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Payne v. Wilder

United States District Court, D. New Mexico

July 7, 2017

CARA PAYNE, Plaintiff,
v.
LEE WILDER; MAYFRITZ BUCAG and DAVID CEBALLES, Defendants.

          Miguel Garcia John R. Hakanson, P.C. Alamogordo, New Mexico Attorneys for the Plaintiff

          Damian L. Martinez Holt Mynatt Martinez, P.C. Las Cruces, New Mexico Attorneys for Defendant Lee Wilder

          Lee M. Rogers Carla Neush Williams Atwood, Malone, Turner, & Sabin, P.A. Roswell, New Mexico Attorneys for Defendants David Ceballes and Mayfritz Bucag

          MEMORANDUM OPINION AND ORDER

         THIS MATTER comes before the Court on: (i) the Plaintiff's Motion for Default Judgment, filed November 29, 2016 (Doc. 26)(“Motion for Default Judgment”); and (ii) Defendant Mayfritz Bucag's Motion to Set aside Entry of Default, filed December 29, 2016 (Doc. 35)(“Motion to Set Aside”). The Court held a hearing on June 5, 2017. The primary issues are: (i) whether the Court should set aside the Clerk's Entry of Default, filed November 16, 2016 (Doc. 22)(“Clerk's Entry of Default”), under rule 55(c) of the Federal Rules of Civil Procedure, because Defendant Mayfritz Bucag has shown good cause to set aside the Clerk's Entry of Default; and (ii) whether the Court should enter default judgment as to Bucag under rule 55(b) of the Federal Rules of Civil Procedure, because Bucag has been so unresponsive that he has prejudicially halted the adversarial process. The Court concludes that Bucag attempted to monitor and manage his defense in this case, and that, although he could have taken different routes to becoming an active participant in this case, he is nonetheless now an active participant in his defense. The Court will, accordingly, deny the Motion for Default Judgment and grant the Motion to Set Aside.

         FACTUAL BACKGROUND

         The Court draws its recitation of the relevant facts from Plaintiff Cara Payne's Amended Complaint for Damages and Petition for Declaratory and Injunctive Relief, filed April 19, 2016 (Doc. 1-2)(“Complaint”). On July 8, 2015, Defendant Lee Wilder, a law enforcement officer in Otero County, New Mexico, stopped and seized Payne in Alamogordo, New Mexico, for driving with a suspended license. See Complaint ¶ 7, at 1. Wilder represented that he was conducting a child abuse investigation, forced Payne to do a field sobriety test, and attempted to force Payne to allow him to search a home where Payne was staying as a house sitter for the owner of the home. See Complaint ¶¶ 7-11, at 2-3. Wilder -- Payne alleges -- did not have reasonable suspicion to support the notion that Payne was intoxicated. See Complaint ¶¶ 8-9, at 2. Regarding the home search, Payne refused to allow the search, and told Wilder that she had previously been under investigation by the State of New Mexico Children, Youth, and Families Department (“CYFD”), but that the investigation did not support allegations of abuse. See Complaint ¶¶ 10-11, at 2-3. Upon her refusal, Wilder contacted Bucag, a CYFD investigator, who then contacted Payne's ex-husband and ordered him to not allow Payne custody of their children. See Complaint ¶¶ 12-14, at 3. Payne did not have custody or visitation rights after this traffic stop, as a consequence of Bucag's directive, despite having the right to custody and visitation. See Complaint ¶¶ 15-16, at 3.

         Wilder and Bucag then petitioned the district attorney's office in Otero County to file criminal charges against Payne for refusing to allow the search of a house where she was staying as a house sitter for the home's owner. See Complaint ¶ 18, at 4. In particular, the criminal charges would flow pursuant to N.M. Stat. Ann. § 30-6-4, which relates to obstruction of reporting or investigating child abuse or neglect. See Complaint ¶ 19, at 4. Wilder expects that charges will be filed against Payne. See Complaint ¶ 20, at 4. Defendant David Ceballes was the District Attorney for Otero County when Payne filed her Complaint. See Complaint ¶ 6, at 2.

