This was it. The moment I had been waiting for. Three years of law school. Passing the bar exam. My arguments were meticulously honed, my notes neatly organized. I was a lawyer, on my way to federal court to argue my first motion.
The motion in question? An unopposed motion for default judgment.
Now, I knew the motion was unopposed. And I knew it was a default hearing. But in my mind’s eye, that default hearing was going to generate the same edge-of-your-seat drama as the courtroom scenes in A Few Good Men.
Suffice it to say, expectation did not meet reality that day. But thanks to a judge who took pity on a wet-behind-the-ears first-year associate, I managed to make a record without too many gaffes. The court granted the motion, I secured a $120,000 judgment for my client, and I was on my way.
The five-page transcript from that hearing remains in my desk today. I keep it as a small reminder of my first day in court. Yet, it also serves as a continued reminder of the importance of the default judgment process.
“Judgment Day.” The phrase conjures images of opponents locked in battle, of a plaintiff and defendant joined in the fray. Opening statements will be made, witnesses called, and documents introduced into evidence. After each side presents closing argument, the jury renders a verdict, declaring a winner and a loser. The court then enters judgment and brings the war to an end.
Or perhaps the parties never reach trial. Their dispute is resolved on a contested motion for summary judgment. The parties have an opportunity to fully brief their respective positions. A motion and memorandum in opposition will be served, followed by a reply brief (and, increasingly, a surreply). After a small forest has been killed, a neutral judge will sift through the competing facts and authority, and either grant or deny judgment.
These ways of reaching Judgment Day share a common thread: A plaintiff and defendant meet on common ground, trade their best intellectual blows, and accept the judgment handed them by a judge or jury. Cue the inevitable appeal.
By comparison, obtaining a default judgment (to be technically accurate, a judgment by default) is a decidedly different process. Instead of coming at the end of the battle, a default judgment comes before it was ever joined. With no forces engaged, the full story possibly is never told.
Not only is it a different process—let’s be honest—it is likely much less interesting. Few interesting war stories begin with a plaintiff moving for a default judgment.
But there is no denying that default judgments play a critical role in modern litigation. For a plaintiff, it is a powerful tool: compelling the defendant’s timely response to the plaintiff’s complaint, ensuring that tactical delays will be minimized, and providing a prompt and cost-effective avenue to a recovery when a defendant refuses to respond. For a defendant—particularly a diligent one who intends to defend against a plaintiff’s claims—the entry of a default or a default judgment can have catastrophic consequences, subjecting the defendant’s assets to immediate execution without any ability to dispute the claims on the merits.
When it comes to default judgments, plaintiffs have one objective: to obtain a timely and defensible judgment capable of withstanding a subsequent attack. On the other hand, defendants also have one objective: to identify any procedural misstep or other “good cause” to convince a court to either set aside any entry of default in jurisdictions where obtaining a default judgment is a two-step process, or to vacate a default judgment.
Maximizing Odds of Success
But even with clearly defined objectives, navigating the default process requires attention to detail. There are traps for the unwary. How do parties maximize their chances of success? As a plaintiff, how do you effectively obtain a default judgment and make it stick? As a defendant, how do you make entries of default or default judgments disappear once they exist?
Begin by acknowledging the system’s preference for deciding cases on the merits. The Federal Rules of Civil Procedure and most states’ rules have made the process of requesting the entry of default and moving for a default judgment quite simple. Occasionally, “default packages” can be found on clerk’s websites—a one-stop shop for each of the filings you will need to complete the default process.
Still, for the plaintiff, a fundamental challenge remains: overcoming the inherent prejudice against default judgments in favor of resolving disputes on the merits. No matter how dilatory a defendant might be in responding to a complaint, no matter how flimsy the justification for missing a deadline, a plaintiff moving for a default judgment will often find itself confronted with the fact that a court will give a defendant every reasonable opportunity to appear and defend on the merits.
