Kuriyan v. Schreiber

Background

Vikram Kuriyan sued Joel Schreiber and Waterbridge Capital, LLC, alleging a violation of the Racketeer Influenced and Corrupt Organizations Act, a federal law commonly known as RICO. Kuriyan filed affidavits stating that Schreiber was personally served and that Waterbridge was served through the New York Secretary of State. The parties later stipulated to an extension of time for Defendants to answer, and the court granted Schreiber additional time to retain counsel.

The Clerk entered a Certificate of Default against Waterbridge on June 21, 2023. Kuriyan then moved for a default judgment. Waterbridge, through counsel, asked the court to vacate the Certificate of Default and allow it additional time to respond. Kuriyan opposed Waterbridge’s request.

Court’s Analysis

Under Federal Rule of Civil Procedure 55(c), a court may set aside a certificate of default for “good cause” before final judgment. The court considered three factors: whether Waterbridge’s default was willful, whether Waterbridge had a potentially valid defense, and whether removing the default would prejudice Kuriyan.

The court found that Waterbridge’s default was not willful. The parties had been communicating, Kuriyan had accepted that Schreiber was acting for both defendants when agreeing to an extension, and Defendants were trying to retain counsel. Waterbridge also moved to vacate the Certificate of Default only a few days after it was entered.

The court found that Kuriyan would suffer little prejudice because the case was at an early stage and the delay was not expected to cause loss of evidence, more difficult discovery, or a greater risk of fraud or collusion. The court also found that Waterbridge had raised a serious potential defense: claim preclusion, sometimes called res judicata, based on Kuriyan’s earlier similar action in New York State Court. The court did not decide that defense or the underlying RICO claim at this stage.

Ruling and Effect

The court GRANTED Waterbridge Capital, LLC’s motion to vacate the Certificate of Default entered against it. The court allowed Waterbridge to answer the complaint and ordered Defendants to answer or otherwise respond by July 27, 2023. The court stated that further extensions were unlikely without a showing of good cause.

The opinion does not state that Kuriyan’s motion for default judgment was granted or denied. Instead, the court directed the Clerk to terminate the motions listed at ECF Nos. 24, 25, and 29. The order addressed the default procedure and did not resolve the merits of Kuriyan’s claim.