The opinion
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
AMERICAN SAFETY LLC CIVIL ACTION
VERSUS CASE NO. 20-3451
HAROLD ALGER et al. SECTION: “G”(1)
ORDER AND REASONS
Pending before the Court is the “Motion to Vacate Clerk’s Entry of Default” filed by pro
se Defendant Harold Alger (“Alger”).1 Plaintiff American Safety LLC (“Plaintiff”) opposes the
motion.2 On February 22, 2021, the Clerk of Court entered a default as to Alger, Seneca Mortgage
Services, LLC (“Seneca Mortgage”), and several other defendants.3 In the instant motion, Alger
seeks to vacate the entry of default on behalf of himself (an individual) and Seneca Mortgage (a
limited liability company).4 Having considered the motion, the memoranda, the arguments made
at oral argument, the record, and the applicable law, the Court grants the motion in part and denies
the motion in part. The Court also grants Seneca Mortgage thirty days to retain counsel in this
matter.
I. Background
Plaintiff filed a Complaint in this Court on December 23, 2020, asserting subject matter
1 Rec. Doc. 30.
2 Rec. Doc. 38
3 Rec. Doc. 28.
4 Rec. Doc. 30 at 1.
jurisdiction pursuant to 28 U.S.C. § 1332.5 Plaintiff alleges that it provides personal protective
equipment (PPE) to hospitals and other businesses.6 Plaintiff further alleges that following the
increase in demand for N95 masks during the COVID-19 pandemic, it entered into an Escrow
Agreement with Defendants (including numerous individual defendants and financial
institutions) to effectuate the sale of over 100 million masks from China to Plaintiff.7 Plaintiff
asserts that after it made multiple payments to Defendants, it “became clear . . . that the
Defendants did not have the ability to provide” the masks.8 Plaintiff claims that Defendants were
engaged in a conspiracy and fraud with respect to the mask agreement.9 Plaintiff brings state law
claims for breach of contract, fraud, fraud in the inducement, violation of the Louisiana Unfair
Trade Practices and Consumer Protection Law (“LUTPA”), conspiracy, breach of fiduciary duty,
and attorney malpractice. 10
On January 22, 2021, an Affidavit of Service was entered into the record by Plaintiff’s
counsel stating that Alger was served with the Complaint on January 6, 2021 and Seneca
Mortgage was served with the Complaint on January 8, 2021.11 On February 15, 2021, Plaintiff
filed a “Motion for Entry of Default” requesting that the Clerk of Court enter a default against
Alger, Seneca Mortgage, and four other defendants who had failed to appear or otherwise respond
5 Rec. Doc. 1.
6 Id.
7 Id.
8 Id.
9 Id.
10 Id.
11 Rec. Doc. 22.
to the Complaint.12 On February 22, 2021, the Clerk of Court entered a default against these
defendants including Alger and Seneca Mortgage.13
On March 9, 2021, Alger filed the instant “Motion to Vacate Clerk’s Entry of Default.”14
On March 30, 2021, Plaintiff filed an opposition to the instant motion.15 The Court held oral
argument on the motion on April 7, 2021 by videoconference.
II. Law and Analysis
In the instant motion, pro se defendant Alger seeks to vacate the entry of default entered
by the Clerk of Court on behalf of himself and Seneca Mortgage pursuant to Federal Rule of Civil
Procedure 55(c).16 As to himself, Alger states that he was “never personally served with any
documents, nor did [he] receive documents at [his] residence that required [his] signature.”17
Alger also states that Plaintiff’s counsel sent the Complaint and Summons to an old address where
he no longer resides.18 Alger notes that the “green United States Postal Service Return receipt”
does not contain his signature but rather “looks to have the word COVID written on the signature
line.”19 As to Seneca Mortgage, Alger states that “neither I nor David Rusk, the agent who is
designated to receive service, was personally served with any documents, nor did either of us