The reported decisions expressing this policy are legion. Fundamental fairness and equity compel courts to afford defendants every opportunity to cure a procedural default in the name of defending a case on the merits. Look no further than Rule 1 of the Federal Rules of Civil Procedure, which states that the purpose of the rules is to “secure the just, speedy, and inexpensive determination of every action and proceeding.” It is likely no accident that “just” precedes “speedy.”
This is not to say that a default judgment is inherently unfair. Where a defendant has been properly served with process and notified of the claims against it but still fails or refuses to timely defend, it is hard to conceive how a decision maker could find the entry of a default to violate fundamental fairness or equity.
But regardless of the applicable procedural rules, there will always be an underlying preference for resolving claims on the merits if at all possible, and without prejudicing a plaintiff in the process.
So how does a plaintiff looking to secure a prompt and defensible default judgment—in the face of a defendant who simply refuses to engage—counter this prejudice? By gaining the credibility of the court. Make it clear from day one that the plaintiff respects the process and the serious consequences to be faced by a defendant. This can be accomplished in a number of simple, intuitive steps.
First, every default-related filing submitted to the court must be professional and error free. Ironically, the simplification of the default process into a series of form filings has only increased the chance for errors. Figures and dates are mechanically slotted into forms and perhaps subject to scant review. Are the dates of service of process and the deadline to respond accurate? Does the amount of the requested judgment match the amount alleged in the complaint? Have you complied with any written or unwritten notice requirements established by the court as a prerequisite to the entry of default judgment? Sweat the details.
Second, be on time for default hearings. Judges will often schedule a group of default hearings back-to-back, which may be handled by a clerk or staff attorney. This might necessitate some waiting. But if you ask the court to enter a default judgment based on a defendant’s failure to timely respond to a complaint, you best be on time to make the request. Day one stuff, really, but often ignored.
Third, prepare for the default hearing. Do you have enough copies of the requisite default filings? If required, do you have copies of the case docket? Have your affidavits been properly executed and notarized? Many courts use default checklists to make sure all of the i’s have been dotted and t’s crossed. Find your court’s checklist, if it exists, and cover every item before heading to court.
The Best Method
The best method for securing a defensible default judgment is complying with the applicable procedural rules. The rules come in three principal forms: (1) the applicable rules of civil procedure in your jurisdiction, (2) any local rules of court and applicable standing orders, and (3) the written (or unwritten) rules of the particular judge.
Let’s consider the written rules first. Under the Federal Rules of Civil Procedure and in jurisdictions modeled after the federal rules, obtaining a judgment by default is a two-step process. Under Rule 55(a), when “a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise, the clerk must enter the party’s default.” Therefore, before a plaintiff can move for a default judgment, it must first satisfy the predicate step of requesting that the clerk enter the defendant’s default.
What does it mean to “otherwise defend”? Prior to the 2007 amendments to the Federal Rules of Civil Procedure, Rule 55(a) provided that an entry of default could be obtained against a defendant that failed to “otherwise defend as provided in these rules”—the implication being that failure to serve a proper Rule 12 or other motion expressly contemplated by the federal rules would constitute a failure to defend. But as the advisory committee notes to the 2007 amendments make clear, the drafters intended to relax this requirement through the deletion of the phrase “as provided in these rules.” Today the litmus test is usually whether the defendant acted with an intent to defend, even if a filing was not connected to a particular procedural rule.
Note that in some jurisdictions, however, such as my home state of Ohio, obtaining a default judgment is not a two-step process. There is no requirement that the clerk first enter a default before a plaintiff may move for a default judgment. As a result, it is not uncommon for lawyers used to state court practice to move for default judgments in federal court only to be advised that they must first have the clerk enter a default before the motion can properly be considered.
Assuming the plaintiff is in federal court or a comparable two-step jurisdiction, the second step is moving for entry of a default judgment. Depending on the case, default judgments can be entered by the clerk or the court. Under Rule 55(b)(1), if the plaintiff’s claim is shown by affidavit to be for a “sum certain” or an amount that can be made certain by computation, and the defendant is neither a minor nor an incompetent person, a default judgment may properly be entered by the clerk. In “all other cases” that do not satisfy the requirements of Rule 55(b)(1), the plaintiff “must” move the court for a default judgment under Rule 55(b)(2).