         PROCEDURAL BACKGROUND

         Payne originally filed her Complaint in the Twelfth Judicial District Court, County of Otero, State of New Mexico. See Complaint at 1. Wilder removed the case to federal court on April 19, 2016. See Notice of Removal, filed April 19, 2016 (Doc. 1). Payne alleges that Wilder and Bucag have committed a violation of her due process rights under the Constitution of the United States of America and under the Constitution of the State of New Mexico. See Complaint ¶¶ 22-32, at 4-6. Payne also alleges that § 30-6-4 is unconstitutional, because it violates the Fourth Amendment to the Constitution of the United States of America and Article II, § 10 of the New Mexico Constitution, supporting her request for injunctive and declaratory relief regarding Ceballes' potential prosecution of her. See Complaint ¶ 21, at 4. The Court has concluded that the allegations in the Complaint implicating Ceballes were not yet ripe for the Court's review, and has thereby granted Defendant David Ceballes [sic] Motion and Memorandum to Dismiss Plaintiff's Declaratory and Injunctive Relief Claims, filed September 27, 2016 (Doc. 10)(“Motion to Dismiss”), which requested that the Court dismiss Payne's allegations against Ceballes, see Memorandum Opinion and Order at 1, filed January 3, 2017 (Doc. 36)(“Ripeness MOO”).

         1. The Clerk's Entry of Default.

         Matthew Dykman, the Clerk of Court for the United States District Court for the District of New Mexico, entered the default of Bucag on November 16, 2016. See Clerk's Entry of Default at 1. The Clerk's Entry of Default states: “It appearing from the files and records of this Court as of November 16, 2016, that the defendant, Mayfritz Bucag, against whom judgment for affirmative relief is sought in this action, has failed to plead or otherwise defend as provided by the Federal Rules of Civil Procedure.” Clerk's Entry of Default at 1. Mr. Dykman, accordingly, entered the default of Bucag “pursuant to the requirements of Rule 55(a).” Clerk's Entry of Default at 1.

         2. The Motion for Default Judgment.

         Payne filed the Motion for Default Judgment, because, “[o]n November 16, 2016, the Court Clerk entered Bucag's default.” Motion for Default Judgment at 1. Payne argues that, subsequent to the Clerk's Entry of Default, “[t]here has still been no answer or response from Defendant Bucag.” Motion for Default Judgment at 1. Payne thus requests “that the Court enter a default judgment on the issue of liability and that the Court find[] the allegations in the complaint admitted by Defendant.” Motion for Default Judgment at 1.

         3. The Response.

         Bucag responded to the Motion for Default Judgment with Defendant Mayfritz Bucag's Response to Plaintiff's Motion for Default Judgment, filed December 16, 2016 (Doc. 32)(“First Response”), and Defendant Mayfritz Bucag's Amended Response to Plaintiff's Motion for Default Judgment, filed December 27, 2016 (Doc. 34)(“Response”). In the Response, Bucag explains:

On December 27, 2016, prior to the filing of Plaintiffs Reply, Plaintiffs counsel informed counsel for Defendant Bucag of unintentional errors contained in the original Response. As a result of this notification, counsel for Defendant Bucag immediately reviewed the response and indeed noted unintentional errors and thus, prepared an amended response, corrected the date the clerk entered default, corrected any confusion it may have created regarding entry of default by the clerk versus entry of default judgment by the Court, and noted that since the filing of the original response, no stipulation between the parties have been reached.

         Response at 1 n.1. The Court, accordingly, will consider Bucag's Response as her operative briefing, as that appears to be the procedure which Bucag desires. See Response at 1 n.1. Bucag first explains that rule 55 “authorizes the entry of default judgment when a defendant fails ‘to plead or otherwise defend' in accordance with the Rules.” Response at 1 (quoting United States v. Moradi, 673 F.2d 725, 727 (4th Cir. 1982)). Further, the Response argues, “[a]fter the entry of default, the non-defaulting party may move the court for ‘default judgment'” under rule 55(b). Response at 1-2 (emphasis in original)(quoting Tweedy v. RCAM Title Loans, LLC, 611 F.Supp.2d 603, 605 (W.D. Va. 2009)(Moon, J.)). Here, Bucag maintains that the Court must deny the Motion for Default Judgment under rule 55 and next provides the case's facts for the Court. See Response at 2.

