Chappell v. Bank of America , N.A.
- Clarke
- 1:24-cv-07056
- U.S. District Court · Southern District of New York
- 3
In Chappell v. Bank of America, N.A., Judge Clarke set aside Santander’s default and denied default judgment after finding good cause.
Santander Bank UK PLC, whose entry of default was set aside, and the plaintiffs, whose motion for default judgment was denied.
What happened
Chappell v. Bank of America, N.A. concerns Santander Bank UK PLC’s failure to respond after the plaintiffs sought to serve it with the complaint. The court had entered Santander’s default, and the plaintiffs asked for a judgment based on that default. Santander later appeared and said it had not been properly served.
The court applied three factors: whether Santander’s default was intentional, whether it had plausible defenses, and whether setting aside the default would unfairly harm the plaintiffs. The court found that Santander plausibly explained the service problem, appeared promptly after learning about it, offered plausible defenses, and had not caused specific prejudice merely because the case was delayed.
Judge Jessica G. L. Clarke found good cause to set aside Santander’s default and denied the plaintiffs’ motion for default judgment. The court also stated that the Second Amended Complaint is the operative complaint against Santander, directed the plaintiffs to refile it with an updated caption, and allowed further briefing on Santander’s pending motion to dismiss.
The detailed version
- Chappell v. Bank of America , N.A. · No. 1:24-cv-07056
- Clarke
- Jan. 27, 2025
Background
The plaintiffs filed the complaint on September 18, 2024. Santander Bank UK PLC was served according to the plaintiffs’ filing, and the Clerk entered Santander’s default on November 4, 2024. The plaintiffs then moved for default judgment.
Santander later appeared and requested additional time to respond to the Second Amended Complaint. Santander said it had not been properly served because the First Amended Complaint was served on a person at the Long Island office of Santander Bank, N.A., which Santander said was a different entity from Santander Bank UK PLC. Santander also said it promptly retained counsel and appeared after learning about the claimed service.
Rule 55(c) Analysis
Federal Rule of Civil Procedure 55(c) allows a court to set aside an entry of default for good cause. The court applied three factors identified by the Second Circuit: the willfulness of the default, whether the defaulting party has a potentially valid defense, and whether setting aside the default would prejudice the other party.
On willfulness, the court found that Santander’s explanation did not show conduct that was egregious or intentional. On defenses, the court stated that Santander did not need to prove a complete defense at this stage; plausible defenses in its motion to dismiss were sufficient. On prejudice, the court found that the delay did not by itself establish prejudice and that there was no evidence of lost evidence, increased opportunity for fraud or collusion, or other specific prejudice.
Ruling
The court found good cause to set aside the entry of default and denied the plaintiffs’ motion for default judgment. The order did not decide Santander’s motion to dismiss. Instead, it stated that the Second Amended Complaint is the operative complaint against Santander, directed the plaintiffs to refile that complaint with an appropriate caption, and allowed the plaintiffs to address the remaining portion of Santander’s motion to dismiss in an authorized omnibus opposition or propose a briefing schedule by January 30, 2025.
The Clerk of Court was directed to terminate ECF Nos. 49, 55, 65, 67, 73, and 83.
Read the full 3-page opinion on CourtListener, the free public archive maintained by the Free Law Project.