While some plaintiffs might think that obtaining a default judgment through the clerk can expedite the process and avoid further potential scrutiny by the court, the clerk has limited authority to enter default judgments.
Preliminarily, the clerk may enter a judgment only if a defendant has not appeared in the case and a default has been entered. What constitutes an “appearance” is the subject of some debate. But a demonstrated intent to defend or representation by counsel is typically sufficient to establish an “appearance” and divest the clerk of jurisdiction to enter a default judgment. Moreover, a clerk’s entry of default judgment must dispose of all claims for relief in a case; the court’s approval is typically required when the judgment would dispose of fewer than all claims.
As Rule 55(b)(1) provides, the clerk may enter judgment only for a “sum certain” or a sum capable of being made certain by computation. Cases involving sum certain damages are the exception, not the rule—a liquidated damages provision is being enforced, or a specific amount is due and owing on a note. Is the plaintiff’s complaint for personal injuries or property damage? Does it include a request for attorney fees? What about punitive damages? Or prejudgment interest? Most likely, none of these damages components would be considered a sum certain, requiring that judgment be entered by the court. When time is of the essence for enforcement purposes, forgoing requests for attorney fees, punitive damages, prejudgment interest, or some or all of these might be a strategic approach to securing a clerk’s judgment.
Finally, for a clerk to enter a default judgment, a plaintiff must make the requisite showing that the defendant is neither a minor nor an incompetent person.
If one or more of the prerequisites for the entry of judgment by the clerk cannot be satisfied, a plaintiff is required to move the court for the entry of default judgment under Rule 55(b)(2). In most jurisdictions, the filings necessary for an entry of default judgment by the court do not differ significantly from cases where the clerk can enter the judgment. The principal difference lies in the court’s ability to further investigate and require the production of additional evidence prior to entry of a default judgment.
Under Rule 55(b)(2), the court is empowered to conduct additional hearings—or refer the matter to a magistrate for additional fact finding—where it determines that, to “enter or effectuate a judgment,” it needs to conduct an accounting, determine the amount of damages, establish the truth of any allegation by evidence, or investigate any other matter. Federal courts (and those in comparable two-step jurisdictions) are vested with significant discretion to vet the merits of a plaintiff’s claims and the appropriate amount of damages before entering a default judgment.
When moving the court for entry of a default judgment under Rule 55(b)(2), the defendant or its representative must be served with written notice of the motion at least seven days prior to the hearing if the defendant has “appeared personally or by a representative” in the action. No such requirement exists for the preliminary entry of default under Rule 55(a) or for a clerk’s entry of default judgment under Rule 55(b)(1).
One of the most overlooked procedural steps is service of the Rule 55(b)(2) notice letter. Do not let this fall through the cracks. If you want to see the face of frustration, look for the lawyer who just traveled half an hour to get to the courthouse for a default hearing, then patiently waited an hour to be called, only to discover at the last minute that she can’t provide the court with proof of service of the Rule 55(b)(2) or comparable notice letter.
The Importance of Local Rules
While the Federal Rules of Civil Procedure or comparable state rules govern the general procedure for obtaining an entry of default or default judgment, the details are often controlled by local rules, clerk’s instructions, standing orders, and the written—and unwritten—rules of particular judges. Attorneys who practice in multiple jurisdictions, when moving for a default, should double-check each of these sources to save considerable time and money as well as to avoid unnecessary frustration.
First, check the local rules. Local rules often include specific provisions relating to the entry of default and default judgments. In addition, courts may include as appendices to their local rules, or provide via the clerk’s website, specific form filings or default packages to be used in connection with the default process. Not only do these save time (particularly for the novice practitioner), but failure to adhere to the clerk-preferred forms can sometimes result in delays or even a refusal by the clerk to process the filings.
