United States District Court, D. South Carolina, Anderson/Greenwood Division
BEATTIE B. ASHMORE, IN HIS CAPACITY AS COURT-APPOINTED RECEIVER FOR RONNIE GENE WILSON AND ATLANTIC BULLION & COIN, INC., Plaintiff,
MELVIN AND MARILYN WHITE, Defendants.
ORDER AND OPINION
Beattie B. Ashmore, serving in his court-appointed capacity
as a receiver, filed this action against Defendants Melvin
and Marilyn White seeking monetary damages for unjust
enrichment and violation of S.C. Code Ann. § 27-23-10
(2016) and/or Mass. Gen. Laws Ch. 109A § 1, et
seq. resulting from Defendants’ involvement in a
fraudulent investment enterprise. (ECF No. 1.)
matter is before the court on Plaintiff’s Motion for
Default Judgment (ECF No. 8). Defendants filed a letter
response in opposition to Plaintiff’s motion seeking to
remove the Clerk’s Entry of Default (ECF No. 7). (ECF
No. 10.) For the reasons set forth herein, the court DENIES
Plaintiff’s Motion for Default Judgment (ECF No. 8) and
GRANTS Defendants’ Request to Remove the Clerk’s
Entry of Default (ECF No. 10).
RELEVANT BACKGROUND TO PENDING MOTION
was appointed Receiver in In Re Receiver,
8:12-cv-02078-JMC (D.S.C. July 25, 2012). (ECF No. 1 at 1-2.)
Plaintiff’s receivership stems from the underlying
criminal action, United States v. Wilson,
8:12-cr-00320-JMC (D.S.C. Apr. 4, 2012), where Ronnie Gene
Wilson (“Wilson”) and Atlantic Bullion &
Coin, Inc. (“AB&C”) perpetrated a fraudulent
investment scheme. (Id.) Certain individuals subject
to the scheme profited from it, while others lost part or all
of their investments. (ECF No. 1 at 3.)
seeks actual damages of $18, 539.28, in addition to interest
as allowed by law, consequential and incidental damages, and
reasonable attorneys’ fees to recover assets gained by
Defendants in relation to the fraudulent investment scheme.
(ECF No. 1 at 8.) Defendants failed to timely file an Answer
to Plaintiff’s Complaint and the Clerk of Court
properly entered default as to Defendants on May 16, 2016.
(ECF No. 7.) On May 17, 2016, Plaintiff filed a Motion for
Default Judgment (ECF No. 8), to which Defendants responded,
pro se, by letter (ECF No. 10).
request that the Clerk of Court’s Default Entry be
removed because Defendants do not believe that they are
liable for the damages sought by Plaintiff. (ECF No. 10.)
Defendants allege that their financial advisor directed them
to a meeting where “a person talk[ed] about investing
in silver.” (Id.) After the meeting,
Defendants gave their financial advisor $20, 000 to invest in
the company, which was likely AB&C. (Id.)
Defendants’ financial advisor provided them with
statements indicating that their investment was doing well.
(Id.) Defendants subsequently withdrew their funds
and have since used the money to pay off their credit cards,
car, and house, as well as to take a vacation. (Id.)
Fed.R.Civ.P. 55(b) courts exercise discretion in the entry of
a default judgment against a party. Moore v. Google,
Inc., 2:13-cv-3034, 2014 WL 4955264, at *3 (D.S.C. Sept.
30, 2014) (citing S.E.C. v. Lawbaugh, 359 F.Supp.2d
418, 421-22 (D. Md. 2005)). The Court of Appeals for the
Fourth Circuit maintains a “strong policy” to
decide cases on their merits. Disney Enters., Inc. v.
Delane, 446 F.Supp.2d 402, 405 (D. Md. 2006) (quoting
United States v. Shaffer Equip. Co., 11 F.3d 450,
453 (4th Cir. 1993)). Default judgment, however, is still
available where a party is “essentially
unresponsive.” Id. (quoting Lawbaugh,
359 F.Supp.2d at 421).
Civ. P. 55(c) states that “[t]he court may set aside an
entry of default for good cause.” The disposition of
motions under Fed.R.Civ.P. 55(c), “lies largely within
the discretion of the trial judge.” Payne ex rel.
Estate of Calzada v. Brake, 439 F.3d 198, 204 (4th Cir.
2006) (quoting Consolidated Masonry & Fireproofing,
Inc. v. Wagman Constr. Corp., 383 F.2d 249, 251 (4th
Cir. 1967)). “[Fed. R. Civ. P.] 55(c) is liberally
construed in favor of setting aside defaults because the law
prefers adjudication on the merits to default
judgment.” Campodonico v. Stonebreaker, No.
4:15-cv-3373, 2016 WL 1064490, at *2 (D.S.C. Mar. 15, 2016)
(citing Tolson v. Hodge, 411 F.2d 123, 130 (4th Cir.
1969)). The Fourth Circuit has articulated six factors for
courts to consider in determining whether relief from an
entry of default is appropriate under Fed.R.Civ.P. 55(c):
“whether the moving party has a meritorious defense,
whether it acts with reasonable promptness, the personal
responsibility of the defaulting party, the prejudice to the
party, whether there is a history of dilatory action, and the
availability of sanctions less drastic.”
Payne, 439 F.3d at 203-04.
court considers whether there is good cause to set aside the
entry of default in the instant action. Here, at least four
of the Payne factors weigh in favor of setting aside
the entry of default. Although Defendants failed to timely
file a response to Plaintiff’s Complaint, they did
promptly respond to Plaintiff’s Motion for Default
Judgment. (See ECF No. 10.) Because the instant
action is at an early stage in litigation, any prejudice
suffered by Plaintiff in setting aside the Clerk’s
Default Entry is outweighed by the court’s preference
to settle matters on their merits. There is also no evidence
of a history of dilatory action by Defendants at this early
stage of litigation. Finally, there are certainly sanctions
available that are less drastic than entering a default
judgment against Defendants. One such example of a less
drastic sanction may include allowing Defendants a limited
time to respond to Plaintiff’s Complaint.
remaining two factors, whether the moving party has a
meritorious defense and the personal responsibility of the
defaulting party, do not weigh clearly in Defendants’
favor. “A meritorious defense requires ‘a proffer
of evidence which, if believed, would permit either the court
or the jury to find for the defaulting party.’”
Campodonico, No. 4:15-cv-3373, 2016 WL 1064490, at
*2 (quoting United States v. Moradi, 673 F.2d 725,
727 (4th Cir. 1982)). Here, Defendants argue that they should
not be held liable in this matter because their financial
advisor misled them. (ECF No. 10.) However, Defendants fail
to provide legal authority for this proposition, therefore
this court does not consider this factor to weigh in
Defendants’ favor. Defendants note that they do not
have counsel in the instant action, however not retaining
counsel and failing to file a responsive pleading are
circumstances within Defendants’ control. Accordingly,
Defendants’ personal responsibility appears to weigh
against offering them relief from the Clerk’s Default
Entry. See, e.g., id. at *1-2 (discussing
the defendant’s failure to notify his attorney of the
action and subsequent failure to file a responsive pleading
as factors weighing against setting aside a default entry).
there are four factors that weigh in favor of relieving
Defendants of the Clerk’s Default Entry (ECF No. 7) and
only two factors that weigh against relief, this court finds
that there is good cause to set aside the entry and allow the
instant action to proceed on its merits. Based on this
analysis and because the Fourth Circuit prefers adjudications
on the merits of a ...