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Strickland-Lucas v. Citibank, N.A.

United States District Court, D. Maryland

November 29, 2016

JOWANDA STRICKLAND-LUCAS, et. al. Plaintiffs,
v.
CITIBANK, N.A. DOING BUSINESS AS CWABS, INC., ASSET-BACKED CERTIFICATES, SERIES 2007-QH2, Defendant.

          MEMORANDUM

          ELLEN LIPTON HOLLANDER, UNITED STATES DISTRICT JUDGE

         On March 18, 2016, JoWanda Strickland-Lucas and James Strickland-Lucas, the self-represented plaintiffs, filed suit against Citibank, N.A., “DBA CWABS, Inc., Asset-Backed Certificates, Series 2007-QH2” (“Citibank”), alleging violations of the Truth in Lending Act (“TILA”), 15 U.S.C. §§ 1635 & 1640, in connection with a 2007 loan. ECF 1.[1] Plaintiffs claim that they were not provided required disclosures with the loan origination and that they properly rescinded the loan in 2015. ECF 1. By Order of March 24, 2016 (ECF 4), I granted plaintiffs' motions to proceed in forma pauperis. See ECF 2; ECF 3.

         On June 23, 2016, a summons return was executed, evidencing service on defendant on June 21, 2016, via Corporation Trust, Inc. ECF 9.

         Under Rule 12 of the Federal Rules of Civil Procedure, a defendant must serve an answer within twenty-one days after being served with a summons and complaint. See Fed. R. Civ. P. 12(a)(1)(A)(i). Citibank did not timely respond to the Complaint. Therefore, by Order of September 6, 2016 (ECF 10), I directed plaintiffs to file a motion for Clerk's entry of default, or show cause why such action was not appropriate. Id. Pursuant to my Order (ECF 10), on September 12, 2016, plaintiffs filed a Motion for Clerk's Entry of Default as to Citibank, pursuant to Fed.R.Civ.P. 55(a). ECF 11. On September 14, 2016, the Clerk entered an order of default as to the defendant. ECF 12. Sydney Fairchild Fitch, Esquire, of McGuireWoods LLP, entered her appearance as counsel for Citibank on October 20, 2016. ECF 13.

         Thereafter, on October 28, 2016, Citibank filed a motion to set aside entry of default (ECF 16), supported by a memorandum of law (ECF 16-1) (collectively, “Motion”), and an exhibit (ECF 16-2). Citibank urges the Court to set aside the entry of default for the following reasons: “(i) Citibank has a meritorious defense to this action because Plaintiffs' TILA claims are time-barred; (ii) Citibank's failure to respond was inadvertent, and Citibank has now responded reasonably promptly; and (iii) setting aside the Entry of Default will not prejudice Plaintiffs.” ECF 16-1 at 3.

         Plaintiffs oppose the Motion. ECF 17, “Opposition.” They argue, inter alia, that there is no merit to Citibank's contention that plaintiffs' claims are time-barred. ECF 17 at 1.[2]Citibank has replied. ECF 18, “Reply”.

         No hearing is necessary to resolve the Motion. See Local Rule 105.6. For the reasons that follow, I shall grant the Motion.

         I. Discussion

         Rule 55(c) of the Federal Rules of Civil Procedure states, in part: “The Court may set aside an entry of default for good cause . . . .” In Payne ex rel. Estate of Calzada v. Break, 439 F.3d 198, 203 (4th Cir. 2006), the Fourth Circuit instructed:

When deciding whether to set aside an entry of default, a district court should consider whether the moving party has a meritorious defense, whether it acts with reasonable promptness, the personal responsibility of the defaulting party, the prejudice to the party, whether there is a history of dilatory action, and the availability of sanctions less drastic.

See also Colleton Preparatory Academy, Inc. v. Hoover Universal, Inc., 616 F.3d 413, 417 (4th Cir. 2010).

         To be sure, a “default judgment may be appropriate when the adversary process has been halted because of an essentially unresponsive party.” SEC v. Lawbaugh, 359 F.Supp.2d 418, 421 (D. Md. 2005). Nevertheless, the Fourth Circuit has repeatedly expressed a strong preference that, as a matter of general policy, “default should be avoided and that claims and defenses be disposed of on their merits.” Colleton, 616 F.3d at 417; see also United States v. Shaffer Equip. Co., 11 F.3d 450, 453 (4th Cir. 1993); Tazco, Inc. v. Director, Office of Workers' Compensation Program, U.S. Dep't of Labor, 895 F.2d 949, 950 (4th Cir. 1990); Herbert v. Saffell, 877 F.2d 267, 269 (4th Cir. 1989).

         As noted, Citibank claims that plaintiffs' TILA claims are time-barred. Citibank explains, inter alia, ECF 16-1 at 4:

Plaintiffs contend that they entered into the loan at issue on or about March 2, 2007, and that they were not provided the required disclosures at that time. (Doc. No. 1 at 2). All actions for damages under TILA must be filed “within one year from the date of the occurrence of the violation.” 15 U.S.C. § 1640(e). The “‘date of the occurrence of the violation' is the date on which the borrower accepts the creditor's extension of credit.” Moseley v. Countrywide Home Loans, Inc., Case No. No. 7:09-CV-210-FL, 2010 WL 4484566 at *2 (E.D. N.C. Oct. 26, 2010). Thus, any claim based on failure to ...

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