Brandt v. American Bankers Ins. Co. of Florida
653 F.3d 1108
| 9th Cir. | 2011Background
- Brandts sued American Bankers for contract breach and bad faith under Washington law; service completed via Washington OIC, with CSC forwarding to Assurant, but not to American Bankers.
- Assurant personnel failed to forward the complaint to the proper American Bankers personnel; the claims adjuster did not receive the complaint.
- American Bankers did not answer; the Clerk entered default; the district court entered a default judgment for $655,489.42 after an evidentiary hearing.
- Brandts moved to set aside the default under Rule 55(c) and the default judgment under Rule 60(b)(1) (excusable neglect); the court held Bankers culpable but meritorious defense and potential cure of prejudice.
- The court set conditions for relief, Bankers satisfied them, the default and judgment were set aside, discovery followed, and ultimately Bankers prevailed on partial summary judgment and at trial; Brandts appeal only the order setting aside the default judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether excusable neglect under Rule 60(b)(1) may be used to set aside a default judgment despite culpable conduct. | Brandt argues culpability precludes relief as a matter of law. | Bankers argues discretion under Rule 60(b)(1) with Falk factors governs relief. | District court did not abuse discretion; relief permitted. |
| Whether Falk factors can be balanced or treated disjunctively in Rule 60(b)(1) determinations. | Brandt asserts a disjunctive approach requires denial once culpability is found. | Bankers contends Falk factors may be collectively weighed. | Discretion to weigh factors, not an automatic denial, supported. |
| Whether the court properly applied the Falk factors given meritorious defense and potential prejudice. | Brandt contends prejudice cannot be cured and defense may be weak. | Bankers shows meritorious defense and prejudice could be cured. | Court correctly considered and granted relief when meritorious defense and cure of prejudice were present. |
Key Cases Cited
- Falk v. Allen, 739 F.2d 461 (9th Cir. 1984) (the Falk factors for setting aside a default judgment)
- Pioneer Inv. Servs. Co. v. Brunswick Assoc., 507 U.S. 380 (U.S. 1993) (excusable neglect is an equitable inquiry)
- Mesle v. United States, 615 F.3d 1085 (9th Cir. 2010) (abuse-of-discretion review for Rule 55/60(b) relief)
- TCI Group Life Ins. Plan v. Knoebber, 244 F.3d 691 (9th Cir. 2001) (frames the Falk-factor analysis and district-court discretion)
- Franchise Holding II, LLC v. Huntington Restaurants Group, Inc., 375 F.3d 922 (9th Cir. 2004) (describes disjunctive vs. holistic application of Falk factors)
- American Ass'n of Naturopathic Physicians v. Hayhurst, 227 F.3d 1104 (9th Cir. 2000) (cited for discretionary consideration of Falk factors)