List v. Carwell

Background

Jason and Alicia List sued Robert Carwell and 0820527 B C LTD doing business as Let It Ride Carriers over a Minnesota truck accident. The claims included negligence, negligence per se, respondeat superior, and loss of consortium. Carwell was served on September 5, 2018, while he was not represented by counsel. He later went to a remote area of Canada to care for a sick relative and did not respond to the lawsuit because he did not understand that he needed to do so. The clerk entered default against him on October 11, 2018. The plaintiffs never sought a default judgment against Carwell.

Troy and Jodi Fiedler later intervened and filed claims against Let It Ride and Carwell arising from the same accident. Carwell timely answered the Fiedlers’ complaint. After counsel reached Carwell in April 2019, Carwell moved under Federal Rule of Civil Procedure 55(c) to set aside the entry of default so he could defend against both sets of claims. The Lists moved to strike part of Carwell’s reply memorandum and a supporting affidavit.

Motion to Set Aside the Entry of Default

Rule 55(c) permits a court to set aside an entry of default for good cause. The court considered three factors: whether Carwell’s conduct was blameworthy or intentional, whether he had a potentially meritorious defense, and whether setting aside the default would prejudice the plaintiffs. The court explained that setting aside an entry of default requires a less demanding showing than setting aside a default judgment.

Blameworthiness

The court found that Carwell was not blameworthy or culpable. It distinguished his situation from cases involving attorneys or legally sophisticated parties who made mistakes of law. Carwell was unfamiliar with the legal system, was not represented when served, was apparently unreachable while in a remote area, and did not fully understand that he needed to respond or how to do so. The court found no evidence that he intentionally sought to interfere with the lawsuit.

Meritorious Defense

To show a meritorious defense, Carwell did not have to prove that he would win. He only had to present evidence that could permit a finding in his favor. He identified two defenses: that Troy Fiedler’s negligence caused the crash and that improper maintenance by a third party contributed to it. The court concluded that, if supported by facts developed during discovery, those defenses could support a finding that Carwell was not liable.

Prejudice

The plaintiffs argued that setting aside the default would delay discovery and trial and require them to spend more resources proving Carwell’s liability. They also alleged a risk of fraud or collusion based on health-related explanations for delays. The court found no evidence that the defendants were lying about those health concerns. It held that delay and increased litigation costs, without more, were insufficient to establish prejudice.

Risk of Inconsistent Judgments

The court also concluded that leaving the default in place could create inconsistent judgments. The Lists and the Fiedlers both asserted negligence claims against Carwell based on the same crash, and Carwell had answered the Fiedlers’ claims. If the default remained, Carwell could potentially be found liable to the Lists while not being found liable to the Fiedlers. Because the people bringing the claims were in the same vehicle, the court reasoned that Carwell’s responsibility for causing the crash should apply equally to both sets of claims.

Motion to Strike

The court denied the Lists’ motion to strike. It explained that motions to strike generally apply only to pleadings. The challenged reply memorandum and supporting affidavit were not pleadings, so the motion was procedurally improper.

Disposition

The court granted Carwell’s motion to set aside the entry of default and denied the plaintiffs’ motion to strike.