Sepulveda v. Ole's Waffle Shop

Background

Richard Sepulveda sued Ole’s Waffle Shop, Douglas F. Durein, and Susan C. Durein, alleging violations of the Americans with Disabilities Act and state law. Sepulveda alleged that he visited Ole’s on three dates in 2019 and encountered several access barriers. The clerk entered default against the defendants after they failed to respond, and Sepulveda later moved for default judgment.

The defendants appeared and moved under Federal Rule of Civil Procedure 55(c) to set aside the entry of default. They stated that Ken Monize, Ole’s chief executive officer and manager, received the complaint with a letter from a law firm but did not believe a summons had been served. After consulting attorney Shona Armstrong, Monize concluded that the materials appeared to be a scam and did not respond. Douglas Durein stated that he and Susan Durein own the building housing Ole’s and that he also believed no response was necessary after speaking with Monize.

Legal standard

Rule 55(c) allows a court to set aside an entry of default for “good cause.” The court considered whether the defendants acted culpably, whether they had a potentially valid defense, and whether setting aside the default would prejudice Sepulveda. The court also emphasized that default judgment is a severe remedy and that cases should generally be decided on their merits when possible.

Court’s analysis

The court found that the defendants’ failure to respond resulted from confusion about service, an outdated service address, miscommunication, and mistaken legal advice. The court concluded that the defendants had not acted in bad faith or attempted to evade or manipulate the legal process.

The court also found that the defendants identified factual disputes that could support a defense, including whether the alleged access barriers existed, whether Sepulveda’s claimed damages were justified, and whether Sepulveda visited Ole’s on the dates alleged. Sepulveda conceded that there was a dispute about material facts.

Finally, the court found that Sepulveda had not shown legally sufficient prejudice. The fact that his counsel had prepared motions for default and default judgment was not enough because setting aside the default would cause no additional costs beyond the ordinary costs of continuing the lawsuit.

Disposition

Judge Donna Ryu granted the defendants’ motion to set aside the default. The court denied the motion for default judgment as moot, granted the defendants leave to file their proposed answer within three days, and set a case-management conference for September 2, 2020.