If the local rules are silent regarding the entry of default or default judgments, be sure to determine whether your judge has any applicable standing orders or other written or unwritten preferences on the subject. In many instances, particularly a defendant’s failure to respond after an initial appearance, judges will have detailed procedures for providing notice of default judgment hearings. For example, many judges require that an additional letter, beyond the notice required by Rule 55(b)(2), be sent to defendants in default advising of the time, date, and location of the default hearing. Still others might mandate that copies of the relevant pleadings or motions be provided along with the notice of hearing. Other requirements include mailing instructions (regular, certified, electronic mail, or a combination of these) and the names of the recipients (the defendant, its representative, or both). Compliance with the court’s prescribed procedures helps provide it with the procedural basis and assurance needed to enter the default judgment.
The principal benefit of the default process is as a mechanism to secure a prompt and enforceable judgment in the face of a dilatory or nonresponsive defendant. Time can mean the difference between a plaintiff collecting all, some, or none of the judgment through various enforcement procedures.
For this reason, in two-step jurisdictions, and particularly where the plaintiff has reason to believe the defendant might be disposing of assets that could be used to satisfy the judgment, plaintiffs should closely monitor the court’s docket to ensure prompt completion of service of process as well as the deadline by which the defendant is required to move, plead, or otherwise respond to the complaint.
Move Quickly after Deadline
Once the deadline for a defendant to respond to a complaint expires, move quickly. This rule applies with special force in those jurisdictions that follow the two-step default process. Why? In jurisdictions that require an entry of default, the defendant is powerless to contest liability once default is entered by the clerk. The defendant’s only option is to move to set aside the entry of default under Rule 55(c), which requires a showing of good cause. Only then may the defendant properly contest liability.
In many cases, plaintiffs wait days, weeks, or even months after expiration of the applicable response deadline before moving for an entry of default or default judgment. During that time, nothing prohibits a defendant from filing an untimely answer or other response to the complaint. Any objection to the untimely filing may well fall on deaf ears, as the defendant has appeared and evidenced an intent to defend.
Timely action by the plaintiff increases the defendant’s burden to establish good cause to be relieved from the entry of default before having an opportunity to defend on the merits.
A word of caution: If you think a defendant will be appearing or is defended by counsel but the defendant misses a response deadline by a day or two, consider whether there is a logical explanation or good cause for the delay. In some situations, it might actually exist. The plaintiff who asks for entry of default at 9:00 a.m. the morning after a response is due—only to learn that defense counsel was involved in a car accident on the way to the courthouse to file an answer—runs a high risk of losing credibility.
Ultimately, the plaintiff should never forget that it might need to prove some or all of the allegations in its complaint, even where a defendant is in default and does not appear at the default judgment hearing.
At a default judgment hearing, Rule 55(b)(2) and comparable state rules typically vest courts with substantial discretion not only to determine the appropriate amount of damages but also to “establish the truth of any allegations by evidence” or “investigate any other matter.”
Where it appears that liability would be disputed or where the damages requested are significant, due consideration should be given to the default judgment hearing. What witnesses, documents, or affidavits might be necessary to establish the plaintiff’s case and the amount of damages? As a practical matter, having a number of witnesses appear at a default hearing on the chance that the court will require further evidence of liability or damages is usually not feasible. But consider whether a few key affidavits establishing important facts and authenticating critical documents would suffice.
The Defendant’s Perspective
Having examined default judgments from the plaintiff’s perspective, let’s take a look from the other side. The client calls, frantic. Today in the mail, it received a notice that a vendor it utilized in the past—but recently terminated without pay due to poor quality work—is attempting to garnish its bank account. How could this happen? The client informs you that a brief investigation revealed that it was recently sued by the vendor, which secured a $15,000 default judgment against it. How can this be fixed?
The first step in setting aside an entry of default (in two-step jurisdictions) and vacating a default judgment is to understand—and then, hopefully, meet—the required showing for relief.
