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Gulf Oil Limited Partnership v. Pioneer Enterprises

UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY


November 9, 2011

GULF OIL LIMITED PARTNERSHIP,
PLAINTIFF,
v.
PIONEER ENTERPRISES, INC., DEEPAK VERMA, RAJNI SETHI,
DHARMINDER SETHI, AND FINE ENTERPRISES, INC.,
DEFENDANTS.

The opinion of the court was delivered by: Honorable Joseph E. Irenas

ORDER GRANTING THE MOTION TO VACATE THE ENTRY OF DEFAULT AS TO DEFENDANTS FINE ENTERPRISES, INC., RAJNI SETHI, AND DHARMINDER SETHI (Docket # 27); AND DISMISSING AS MOOT PLAINTIFF'S MOTION FOR DEFAULT JUDGMENT (Docket # 21)

IRENAS, Senior District Judge:

This matter having appeared before the Court upon Plaintiff's Motion for Entry of Default Judgment against Defendants Fine Enterprises, Inc., Rajni Sethi, and Dharminder Sethi (Docket # 21) and those Defendants' Cross Motion to Set Aside or Vacate the Clerk's Entry of Default (Docket # 27), the Court having considered the moving briefs*fn1 , and it appearing that:

(1) This is primarily a Lanham Act trademark infringement / breach of contract suit arising out of the termination of Defendant Pioneer's Distributor Agreement with Plaintiff Gulf Oil Limited Partnership.

(2) The Complaint alleges that Pioneer operated seven gas stations as Gulf Oil gas stations, pursuant to the Distributor Agreement. Plaintiff asserts that, as a result of various breaches of the Distributor Agreement, it terminated the Agreement, effective March 18, 2011. According to Plaintiff, after the termination, Pioneer continued to operate its stations as Gulf-branded stations.

(3) The Complaint asserts violations of the Lanham Act, an unfair competition claim under New Jersey law, and breach of contract claims, among others. Plaintiff also seeks to recover on the guarantees it alleges Defendants executed in connection with Pioneer's agreement to purchase Gulf Oil petroleum products.

(4) On July 1, 2011, upon Plaintiff's application, and a finding that none of the Defendants had answered or otherwise responded to the Complaint, the Clerk of Court entered default against all Defendants pursuant to Fed. R. Civ. P. 55(a).

(5) Presently, Plaintiff only seeks default judgment as to the claim on the guarantees allegedly executed by Fine Enterprises, and the Sethis (Count VII of the Complaint) even though the other six counts of the Complaint also name Fine Enterprises and the Sethis as Defendants.*fn2

(6) Sometime after default was entered, the Moving Defendants retained counsel for the first time. On September 16, 2011, Mr. Parenti formally entered his appearance in this case on behalf of Moving Defendants. Two weeks later, the Moving Defendants filed the instant Motion to Set Aside or Vacate the Entry of Default. As noted previously, Plaintiff has filed no opposition to the Motion.

(7) Fed. R. Civ. P. 55(c) provides, in relevant part, "[t]he court may set aside an entry of default for good cause." In exercising its discretion to set aside the entry of default, the Court considers "(1) whether setting aside the default would prejudice the plaintiff;" "(2) whether defendant has asserted a meritorious defense;" and (3) "defendant's culpability." Farnese v. Bagnasco, 687 F.2d 761, 764 (3d Cir. 1982); see also Feliciano v. Reliant Tooling Co., Ltd., 691 F.2d 653, 656 (3d Cir. 1982) (applying the "Farnese factors" and observing, "[l]ess substantial grounds may be adequate for setting aside a default than would be required for opening a judgment."). "Any doubt should be resolved in favor of setting aside the [entry of default] so that cases may be decided on their merits." Feliciano, 691 F.2d at 656.*fn3

(8) Plaintiff has not asserted that it will be prejudiced if default is vacated; nor has it asserted that the Moving Defendants were culpable in their delay in answering or otherwise responding to the Complaint. The Court concludes that Plaintiff will not be prejudiced, and there is no evidence from which the Court might conclude that the Moving Defendants acted culpably.

(9) The Court also concludes that the Moving Defendants have presented "at least one meritorious defense." Farnese, 687 F.2d at 764; Feliciano, 691 F.2d at 657 (requiring the presentation of at least one "prima facie . . . valid defense"). The Moving Defendants assert that Deepak Verma repaid the indebtedness that they allegedly guaranteed.

(10) After considering the Farnese factors, the Court concludes that the Moving Defendants have established good cause for setting aside the entry of default.

Accordingly,

IT IS on this 9th day of November, 2011, ORDERED THAT:

(1) The Motion of Defendants Fine Enterprises, Inc., Rajni Sethi and Dharminder Sethi to set aside the entry of default (Docket # 27) is hereby GRANTED. The Clerk of Court is hereby directed to VACATE the default entered against Defendants Fine Enterprises, Inc., Rajni Sethi and Dharminder Sethi.

(2) The Moving Defendants shall answer or otherwise respond to the Complaint within 20 days of the date of this Order.

(3) Plaintiff's Motion for Entry of Default Judgment (Docket # 21) is hereby DISMISSED AS MOOT.

JOSEPH E. IRENAS, S.U.S.D.J.


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