The opinion of the court was delivered by: Honorable B. Lynn Winmill Chief U. S. District Judge
MEMORANDUM DECISION AND ORDER
The Court has before it (1) Defendant Wells Fargo Home Mortgage, Inc. and Wells Fargo Bank National Association's Motion to Set Aside Clerk's Entry of Default (Dkt. 26); and (2) Plaintiff Tenny Garner's Motion for Attorney Fees (Dkt. 14). In the interest of avoiding further delay and because the Court conclusively finds that the decisional process would not be significantly aided by oral argument, the Court will resolve these motions without a hearing and vacate the hearing on the motion to set aside default scheduled for July 11, 2011.
Having carefully reviewed the record, the Court will grant Wells Fargo's motion to set aside default. But it will award Garner the attorney fees she incurred in preparing for the default judgment hearing in the amount of $5,052.66. In addition, the Court will award Garner the reasonable attorney fees she incurred in opposing Wells Fargo's motion to set aside default.
On May 27, 2010, Plaintiff Tenny Garner filed a Complaint alleging that Defendants Wells Fargo Home Mortgage, Inc. and Wells Fargo Bank National Association (Wells Fargo) terminated her employment in violation of the Family Medical Leave Act. Garner also asserted state claims for unpaid wages, quantum meruit and unjust enrichment. Garner did not serve the Complaint immediately, but Wells Fargo's in-house counsel apparently obtained a copy of the Complaint and left a voicemail for Plaintiff's counsel in June 2010. Voicemail left by Joan Harris on June 21,2010, Dkt. 22, Exhibit at 2 of 22. Between June and September 2010, counsel for the parties spoke a few times on the phone and exchanged several voicemails about settling the case.
Because the 120-day time period for serving the Complaint was approaching, Garner served Wells Fargo on September 23, 2010. Wells Fargo never filed an answer. Nor did it file a notice of appearance or seek an extension of time to answer the Complaint.
The Clerk entered default on November 12, 2010. The Court then set a hearing on Garner's motion for default judgment for January 27, 2010 to determine damages. A day before the hearing, Wells Fargo notified the Court that it intended to move to set aside the Clerk's Entry of Default. Rather than potentially waste the Court and parties' time, the Court vacated the default judgment hearing, but invited Garner to move for attorney fees she incurred in preparing for the hearing. Wells Fargo now moves to set aside default.
"The court may set aside an entry of default for good cause .... " Fed.R.Civ.P. 55(c). The "good cause" standard that governs vacating an entry of default under Rule 55(c) is the same standard that governs vacating a default judgment under Rule 60(b). See TCI Group Life Ins. Plan v. Knoebber, 244 F.3d 691, 696 (9th Cir.2001). The good cause analysis considers three factors:
(1) whether Wells Fargo engaged in culpable conduct that led to the default;
(2) whether Wells Fargo has a meritorious defense; or (3) whether reopening the default judgment would prejudice Garner.
United States v. Signed Pers. Check No. 730 of Yubran S. Mesle, 615 F.3d 1085, 1091 (9th Cir. 2010) (citing Franchise Holding II, LLC v. Huntington Rests. Group, Inc., 375 F.3d 922, 925--26 (9th Cir.2004)). As these factors are disjunctive, the district court may deny the motion if any of the three factors are true. American Ass'n of Naturopathic Physicians v. Hayhurst, 227 F.3d 1104, 1108 (9th Cir. 2000).
The party seeking relief from the entry of default bears the burden of showing that these factors favor such relief. See Franchise Holding II, 375 F.3d at 926. In considering these good cause factors, however, the Ninth Circuit instructs that the court is to be guided by the underlying policy concern that "'judgment by default is a drastic step appropriate only in extreme circumstances; a case should, whenever possible, be decided on the merits." Falk v. Allen, 739 F.2d 461, 463 (9th Cir. 1984).
1. Motion to Set Aside Default Judgment
Wells Fargo contends that the Clerk's Entry of Default should be set aside for good cause because"(1) Wells Fargo's failure to file an Answer was based upon its reasonable belief that no formal pleading was required in light of the parties' ongoing settlement negotiations; (2) Wells Fargo has meritorious defenses in that it terminated plaintiff after she admitted to two acts of forging customer loan documents; and (3) setting aside the Entry ...