Tuesday, March 21, 2006

EDNY Vacates Default Entered against Defendant Who Failed to Answer Amended Complaint that Mooted Defendant's Motion to Dismiss

Per S.E.C. v. Apolant, 411 F.Supp.2d 271 (E.D.N.Y. Jan. 31, 2006):

Rule 55(c) provides, “For good cause shown, the court may set aside an entry of default and, if a judgment by default has been entered, may likewise set it aside in accordance with Rule 60(b).” Fed.R.Civ.P. 55(c). Rule 60(b) authorizes a court to vacate the entry of default on the basis of, among other things, “mistake, inadvertence, surprise or excusable neglect ··· [or if] the judgment is void.” Fed.R.Civ.P. 60(b)(1), (4). Whether to grant a motion to vacate a default is within the sound discretion of the district court. State Street Bank and Trust Co. v. Inversiones Errazuriz Limitada, 374 F.3d 158 (2d Cir.2004).

In this case the Defendant's failure to answer the amended complaint does not appear to be willful. Instead of filing an answer or renewing the motion to dismiss to address the amended complaint, the Defendant filed a reply brief and argued that the amended complaint failed to cure any defects raised by the motion to dismiss. The procedural tactic that the Defendant employed has support in the law. As explained by a learned treatise, when faced with an amended pleading in response to a motion to dismiss, the Court may either consider the earlier motion as against the amended complaint, or deny the motion if the Court finds that the amendments to the complaint cured the deficiencies raised by the motion. See Charles A. Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure, § 1476 (2d ed.2005).

Here, the Court took the latter approach and denied the motion to dismiss. Technically, this placed the Defendant in default for failing to properly respond to the Plaintiff's amended complaint. However, the Defendant timely filed a reply to the motion and has continued to expeditiously defend the action. To hold the Defendant in default at this point “would be to exalt form over substance.” Id. Accordingly, for good cause shown, the Court vacates the default and will address the merits of Apolant's latest motion to dismiss.


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