In re Newlin (08-04015)

Plaintiff filed complaint against Defendant in Superior Court alleging breaches of fiduciary duty under Georgia Partnership law. Defendant removed to bankruptcy court. Trustee intervened in Superior Court and filed answer and counterclaim. Trustee issued a bill of sale to the Defendant transferring any interest in business partnership to Defendant. Defendant erroneously believed this to automatically substituted him for the Trustee. Defendant failed to file an answer or other response within 10 days; thus, Defendant was in default. The "good cause" standard of Fed. R. Civ. P. 55(c) governs whether a clerk.s entry of default should be set aside. The four factor test is (1) whether the defaulting party took prompt action to vacate the default; (2) whether the defaulting party provides a plausible excuse for the default; (3) whether the defaulting party presents a meritorious defense; and (4) whether the party not in default will be prejudiced if the default is set aside. Turner Broadcasting Systems, Inc. v. Sanyo Electric, Inc., 33 B.R. 996, 1001 (N.D. Ga. 1983), aff.d, 742 F.2d 1465 (11th Cir. 1984). In this case, Defendant failed to satisfy the 2nd, 3rd, and 4th factors. Therefore, the motion to reconsider order striking Defendant.s untimely answer was denied.

Thursday, October 22, 2009