Rule 55(c) of the Federal Rules of Civil Procedure provides that an entry of default judgment may be set aside “for good cause.” What does that mean? The specific formulation varies across jurisdictions, but courts typically look to three factors in determining whether good cause exists to set aside an entry of default: (1) Was the default willful? (2) Will setting aside the entry of default unduly prejudice the plaintiff? (3) Does the defendant have a meritorious defense to the plaintiff’s claims? Note that Rule 55(c) does not provide a time limit for moving to set aside an entry of default, though this makes little practical difference because a plaintiff will usually move promptly for a default judgment upon the entry of default.
By contrast, once a default judgment has been entered, Rule 60(b) governs motions to vacate a default judgment. Under Rule 60(b), a default judgment may be vacated “on motion and just terms” as a result of (1) mistake, inadvertence, surprise, or excusable neglect; (2) fraud, misrepresentation, or misconduct by the opposing party; or (3) any other reason that justifies relief. Under Rule 60(c)(1), a motion to vacate predicated on any of these grounds must be filed within a “reasonable time” and, as to the first two grounds, no more than a year after the entry of the default judgment.
Obviously, what passes for a mistake, excusable neglect, or reasonable time will entail a fact-dependent, case-by-case determination. But that is not to say that some general pointers can’t be distilled.
When advised by the client that a default has been entered or a default judgment rendered, run, don’t walk, to the appropriate court. Considering the preference for resolving cases on the merits, immediately addressing an entry of default or default judgment should help tip the scales in favor of the court finding excusable neglect. And when moving to set aside the entry of default or to vacate the default judgment, provide sufficient evidence to support the grounds you are advancing for relief. Did the defendant not receive service of process? Provide an affidavit attesting to this fact. Was a notice of a default hearing, required by the local rules to be sent by certified mail, only sent by regular mail? Provide a copy of the envelope. Whenever possible, show, don’t tell, the court.
The good cause required to set aside an entry of default or the various grounds for relief from a default judgment can often be significantly enhanced, if not established, by scouring a plaintiff’s default-related filings for procedural or substantive irregularities.
Start with service of process. Under Rule 55(a), before a clerk may enter a default, a plaintiff is obligated to show by affidavit or otherwise that a defendant has failed to timely plead or otherwise defend. But the duty to plead or otherwise defend is triggered only if the defendant is properly served with process. Check the docket. Check the returns on service (if they were properly filed). Clerks of court can make mistakes. You won’t be the first defendant to find that, despite a plaintiff’s representations to the contrary, service of process was never properly completed before commencement of the default process.
Next, check the plaintiff’s motion for entry of default and motion for default judgment. In federal court or other two-step jurisdictions, where default judgment is being entered by the clerk, are the damages truly for a sum certain or capable of being made certain by computation? Did the plaintiff properly submit an affidavit attesting to these facts? Does the measure and amount of damages match those alleged in the plaintiff’s complaint, or did the plaintiff increase them? Did the judgment account for all claims in a plaintiff’s complaint? Is the defendant a minor or incompetent person? Did the defendant actually appear in the action, thereby making a clerk’s entry of default judgment inappropriate?
Similarly, where a default judgment is to be entered by the court, did the plaintiff provide the proper notice of the default motion at least seven days prior to the default hearing? Did the plaintiff comply with all local rules of court and any standing orders or notice requirements of the particular judge? And in two-step jurisdictions, did the clerk enter a default before the plaintiff moved for default judgment? This may happen particularly when practitioners are accustomed to a one-step default process. In the normal course, many if not all of these procedural missteps would be noted by the court prior to entering a default judgment. Nonetheless, it never hurts to check and raise these issues whenever possible.
Cases involving military defendants present additional opportunities to defend against default judgments. Compliance with the Servicemembers Civil Relief Act (SCRA), 50 U.S.C. app. §§ 501 et seq., warrants separate consideration. While noncompliance with the SCRA’s requirements may be invoked only by military service members, it can serve as a convenient tool to void a default judgment when applicable.
