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Kona Ice, Inc v. Gonzalez

United States District Court, D. New Jersey

January 9, 2019

Kona Ice, Inc.,
Gonzalez, et al.



         Dear Counsel:

         Before the Court are Plaintiff Kona Ice, Inc.'s (“Plaintiff”) motion for default judgment (D.E. No. 10) and Defendants Anthony Gonzalez, Cindy Gonzalez, and Snowball Factory's (“Defendants”) motion to set aside default (D.E. No. 12). Plaintiff also requests attorney's fees for the costs associated with this motion. (See D.E. No. 13 at 6). The Court has considered the parties' submissions and decides the matter without oral argument. See Fed. R. Civ. P. 78(b). For the reasons below, the Court DENIES Plaintiff's motion for default judgment and request for attorney's fees, and GRANTS Defendants' motion to set aside default.

         I. BACKGROUND

         Plaintiff is an assignee of U.S. Patent No. 8, 157, 136 (“the '136 Patent”). (D.E. No. 1 ¶¶ 7 & 8). The '136 Patent is directed to a “mobile confectionary apparatus for dispensing beverages and/or frozen confections and the like, includes a vehicle configured for travel over public roads to a location such as a parking lot, street, festival or fairgrounds, or the like.” (D.E. No. 1, Ex. 1 '136 Patent at Abstract). Plaintiff alleges that “Defendants have infringed at least Claims 19, 21, 23 and 24” of the '136 Patent with their “service vehicles through which they offer frozen treats. . . .” (D.E. No. 1 ¶¶ 9 & 11).

         Plaintiff filed its Complaint on October 2, 2017. (See D.E. No. 1). Plaintiff requested, and the Clerk of Court entered default as to Defendants, on February 2, 2018. (See D.E. No. 8). Plaintiff filed the instant motion for default judgment on May 7, 2018, and Defendants filed the instant motion to set aside default on May 10, 2018. (See D.E. Nos. 10 & 12).


         A. Legal Standard

         Federal Rule of Civil Procedure 55 governs default. Under Rule 55(a), a plaintiff can request the clerk's entry of default against a party that “has failed to plead or otherwise defend as provided by these rules and that fact is made to appear by affidavit or otherwise.” Fed.R.Civ.P. 55(a). Thereafter, a plaintiff can seek the Court's entry of default judgment under either Rule 55(b)(1) or Rule 55(b)(2). Nationwide Mut. Ins. Co. v. Starlight Ballroom Dance Club, Inc., 175 Fed.Appx. 519, 521 n.1 (3d. Cir. 2006) (“Prior to obtaining a default judgment under either Rule 55(b)(1) or Rule 55(b)(2), there must be entry default as provided by Rule 55(a).”). Finally, Rule 55(c) provides, “for good cause shown the court may set aside an entry of default and, if judgment by default has been entered, may likewise set it aside in accordance with Rule 60(b).”

         Before imposing the extreme sanction of default, district courts must make explicit factual findings as to: (1) whether the party subject to default has a meritorious defense, (2) the prejudice suffered by the party seeking default, and (3) the culpability of the party subject to default. Emcasco Ins. Co. v. Sambrick, 834 F.2d 71, 73-74 (3d Cir. 1987) (“We have further required the district court to make explicit findings concerning the factors it must consider in rendering judgment by default or dismissal, or in declining to reopen such judgment.”). In weighing the factors, district courts must remain mindful that, like dismissal with prejudice, default is a sanction of last resort. Poulis v. State Farm Fire & Casualty Co., 747 F.2d 863, 867-68 (3d Cir. 1984) (“We reiterate what we have said on numerous occasions: that dismissals with prejudice or defaults are drastic sanctions, termed ‘extreme' by the Supreme Court, National Hockey League, 427 U.S. 639, 643 (1976), and are to be reserved for comparable cases.”). To this end, district courts must resolve all doubt in favor of proceeding on the merits. Zawadski de Bueno v. Bueno Castro, 822 F.2d 416, 420 (3d Cir.1987).

         Because the Third Circuit mandates explicit factual findings, evidence regarding the circumstances leading up to the default becomes the polestar of the district courts' review. Thus, affidavits of individuals with personal knowledge of said circumstances are indispensable. Pursuant to Local Civil Rule 7.2(a), “Affidavits, declarations, certifications and other documents of the type referenced in 28 U.S.C. § 1746 shall be restricted to statements of fact within the personal knowledge of the signatory.” Moreover, the Court must disregard any argument of facts and the law contained in the affidavits. Id. As one commentator notes, “the court has not hesitated to enforce the directives of this rule.”[1]

         B. Analysis

         1. Meritorious Defense

         District courts must find this factor in favor of proceeding on the merits when the party subject to entry of default can proffer a meritorious defense. Facial merit will suffice to support a finding that this factor favors proceeding on the merits. Emcasco Ins. Co., 834 F.2d at 74 (“We need not decide the legal issue at this time; it is sufficient that ...

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