United States District Court, D. New Jersey
August 8, 2005.
LINDA CALHOUN, Plaintiff,
FRUNGILLO CATERING DESIGN and, VARANO PHOTOGRAPHY, Defendant.
The opinion of the court was delivered by: JOSEPH GREENAWAY, District Judge
[EDITOR'S NOTE: This case is unpublished as indicated by the issuing court.] OPINION
This matter comes before this Court on the motion of Defendant
Frungillo Catering Design ("Defendant") to vacate a default
entry, pursuant to FED. R. CIV. P. 55(c), and the cross-motion of
Plaintiff Linda Calhoun ("Plaintiff") for a default judgment,
pursuant to FED. R. CIV. P. 55(b). For the following reasons,
Defendant's motion to vacate the entry of default is granted and
Plaintiff's cross-motion is denied as moot.
Defendant was the caterer for a wedding at the Skylands Manor
in Ringwood, New Jersey on March 2, 2002. (Affidavit of Robert
Frungillo ("Frungillo Aff."), at ¶ 2.) Plaintiff, a florist and
floral designer, was hired to decorate the wedding cake and
provide flowers for the wedding and reception (Frungillo Aff. ¶
3). Varano was hired as the photographer for the wedding. (Affidavit of Linda Calhoun ("Pl. Aff."), at ¶ 4.) For the
wedding at Skylands-Manor, Defendant baked a four tiered cake
(Frungillo Aff. ¶ 2), Plaintiff decorated the wedding cake, and
Varano photographed the completed cake ("Work"). (Frungillo Aff.
¶ 3; Pl. Aff. ¶ 3.)
Subsequent to the wedding, Defendant placed an advertisement
("Ad") in one or more bridal magazines promoting the Skylands
Manor. (Frungillo Aff. ¶ 9.) The Ad contained a picture of the
outside of Skylands Manor as well as four other pictures, one of
which was a picture of a wedding cake that Plaintiff claims to be
her copyright protected Work. (Pl. Aff. ¶ 4.)
Plaintiff sent cease-and-desist letters to Defendant on or
about March 19, 2003 and August 22, 2003, in which she asked
Defendant to stop running all advertisements in any form
containing the Work. Defendant did not respond to the
cease-and-desist letters. (Pl. Aff. ¶ 5.) On August 22, 2003,
Plaintiff registered her Work with the United States Copyright
Office. (Pl. Aff. ¶ 6.) Plaintiff registered her Work as a
Sculpture entitled "A Floral Design for a Wedding Cake." (Pl.
Aff. ¶ 6.)
On August 25, 2003, Plaintiff filed suit in this Court against
Defendant and Varano Photography seeking damages for copyright
infringement, pursuant to 17 U.S.C. § 101, and unfair
competition, pursuant to N.J. STAT. ANN. § 56:4-1 (2001). (Pl.
Aff. ¶ 6.) On February 3, 2004, Defendant sent a letter to this
Court stating that: (1) he was representing himself; (2) denying
all allegations set forth in the complaint; and (3) seeking to
join in Varano's motion to dismiss, which was pending at that
time. Defendant did not appear for oral argument on February 27,
2004, when this Court granted in part and denied in part Varano's
motion to dismiss and directed Plaintiff to file an amended
pleading by March 26, 2004. Plaintiff and Varano Photography
settled, and on June 24, 2004, this Court dismissed Varano from
this action. Plaintiff filed a second amended complaint on March 26, 2004.
Defendant failed to answer and Plaintiff requested an entry of
default, pursuant to Rule 55(a) on February 2, 2005. The Clerk of
the Court entered a default against Defendant on February 2,
2005. On March 22, 2005, Defendant moved to set aside the default
entry, pursuant to Rule 55(c), and Plaintiff cross-moved for
default judgment, pursuant to Rule 55(b)(2).
