United States District Court, D. Maryland, Southern Division
GARNIER-THIEBAUT, INC. Plaintiff,
CASTELLO 1935 INC., et al., Defendants.
MEMORANDUM OPINION REGARDING DEFAULT
Stephanie D. Thacker United States Circuit Judge.
November 23, 2019, Plaintiff filed a Motion to Strike
Defenses and Enter Judgment by Default (“Default
Motion”). ECF No. 51. Following the November 25, 2019
pretrial conference in this case, the Court issued an Order
to Show Cause ordering Defendants to show cause by noon on
December 2, 2019 as to why entry of default judgment should
not be entered as to the issue of liability and ordering
Plaintiff to provide additional reasoning for its Default
Motion. ECF No. 53. On December 2, 2019, Defendant Campbell
filed a purported response to the November 25, 2019 Order to
Show Cause, which although docketed as a response to the
Order to Show Cause is, in fact, merely a listing of supposed
stipulations. ECF No. 56.
Court has reviewed Plaintiff's Default Motion,
Plaintiff's response to the November 25, 2019 Order to
Show Cause (ECF No. 55), and Defendant Campbell's
response to the November 25, 2019 Order to Show Cause (ECF
No. 56). For the reasons contained herein, the Court
GRANTS Plaintiff's Motion for Default
Judgment and ORDERS Defendant Campbell's
answer stricken from the docket and entry of default judgment
against Defendants as to the issue of liability on Counts I,
III, and IV of the Amended Complaint.
Federal Rule of Civil Procedure 55
Rule of Civil Procedure 55 provides that upon a showing that
“a party against whom a judgment for affirmative relief
is sought has failed to plead or otherwise defen[d], . . .
the clerk must enter the party's default.”
Fed.R.Civ.P. 55(a). Once the clerk enters the party's
default, a party may then seek a default judgment against the
defaulting party. Id. at 55(b). The Court has
discretion to enter default judgment, Balt. Line Handling
Co. v. Brophy, 771 F.Supp.2d 531, 540 (D. Md. 2011)
(citation omitted), although the Fourth Circuit “has a
strong policy that cases be decided on the merits.”
Int'l Painters & Allied Trades Indus. Pension
Fund v. Capital Restoration & Painting Co., 919
F.Supp.2d 680, 684 (D. Md. 2013) (quoting United States
v. Shaffer Equipment Co., 11 F.3d 450, 453 (4th Cir.
1993)) (internal quotation marks omitted). However,
“default judgment is appropriate when the adversary
process has been halted because of an essentially
unresponsive party.” Id. (quoting S.E.C.
v. Lawbaugh, 359 F.Supp.2d 418, 421 (D. Md. 2005)
(concluding that entry of a default judgment was proper where
“[d]efendant has been unresponsive for more than a
year”)); see, e.g., Home Port Rentals, Inc. v.
Ruben, 957 F.2d 126, 133 (4th Cir. 1992) (finding entry
of default judgment pursuant to Federal Rule of Civil
Procedure 55 was proper against the unresponsive parties who
did not participate in discovery when they “did not
appear at the show cause hearing” and “they did
not respond to certified notices sent by the court”).
the Amended Complaint was filed on January 26, 2018. ECF No.
16. Thereafter, on February 16, 2018, Defendants filed a
motion to dismiss for failure to state a claim. ECF No. 17.
Counsel for Defendants later filed a motion for leave to
withdraw as counsel. ECF No. 20. On May 17, 2018, the Court
issued an Order denying Defendants motion to dismiss and
granting counsel for Defendants' motion for leave to
withdraw as counsel. ECF No. 21. At that point, the Court
ordered Defendants to file an answer to Plaintiff's
Amended Complaint by June 7, 2018. Id. The Court
also specifically ordered, “Defendant Castello must
retain counsel as this case proceeds.” Id. at
13 (citing McGowan v. Cross, Nos. 92-1480, 92-1584,
1993 U.S. App. LEXIS 9134, at *1 n.1 (4th Cir. 1993)
(“Corporations and partnerships, as artificial
entities, may not appear pro se but must instead appear
through counsel.”) (citations omitted)). Neither
Defendant filed an answer by the time designated by the
court. Particularly, Defendant Castello 1935 Inc. could not
file an answer due to its failure to retain counsel.
2, 2018, the Court issued an Order to Show Cause directing
Defendant Castello 1935 Inc. to show cause as to why default
judgment should not be entered against it for failing to have
new counsel enter an appearance in this case. ECF No. 22
(citing D. Md. Loc. R. 101.2(b) (a corporation “must
have new counsel enter an appearance or be subject to . . .
default judgment on claims against it”)). Defendant
Campbell answered the Order to Show Cause and requested the
Court refrain from entering default judgment. ECF No. 23.
Defendant Campbell, pro se, explained,
“[Defendants] have been trying to secure a new attorney
to take over this case; however as of this date we have been
unable to find one. We will certainly have new counsel in
place when the assigned court date comes up.”
result, on July 24, 2018, the Court issued an Order directing
Defendants to each file an answer to Plaintiff's Amended
Complaint by August 23, 2018. ECF No. 24. The Court cautioned
Defendants that “[f]ailure to file a timely answer and
for corporate counsel to enter his or her appearance may
subject the defendant failing to do so to a default judgment
on the claims against him or it.” Id. On
August 23, 2018, Defendant Campbell answered the Amended
Complaint. ECF No. 25. Defendant Campbell also notified the
Court, “[W]e have been unable to retain counsel in this
case. We continue to try and will inform the courts [sic] the
moment we have counsel secured. Please accept our sincere
apologies in this delay.” ECF No. 26.
