United States District Court, E.D. Michigan, Southern Division
OPINION AND ORDER (1) DENYING PLAINTIFF'S MOTION FOR DEFAULT JUDGMENT (ECF No. 11); (2) DIRECTING THE CLERK OF COURT TO SET ASIDE THE ENTRY OF DEFAULT AS MOOT; AND (3) ORDERING PLAINTIFF TO PROPERLY SERVE DEFENDANT THE AMENDED COMPLAINT PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 4(h)
PAUL D. BORMAN, District Judge.
This action arises from Plaintiff's allegation that Defendant United Car Company, Inc. violated the federal Truth-in-Lending-Act, 15 U.S.C. § 1601, et seq. ("TILA"). Plaintiff's Amended complaint was filed on behalf herself and on behalf of a putative class. (ECF No. 6). Defendant has failed to defend or otherwise appear in this action and Plaintiff now moves this Court for entry of a Default Judgment pursuant to Federal Rule of Civil Procedure 55(b)(2). (ECF No. 11). As the class has never been certified, Plaintiff has moved for default only as to her own claims.
The Court finds the briefing is sufficient and there is no need for oral argument on the present motion. See E.D. MICH. LR 7.1(f)(2). For the following reasons, the Court will DENY Plaintiff's Motion for Default, direct the Clerk of the Court to set aside the Clerk's Entry of Default, and ORDER Plaintiff to re-serve Defendant the Amended Complaint pursuant to Federal Rule of Civil Procedure 4(h).
Plaintiff filed her original complaint on September 29, 2014. (ECF No. 1). Plaintiff allegedly served Defendant the original complaint and summons on October 1, 2014. (ECF No. 3). Thereafter, on November 5, 2014, the Court ordered Plaintiff to show cause as to why the Eastern District of Michigan was a proper venue for the action. (ECF No. 5). Plaintiff promptly filed the operative Amended Complaint on November 10, 2014 which set forth that the events, acts or omissions that formed the basis of the complaint occurred in this district but did not add any new claims or parties. (ECF No. 6). Thereafter, the order to show cause was vacated (ECF No. 7).
Plaintiff alleges in her amended complaint that she purchased a used 2007 Chevrolet Impala from Defendant on September 10, 2014 and paid Defendant $1, 500 for a down payment. (Am. Compl. ¶¶ 24, 27). Plaintiff claims that Defendant represented that Plaintiff's credit was approved for financing and also provided her with a retail installment sales contract ("RISC") that purportedly reflected all the terms and conditions of that financing. (Id. at ¶¶ 24-25). In addition to the RISC, Plaintiff signed a "Purchase Spot Delivery Agreement" which provided that Defendant could "unilaterally cancel the contract in the event the dealership is unable to assign the Retail Installment Sales Contract to a third party, ' or if Defendant unilaterally cancels the RISC or changes the terms to its pecuniary advantage." (Id. at ¶ 26). Plaintiff signed the RISC and Defendant delivered the vehicle to Plaintiff. (Id. at ¶ 25).
On September 16, 2014, Defendant telephoned Plaintiff and unilaterally canceled Plaintiff's RISC and demanded that she return the vehicle and a pay $600.00 "repossession fee" and forfeit her down payment. Plaintiff alleges that Defendant was "verbally abusive" and accused her of fraud during the phone call. (Id. at ¶ 27). Defendant called again on September 17 and 18 and repeated the same. (Id. at ¶ ¶ 28, 29). Plaintiff then used her "monetary resources to repair another vehicle so that she could have reliable transportation." (Id. at ¶ 30). Then, on September 19, 2014, Defendant contacted Plaintiff and advised her that it had "obtained financing" for her. (Am. Compl. at ¶ 31).
It is unclear from the Amended Complaint if Plaintiff still retains possession of the vehicle under new terms or whether Defendant actually repossessed the vehicle.
Plaintiff avers that Defendant did not consider the vehicle sold until Defendant sold the RISC to a third-party. (Id. ). However, Plaintiff was responsible for insuring the car at her own expense after taking possession. (Id. ). Plaintiff alleges that Defendant's use of the "Purchase Spot Delivery Agreement" rendered the terms of the RISC illusory and illegally waived Defendant's obligations under TILA because TILA "mandates that retail installment contracts when signed by the buyer are the final written financing expression between the parties and is binding on both the Defendant-creditor and the buyers. (Id. at ¶¶ 17-18).
On December 20, 2014, Plaintiff requested a Clerk's Entry of Default. (ECF No. 8). The Clerk granted the request and a Clerk's Entry of Default was entered on December 24, 2014. (ECF No. 9). On February 26, 2015, this Court ordered Plaintiff to show cause why this case should not be dismissed for failure to prosecute. (ECF No. 10). Shortly thereafter, Plaintiff filed the present Motion for Default Judgment on March 3, 2015. (ECF No. 11).
II. STANDARD OF REVIEW
Pursuant to Federal Rule of Civil Procedure 55(b) a judgment by default may be entered against a defendant who has failed to plead or otherwise defend against an action. In order to obtain judgment by default, the proponent must first request the clerk's entry of default pursuant to Rule 55(a). See Hanner v. City of Dearborn Heights, No. 07-15251, 2008 WL 2744860, at *1 (E.D. Mich. July 14, 2008). Once a default has been entered by the clerk's office, all of a plaintiff's well-pleaded allegations, except those relating to damages, are deemed admitted. Antoine v. Atlas Turner, Inc., 66 F.3d 105, 110 (6th Cir. 1995), see also Ford Motor Co. v. Cross, 441 F.Supp.2d 837, 846 (E.D. Mich. 2006) (citation omitted). Once a default is obtained, the party may then file for a default judgment by the clerk or by the court. FED. R. CIV. P. 55(b). If the plaintiff's well-pleaded allegations are sufficient to support a finding of liability as to the defendant on the asserted claims, then the Court should enter a judgment in favor of the plaintiff. See Cross, 441 F.Supp.2d at 848. Although Rule 55(b)(2) does not provide a standard to determine when a party is entitled to a judgment by default, the case law sets forth that the court must exercise "sound judicial discretion" when determining whether to enter the judgment. Wright & Miller, 10A Federal Practice & Procedure, § 2685 (3d ed. 1998) (collecting cases). After a court determines that a default judgment should be entered, it will determine the amount and character of the recovery awarded. See id. § 2688 (collecting cases).
"Because a party has no duty to plead until properly served, sufficient service of process is a prerequisite to entry of default." Russell v. Tribley, No. 10-14824, 2011 WL 4387589, at *8 (E.D. Mich. Aug. 10, 2011) (collecting cases). The Federal Rules of Civil Procedure provide that a corporation, partnership, or association must be served either by the procedure set forth in Rule 4(e)(1), that provides an individual may be served by "following the state law for serving a summons in an action brought in courts of general jurisdiction in the state where the district court is located or where service is made", or by "delivering a copy of the summons and of the complaint to an officer, a managing or general agent, or any other agent authorized by appointment or by law to receive ...