United States District Court, D. New Jersey
V. BROWN, MARIA TEMKIN, BROWN LEGAL CONSULTING, LLC., On
behalf of Plaintiffs.
KAPUSTINA, Pro Se Defendant.
MICHAEL GOLOVERYA, Pro Se Defendant.
VLADIMIR SHTEYN, Pro Se Defendant.
L. HILLMAN, U.S.D.J.
case is a companion to Akishev v. Kapustin, Civil
Action No. 13-7152 (NLH/AMD), and both cases concern a
“bait-and-switch” fraudulent scheme masterminded
and operated by defendant, Sergey Kapustin, and allegedly
assisted by other defendants, through deceptive online
advertising aimed at luring international customers to wire
funds for automobile purchases and then switching to higher
prices, misrepresenting mileage, condition and location and
ownership of these vehicles, extorting more funds, and
failing to deliver the paid-for-vehicles. Presently before
the Court are the motions of three individual Defendants to
vacate the Clerk's entry of default against them. For the
reasons expressed below, Defendants' motions will be
January 29, 2016, Plaintiffs filed their Complaint against
numerous Defendants, including Irina Kapustina, Michael
Goloverya, and Vladimir Shteyn. Plaintiffs filed an Amended
Complaint on April 8, 2016. Summonses were returned as
executed on these three Defendants on June 20, 2016.
Defendants' Answers were due on July 11, 2016, but
Defendants failed to file their Answers or otherwise appear
in the matter. On July 22, 2016, Plaintiffs asked the Clerk
to enter default against Kapustina, Goloverya, and Shteyn,
and the Clerk entered default on July 25, 2016.
29, 2016, Kapustina and Goloverya, appearing pro se, filed
motions to set aside default, and at the same time filed
their Answers to Plaintiffs' Amended Complaint. On August
10, 2016, Shteyn, also appearing pro se, filed a motion to
set aside default, along with his Answer and cross-claims
against other Defendants. Plaintiffs have opposed these
motions, and have asked for attorneys' fees and costs for
having to do so.
Rule of Civil Procedure 55(c) provides, “The court may
set aside an entry of default for good cause.”
Fed.R.Civ.P. 55(c). A decision to set aside the entry of
default pursuant to Fed.R.Civ.P. 55(c) is left primarily to
the discretion of the district court. U.S. v. $55, 518.05
in U.S. Currency, 728 F.2d 192, 194 (3d Cir. 1984)
(citation omitted). The Third Circuit does not favor entry of
defaults or default judgments, and “doubtful
cases” should “be resolved in favor of the party
moving to set aside the default judgment so that cases may be
decided on their merits.” Id. (quotations and
determining whether to set aside default, the district court
must consider three factors: “(1) whether plaintiff
will be prejudiced if default is not granted; (2) whether
defendant has a meritorious defense; and, (3) whether
defendant's delay was the result of culpable
misconduct.” Id. (citations omitted).
Court finds that all three factors weigh in favor of vacating
the Clerk's entry of default against Kapustina,
Goloverya, and Shteyn. First, Plaintiffs will not be
prejudiced if default is vacated. Even though Plaintiffs
contend that these Defendants willfully ignored proper
service, and that only notice via email of the Clerk's
entry of default spurred them into action, the four week
delay from Defendants' deadline to file their Answers and
their appearance in the case had a de minimus effect on the
progression of the matter at that time.
Defendants, through their Answers, have presented meritorious
defenses to Plaintiffs' claims, including challenges to
the propriety of Plaintiffs' service of process. (See
Docket No. 27, 29, 30.) Third, when reviewing Defendants'
explanations for why they did not answer the Amended
Complaint within the time frame provided under the Rules,
their explanations include assertions from all of these
Defendants that they never received personal service of the
Amended Complaint and they first learned of the case against
them by way of email from Plaintiff's counsel. Instead of
ignoring counsel's email on July 22, 2016, they
expeditiously prepared their motions and filed their Answers.
Defendants' conduct, especially considering their pro se
status, does not constitute “culpable
if the Court were to deny Defendants' motions and
entertain motions by Plaintiffs for the entry of default
judgment against these Defendants, which would be the next
step in the defaulting defendant process, the same factors
would support the denial of those motions. Thus, as directed
by the Third Circuit, this case must move forward with
Defendants' participation so that it will be decided on
the merits. ...