Defaults are disfavored, and where a party has moved to set
aside a default, doubtful cases should be resolved in favor of
the party moving to set aside a default entry "so that cases may
be decided on their merits." See United States v. $55,518.05
in U.S. Currency, 728 F.2d 192, 194-95 (3d Cir. 1984). "Between
the extremes of repeated contumacious conduct and innocent
procedural error are the manifold instances of neglect and
inadvertence that require trial courts to weigh the equities of
the situation and the need for the efficacious resolution of
controversies." Feliciano v. Reliant Tooling Co., Ltd.,
691 F.2d 653, 656 (3d Cir. 1982). "The exercise of such judgment does
not lend itself to a rigid formula or to a per se rule." Hritz
v. Woma Corp., 732 F.2d 1178, 1181 (3d Cir. 1984).
Rule 55(c) of the Federal Rules of Civil Procedure provides
that "[f]or 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)." In
resolving a motion to set aside a default under Rule 55(c),
courts should consider: (1) whether the defendant has a
meritorious defense; (2) whether the default was the result of
the defendant's culpable conduct; and (3) whether the plaintiff
will be prejudiced. See $55,518.05 in U.S. Currency,
728 F.2d at 194-95. DISCUSSION
In deciding a motion to vacate a default entry, courts should
consider whether the party seeking to vacate the default has
demonstrated good cause. See FED. R. CIV. P. 55(c). Any doubts
should be resolved in favor of vacating a default entry so that
cases may be decided on their merits. See $55,518.05 in U.S.
Currency, 728 F.2d at 194-95. Courts should examine whether the
defendant may have a meritorious defense, assess the prejudice to
the plaintiff of vacating a default, and evaluate whether the
default resulted from the culpable conduct of the defendant.
This Court has considered these factors and the parties'
submissions. For the reasons set forth below, Defendant's motion
to vacate the entry of default shall be granted and Plaintiff's
cross-motion for default judgment shall be denied as moot.
A. Meritorious Defense
One of the primary considerations in deciding a motion to
vacate an entry of default is whether the defendant has a
meritorious defense. Id. The showing of a meritorious defense
is accomplished when "allegations of defendant's answer, if
established, would constitute a complete defense to the action."
Id. Here, it appears that Defendant has alleged sufficient
facts that, if established, would constitute a meritorious
defense to Plaintiff's copyright and unfair competition claims.
Thus, this factor supports vacating the default against
Two essential components of a copyright infringement case are
ownership of a copyright and infringement. See Walker v. DC
Comics, Inc., 67 Fed. Appx. 736, 737 (3d Cir. 2003). Copyright
protection subsists in "original works of authorship fixed in any
tangible medium of expression, now known or later developed from
which they can be perceived, reproduced, or otherwise communicated . . . [and] include . . . pictorial,
graphic and sculptural works." See 17 U.S.C. § 102(a).
In this case, Defendant asserts sufficient facts to show that
it can present a meritorious defense to Plaintiff's copyright
claim. This Court agrees.
Defendant first maintains that Plaintiff does not possess a
valid copyright, because Plaintiff copied the design from a
picture, and therefore, the Work is not original or independently
artistic. (Def. Br. at 7.) Essentially, Defendant seeks to prove
that Plaintiff has no "original work of authorship" subject to
protection under 17 U.S.C. § 102(a). Without a valid copyright,
Plaintiff cannot succeed on a claim of copyright infringement.
Walker v. DC Comics, Inc., 67 Fed. Appx. 736, 737 (3d Cir.
Defendant also maintains that the Certificate of Registration
from the United States Copyright Office is invalid because
Plaintiff failed to advise the United States Copyright Office of
the preexisting picture upon which that the Work was based. (Ex.
B to Frungillo Aff.)*fn1 Proof that Plaintiff's copyright
registration is invalid would present a meritorious defense to
Plaintiff's claim of copyright infringement.
Accordingly, this Court is satisfied that Defendant has alleged
sufficient facts that suggest that it has a meritorious defense.