         Bucag states that, at the time of the incident giving rise to Payne's Complaint, he “was an employee of New Mexico Department of Children, Youth, and Families.” Response at 2. Bucag -- who resides in Seattle, Washington -- explains that, when Payne filed suit against him on April 13, 2016, he was not served until September 13, 2016, which was five months after Payne filed the Complaint. See Response at 2. Bucag then explains that he retained counsel to defend these charges on December 9, 2016, shortly after the Clerk entered the Clerk's Entry of Default was entered on November 16, 2016. See Response at 3. Regarding answering Payne's Complaint, Bucag states that he answered on December 12, 2016, and on “December 13, 2016, . . . served his initial disclosures, and on December 14, 2016, . . . served his First Set of Discovery Requests to Plaintiff.” Response at 3. Bucag also notes that the other Defendants, Ceballes and Wilder, had already answered Payne's Complaint. See Response at 3. Accordingly, Bucag argues that there will be no prejudice to Plaintiff by the late filing of Defendant Bucag's Answer as Defendant's late-filed answer has caused no delay in moving this case forward. Defendant's Answer raises the same affirmative defenses to Plaintiff's Amended Complaint as were raised in Defendant Wilder's Answer to Plaintiffs Amended Complaint, leaving the factual and legal issues the same.

         Response at 3-4. Bucag also alerts the Court that he had been hoping to reach an agreement with Payne that would let him set aside the Clerk's Entry of Default, but that such an agreement was not reached when he filed the Response. See Response at 4.

         Bucag then requests that the Court not enter default judgment in this case first by reference to Tenth Circuit case law which disfavors default judgments. See Response at 4 (citing, e.g., Cessna Finance Corp. v. Bielenberg Masonry Contracting, Inc., 715 F.2d 1442.1444 (10th Cir. 1983)(“Strong policies favor resolution of disputes on their merits: the default judgment must normally be viewed as available only when the adversary process has been halted because of an essentially unresponsive party.”)(alterations and internal quotation marks omitted)). Bucag then describes a case from the United States District Court for the Northern District of Indiana, where the district court “denied plaintiffs' motion for default judgment, ” by considering a number of factors in that litigation, “including whether there is a material issue of fact, whether the default is largely technical, whether the plaintiffs were substantially prejudiced and how harsh an effect a default judgment might have.” Response at 4-5 (citing Laporte Savings Bank v. Schmitt, 2012 WL 733691 (N.D. Ind. 2012)). Bucag also explains that the district court in that case was operating with respect to the notion that “its circuit favored a policy of promoting trial based on the merits rather than default judgment.” Response at 4. In light of the Tenth Circuit's policy disfavoring default judgment, Bucag avers:

Given the circumstances of this case, Plaintiff's Motion for Default Judgment should be denied. The adversarial process has not been halted, Defendant Bucag has denied the allegations in Plaintiff's Amended Complaint and raised affirmative defenses, and Plaintiff has not been prejudiced as a result of Defendant Bucag's delayed answer to Plaintiff's Amended Complaint. Plaintiff has not missed an opportunity to undertake discovery nor does any discovery have to be repeated as a result of Defendant Bucag's delayed answer.

         Response at 5. Bucag last reiterates that his “failure to timely answer Plaintiffs Amended Complaint was not the result of or a willful disregard or mal-intent towards the Court, Plaintiff, or the rules. Once counsel was assigned, an immediate answer was filed, and Defendant Bucag immediately began defending the case and conducting discovery.” Response at 6.

         4. The Reply.

         In support of the Motion for Default Judgment, Payne filed the Plaintiff's Reply to Defendant Bucag's Response to Plaintiff's Motion for Default Judgment, filed December 27, 2016 (Doc. 33)(“Reply”). The Reply responded to Bucag's First Response, but the Court will assume that Payne considered the amendments in the Response insignificant enough to not warrant an amended reply. See Email from Miguel Garcia to Carla Williams (dated December 27, 2016), filed December 27, 2016 (Doc. 34-1)(making no objection on Payne's behalf to Bucag's filing of the Response, which makes amendments to the First Response, even though she had already filed the Reply, indicating that she would make another reply to the Response at a later date). Payne's Reply argues first that Bucag has not filed a motion to set aside the Clerk's Entry of Default, making his arguments against the Motion for Default Judgment moot. See Reply at 1. Payne also suggests that “the issue of the entry of default is long foregone in this case. The only issue to be decided is whether judgment should be entered . . . .” Reply at 2. Payne concludes by maintaining the Court should enter a default judgment. See Reply at 2.

