The opinion of the court was delivered by: Hon. Jerome B. Simandle
SIMANDLE, District Judge:
This personal income tax matter is before the Court on Plaintiff's motion for default judgment against both Defendants, Morris Pinsky and Margaretha Pinsky. [Docket Item 6.] Defendants are allegedly indebted to the United States in the amount of $1,323,494.70 from many years of unpaid income taxes. The United States seeks to reduce the tax assessments to judgment, foreclose on the federal tax liens attached to certain real property since 1999, and sell the real property subject to the liens. Defendants have failed to properly answer or otherwise respond to the Complaint, but Margaretha Pinsky has filed an untimely answer without leave of Court. No opposition to default judgment has been filed by Morris Pinsky. The principal issue is whether Margaretha Pinsky's belated answer - offered without an explanation for the delay or an accompanying motion to vacate default and offering only vague reference to the innocent spouse defense - is a sufficient basis to show the good cause necessary to vacate default and to avoid default judgment. As explained below, the Court finds that Ms. Pinsky has failed to show good cause for vacating the entry of default, and that Plaintiff is entitled to default judgment.
Plaintiff filed the Complaint on May 5, 2010. Defendants were properly served shortly thereafter on May 19, 2010, and failed to respond to the Complaint. The Clerk entered default on July 29, 2010. On September 10, 2009, the United States moved for default judgment against both Defendants. [Docket Item 6.]
On September 22, 2010, after the period for opposition had expired, Robert E. Madden, Esq., wrote to the Court indicating that he had been retained by Margaretha Pinsky to defend the action. He stated that, "it is obvious that she should have been give[n] innocen[t] spouse treatment," and requested that the Court postpone entering default judgment until he had the opportunity to enter an appearance and file opposition. [Docket Item 7.] On September 29, 2010, Mr. Madden entered an appearance on behalf of Ms. Pinsky, and did nothing else.
Nearly three months later, Mr. Madden still had made no further filings. He had not moved to set aside the entry of default nor filed opposition to the entry of default judgment. The Court, by letter dated December 20, 2010 [Docket Item 9], informed the parties that the default judgment motion would only be held in abeyance until January 5, 2011. Upon receipt of a letter from Mr. Madden requesting yet more time, the Court, by letter dated January 7, 2011 [Docket Item 10], again enlarged Margaretha Pinsky's time to move to set aside default and oppose default judgment to January 19, 2011.*fn1
On January 19, 2011, Mr. Madden filed an answer without leave of Court. He did not move to set aside the entry of default. And his opposition to default judgment consisted of a single sentence, stating, "Default Judgment should not be entered in this matter as Defendant Margaretha Pinsky has answered Plaintiff's Complaint and also asked for Innocen[t] Spouse Relief." [Docket Item 12.]
Plaintiff urges that these circumstances present an insufficient basis upon which to vacate default, and contends that the Court should grant the motion for default judgment notwithstanding the improperly filed answer referring to the innocent spouse defense.
A party who fails to answer or otherwise plead to a Complaint within the allotted period of 21 days is subject to entry of default under Rule 55(a) of the Federal Rules of Civil Procedure. The entry of default has serious consequences. Once default has been entered, "the factual allegations of the complaint, except those relating to the amount of damages, will be taken as true." Comdyne I, Inc. v. Corbin, 908 F.2d 1142, 1149 (3d Cir. 1990). When the damages are for a sum certain, which is established by competent affidavit, default judgment may be entered without further proceedings. Rule 55(b)(1), Fed. R. Civ. P.
The Federal Rules of Civil Procedure provide that "the court may set aside an entry of default for good cause." Fed. R. Civ. P. 55(c). The United States Court of Appeals for the Third Circuit "has adopted a policy disfavoring default judgments and encouraging decisions on the merits," though "the decision to vacate a default judgment is left to the sound discretion of the trial court." Harad v. Aetna Cas. & Sur. Co., 839 F.2d 979, 982 (3d Cir. 1988). In exercising this discretion, the Court must consider (1) whether lifting the default would prejudice the plaintiff; (2) whether the defendant has a prima facie meritorious defense; and (3) whether the defaulting defendant's conduct is excusable or culpable. United States v. $55,518.05 in U.S. Currency, 728 F.2d 192, 194-95 ...