Defendant also may have a meritorious defense to Plaintiff's
unfair competition claim. The unfair competition claim is based
on N.J. STAT. ANN. § 56:4-1, which provides: "No merchant, firm
or corporation shall appropriate for his or their own use a name,
brand, trade-mark, reputation or goodwill of any maker in whose
product such merchant, firm or corporation deals." N.J. STAT.
ANN. § 56:4-1 (2001). In essence, unfair competition is a
business tort. Duffy v. Charles Schwab & Co., Inc., 123 F.
Supp.2d 802, 815 (D.N.J. 2000). Generally, it consists of "the misappropriation of one's property by another or
property which has some sort of commercial or pecuniary value."
Duffy v. Charles Schwab & Co., Inc., 123 F. Supp.2d 802, 815
(D.N.J. 2000) (quoting New Jersey Optometric Ass'n v.
Hillman-Kohan Eyeglasses, Inc., 365 A.2d 956 (N.J.Super.Ct.
App. Div. 1976)). Plaintiff's unfair competition claim is also
susceptible to Defendant's potential defense to Plaintiff's claim
of copyright infringement namely, that Plaintiff does not
possess a valid copyright on the work. In addition, Defendant
contends that it never misled customers to believe that it had
produced the Work, if proven, also would defeat Plaintiff's
unfair competition claim. (Def. Reply Br. at 11.)
Plaintiff contends that the default entry should not be vacated
because Defendant does not have a meritorious defense to her
copyright and unfair competition claims. Plaintiff contends that
she is the sole proprietor of all title, right, and interest in
and to the copyright in the Work. (Pl. Aff. ¶ 3.) Plaintiff
further contends that, although Defendant produced the cake, the
Work was original. (Pl. Aff. ¶ 3.) According to Plaintiff, she
abandoned her original design and spontaneously created the
design in response to defects that she discovered in the cake.
(Pl. Aff. ¶ 3.)
This Court concludes that this factor weighs in favor of
vacating the default entry. Defendant has alleged sufficient
facts concerning the validity of Plaintiff's copyright to show
that, if proven, Defendant could present a meritorious defense to
B. Culpable Conduct
This Court next considers whether the default entry was a
product of Defendant's culpable conduct. Although Defendant
failed to respond to the second amended complaint, Defendant's
actions in this case do not rise to the level of culpable
In determining whether a default entry resulted from the
culpable conduct of a Defendant, courts examine the "willfulness"
or "bad faith" of a non-responding defendant. Hritz,
732 F.2d at 1182. A finding of culpable conduct requires more than mere
negligence. Id. Certainly, "willfulness" and "bad faith" include acts intentionally designed
to avoid compliance with court notices. Id. The fact that the
defendant or his counsel neglected the obligation to respond is
not sufficient to establish culpable conduct. See Farnese v.
Bagnasco, 687 F.2d 761, 764 (3d Cir. 1982).
Defendant maintains that the reason that it did not respond was
that it, proceeding pro se, believed that the initial response
denying all allegations and incorporating, through reference,
Varano's motion to dismiss satisfied its obligations in the
instant litigation. (Def. Br. at 5.) Furthermore, Defendant
contends that it was not served with the second amended
complaint. (Def. Br. at 5.) Defendant admits to being served with
the initial complaint, Varano's motion to dismiss and notice of
the default entry, but vehemently denies being served with the
second amended complaint. (Def. Br. at 5; Frungillo Aff. ¶ 17.)
Plaintiff disagrees, and contends that default resulted from
culpable conduct. (Pl. Reply Br. at 12.) Specifically, Plaintiff
maintains that she served Defendant with the second amended
complaint. (Pl. Reply Br. at 12.) Furthermore, Plaintiff argues
that Defendant is culpable, because it recklessly disregarded
repeated communications from Plaintiff and this Court by not
responding to the second amended complaint. (Pl. Reply Br. at
Although the record suggests that Defendant's own negligent
conduct may have contributed in the entry of default, it is
difficult to conclude that its actions rise to the level of
culpable conduct. Defendant initially responded to the first
complaint, but did not respond to the second amended complaint.
