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 Defendants’ 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, Defendants’ 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 Defendants’
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.