Larson v. Securiguard, Inc. Health and Welfare Plan
8:17-cv-00052
D. Neb.Aug 18, 2017Background
- Plaintiff Mark Larson sued Securiguard, Inc. Health and Welfare Plan (the Plan) and FCE Benefit Administrators alleging ERISA claims for denial of benefits, failure to provide plan documents/notice, and breaches of fiduciary duty. Complaint filed Feb. 21, 2017.
- Service: FCE accepted service on behalf of the Plan on Feb. 24, 2017; the Plan’s answer was due March 17, 2017.
- Miscommunication: TMS (sharing an address with FCE) sent emails suggesting it would hire counsel to defend the Plan; Plan HR relied on those communications and on FCE, producing delay and confusion over who would retain counsel.
- Default: Plaintiff moved for clerk’s entry of default and default judgment; clerk entered default and awarded default judgment on May 1, 2017.
- Motion to set aside: Plan learned of the default in mid-May, retained counsel, and moved to set aside the clerk’s entry of default and rescind the default judgment (filed May 30, 2017).
- Court considered good-cause factors (delay/blameworthiness, prejudice, meritorious defense) under Rule 55(c) and Rule 54(b) because the default judgment was not final as it did not dispose of all parties/claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether to set aside clerk’s entry of default | Larson argued Plan’s conduct (attorney contact, failure to answer) was blameworthy and default should stand | Plan argued confusion caused by TMS/FCE communications and lack of internal litigation procedures produced excusable delay; moved to set aside | Court granted motion — good cause to set aside default (Rule 55(c)) |
| Standard for relief from default judgment | Default judgment should be final and governed by Rule 60(b) | Non-final default judgment (did not resolve all parties) should be revisable under Rule 54(b) and assessed under Rule 55(c) factors | Court applied Rule 55(c)/Rule 54(b) because judgment was non-final and rescinded default judgment |
| Prejudice to plaintiff from setting aside default | Default favored plaintiff; delay harms plaintiff | Plaintiff failed to show concrete prejudice (lost evidence, discovery problems, fraud) beyond delay | No concrete prejudice shown; this factor favors vacating default |
| Whether Plan proffered meritorious defenses | Larson contended Plan misclassified employment and failed to provide required documents; fiduciary breaches alleged | Plan asserted records show proper classification; SPD/conflicting documents mean plan administrator identity unclear; plan as entity cannot be fiduciary for its own assets | Court found Plan presented minimally adequate factual support for meritorious defenses as to denial-of-benefits, document-provision claims, and fiduciary claims; weighs in favor of vacating default |
Key Cases Cited
- Stephenson v. El-Batrawi, 524 F.3d 907 (8th Cir. 2008) (good-cause factors for setting aside default: culpability, meritorious defense, prejudice)
- Johnson v. Dayton Elec. Mfg. Co., 140 F.3d 781 (8th Cir. 1998) (same three-factor test and prejudice must be concrete)
- Grant v. City of Blytheville, Arkansas, 841 F.3d 767 (8th Cir. 2016) (distinguishing standards for setting aside non-final vs final default judgments)
- Acosta v. Pacific Enters., 950 F.2d 611 (9th Cir. 1991) (a plan entity cannot act as fiduciary with respect to its own assets)