Sharma v. Big Limos MFG, LLC, 1:17-cv-00021

Sharma sued Big Limos MFG, LLC and its CEO/founder/registered agent Michael Walstrom for breach of contract over a $125,000 custom limousine purchase. Complaint filed January 3, 2017.
Service was difficult: Big Limos was served via the Arizona Corporation Commission on February 9, 2017; Walstrom was served at his Huntington Beach residence (by serving his wife and leaving papers) on March 23, 2017 after multiple failed attempts and private investigators’ efforts.
Plaintiff moved for default as to Big Limos; the court entered default against Big Limos on March 29, 2017 after Defendants did not appear at a hearing.
Defendants later retained (or believed they retained) attorney Dennis Esford; Esford filed an appearance and a motion to vacate Big Limos’s default on April 24, 2017. Plaintiff moved for default as to Walstrom on April 19, 2017.
Investigator Dotson spoke with Walstrom on February 24, 2017; Walstrom acknowledged knowledge of the lawsuit and indicated he would make service difficult and might honor the contract only if the suit were dropped.
The court denied Defendants’ motion to vacate Big Limos’s default (Rule 55(c)) and granted Sharma’s motion to enter default as to Walstrom (Rule 55(a)), concluding Defendants showed neither good cause nor prompt action to set aside the default.

Issue	Sharma's Argument	Defendants' Argument	Held
Whether the entry of default against Big Limos should be vacated under Fed. R. Civ. P. 55(c)	Default should remain; Defendants failed to show good cause, quick action, or a meritorious defense	Miscommunication about attorney-client relationship with Esford excuses delay; Esford appeared immediately upon learning of the matter	Denied — Defendants failed to show good cause (miscommunication insufficient) and did not act quickly enough; willful evasion of service undermined relief
Whether entry of default as to Walstrom should be denied or his answer deadline extended	Default should be entered; Walstrom failed to timely answer after service	Esford’s appearance moots default motion; same good cause excuse applicable; request 30-day extension to answer	Default entered against Walstrom — Court found Walstrom had notice, willfully evaded service, and did not show good cause or excusable neglect to extend time

Cracco v. Vitran Express, Inc., 559 F.3d 625 (7th Cir. 2009) (three-part test for vacating default: good cause, quick action, meritorious defense; favoring merits but differing Rule 55(c)/60(b) treatment)
Pretzel & Stouffer v. Imperial Adjusters, Inc., 28 F.3d 42 (7th Cir. 1994) (routine attorney miscommunications do not establish good cause to set aside default)
Jones v. Phipps, 39 F.3d 158 (7th Cir. 1994) (Rule 60(b) relief applied stringently out of respect for finality)
Sun v. Board of Trustees of Univ. of Illinois, 473 F.3d 799 (7th Cir. 2007) (policy favoring trial on the merits over default judgment)
O’Brien v. R.J. O’Brien & Associates, Inc., 998 F.2d 1394 (7th Cir. 1993) (discussing circuit’s stance on defaults)
Connecticut National Mortgage Co. v. Brandstatter, 897 F.2d 883 (7th Cir. 1990) (attorney communication problems insufficient to excuse default)
Keeton v. Morningstar, Inc., 667 F.3d 877 (7th Cir. 2012) (district court discretion to extend deadlines for good cause or excusable neglect)