12 Rec. Doc. 27.
13 Rec. Doc. 28.
14 Rec. Doc. 30.
15 Rec. Doc. 38.
16 Rec. Doc. 30.
17 Id. at 1.
18 Id.
19 Id. at 4.
receive summons and complaint that required either my or Mr. Rusk’s signature.”20 In support of
the instant motion, Alger attaches his declaration and a declaration of David Rusk.21
In opposition to the instant motion, Plaintiff argues that Plaintiff properly served Alger
and Seneca Mortgage under Louisiana law.22 Plaintiff also argues that the Clerk of Court properly
entered default against Alger and Seneca Mortgage pursuant to Federal Rule of Civil Procedure
55.23 In addition, Plaintiff notes that Seneca Mortgage, a limited liability company, cannot appear
pro se.24
A. Whether Alger (an individual) can represent Seneca Mortgage (an LLC)
Alger seeks to vacate the entry of default as to himself and Seneca Mortgage.25 According
to the Complaint, Seneca Mortgage is a limited liability company with two members: David Rusk
and John Chapman.26 The Fifth Circuit has held “that a corporation as a fictitious legal person
can only be represented by licensed counsel.”27 Under Louisiana law, like a corporation or
partnership, an LLC is an entity separate from its owners.28 Because an LLC is a separate entity,
a member that is not a licensed attorney may not represent the LLC in court, even if the LLC is a
20 Id. at 1–2.
21 Rec. Doc. 30 at 3–8.
22 Rec. Doc. 38 at 1–4.
23 Id. at 5.
24 Id. at 5–6.
25 Id. at 1.
26 Rec. Doc. 1 at 2.
27 Donovan v. Road Rangers Country Junction, Inc., 736 F.2d 1004, 1005 (5th Cir.1984), cert. denied, 469
U.S. 1217 (1985) (citing K.M.A., Inc. v. Gen. Motors Acceptance Corp., 652 F.2d 398, 399 (5th Cir.1982)).
28 La. R.S. § 12:1301(10).
single member LLC.29 Therefore, Alger may not represent Seneca Mortgage in this action.
Accordingly, the Court denies the instant motion to the extent that Alger seeks to vacate the entry
of default as to Seneca Mortgage. Additionally, considering the arguments made at oral argument,
the Court grants Seneca Mortgage thirty days to retain counsel in this matter.
B. Whether the Entry of Default should be Vacated as to Alger Individually
In the instant motion, Alger also seeks to vacate the entry of default entered by the Clerk
of Court as to himself individually.30 Federal Rule of Civil Procedure 55(c) pertinently provides
“for good cause shown, the court may set aside an entry of default.”31 The Fifth Circuit has held
that courts should examine four factors to determine whether good cause is shown: (1) whether
the failure to act was willful; (2) whether setting the default aside would prejudice the adversary;
and (3) whether a meritorious claim has been presented.32 “These factors are not exclusive;
instead, they are to be regarded simply as a means to identify good cause.”33 Nevertheless,
“[d]efaults are not favored and their strict enforcement ‘has no place in the Federal Rules.’”34 A
district court’s decision to vacate an entry of default is reviewed for abuse of discretion.35
Applying the three good cause factors here, the Court grants the instant motion to the
extent that Alger seeks to vacate the entry of default as to himself individually. First, there is no
29 § 1:2.The Louisiana limited liability company: The entity, 9 La. Civ. L. Treatise, LLC & Partnership Bus.
& Tax Plan § 1:2 (4th ed.) (citing Collier v. Cobalt, LLC, 2002 WL 726640 (E.D. La. 2002)).
30 Rec. Doc. 30.
31 Fed. R. Civ. P. 55(c).
32 Effjohn Int'l Cruise Holdings, Inc. v. A&L Sales, Inc., 346 F.3d 552, 563 (5th Cir. 2003).
33 Id. (internal citation omitted).
34 Id. (internal citation omitted).
35 Id.
evidence indicating that Alger’s failure to act was willful; rather, Alger attests that he did not
receive the Complaint and Summons because it was sent to the wrong address.36 The United
States Postal Service Return receipt does not contain Alger’s signature and appears to have the
word COVID written on the signature line.37 Second, setting aside the default would not prejudice
the adversary because this litigation is in its infancy. The Fifth Circuit has stated that “[t]here is
no prejudice to the plaintiff where the setting aside of the default has done no harm to plaintiff
except to require it to prove its case.”38 Third, Alger has filed an answer responding to the
Complaint filed by Plaintiff and asserting several affirmative defenses and a cross claim in this
action. Accordingly,
IT IS HEREBY ORDERED that the Motion is GRANTED IN PART and DENIED
IN PART. The Motion is GRANTED to the extent that Alger seeks to vacate the entry of default
as to himself individually. The Motion is DENIED to the extent that Alger seeks to vacate the
entry of default as Seneca Mortgage because Alger cannot represent an LLC.
36 Rec. Doc. 30 at 4.
37 Rec. Doc. 30-1 at 7.
38 Lacy v. SitelCorp., 227 F.3d 290, 293 (5th Cir. 2000) (internal quotation omitted).
IT IS FURTHER ORDERED that Defendant Seneca Mortgage is granted thirty days to
retain counsel in this matter.
9th
NEW ORLEANS, LOUISIANA, this. day of April, 2021.
NANNETTE J ‘ jel BROWN
CHIEF JUDGE
UNITED STATES DISTRICT COURT