†††††††††††††††††††††††††††††††††††††††††††† UNITED STATES BANKRUPTCY COURT

††††††††††††††††††††††††††††††††††††††††††††††† EASTERN DISTRICT OF KENTUCKY

††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† LEXINGTON DIVISION

 

 

IN RE:

 

BRYAN HENDERSON and††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† CASE NO. 09-50596

NINA HENDERSON

 

DEBTORS

 

BRYAN HENDERSON and

NINA HENDERSON††††††††††††††††††††††††††††††††††††††† PLAINTIFFS

 

v.††††††††††††††††††††††††††††††††††††††††††††††††††† ADV. NO. 09-5114

 

AUTO BARN ATLANTA, INC. and

PAUL LU, INDIVIDUALLY AND AS CEO, AUTO BARN

ATLANTA, INC.†††††††††††††††††††††††††††††††††††††††† DEFENDANTS

 

††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† ORDER

 

This matter having come before the Court on the Defendantsí Motion to Set Aside Default Judgment, to Permit Answers, and to Permit Counsel Pro Hac Vice to File Paper Documents (DOC 14), and the matter having been heard on December 10, 2009, and the matter having been taken under submission, the Court hereby issues this Order.

†††† An Order (DOC 9) was entered on October 14, 2009, granting default judgment against defendant Auto Barn Atlanta, Inc. Defendant Auto Barn Atlanta, Inc. seeks that order to be set aside. The CEO of Auto Barn Atlanta, Inc. argues that he has limited English language skills, and this caused him to misunderstand what he needed to do in order to defend Auto Barn Atlanta, Inc. in this lawsuit. He also argues that he has a meritorious defense as the facts as alleged by plaintiff are incorrect.

†††† Legal Analysis


†††† When a defendant seeks relief from an entry of default, three equitable factors are considered to determine if good cause has been shown: (1) whether culpable conduct of the defendant led to the default, (2) whether the defendant has a meritorious defense, and (3) whether the plaintiff will be prejudiced. Defendant seeking relief from default judgment on grounds of mistake, inadvertence, surprise, or excusable neglect must prove that the default was due to one or more of those factors before it would be permitted to demonstrate that it could satisfy the remaining two factors, namely, a meritorious defense and the lack of prejudice to the plaintiff. On consideration of request for relief from default judgment, defense is meritorious if there is some possibility that the outcome of the suit after a full trial will be contrary to the result achieved by the default; if a defense is good at law, regardless of the likelihood of success, it will be considered meritorious. See Burrell v. Henderson, 434 F.3d 826 (6th Cir. 2006).

†††† Here, defendant Auto Barn Atlanta, Inc. has shown mistake due to limited English skills, and has raised factual issues that could create an outcome different than that achieved by default judgment. Also, plaintiff is not prejudiced by setting aside the default judgment as a trial on damages would need to be held if the motion to set aside was overruled.


††† For those reasons, Defendantsí Motion to Set Aside Default Judgment, to Permit Answers, and to Permit Counsel Pro Hac Vice to File Paper Documents (DOC 14) is SUSTAINED. Defendant Auto Barn Atlanta, Inc. has 10 days from the entry of this order to file an answer; Defendant Paul Lu has 10 days from the entry of this order to file an amended answer; and Defendantsí attorney may file in paper format provisionally, but must be CM/ECF certified no later than January 26, 2010.

 

COPIES TO:

Ryan R. Atkinson, Esq.

Robert W. Edler, Esq.