Calloway v. Pankopf, 3:12-cv-00441

Calloway sued Pankopf and Tory M. Pankopf, Ltd. in California state court on July 9, 2012; Pankopf removed to the District of Nevada on August 17, 2012.
Defendants were served and acknowledged service; Pankopf filed a removal notice the day answers were due but did not file an answer until February 27, 2013; Pankopf Ltd. answered on March 18, 2013.
Plaintiff moved for clerk’s default in February 2013; the Clerk entered default on April 12, 2013 after the motion had been filed before answers were filed.
Defendants unsuccessfully sought reconsideration; the Court denied that motion and later received Defendants’ Rule 55(c) motion to set aside default in April 2014. Plaintiff moved for default judgment in April 2014.
The court found Defendants’ delay and explanation (including that Pankopf is an attorney who understood removal rules) suggested culpable conduct, but also found material factual disputes and a large punitive damages request that counseled against default judgment.
The court declined both to grant default judgment and to set aside the Clerk’s entry of default on purely procedural grounds, instead setting aside the Clerk’s default in the interest of deciding the case on the merits and transferring the case to the Central District of California for improper-venue remedial reasons.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether entry of default should be set aside under Fed. R. Civ. P. 55(c)	Default should stand as Defendants missed responsive deadlines	Delay was due to personal/family hardships, removal notice showed intent to defend	Denied: Defendants culpable; motion to set aside entry of default denied (but court later set aside Clerk’s default in exercise of discretion to reach merits)
Whether default judgment should be entered under Rule 55(b)	Default judgment appropriate given late answers and entry of default	Default judgment inappropriate because factual disputes exist and defendants are willing/able to litigate	Denied: Eitel factors (large punitive damages request, disputed material facts, preference for merits) weigh against default judgment
Whether removal to Nevada was improper and what remedy applies	Plaintiff noted improper venue as part of culpability argument; did not seek remand	Defendants removed to Nevada (incorrect district) but did not oppose transfer	Transfer to Central District of California ordered as most efficient remedy for improper removal

Brandt v. Am. Bankers Ins. Co. of Fla., 653 F.3d 1108 (9th Cir. 2011) (three-factor good-cause test for setting aside default)
Mesle v. U.S., 615 F.3d 1085 (9th Cir. 2010) (policy favoring decisions on merits and analysis of culpability for defaults)
TCI Group Life Ins. Plan v. Knoebber, 244 F.3d 691 (9th Cir. 2001) (culpability requires intentional failure to answer; mitigation where credible, good‑faith explanation exists)
Eitel v. McCool, 782 F.2d 1470 (9th Cir. 1986) (factors governing default-judgment disposition)
TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915 (9th Cir. 1987) (well-pleaded allegations in complaint taken as true after default)
Speiser, Krause & Madole P.C. v. Ortiz, 271 F.3d 884 (9th Cir. 2001) (removal does not excuse complying with federal pleading rules)