Defendant joined Varano's motion to dismiss, but apparently did
not ascertain the disposition of that motion. Even though
Defendant may bear some responsibility for the default entered
against it, the record is devoid of any evidence that would allow
this Court to infer that Defendant acted willfully or in bad
faith. While Defendant played a role in the entry of default,
this Court cannot conclude that its conduct exceeded negligence
such that a default entry should not be vacated. C. Prejudice
This Court also must consider whether Plaintiff will suffer
prejudice if the entry of default is vacated. Based on the
parties' submission, this Court concludes that Plaintiff will not
suffer prejudice by vacating the default entry.
Prejudice can be defined as the loss of available evidence,
increased potential for fraud or collusion, or substantial
reliance upon the judgment. See Feliciano, 691 F.2d at 657. A
delay in realizing satisfaction on a claim rarely serves to
establish the degree of prejudice sufficient to prevent vacating
a default entry entered at an early stage of the proceeding.
See id. In addition, prejudice suffered by a non-defaulting
party often can be rectified through the trial court's power
under Rule 60(b) to impose terms and conditions upon the opening
of a default entry. See id.
Plaintiff asserts that, if the default entry is vacated, there
is a high likelihood that evidence of Defendant's offending
advertisement may be lost, and thus, that she will suffer
prejudice. (Pl. Reply Br. at 20.) Furthermore, Plaintiff argues
that there is a great likelihood that business records of
Defendant may be purged, making basic discovery difficult and
thus prejudicing Plaintiff. (Pl. Reply Br. at 20.) In essence,
Plaintiff claims that there is potential for a loss of evidence
that would hinder her ability to litigate effectively and prevail
on her claim.
Defendant maintains that Plaintiff will not suffer prejudice as
a result of vacating the default entry. (Def. Br. at 5.)
Defendant claims that there is no risk that evidence will be lost
or destroyed, particularly since Plaintiff already possesses
sufficient evidence of the advertisement and Defendant's business
records. (Def. Reply Br. at 2.) Defendant also asserts that it
filed tax returns during the relevant period, and will continue
to maintain those business records, as required by law. (Def.
Reply Br. at 2.) Thus, any business record that may be required
in litigation shall be available to Plaintiff. (Def. Reply Br. at
2.) Plaintiff has not persuaded this Court that she will suffer
prejudice in the form of potential loss of evidence. Plaintiff
already has in her possession numerous instances of allegedly
offending advertisements. (Exhibit A ("Ex. A") to Certification
of Eric J. Hughes.)*fn2 The concern for the potential loss
of evidence is not overwhelming, particularly in light of
Plaintiff's detailed expert report, which illustrates at least
some of the fact discovery already in Plaintiff's possession.
Plaintiff maintains that the figures that appear in her expert
report are estimates, and that there may be more "offending
advertisements" in circulation that could be lost if default is
vacated. (Pl. Reply Br. at 17.) This assertion does not support
her contention that she will be prejudiced, since it acknowledges
that Plaintiff already possesses some of the allegedly offending
material, and merely seeks discovery of more advertisements in
circulation. (Pl. Reply Br. at 17.)
In addition, there is no evidence that Plaintiff has
substantially relied on the default or that there is an increased
likelihood of fraud.
Finally, both parties and the interests of justice would be
better served by setting aside the default entry and allowing
these factual questions to be resolved on the merits. See
$55,518.05 in U.S. Currency, 728 F.2d 194-95. While Plaintiff
may have to wait to realize monetary satisfaction of her claims,
this delay does not constitute prejudice. Feliciano,
691 F.2d at 657.
Therefore, this Court concludes that considerations of
prejudice militate towards granting Defendant's motion. CONCLUSION
For the foregoing reasons, Defendant's motion to vacate default
motion is granted and Plaintiff's cross-motion for entry of a
default judgment is denied as moot.