United States District Court, W.D. Virginia, Charlottesville Division
K. MOON, UNITED STATES DISTRICT JUDGE
case is before the Court upon Plaintiff Daniel Armeni’s
(“Armeni”) motion for entry of default judgment
(Docket No. 26) and Defendant BSI Financial Services,
Inc.’s (“BSI”) motion to vacate entry
of default, grant enlargement and leave to file a responsive
pleading, and oppose entry of default judgment (Docket No.
33). Because Defendant has failed to show insufficient
process or demonstrate the requisite good cause to set aside
entry of default, and Plaintiff has pled sufficient facts to
support his claims, I will deny BSI’s motion and grant
case arises out of purported violations of the Federal Fair
Credit Reporting Act (“FCRA”), 15 U.S.C. §
1681, et seq. Armeni instituted this action on
November 19, 2015. In his complaint, Armeni alleged various
claims against Trans Union, LLC (“Trans Union”),
Experian Information Solutions, Inc.
(“Experian”), and BSI.
FACTS AS ALLEGED
Initial Consumer Credit Report Errors
alleges that, in June 2014, he obtained copies of his credit
report from Trans Union and Experian, two companies which
produce consumer credit reports. In so doing, he discovered
that these companies inaccurately represented his credit
information. (Compl. ¶¶ 10, 23). In particular,
Armeni’s credit report with Trans Union stated that he
was $56, 000 past due on a mortgage account with BSI, a loan
servicing company. Id. ¶ 11. According to his
complaint, the home subject to this mortgage was foreclosed
upon in August 2013. Subsequently, the home was put up for
sale. Armeni states that the “home sold for
approximately $526, 000, which was $10, 000.00 more than the
amount owed . . . on the loan.” Id. ¶ 12.
Armeni’s credit report from Experian “was double
reporting the foreclosure of the BSI account, creating the
appearance that two different foreclosures occurred-one in
August 2013 and one in September 2014.” Id.
Armeni’s Dispute Letters
claims that he sent a dispute letter to Trans Union on or
around June 11, 2014, alleging that the company inaccurately
reported information regarding the BSI mortgage account.
(Compl. ¶ 13). The letter stated that he did not owe any
past balance on the mortgage “as BSI had been paid in
full after the August 2013 foreclosure sale.”
Id. Trans Union subsequently investigated the BSI
account and provided their investigation results to Armeni.
After this investigation, Trans Union updated Armeni’s
credit profile to show that he owed a balance of $0 on the
BSI account, but nonetheless verified the inaccurate
information that the account had “settled for less than
the full balance.” Id. ¶¶ 15, 19.
Afterward, Armeni contacted the Consumer Financial Protection
Bureau (“CFPB”), notifying the CFPB of Trans
Union’s supposed inaccurate reporting. In response to
his complaint to the CFPB, Trans Union removed the inaccurate
information on September 12, 2014. However, Trans Union
subsequently reinstated this information. Id.
BSI’s Reporting and Investigation
further alleges that when credit reporting agencies like
Trans Union and Experian receive consumer disputes, they
translate them into Automatic Consumer Dispute Verification
(“ACDV”) forms using a dispute system called
“e-Oscar.” (Compl. ¶¶ 60-61).
“[T]he ACDV form is the method by which BSI has elected
to receive consumer disputes.” Id. ¶ 62.
Armeni claims that BSI received such a report from Trans
Union after he sent a dispute letter to the credit reporting
agency. Id. ¶ 65.
to Armeni, BSI does not engage in a substantive investigation
of consumer credit disputes. Instead, BSI only reviews
“its own internal computer screen for the account and
repeats back to the ACDV system the same information that BSI
had already reported to the [credit reporting
agencies].” Id. ¶ 67. According to
Armeni, BSI knew that his account had been paid in full, but
reported otherwise to Trans Union. Additionally, BSI failed
to note that Armeni’s account was disputed despite the
fact that Armeni “had previously disputed the debt
directly to BSI on numerous occasions.” Id.
December 18, 2015, the Secretary of the Commonwealth of
Virginia filed a certificate of compliance (Docket No. 5)
demonstrating service of process upon BSI. On this occasion,
Armeni’s complaint and summons were sent to 3001 South
Lamar, Suite 320, Austin, Texas 78704. Id. After BSI
did not file a responsive pleading, Armeni attempted service
upon BSI twice more. Certificates of compliance for these
service attempts were filed on January 21, 2016, and February
8, 2016, respectively. (Docket Nos. 16, 18). In the second
instance, the complaint and summons were addressed to 1425
Greenway Drive, Suite 400, Irving, Texas 75038, while on the
third occasion, such documents were mailed to 350 N. Saint
Paul St., Dallas, Texas 75201-0000. Id.
March 17, 2016, Armeni moved for entry of default against
BSI. (Docket No. 20). Default was entered by the clerk the
following day. (Docket No. 21). Later, on June 7, 2016,
Armeni moved for entry of default judgment. (Docket No. 26).
Subsequently, on June 20, 2016, BSI filed a notice of
appearance. (Docket No. 28).
28, 2016, BSI filed its motion to set aside entry of default,
grant enlargement of time and leave to file a responsive
pleading, and oppose Armeni’s motion for default
judgment. (Docket No. 33). Oral argument on the motions was
held on July 25, 2016.
STANDARD OF REVIEW
a defendant is required to serve an answer or some other
responsive pleading “within 21 days of being served
with [a] summons and complaint.” Fed.R.Civ.P. 12;
King v. Flinn & Dreffin Engineering Co., No.
7:09-cv-00410, 2012 WL 4459568, at *2 (W.D. Va. May, 16,
2012). “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.”
Fed.R.Civ.P. 55(a). Once a party has moved for default
judgment, “a court may either grant the motion pursuant
to Rule 55(b)(2), or set aside the entry of default for good
cause pursuant to Rule 55(c).” Red Light
Management, Inc. v. Dalton, No. 3:15-cv-00051, 2016 WL
1337329, at *3 (W.D. Va. Apr. 5, 2016). In determining
whether or not a defaulting party has demonstrated sufficient
good cause 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
Mavila v. Absolute Collection Service, Inc., 539
Fed. App’x 202, 204-05 (4th Cir. 2013) (quoting
Payne ex rel. Estate of Calzada v. Brake, 439 F.3d
198, 204-05 (4th Cir. 2006)).
BSI’S MOTION TO VACATE DEFAULT, GRANT ENLARGMENET
AND LEAVE TO FILE A RESPONSIVE PLEADING, AND OPPOSE ENTRY OF
argument to set aside entry of default has two strands.
First, BSI argues that it was improperly served
Armeni’s complaint and summons. Second, BSI argues that
it can show the requisite good cause to vacate an order of
Improper Service of Process
service of process is ineffective a court does not acquire
personal jurisdiction over a party, and a default judgment
resulting from such defective service is void.”
Capital Concepts Inc. v. CDI Media Grp. Corp., No.
3:14-cv-00014, 2014 WL 3748249, at *4 (W.D. Va. July 29,
2014) (quoting Bank United v. Hamlett, 286 B.R. 839,
743 n.3 (W.D. Va. 2002)). “However, returns of service
of process . . . act as prima facie evidence of
valid service.” Id. In such a case, a
defendant must “at the very least, present credible
evidence to rebut the presumption of ...