         5. The Motion to Set Aside.

         On December 29, 2016, Bucag filed the Motion to Set Aside, seeking to set aside the Clerk's Entry of Default. See Motion to Set Aside at 1. The Motion to Set Aside restates much of the factual background and argument Bucag makes already in his Response to Payne's Motion for Default Judgment. Compare Motion to Set Aside at 1-3, with Response at 1-6. Regarding the procedural history of the case, Bucag informs the Court that after he was served, on September 13, 2016, he “contacted his former supervisor at CYFD and emailed her a copy of the Summons. It was Defendant Bucag's understanding that his former supervisor would send the Summons to CYFD attorneys, and that the matter would be handled, ” and that he should wait to be contacted by the CYFD attorneys. Motion to Set Aside at 2 (citing the Declaration of Mayfritz Bucag at 1 (executed December 28, 2016), filed December 29, 2016 (Doc. 35-1)(“Mayfritz Decl.”)). Having not heard from the CYFD attorneys for some time after he made contact with his former supervisor, Bucag Google searched his name and discovered the Clerk's Entry of Default. See Motion to Set Aside at 2 (citing Mayfritz Decl. at 1-2). Bucag then reached out again to his former supervisor and alerted the supervisor to the Clerk's Entry of Default, and Bucag then received a call from the CYFD attorneys on December 9, 2016. See Motion to Set Aside at 2 (citing Mayfritz Decl. at 1-2).

         The Motion to Set Aside then makes new legal argument -- in addition to that he made in the Response -- regarding the notion that “default judgments against state actors, ” such as Bucag, “are especially disfavored.” Motion to Set Aside at 4-5 (citing rule 55(d) of the Federal Rules of Civil Procedure, which provides: “A default judgment may be entered against the United States, its officers, or its agencies only if the claimant establishes a claim or right to relief by evidence that satisfies the Court”). Further, Bucag references the Court's opinion in Dogs Deserve Better, Inc. v. N.M. Dogs Deserve Better, Inc., 2016 WL 6396392 (D.N.M. 2016)(Browning, J.), and asserts:

“[T]he clerk or the court may enter a default upon the application of the non-defaulting party. The entry simply is an official recognition of the fact that one party is in default, as, for example, for failure to comply with the rules, to appear as scheduled, or to prosecute the case with due diligence. The entry is an interlocutory step that is taken under Rule 55(a) in anticipation of a final judgment by default under Rule 55(b).”

         Motion to Set Aside at 5 (quoting Dogs Deserve Better, Inc. v. N.M. Dogs Deserve Better, Inc., 2016 WL 6396392, at *16). Bucag also argues that the standard underlying a “motion to set aside a default entry is less stringent then [sic] setting aside a default judgment, and may be granted for ‘good cause shown.'” Motion to Set Aside at 5 (quoting Dogs Deserve Better, Inc. v. N.M. Dogs Deserve Better, Inc., 2016 WL 6396392, at *16). In particular, regarding a showing of good cause, Bucag suggests that the Court “may consider the factors of whether setting aside the entry of default would prejudice the non-movant, and whether the movant has presented a meritorious defense.” Motion to Set Aside at 5-6 (citing Pinson v. Equifax Credit Info. Servs, 316 F. App'x 744, 750 (10th Cir. 2009)(unpublished) (“In deciding whether to set aside an entry of default, courts may consider, among other things, ‘whether the default was willful, whether setting it aside would prejudice the adversary, and whether a meritorious defense is presented.'”); Dogs Deserve Better, Inc. v. N.M. Dogs Deserve Better, Inc., 2016 WL 6396392, at *16). Accordingly, Bucag reasserts that he “did not willfully default in this case, ” and that he “believes he has a meritorious defense, and as soon as he learned of the default, he notified Plaintiff . . . of his affirmative defenses and initial disclosures and immediately engaged in discovery.” Motion to Set Aside at 6. Bucag additionally maintains that there will be no prejudice to Payne, because his “late-filed answer has caused no delay in moving this case forward . . . Bucag has not sought to extend any deadlines in this case, and no discovery has been delayed . . . [and] the same affirmative defenses . . . were raised [already by] Wilder . . . .” Motion to Set Aside at 7. Payne thus requests that the Court set aside the Clerk's Entry of Default. See Motion to Set Aside at 7.

