The opinion
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
MACK FINANCIAL SERVICES, ET AL CIVIL ACTION
VERSUS NO. 20-2814
c/w 21-669
GEORGE L. ACKEL III, ET AL SECTION "B"(5)
ORDER AND REASONS
Before the Court is plaintiffs’ Motion for Default Judgment
(Rec. Doc. 21). For the following reasons,
IT IS ORDERED that the motion is DENIED.
FACTS OF THE CASE AND PROCEDURAL HISTORY
This suit arises from a breach of guaranty claim wherein the
defendant Fleetstar, LLC (“Fleetstar”) allegedly failed to remit
payments owed to plaintiffs Mack Financial Services, a division of
VFS US LLC (“Mack Financial”) and Volvo Financial Services, a
division of VFS US LLC (“Volvo Financial”)(collectively
“plaintiffs”). Mack Financial Services, et al v. Fleetstar LLC,
(CA 21-669), ECF No. 1 at 8.
On April 1, 2021, plaintiffs filed a complaint in this Court
against Fleetstar to enforce their security interest in the
collateral set forth in the complaint (i.e., vehicles and equipment
that plaintiffs financed on behalf of defendant) and return of
such collateral. Rec. Doc. 21-1 at 1. Service of process was
perfected upon Fleetstar LLC through its registered agent on April
6, 2021. Id.
Since perfection of service, Fleetstar failed to serve or
file an answer, responsive pleading, or motion and otherwise failed
to appear and defend in this action within 21 days of service as
required by the Federal Rules of Civil Procedure. Id. at 2. As
such, on April 29, 2021, the Clerk of Court docketed an Entry of
Default as to Fleetstar. Id.
On May 5, 2021, plaintiffs moved for default judgment against
Fleetstar, generally arguing that Fleetstar’s failure to appear
warrants a default judgment. Rec. Doc. 21-1 at 4. Accordingly,
plaintiffs urge the Court to formally recognize their secured
interests in the contracts executed between the parties and enforce
their right to take possession of the collateral. Id. at 13.
Fleetstar did not file any response to the motion.
On that same date, this Court consolidated this action to a
related action brought by the same plaintiffs against Fleetstar’s
guarantors George L. Ackel III (“Ackel”) and Ackel Construction
Company, LLC (“Ackel Construction”). Rec. Doc. 18.
LAW AND ANALYSIS
Federal Rule of Civil Procedure 55 governs the entry of
defaults and default judgments. See Fed. R. Civ. P. 55. When a
plaintiff believes that a defendant is in default, it must first
seek an entry of default under Rule 55(a). See N.Y. Life Ins. Co.
v. Brown, 84 F.3d 137, 141 (5th Cir. 1996). If the Clerk of Court
enters a default, the plaintiff may then seek entry of default
judgment under Rule 55(b). See id. The district court has
discretion as to whether entry of default judgment is proper. Lewis
v. Lynn, 236 F.3d 766, 767 (5th Cir. 2001). Thus, “a party is not
entitled to default judgment as a matter of right, even where the
defendant is technically in default. Default judgments are a
drastic remedy, not favored by the Federal Rules and resorted to
by courts only in extreme situations.” Id.
Considering the recent consolidation of plaintiffs’ claims
against Ackel, Ackel Construction, and Fleetstar, it is important
to mention the applicability of Federal Rule of Civil Procedure
54(b). The rule titled “Judgment Upon Multiple Claims or Involving
Multiple Parties” provides, “the court may direct entry of a final
judgment as to one or more, but fewer than all, claims or parties
only if the court expressly determines that there is no just reason
for delay.” Fed. R. Civ. P. 54(b). Despite the power conferred
upon courts through this rule, the Fifth Circuit cautioned that
such orders “should not be entered routinely or as a courtesy or
accommodation to counsel” Kirtland v. J. Ray McDermott & Co., 568
F.2d 1166, 1171 (5th Cir. 1978). Rather, default judgments “should
be used only in the infrequent harsh case as an instrument for the
improved administration of justice and the more satisfactory
disposition of litigation in light of the public policy indicated
by statute and rule.” Id.
Moreover, “if the possibility exists that entry of default
judgment against one defendant risks unavoidable inconsistency
with a later judgment concerning the other defendants in the
action, judgment should not be entered against that defendant until
that matter has been adjudicated with regard to all defendants.”
General Electrical Capital Corp. v. Arnoult, No. CIV.A.99-2411,
2002 WL 32856, at *2 (E.D.La. Jan. 9, 2002)(citing 10A Charles
Alan Wright, et al., Federal Practice & Procedure § 2690 (4th ed.
2021)).
In Arnoult, this Court denied plaintiff’s motion for default
judgment against two of the three defendants because the
plaintiff’s factual allegations against all three defendants
rendered them “similarly situated”. Arnoult, 2002 WL 32856, at *2.
The court reasoned, “it is not proper to enter a default judgment
against one defendant when there are multiple defendants that are
‘similarly situated’ because of the risk of inconsistent
judgments.” Id.
Here, plaintiffs request a default judgment against Fleetstar
alone for failure to answer the complaint or otherwise defend the
action. Rec. Doc. 21-1 at 1. However, prior to consolidation, Ackel
and Ackel Construction filed an answer and counterclaim to
plaintiffs’ complaint in the master action. Rec. Doc. 7. Like
Arnoult, Fleetstar, Ackel, and Ackel Construction are similarly
situated defendants because plaintiffs’ allegations against the
defendants in both complaints are identical. See Rec. Doc. 1; Mack
Financial Services et al v. Fleetstar, (CA 21-669), ECF No. 1. As
such, final judgment against Fleetstar alone presents a risk of
inconsistent judgments against its co-defendants Ackel and Ackel
Construction. Therefore, default judgment in this matter is not
proper.
New Orleans, Louisiana this 3rd day of June, 2021
___________________________________
SENIOR UNITED STATES DISTRICT JUDGE