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Adams v. Applied Business Services, Inc.

United States District Court, E.D. Virginia, Norfolk Division

February 21, 2018

DAWN ADAMS, Plaintiff,
v.
APPLIED BUSINESS SECURITY, INC. d/b/a SECURITY COLLECTION AGENCY and EQUIFAX INFORMATION SERVICES, LLC, Defendants.

          OPINION AND ORDER

          Robert G. Doumar Judge.

         This matter comes before the Court upon Dawn Adams' ("Plaintiff) Motion for Default Judgment as to liability against defendant Applied Business Security, Inc. d/b/a Security Collection Agency ("SCA"). ECF No. 11. For the reasons set forth below, Plaintiffs motion is STAYED pending resolution of Plaintiffs case on the merits against defendant Equifax Information Services, LLC ("Equifax").

         I. PROCEDURAL BACKGROUND

         Plaintiff filed the instant lawsuit on October 6, 2017. ECF No. 1. Her complaint seeks actual, statutory and punitive damages and attorneys' fees and costs against SCA and Equifax for alleged violations of the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681, et seq., as well as actual and punitive damages and costs against SCA for alleged defamation under Virginia law. Id. On November 2, 2017, Equifax filed its answer and defenses to Plaintiffs complaint. ECF No. 5. However, SCA has yet to file an answer or otherwise appear in this lawsuit.

         The record of this case shows that SCA was properly served process pursuant to Rule 4 of the Federal Rules of Civil Procedure and Section 8.01-329 of the Virginia Code via service upon the Secretary of the Commonwealth whose Certificate of Compliance was docketed on October 19, 2017. See ECF No. 4. When SCA failed to answer or otherwise appear within twenty-one days of such service, Plaintiff asked the Clerk to enter default as to SCA pursuant to Rule 55(a) of the Federal Rules of Civil Procedure. ECF No. 8. On November 11, 2017, the Clerk entered default as to SCA as requested. ECF No. 9.

         On January 10, 2018, Plaintiff filed the instant motion for default judgment as to liability against SCA ("Motion for Default Judgment") pursuant to Rule 55(b) of the Federal Rules of Civil Procedure ("Rule 55(b)"). ECF No. 11. To date, SCA has not responded. Plaintiffs Motion for Default Judgment is now before the Court.

         II. DISCUSSION

         Plaintiff seeks entry of default judgment as to liability against SCA, one of the two named defendants in this case, and indicates that Plaintiff will "seek a trial by jury on the issues of damages to be awarded against [SCA]" after such judgment is entered. ECF No. 11 at 1. Rule 54(b) of the Federal Rules of Civil Procedure authorizes the Court to enter final judgment as to fewer than all named defendants in a lawsuit following an express determination that "there is no just reason for delay." Fed.R.Civ.P. 54(b). The question now before the Court is whether the possibility of inconsistent judgments in the instant action constitutes a "just reason" to delay entry of default judgment against SCA. See Phoenix Renovation Corp. v. Gulf Coast Software. Inc.. 197 F.R.D. 530 (E.D. Va. 2000). For the reasons below, the Court finds that it does.

         A. The Frow Rule and Its Progeny

         The Supreme Court first addressed this issue in Frow v. De La Vega. 82 U.S. 552 (1872). In Frow. the plaintiff alleged that several defendants jointly conspired to defraud him. The trial court entered default judgment against one defendant, Frow, who failed to appear, but subsequently found in favor of the remaining defendants who appeared and litigated the case on the merits. On appeal, the Supreme Court condemned these inconsistent judgments as "unseemly and absurd" and ultimately vacated the default judgment against Frow. Id. at 554.

         Since the adoption of Rule 54(b), many jurisdictions have construed the Frow rule to apply only to situations of "true joint liability" among defendants. See Phoenix Renovation Corp., 197 F.R.D. at 583 (collecting cases). However, the Fourth Circuit has interpreted Rule 54(b) to extend the holding of Frow to situations where defendants' liability is joint and/or several or otherwise closely interrelated. U.S. for Use of Hudson v. Peerless Ins. Co., 374 F.2d 942, 944-45 (4th Cir. 1967). Therefore, in light of Peerless Insurance, this Court has consistently avoided entry of default judgment against one defendant where there is a risk of unavoidable inconsistency with a later judgment with respect to other defendants. See, e.g., Phoenix Renovation Com.. 197 F.R.D. at 583; Jefferson v. Briner. Inc.. 461 F.Supp.2d 430, 436 (E.D. Va. 2006); Southern Bank and Trust Co. v. Prosperity Beach. LLC. No. 2:14cv270, 2014 WL 4976598 (E.D. Va. 2014).

         B. Analysis

         In order to determine whether the Frow rule should apply in the instant case, a brief summary of ...


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