has had substantial time to correct the default.” Helena Chem. Co. v. ...


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