Court’s tend to disfavor default judgments. Courts are more inclined to give each party the opportunity to argue their side of the case on merits, rather than allowing a judgment by default to stand. A motion to set aside an entry of default is commonly addressed to the sound discretion of a trial judge.
The procedural rule for relief of a default judgment is provided by Fed. R. Civ. P. 60 (b). A party seeking recourse under Rule 60(b) must persuade the trial court, at a bare minimum, that his/her motion is timely; that exceptional circumstances exist, favoring extraordinary relief; that if the judgment is set aside, s/he has the right stuff to mount a potentially meritorious claim or defense; and that no unfair prejudice will accrue to the opposing parties should the motion be granted.
Exceptions for not filing the complaint in a timely manner are
- Mistake, inadvertence, surprise, or excusable neglect;
- New evidence being discovered that with reasonable diligence, could not have been discovered in time to move for a new trial;
- Fraud, misrepresentation, or misconduct by an opposing party; the judgment being void; judgment being satisfied, released or discharged; any other reason that justifies failure to answer.
The party seeking relief from judgment should be acting with reasonable promptness. A one-year deadline exists for certain situations. For example, a motion to vacate a default judgment must be filed within one year from the date the judgment or order or the proceeding was entered by the court if the grounds for vacating the default judgment are based on mistake, inadvertence, surprise, excusable neglect, irregularity or newly discovered evidence.
Excusable default is the most common reason for vacating a default judgment. Not receiving a summons occurs frequently and is often an excuse for setting aside a default. Therefore the court must determine if service of the summons and complaint upon the party was proper. If in fact it were improperly served or simply not served, the default judgment is void. The excusable neglect standard that courts apply in setting aside default judgment is more rigorous than the good cause standard that is utilized in setting aside entry of default. Subsequently, there is not a time limitation in seeking to have a judgment vacated by the court if the judgment was obtained through insufficient service of the summons and complaint.
Relief from judgment on grounds of mistake is warranted when a petitioner demonstrates that mistake is attributable to special circumstances and not simply an erroneous legal ruling. However, neither ignorance nor carelessness on part of attorney will provide grounds for relief under the rule pertaining to mistake, inadvertence, surprise or excusable neglect. Also, it’s pertinent to note that rule authorizing relief from judgment on ground of mistake, inadvertence, surprise or excusable neglect is not intended as substitute for timely appeal.
Fraud is the knowing misrepresentation of a material fact, or concealment of the same when there is a duty to disclose and it was done to induce another to act to his or her detriment. Therefore, fraud includes deliberate omissions when a response is required by law or when the non-moving party has volunteered information that would be misleading without the omitted material. However, the moving party need not demonstrate that the adverse party has committed all the elements of fraud specified in the law of the state where the federal court is sitting, but rather must simply show that the adverse party’s conduct was fraudulent under the general common law understanding. To prevail under a motion for relief from judgment based on fraud, it is incumbent upon the movant to establish the fraud complained of by clear and convincing evidence.
In conclusion, the courts analyze the facts of each particular case to determine what constitutes sufficient grounds for vacating a default judgment. Remember, allowing a default judgment to stand uncontested can be damaging to any defenses you may have.