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Loring v. Kwal-Howels, Inc.

United States District Court, Tenth Circuit

December 17, 2013




Plaintiff filed this action alleging violations under Title VII of the Civil Rights Act of 1964, [1] and the Equal Pay Act.[2] Before the Court is Defendant KWAL-Howells’ objection (Doc. 37) to Plaintiff’s Third Motion for Entry of Judgment by Default Against Defendant KWAL-Howells, Inc. (Doc. 30).[3] As described more fully below, Defendant KWAL-Howels’ objection to entry of Plaintiff’s default judgment is overruled.

I. Background

Plaintiff, a former employee of KWAL-Howels, Inc. (“KWAL”), filed this lawsuit on June 15, 2012, against Defendants KWAL and Professional Paint & Coatings, Inc. (“PPC”).[4]The docket shows that summonses were returned executed upon both Defendants on October 9, 2012.[5] The Notice of Service of Summons and Complaint filed with regard to Defendant KWAL attaches a Proof of Service stating that the summons was served on “The Corporation Company, Inc. (via USPS Certified Mail), who is designated by law to accept service of process on behalf of [KWAL] on October 9, 2012.”[6] Plaintiff alleges that KWAL was served on October 9, 2012 by certified mail through its registered agent listed with the Kansas Secretary of State. Pursuant to Fed.R.Civ.P. 12(a), Defendants KWAL and PPC were required to file a responsive pleading on or before October 30, 2012.[7] Defendant PPC appeared and filed its Answer on October 30, 2012. Defendant KWAL did not file a responsive pleading by the October 30, 2012 deadline.

On November 30, 2012, Plaintiff filed a Motion for Entry of Judgment by Default Against Defendant KWAL.[8] The Court entered a Memorandum and Order denying the motion for default judgment, finding that: 1) Plaintiff failed to comply with the two-step process contemplated by Fed.R.Civ.P. 55; 2) Plaintiff’s proof of service appeared to be deficient; and 3) default judgment should be denied against a defendant that has a closely related defense with the non-defaulting defendant.[9] After the Court entered its Memorandum and Order, Plaintiff resolved her claims against PPC. PPC withdrew its opposition to Plaintiff’s motion for default judgment and Plaintiff’s claims against PPC were dismissed with prejudice.[10]

Plaintiff filed her Second Motion for Default Judgment against Defendant KWAL on June 6, 2013, and the Court denied the motion without prejudice on July 3, 2013, for failure to cure the remaining two deficiencies noted in the previous Memorandum and Order.[11]

Plaintiff filed her Application for Clerks Entry of Default on July 13, 2013, and the Clerk entered default on July 16, 2013.[12] Plaintiff filed her Third Motion for Default Judgment on August 1, 2013.[13] The Court set a damages hearing for September 6, 2013, and mailed a copy of the notice to Defendant KWAL on August 27, 2013.[14]

The Court held the evidentiary hearing on September 6, 2013, and Defendant KWAL failed to appear. After hearing testimony and receiving evidence at the hearing, the Court granted Plaintiff’s Third Motion for Default Judgment, determined damages, and requested Plaintiff’s counsel to submit a proposed Default Judgment Order.[15] On September 9, 2013, counsel entered an appearance for Defendant KWAL, and filed a Motion for Extension of Time to File Answer, Memorandum in Opposition to Plaintiff’s Third Motion for Default Judgment and/or Motion to Set Aside any Default Judgment Entered by this Court.[16] The Court granted KWAL leave to respond to Plaintiff’s Third Motion for Default Judgment, and denied the remainder of its motion.[17] KWAL has now filed its response.[18] The matter is fully briefed and the Court is prepared to rule on KWAL’s objection to entry of default judgment. For the reasons set forth in detail below, the Court overrules KWAL’s objection.

II. Facts

Plaintiff’s claims stemmed from her employment at KWAL’s Overland Park, Kansas store, which sold paint, coatings, and other items. KWAL sold the store to PPC in June 2011 before Plaintiff filed this lawsuit. On October 9, 2012, KWAL was served with the Summons and Complaint through the Company’s registered agent, CT Corporation. CT Corporation notified The Comex Group and Lockton Insurance of the service. The Comex Group is the parent company of KWAL and handles litigation on behalf of KWAL and other subsidiaries. Lockton Insurance manages a portfolio of insurance policies for The Comex Group. Because Lockton had received notice of the Complaint, The Comex Group understood that Lockton would notify Chartis Insurance (now AIG), the insurance company through which KWAL maintained Employment Practices Liability Insurance.

The Comex Group believed that it had completed its obligation in obtaining counsel for the lawsuit, expecting that AIG would assign a claims analyst to the case, and retain defense counsel. Following the service of the Complaint and Lockton’s notification of the same, The Comex Group heard nothing further regarding the case for almost a year, until August 28, 2013. KWAL asserts that The Comex Group believed this was normal as it would typically only receive periodic updates as cases progressed and because the store where Plaintiff worked had long since closed.[19]

Upon receiving the Notice of Hearing from the Court through its registered agent on August 28, 2013, John O’Toole, VP of Corporate and Legal Affairs of The Comex Group, forwarded the notice to his paralegal Joanne Edmunds, who had also received the Notice of Hearing, and Lockton. O’Toole inquired as to whether a claims analyst and defense counsel had been assigned. On August 29, 2013, he still could not identify any claims analyst or defense counsel assigned to the claim. On August 29, 2013, O’Toole reached out to an adjuster at AIG, James Berkson, with whom O’Toole was working on other matters to find out who was assigned to Plaintiff’s case. Berkson responded by sending an email with a carbon copy to the assigned adjuster, Erica Schierman.

On the morning of Tuesday, September 3, 2013, after the long Labor Day holiday weekend, O’Toole followed up with Schierman to determine who had been assigned as defense counsel for KWAL on Plaintiff’s case. On the afternoon of September 3, 2013, O’Toole asked Edmunds to confirm with AIG that defense counsel had been retained to defend KWAL in this case. O’Toole also asked Edmunds to contact defense counsel to appear for the scheduled hearing and defend KWAL in this case. Edmunds attempted to follow up with Schierman in that regard but received an out of office auto-reply notification. Also on the afternoon of September 3, 2013, O’Toole reached out to Berkson asking him to confirm that AIG had assigned defense counsel to defend KWAL in this case. Berkson responded to O’Toole’s email at around 10:00 p.m. that night indicating he believed The Comex Group needed to retain counsel for the defense of this case. Berkson also advised that he would be out of the office beginning the afternoon of September 4, 2013, through September 9, 2013.

On September 3, 2013, O’Toole asked Edmunds to contact Littler Mendelson in Kansas City to appear at the September 6th hearing. Edmunds was only in the office on September 4th for a short while before she had to leave.[20] Unfortunately, Edmunds was out of the office for the funeral of a family member on the afternoon of September 4th and all day ...

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