A District Court judge in Ohio has granted a defendant’s motion to vacate an entry of default that was filed against it in a Fair Debt Collection Practices Act case, ruling that the defendant’s failure to respond to the plaintiff’s complaint did not constitute culpable conduct and that the case should be decided on its merits.
The background: The plaintiff was involved in a car accident in 2022 and his vehicle was deemed a total loss. The insurance company sent the defendant a check for $5,989. However, the defendant allegedly failed to return the difference to the plaintiff. The defendant then continued its collection efforts, including filing a lawsuit against the plaintiff in the Municipal Court of Clermont County, Ohio, which was dismissed when the defendant failed to appear for trial.
The plaintiff filed this lawsuit earlier this year, accusing the defendant of violating the FDCPA and the Ohio Consumer Protection Act. When the defendant did not answer the suit, the plaintiff applied for an entry of default, which was granted.
The defendant then filed this motion to vacate the entry of default, arguing that its failure to respond was due to an unintentional error in processing the complaint, not an intentional disregard for judicial proceedings. The defendant also requested leave to file an answer.
The ruling: Judge Matthew W. McFarland of the District Court for the Southern District of Ohio ruled in favor of the defendant, on the grounds that courts may set aside an entry of default for “good cause.” The judge determined that the defendant’s conduct did not rise to the level of culpable behavior, noting that the company’s president had failed to properly enter the complaint into the computer system, which led to a missed response deadline. Judge McFarland also found that the defendant had a potentially meritorious defense, as it intended to argue that the agreed settlement terms differed from what the plaintiff had claimed. Furthermore, there was no evidence that vacating the default would prejudice the plaintiff, beyond a delay in the resolution of the claims.