         6. The Hearing.

         The Court held a hearing on June 5, 2017. See Transcript of Hearing (taken June 5, 2017)(“Tr.”).[1] At the hearing, the Court heard argument on a variety of issues, but began the hearing with the Motion to Set Aside and the Motion for Default Judgment. See Tr. At 2:5-7 (Court). Payne argued first, and explained that at a previous hearing -- when the Court queried as to the status of Bucag -- she “informed the Court that he had been in serious default at that time, and that my intentions were to give him another week or two, due to my not liking to file motions for default. I did give him that week or two.” Tr. at 2:14-18 (Garcia). Payne then explained that she eventually “filed the motion for default, gained the clerk's entry of default. And of course not long after that, Mr. Bucag showed up wanting back in to the lawsuit.” Tr. at 2:18-21 (Garcia). Payne next suggested that Bucag's basis for evading the Clerk's Entry of Default at this time is, apparently, that

he was served with our lawsuit, turned that lawsuit over to his former supervisor whom he had worked for at CYFD, checked -- waited to hear something, started checking Internet websites on the status of the lawsuit. He eventually learned and like I said I did wait a long time to file that motion for default. But eventually [he] learned that default had been entered against him by the Court clerk, and then finally got around to calling somebody to find out what happened. When he did call, of course whoever he had turned over his defense to made their entry and the ball got rolling. Despite being in default an answer was filed without leave of the Court to file the answer, and ever since, he's conducted himself as if he's an active part of the lawsuit despite having default entered against him.

Tr. at 3:2-18 (Garcia). Payne also alerted the Court that “Bucag is an educated man” and the “summons is very clear.” Tr. at 3:22-4:2 (Garcia). Next, Payne argued that “going through the default process here in Federal Court is a little more onerous than state court. But as we were halfway through the process, he filed his paperwork to get back in.” Tr. at 4:12-15 (Garcia). In light of those facts, Payne asserted that there is no good cause to set aside the Clerk's Entry of Default, because Bucag

did absolutely nothing to ensure that he had presented a defense within the time line or the amount of time that we gave him afterward, until he was already in default. And so what did he actually do to cure the problem? What would have stopped this from happening in the first place? All he did was make a phone call and say hey, what's going on. They realized there was an issue two or three days later, he was in the lawsuit and the[n] his answer was filed []. That's my belie[f] of the facts as I see the[m] . . . I haven't talked to the gentleman or deposed him so I may be wrong on some of the facts, and if so I'm sure my colleagues will correct me. But as I stated, as far as the standard goes, I don't see good cause to set aside the clerk's entry of default.

Tr. at 5:1-12 (Garcia).

         Bucag then argued, and asserted that he

didn't just sit on it. Right or wrong he sent it to his supervisor as a CYFD employee he assumed that would just take care of it. It didn't. But he did, it was him who discovered the default against him, again followed up and at this time a counsel was assigned. So really we're talking about a 70 day delay. He was served September 13, 2016, entered an appearance and filed an answer December 12, 2016. As his affidavit . . . shows, there was no disrespect for the Court, he was not intentionally trying to ignore it. He thought he was doing the right thing. It turned out it required a follow-up phone call to get the answer filed. . . . Nothing about this 70 day delay has halted the discovery process. A trial had already been set, deadlines had already been set, Mr. Bucag did not seek to vacate any of those. He immediately started engaging in discovery. Nothing by the 70 day delay caused any delay in the proceedings.

Tr. at 6:21-7:17 (Williams). Bucag also compared the standard for setting aside an entry of default with the standard for setting aside a default judgment, and argued that the standard for the former was much less stringent. See Tr. at 7:19-25 (Williams). Bucag then explored one factor for the Court's consideration -- “whether setting aside the entry would prejudice the nonmovant” -- and asserted that he had established there would be no prejudice, because Wilder had already asserted the exact same affirmative defenses and arguments Bucag proposed. Tr. At 8:1-12 (Williams). Bucag also asserted that he has a ...


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