China Cinda Asset Management Co. Ltd. v. Peng

Background

China Cinda Asset Management Co. Ltd. sued Xiaofeng Peng, Shan Zhou, and other defendants. The court had entered default against Zhou on September 15, 2025. On January 6, 2026, Zhou moved under Federal Rule of Civil Procedure 55(c) to set aside the entry of default. Peng and Zhou also filed a motion to dismiss under Rule 12(b)(6), which asks whether the complaint adequately states a legal claim.

Motion to Set Aside Default

The court explained that an entry of default may be set aside for “good cause.” In deciding whether good cause exists, courts consider whether the defendant acted culpably, whether the defendant has a potentially valid defense, and whether reopening the matter would prejudice the plaintiff. The court also emphasized the preference for deciding cases on their merits rather than by default.

Zhou argued that she did not deliberately fail to respond, noting that English is not her native language and that she was unfamiliar with litigation. She also argued that she had a potentially valid defense because she was not a party to the agreement and therefore was not liable. China Cinda argued that Zhou had enough time to seek an extension, that her defense was not valid, and that delay concerning the underlying debt would prejudice China Cinda.

The court rejected the prejudice argument. Because Peng was not in default and the case would continue, the court found that China Cinda would not be meaningfully prejudiced by allowing Zhou to participate. The court therefore granted Zhou’s motion to set aside the entry of default. Zhou was ordered to respond to the operative complaint within 21 days, unless the parties stipulated otherwise.

Motion to Dismiss

The court denied the motion to dismiss. It determined that Zhou could not bring the motion while the entry of default against her remained in effect when the motion was filed. As to Peng, the court found that his motion was untimely because he waited several months to file it and the parties had not filed a stipulation extending his deadline to respond.

The court also stated that the arguments in the motion involved factual disputes that were more appropriate for a later summary-judgment motion than for resolution at the complaint stage. The court noted that the motion relied on Peng’s declaration to dispute the complaint’s allegations and raise affirmative defenses. The court said Zhou retained the ability to file a later motion under Rule 12(b), and encouraged the defendants to file a single answer.

Orders

Magistrate Judge Kandis Westmore ordered the following:

- Zhou’s motion to set aside the entry of default was granted. - Peng and Zhou’s motion to dismiss was denied. - Zhou must respond to the operative complaint within 21 days, absent a stipulation. - Peng must file an answer within 21 days, absent a stipulation. - The parties must meet and confer within seven days about the defendants’ deadlines to respond to the complaint.