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Rodgers v. Melton Electric Co.

United States District Court, D. North Dakota, Southeastern Division

April 30, 2014

Thomas Rodgers and Edward S. Christian, as Trustees of the Dakotas and Western Minnesota Electrical Industry Workers Health and Welfare Fund, and as Trustees of the Dakotas Areawide IBEW-NECA Savings & Retirement Plan; and each of their successors, Plaintiffs,
v.
Melton Electric Company and John D. Melton d/b/a Melton Electric Company, Defendants.

ORDER GRANTING MOTION TO VACATE DEFAULT ORDER AND TRANSFERRING CASE TO THE WESTERN DISTRICT OF MISSOURI

RALPH R. ERICKSON, Chief District Judge.

Before the Court is Defendants Melton Electric Company and John D. Melton d/b/a Melton Electric Company's (hereafter collectively "Melton") motion to vacate default order and/or motion to transfer venue to Missouri.[1] The matter came regularly on for a hearing on April 29, 2014. Plaintiffs appeared through their counsel Amanda Cefalu. John D. Melton appeared via telephone on behalf of himself and Melton Electric Company. Because good cause has been shown, Melton's motion to vacate the default order is GRANTED. The Court further finds that judicial economy and the interests of justice necessitate a transfer of venue, and hereby ORDERS this case transferred to the Western District of Missouri.

I. BACKGROUND

This is an action to collect alleged delinquent fringe benefit contributions. On May 6, 2013, Melton was served with the summons and complaint in this action.[2] Melton failed to answer the complaint or otherwise appear. On November 5, 2013, Plaintiffs moved for entry of a default order for an accounting.[3] Melton did not respond to the motion or otherwise appear. The Court granted the motion on November 12, 2013, compelling Melton to provide records for an accounting.[4] Melton failed to provide the necessary reports for an audit. On February 3, 2014, Plaintiffs filed a motion for an order to show cause based on Melton's failure to comply with the terms of the default order.[5]

On February 20, 2014, Melton made his first appearance in the case when he contacted the undersigned's chambers regarding the order to show cause hearing set for February 24, 2014. Melton was told to submit a written response, which he did on February 21, 2014.[6] The Court has construed Melton's response as a motion to vacate the default order and/or a request to transfer the case to Springfield, Missouri.

II. ANALYSIS

MOTION TO VACATE

Although there is a "judicial preference for adjudication on the merits, "[7] an entry of default under Fed.R.Civ.P. 55(a) may be set aside only for "good cause."[8] To find "good cause", courts should weigh the excuse or explanation for the default, the existence of a meritorious defense, and the prejudice to the non-defaulting party.[9] Each of these three factors are considered when setting aside an entry of default or a default judgment; however, a lesser showing is required to set aside an entry of default.[10] No default judgment having been entered, Melton is entitled to the more lenient "good cause" standard in considering his motion to vacate the default order.

A. Blameworthy or Culpable Conduct

At the hearing, Melton explained he failed to respond to the complaint because he believed Plaintiffs had no legal basis for pursuing a cause of action against him since he was no longer a signatory on the collective bargaining agreement at issue in this case. From his perspective, this action was entirely unfounded. Melton asserted that he called the local union business manager, Randy Appleby, and asked him to contact the Plaintiffs to tell them he was not under contract. Melton took no further action to respond to the complaint or the allegations contained within the complaint.

Melton's attention was captured when he was served the Court's order to show cause. The order notified Melton that he may be found in contempt if he failed to appear at the hearing set for February 24, 2014. Melton contacted the Court on February 20, 2014, and, at the Court's suggestion, submitted a written response on February 21, 2014. Melton clearly had notice of the litigation; yet he failed to take action until faced with the prospect of a bench warrant if he did not appear. Although Melton might believe that the action is unfounded and he hoped that the case would go away if Appleby contacted Plaintiffs on his behalf, Melton failed to act with diligence. While unfamiliar with legal proceedings, Melton is not blameless for his failure to timely appear and/or file an answer prior to the entry of the default order. This factor weighs against granting the motion to vacate.

B. Meritorious Defense

When Melton submitted a response to the allegations in the complaint, he provided a copy of a letter he sent to the Plaintiffs indicating a desire to terminate the collective bargaining agreement with Local Union 453.[11] He also submitted various letters from Local Union 453 to John Melton/Melton Electric Company requesting that the collective bargaining agreement be opened for negotiations.[12] Melton invites this Court to infer that these letters indicate the absence of a collective bargaining agreement. In contrast, Plaintiffs submitted evidence that Melton continued sending contributions even after he purportedly terminated the collective bargaining agreement.[13] Plaintiffs allege Melton submitted the required fringe benefit reports until August 2012, and assert that the Plan administrator would have returned the money if there was no valid contract.

At this stage of the proceedings, the Court need not resolve the dispute. "The underlying concern is... whether there is some possibility that the outcome... after a full trial will be contrary to the result achieved by the default."[14] It is plain from the record that Melton has submitted sufficient evidence of ...


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