United States District Court, E.D. Virginia, Alexandria Division
JAMES C. CACHERIS, UNITED STATES DISTRICT COURT JUDGE.
This matter is now before the Court on the Plaintiff’s Motion for Default Judgment [Dkt.10], Defendant’s Motion to Set Aside Default [Dkt. 16], and Defendant’s Objections to the Magistrate Judge’s Proposed Findings of Fact and Recommendation [Dkt. 18].
Plaintiff Goldbelt Wolf, LLC (“Plaintiff”) filed this action for breach of contract against Defendant Operational Wear Armor, LLC (“OpWear” or “Defendant”)on October 2, 2015. On October 27, 2015, a summons was issued for service on Defendant in Indianapolis, Indiana but was returned unexecuted on October 27, 2015. (Summons Issued [Dkt. 3]; Summons Returned Unexecuted [Dkt. 4].) On October 27, 2015, an alias summons was issued for service on defendant in Jacksboro, Tennessee. (Alias Summons [Dkt. 5].) On November 2, 2015, Sharon Schwartz, a purchasing manager at OpWear, received and signed for a copy of the summons and complaint. (Alias Summons Returned Executed [Dkt. 6].) OpWear did not file a responsive pleading after Ms. Schwartz received the summons.
On December 1, 2015, this Court entered an order instructing plaintiff to immediately obtain an entry of default from the Clerk of Court pursuant to Federal Rule of Civil Procedure 55(a), and subsequently file a motion for default judgement. (Order [Dkt. 8].) On December 1, 2015, Plaintiff filed its request for entry of default. (Entry of Default [Dkt. 9].) The Clerk of Court entered the default and the Plaintiff then filed a motion for default judgment on December 9, 2015. (Pl.’s Mot. for Default Judgment [Dkt. 10].) On December 18, 2015, the Magistrate Judge held a hearing on the motion at which no one appeared on behalf of the defendant, and entered a Report and Recommendation recommending a default judgment in favor of the plaintiff. (Report and Recommendation [Dkt. 14], at 2.)
OpWear was originally made aware that a lawsuit had been filed against it by an e-mail communication from Plaintiff’s General Counsel, Philip Livingston, to OpWear’s CEO, Wade Lemon, on December 23, 2015. (Second Lemon Decl., Def.’s Ex. D [Dkt. 22-1].) This e-mail conversation included an attached copy of the complaint Plaintiff had filed against OpWear. However, OpWear contends that it did not find out that Plaintiff had attempted to serve it with the lawsuit until it received the Magistrate Judge’s Report and Recommendation on December 23, 2015. (Def.’s Resp. [Dkt. 22] at note 1.)
OpWear filed its motion to set aside default [Dkt. 16], as well as an accompanying memorandum of law [Dkt. 17], on January 4, 2016. Plaintiff filed its opposition on January 19, 2016 [Dkt. 21]. OpWear filed its reply brief [Dkt. 22] on January 26, 2016, and oral argument was heard on February 4, 2016.
II. Legal Standard
The district judge shall make a de novo determination of those portions of the Magistrate Judge’s Report and Recommendation to which objections are made. Fed.R.Civ.P. 72(b); 28 U.S.C. § 636(b)(1)(C). Under de novo review, “[t]he district judge may accept, reject, or modify the recommended decision, receive further evidence, or recommit the matter to the magistrate judge with instructions.” Fed.R.Civ.P. 72(b)(3).
Rule 55 of the Federal Rules of Civil Procedure provides for the entry of a default judgment when “a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend.” Fed.R.Civ.P. 55(a). A defendant in default admits the factual allegations in the complaint. See Fed.R.Civ.P. 8(b)(6)(“An allegation - other than one relating to the amount of damages - is admitted if a responsive pleading is required and the allegation is not denied.”); see also, GlobalSantaFe Corp. v. Globalsantafe.com, 250 F.Supp.2d 610, 612 n.3 (E.D. Va. 2003)(“Upon default, facts alleged in the complaint are deemed admitted and the appropriate inquiry is whether the facts as alleged state a claim.”)
Rule 55(c) of the Federal Rules of Civil Procedure provides that “the court may set aside an entry of default for good cause shown and, it may set aside a final default judgment in accordance with Rule 60(b).” “The disposition of motions made under Rules 55(c) and 60(b) is a matter which lies largely within the discretion of the trial judge.” Consol. Masonry & Fireproofing Inc. v. Wagman Constr. Corp., 383 F.2d 249 (4th Cir. 1967). The Fourth Circuit has established that:
When deciding whether to set aside an entry of default, a district court should consider whether the moving party has a meritorious defense, whether it acts with reasonable promptness, the personal responsibility of the defaulting party, the prejudice to the party, whether there is a history of dilatory action, and the availability of sanctions less drastic.
Payne ex rel. Estate of Calzada v. Brake, 439 F.3d 198, 203 (4th Cir. 2006). The Fourth Circuit has also “repeatedly expressed a strong preference that, as a general matter, defaults should be avoided and that claims and defenses be disposed of on their merits.” Colleton Preparatory Acad., Inc. v. Hoover Universal, Inc. 616 F.3d 413, 417 (4th Cir. 2010).
As a jurisdictional matter, a court cannot enter default judgment against a defendant until that defendant has been brought within the court’s jurisdiction by adequate service of process. Armco, Inc. v. Penrod-Stauffer Bldg. Systems, Inc., 744 F.2d 1087, 1089 (4th Cir. 1984). Pursuant to Federal Rule of Civil Procedure 4(h), a corporation, partnership, or other unincorporated association may be served in a judicial district of the United States in the manner prescribed in Rule 4(e)(1) for serving an individual or by delivering a copy of the summons and complaint to an officer, managing, or general agent, or any other agent authorized by law to receive service of process. Rule 4(e)(1) provides that an individual may be served in a judicial district of the United States “by following state law for serving a summons in an action brought in courts of general jurisdiction in the state where the district court is located or where service is made.” Fed.R.Civ.P. 4(e)(1).
Defendant OpWear moves to set aside the default on the grounds that OpWear was never properly served. In this case, service could have been effected by following the law of either Tennessee or Virginia. See Sams v. Heritage Transp., Inc., 2013 U.S.Dist. LEXIS 45906, *5 (D.S.C.). The Court will first consider whether service of ...