United States District Court, D. New Jersey
Madeline Cox Arleo United States District Judge.
MATTER comes before the Court on Third-Party
Defendant Lehigh Valley Lines, Inc.'s
(“Lehigh”) Motion to Vacate Default against it,
ECF No. 35, and Defendant/Counterclaim Plaintiff/Third-Party
Plaintiff CMC Food, Inc.'s Motion for Default Judgment
(“CMC”), ECF No. 26. For the reasons stated
herein, Defendant's motion is GRANTED.
a New Jersey corporation with its principal place of business
located at 282 South Avenue, Fanwood, New Jersey. Third Party
Compl. ¶ 1. CMC is in the business of wholesale egg
sales and marketing of farm fresh shell eggs and egg
products. Id. ¶ 3.
the instant motions is a suit brought by Plaintiff Delta
Logistics, LLC (“Delta”) against Defendant CMC.
See Compl., ECF No. 1, Ex. B. Delta alleged that it
performed transportation brokerage services at CMC's
request, subject to written contracts. Id. ¶ 3.
Delta alleged that CMC refused to pay for its services and
sued, inter alia, for breach of contract and unjust
enrichment. See id. Delta purported to have acted as
a broker between CMC and various carriers, one of whom is
Lehigh, and demanded the payment of broker fees allegedly
owed by CMC to Delta. Among those fees were fees related to a
Lehigh shipment that is the subject of the instant motions.
Third-Party Complaint alleges that Lehigh agreed to provide
freight transportation services for the transportation of
organic eggs from CMC's offices in Clark, New Jersey to
Schwenksville, Pennsylvania. Third-Party Complaint
(“CMC Compl.”) ¶ 5, ECF No. 6. On or about
February 8, 2016, a truck picked up a load of organic eggs
from CMC's offices in Clark, New Jersey. Id.
¶ 6. The truck thereafter transported the eggs to
Schwenksville, Pennsylvania; however, upon arrival, the eggs
were allegedly destroyed and rendered unmarketable.
Id. ¶ 7-8.
filed its Answer, Counterclaim, and Third-Party Complaint,
asserting claims against Lehigh on December 22, 2017. ECF No.
6. On January 12, 2018, Lehigh was served, via hand delivery,
with a copy of the Answer, Counterclaim, and Third-Party
Complaint. ECF No. 9. Accordingly, Lehigh's answer or
response to the Third-Party Complaint was due on February 2,
2018. Lehigh failed to appear, plead, or otherwise defend
within the time allowed. Accordingly, default was entered
against Lehigh. ECF No. 15. On March 27, 2018, CMC moved for
default judgment against Lehigh. ECF No. 26. On May 5, 2018,
Lehigh moved to vacate default. ECF No. 35. The Court will
address both motions here.
Standard of Review
Civ. P. 55(c) permits a District Court to set aside an entry
of default for good cause. The Court must consider three
factors: “(1) whether the plaintiff will be prejudiced;
(2) whether the defendant has a meritorious defense; and (3)
whether the default was the result of the defendant's
culpable conduct.” Gold Kist, Inc. v. Laurinburg
Oil Co., Inc., 756 F.2d 14, 19 (3d Cir. 1985) (citing
Hritz v. Woma Corp., 732 F.2d 1178, 1181 (3d Cir.
1984)). Courts, in some circumstances, also consider the
effectiveness of alternative sanctions. See, e.g.,
National Specialty Ins. Co. v. Papa, No.
11-2798, 2012 WL 868944, *2 (D.N.J. Mar.14, 2012) (citing
Emcasco Ins. Co. v. Sambrick, 834 F.2d 71, 73 (3d
decision to set aside an entry of default pursuant to Fed.
Civ. P. 55(c) is left primarily to the discretion of the
District Court.” Bailey v. United Airlines,
279 F.3d 194, 204 (3d Cir. 2002) (quoting Hritz, 732
at 1180). Courts generally disfavor entry of defaults.
Harad v. Aetna Cas. & Sur. Co., 839 F.2d 979,
982 (3d Cir. 1988). Accordingly, “any doubt should be
resolved in favor of the petition to set aside”
default. Medunic v. Lederer, 533 F.2d 891, 894 (3d
Cir. 1976). “[T]he standard for setting side a default
is less stringent than for setting aside a default
judgment.” Mettle v. First Union Nat. Bank,
279 F.Supp.2d 598, 601 (D.N.J. 2003) (citing Feliciano v.
Reliant Tooling Co., Ltd., 691 F.2d 653, 656 (3d Cir.
contends that: (1) CMC will not be prejudiced by vacating
default; (2) Lehigh has a meritorious defense; and (3) the
default was not the result of Lehigh's culpable conduct.
Plaintiff disputes each contention. Given the disfavor for
entry of defaults, the Court agrees with Defendant.
argues that CMC cannot establish prejudice because this
matter is still in the early stages. Lehigh points out that
CMC allegedly suffered damages in 2016 and filed suit in
2017, thus weakening CMC's argument that it would be
prejudiced if the Court allowed Lehigh to prepare a defense.
CMC contends that, due to Lehigh's initial lack of
response, it was concerned that Lehigh would neither
participate nor provide discovery “which may have been
of use vis Delta's purported brokerage claims
regarding the shipment at ...