United States District Court, D. Arizona
Honorable Rosemary Marquez United States District Judge
before the Court is Defendants' Motion to Set Aside Entry
of Default Judgment. (Doc. 16.) The Motion is fully briefed
and suitable for determination without oral argument. For the
following reasons, the Motion will be granted.
September 10, 2018, Plaintiff G&G Closed Circuit Events
LLC filed a Complaint against Defendants First Arizona Bar
LLC and Gregory and Diane Tryggestad, alleging that
Defendants displayed a live sporting event (a boxing match)
for profit without first obtaining a license to do so. (Doc.
1.) Plaintiff completed service of process on the Tryggestads
on October 25, 2018, and on First Arizona Bar LLC on November
7, 2018. (Docs. 11, 12, 13.) Defendants were thus required to
respond by November 15 and November 28, 2018, respectively.
See Fed. R. Civ. P. 12(a)(1).
the Defendants filed a response within the required time. On
December 13, 2018, Plaintiff filed an Application for Entry
of Default. (Doc. 14.) The Clerk of Court entered
Defendants' default on December 14, 2018. (Doc. 15.)
Although Plaintiff did not request that default judgment be
entered or submit an affidavit showing a sum certain amount
due on its claims, the Clerk of Court entered a default
judgment in favor of Plaintiff. (Id.); see
Fed. R. Civ. P. 55(b)(1) (stating that clerk may enter
default judgment “on the plaintiff's request, with
an affidavit showing the amount due”).
appeared on December 21, 2018, by filing the currently
pending Motion to Set Aside Entry of Default Judgment. (Doc.
Standard of Review 
court may set aside an entry of default for good
cause.” Fed.R.Civ.P. 55(c). “The ‘good
cause' standard that governs vacating an entry of default
under Rule 55(c) is the same standard that governs vacating a
default judgment under Rule 60(b).” Franchise
Holding II, LLC, 375 F.3d at 925. Under that standard,
district courts examine three factors: “(1) whether the
party seeking to set aside the default engaged in culpable
conduct that led to the default; (2) whether it had no
meritorious defense; or (3) whether reopening the default
judgment would prejudice the other party.” United
States v. Signed Pers. Check No. 730 of Yubran S. Mesle,
615 F.3d 1085, 1091 (9th Cir. 2010) (internal quotation marks
and brackets omitted). Although a default may be upheld if
any of the three factors is present, district courts must
remain cognizant of the policy favoring resolution of cases
on their merits. Id. (quoting Falk v.
Allen, 739 F.2d 461, 463 (9th Cir. 1984) (per curiam)).
Court finds that Defendants did not engage in culpable
conduct. A defendant is culpable if she has notice of the
action and “intentionally” fails to respond.
Mesle, 615 F.3d at 1092 (quoting TCI Grp. Life
Ins. Plan v. Knoebber, 244 F.3d 691, 697 (9th Cir.
2001), overruled on other grounds by Egelhoff v. Egelhoff
ex rel. Breiner, 532 U.S. 141 (2001)).
“Intentional” in this context means that the
defendant “acted with bad faith, such as an
‘intention to take advantage of the opposing party,
interfere with judicial decisionmaking, or otherwise
manipulate the legal process.'” Id. Thus,
“a conscious choice not to answer” is
insufficient by itself to establish culpable conduct.
have established that they acted reasonably and in good
faith. They submit declarations asserting that they submitted
the Complaint to their insurance carrier and, while awaiting
a coverage determination, were informed by an insurance
representative that Plaintiff's counsel had agreed to
extend the deadline to file a response. (Doc. 16-1, Ex. A,
¶¶ 9-10 & Ex. B, ¶¶ 10-11; Doc. 18-1,
Ex. C, ¶¶ 8-9 & Ex. D, ¶¶ 8-9.)
Additionally, they state that they immediately sought counsel
outside of their insurance carrier upon learning that
Plaintiff had applied for an entry of default.
explanation for their default is “inconsistent with a
devious, deliberate, willful, or bad faith failure to
respond, ” and thus their conduct was not culpable.
Mesle, 615 F.3d at 1092 (quoting TCI Grp.,
244 F.3d at 698). They sensibly submitted the Complaint to
their insurance carrier and, as unrepresented parties,
reasonably relied on the insurance representative's
assertion that she had spoken to Plaintiff's counsel and
obtained an extension of time to respond. Id. at
1089 (explaining that the “rules for determining when a
default should be set aside are solicitous towards movants,
especially those whose actions leading to the default were
taken without the benefit of legal representation.”).
Their lack of bad faith is further evidenced by their
celerity in seeking outside counsel and moving to set aside
their default, which they accomplished in one week.
argues that Defendants' “subjective beliefs”
about the time to respond do not constitute a good faith
explanation that establishes a lack of
culpability. Plaintiff further argues that
Defendants' failure to respond has interfered with the
Court's judicial ...