Designed to temporarily suspend judicial and administrative actions that could adversely affect the civil rights of military service members on active duty, the SCRA applies to both federal and state judicial proceedings. See 50 U.S.C. app. §§ 502, 512.
Under the SCRA, before a court may enter judgment for a plaintiff, it “shall require” the plaintiff to file an affidavit with the court, stating whether or not the defendant is in military service and showing necessary facts to support the affidavit, or stating that the plaintiff is unable to determine whether or not the defendant is in military service. See 50 U.S.C. app. § 521(b)(1).
While the SCRA is applicable to default judgment proceedings, Rule 55 does not explicitly reference the SCRA’s requirements. As a result, the requirements are simply overlooked, particularly in jurisdictions where there is no substantial military presence. Default judgments will be entered without the court ever requiring production of the SCRA-mandated affidavit attesting to the defendant’s military service status.
The SCRA not only imposes an affidavit requirement before judgment may be entered; it provides for the vacation of default judgments entered against service members.
If a default judgment is entered in an action covered [under the SCRA] against a servicemember during the servicemember’s period of military service (or within 60 days after termination of or release from such military service), the court entering the judgment shall, upon application by or on behalf of the servicemember, reopen the judgment for the purpose of allowing the servicemember to defend the action if it appears that—
(A) the servicemember was materially affected by reason of that military service in making a defense to the action; and
(B) the servicemember has a meritorious or legal defense to the action or some part of it.
50 U.S.C. app. § 521(g)(1).
True, the SCRA may only be invoked by military service members as a means to vacate a default judgment. Nonetheless, its protections should not be overlooked. Even in places with fewer service members, defense counsel should be cognizant of whether the court has enforced the SCRA requirements and whether there are possible grounds for vacating a judgment under the SCRA.
In two-step default jurisdictions, a defendant appearing at a default judgment hearing ought first to have moved to set aside the entry of default. As a practical matter, however, a defendant’s first opportunity to contest an entry of default—and prevent a default judgment—will occur at the default judgment hearing. Make the most of it.
Under Rule 55(b)(2), the court isn’t limited to evidence relating to the amount of damages; it may also investigate the truth of the plaintiff’s allegations and any other matter. Defendants should be well armed with all available evidence to establish that an entry of default should be set aside (if applicable), liability and damages are disputed, a meritorious defense exists, and the case should be resolved on the merits.
If the opportunity exists—and it certainly should, at least in one-step jurisdictions—to file a written opposition to the motion or default judgment in advance of the hearing, do so. Inform the court of the evidence and witnesses available to establish the basis for denying the default judgment and the reasons why a meritorious defense exists.
Just as a plaintiff seeks to overcome the inherent preference for resolving cases on the merits, a defendant has its own presumption to overcome: that despite proper notice, the defendant failed to take timely action to respond to the plaintiff’s complaint. Other explanations might exist—facts that absolve the defendant without calling into question its diligence or respect for the judicial process. But despite the possibility of these other explanations, it is difficult to ignore the presumption typically associated with one who fails to take timely action in response to a judicial proceeding.
How does a defendant rebut this presumption? Act quickly. As soon as the appropriate motion to set aside an entry of default or motion to vacate a default judgment can be prepared, file it. And it cannot be said enough: Sweat the details. A thorough, error-free motion will go a long way toward establishing the defendant’s credibility and heighten the impression that a viable defense might exist that would justify hearing the case on the merits. Finally, operate on the court’s schedule, regardless of when any default-related hearing may be scheduled. If an irreconcilable conflict exists, arrange for a colleague to appear. As the saying goes, beggars can’t be choosers. Sometimes you take what you can get.
While lacking in the drama associated with a trial or the anticipation that accompanies waiting for a decision on a motion for summary judgment, default judgments often play a critical role. Through diligence, attention to detail, and respect for the process, plaintiffs and defendants alike can best maximize the odds of success.