TW Telecom Holdings Inc. v. Carolina Internet Ltd.
1:10-cv-01799
D. Colo.Dec 15, 2010Background
- Default entered against Carolina Internet on Oct 13, 2010 for failure to plead after service on Aug 13, 2010; service effected via NC Secretary of State per NC law; Defendant failed to answer within 21 days; Plaintiff moved for service by U.S. Marshals and sought default judgment; Court ordered show cause regarding setting aside default; Plaintiff provided evidence of attempted service and evasion by Miskell; Defendant did not meaningfully dispute the evidence; Court found culpable conduct and denied setting aside default; Plaintiff’s motion for default judgment pending calculation of damages; Defendant’s Answer was stricken if default stands.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether service of process was valid and proper | TW Telecom argues NC Secretary of State service valid under NC law and Fed. Rules. | Carolina Internet contends service failed due to returned unclaimed mail. | Service valid; default properly entered. |
| Whether the default should be set aside for good cause under Rule 55(c) | Set aside would prejudice plaintiff by delaying enforcement. | Defendant asserts meritorious defenses and lack of culpable conduct. | No good cause to set aside default. |
| Whether Defendant has meritorious defenses to justify setting aside default | Defendant has not shown concrete facts for meritorious defenses. | Defendant cites potential NC-law penalties and implied covenant defenses. | No meritorious defense shown at this stage. |
| Whether Plaintiff will be prejudiced if the default is vacated | Vacating would cause delay and incur expense without benefit to plaintiffs. | Vacatur would allow merits development; no prejudice argued other than delay. | Plaintiff would be prejudiced by vacatur. |
| Whether the Answer should be stricken and default judgment entered | If default remains, the Answer should be stricken; judgment possible on liquidated damages. | Defendant seeks opportunity to respond on damages calculation. | Answer stricken; default judgment address damages; provide briefing window. |
Key Cases Cited
- Amoco Oil Co. v. Ervin, 908 P.2d 493 (Colo. 1995) (Colorado choice-of-law impacts implied duty analysis)
- Coleman v. Shirlen, 281 S.E.2d 431 (N.C. App. 1981) (culpable conduct standard for default)
- Kaiser v. Market Square Discount Liquors, Inc., 992 P.2d 636 (Colo. App. 1999) (merits of defense standard and duty analysis)
- Olcott v. Delaware Flood Co., 327 F.3d 1115 (10th Cir. 2003) (standard for setting aside default; factors)
- In re Stone, 588 F.2d 1316 (10th Cir. 1978) (multifactor test for default relief)
- Hunt v. Kling Motor Co., 841 F. Supp. 1098 (D. Kan. 1993) (predecessor authority on default standard)
- United States v. Timbers Preserve, 999 F.2d 452 (10th Cir. 1993) (reliance on procedural default standards)
- Hardee’s Food Systems, Inc. v. Beardmore, — (—) (cited for related good-faith/fair-dealing context)