Defendant Castello 1935 Inc. failed to file an answer,
Plaintiff moved for the entry of default against Defendant
Castello 1935 Inc pursuant to Federal Rule of Civil Procedure
55. ECF Nos. 33, 35. Thereafter, on March 28, 2019, pursuant
to Federal Rule of Civil Procedure 55(a),  the Clerk entered
default against Defendant Castello 1935 Inc. ECF No. 38.
August 7, 2019, the Court denied Plaintiff's motion for
default judgment against Defendant Castello 1935 Inc. without
prejudice. ECF No. 45. The Court reasoned that Frow v. De
La Vega, 82 U.S. 552 (1872) “declared that, in a
case where joint liability is alleged, it would [be] both
unlawful and ‘absurd' to issue a default judgment
against one defendant, individually, while the same claims
proceed against other, non-defaulting defendants.”
Id. at 3 (citing Frow, 82 U.S. at 554
(1872)). The Court further noted, “The Fourth Circuit
has extended the Frow rule to cases where the
plaintiff alleges defendants are liable not jointly, but
jointly and severally.” Id. (citing United
States ex rel. Hudson v. Peerless Ins. Co., 374 F.2d
942, 944 (4th Cir. 1967)). The Court concluded that because
this case alleges that Defendants are jointly and severally
liable, “default judgment against [Defendant Castello
1935 Inc.] would risk producing inconsistent judgments . . .
until the matter has been adjudicated as to Mr.
Campbell.” Id. at 5 (citing Frow, 82
U.S. 552 (1872)).
Federal Rules of Civil Procedure 16 and 37
Rule of Civil Procedure 16 provides that a court may issue a
discovery sanction. Fed.R.Civ.P. 16(f)(1). And Federal Rule
of Civil Procedure 37(b)(2)(A) specifically provides for
“rendering a default judgment against the disobedient
party.” Fed.R.Civ.P. 37(b)(2)(A)(vi). In reviewing a
district court's order of default judgment against
defendants pursuant to Federal Rules of Civil Procedure
16(f)(1) and 37(b)(2)(A)(vi), the Fourth Circuit has
concluded that there is “no reason to treat misconduct
during the pretrial process as different from misconduct
during the discovery process.” Young Again Prods.
v. Acord, 495 F. App'x. 294, 301 (4th Cir. 2011)
(citing Newman v. Metro. Pier & Exposition
Auth., 962 F.2d 589, 590-91 (7th Cir. 1992) (holding
that failure to participate in the pretrial process is a
ground for default judgment)). Notably, the Fourth Circuit
has “emphasized the significance of warning a defendant
about the possibility of default before entering such a harsh
sanction.” Hathcock v. Navistar Int'l Transp.
Corp., 53 F.3d 36, 40 (4th Cir. 1995); see RDLG, LLC
v. Leonard, 649 Fed.Appx. 343, 347-48 (4th Cir. May 23,
2016) (holding that a district court's sanction of
default judgment pursuant to Federal Rule of Civil Procedure
16(f) did not violate appellant's due process rights when
the court repeatedly issued oral and written warnings that it
would enter default judgment).
case, the Court twice issued orders directing the parties to
file their pretrial pleadings by November 8, 2019. ECF Nos.
44, 47. On April 24, 2019, the Court's pretrial Order
ordered the parties to submit their pretrial pleadings by
November 8, 2019. ECF No. 44. And, again, on October 21,
2019, the Court ordered the parties to submit their pretrial
pleadings by November 8, 2019. ECF No. 47. Specifically, the
Court ordered the parties to submit the following pretrial
• joint stipulation of facts;
• witness list;
• joint pretrial order;
• statement of legal authority;
• binder of exhibits; and
• any motions in limine.
ECF No. 47. Even after the Court repeatedly reminded the
parties to submit their pretrial pleadings by November 8,
2019, Defendants failed to comply at all. Therefore, on
November 15, 2019, the Court issued an order noting, in part,
“despite having a 6 1/2-month notice of the pretrial
filing deadline and a subsequent 2 1/2-week reminder of the
same, [Defendants] Campbell and Castello 1935 Inc. failed to
meet the November 8, 2019 pretrial filing deadline.”
ECF No. 50. Thereafter, the Court cautioned Defendants that
they were in danger of being sanctioned for failure to comply
with prior Orders. ECF No. 53. The Court also warned
Defendants that continued failure to participate in the
adversary process may result in an Order to Show Cause as to
why a default judgment should not be entered against them.
the Court gave Defendants one last chance to submit their
pretrial filings. Id. On November 15, 2019, the
Court ordered Defendants to file their pretrial filings by
noon on November 22, 2019. Id. The Court also
ordered Defendants to advise the Court whether or not they
are represented by counsel by noon on November 22, 2019.
Id. Additionally, the Court ordered any counsel for
Defendants to note their appearance by noon on November 22,
Defendants failed to comply with any of the
Court's Orders set out in the November 15, 2019 Order.
Id. Following the November 22, 2019 pretrial filings
deadline, on November 23, 2019, Plaintiff filed its Default
Motion pursuant to Federal Rules of Civil Procedure 16 and 37
against both Defendants, arguing “[D]efendants have
engaged in a pattern of ignoring the duties and obligations
imposed by the Rules and the prior orders of this
Court.” ECF No. 51 (emphasis in original).
Court concludes that consideration of default judgment is
appropriate here because Defendants had ample notice of the
consequences of their inaction. See Hathcock, 53
F.3d at 40 (“[A] party is entitled to be made aware of
the drastic consequences of failing to meet the court's
conditions at the time the conditions are imposed, when he
still has the opportunity to satisfy the conditions and avoid
the sanction”) (citation and internal quotation marks
omitted). This Court has repeatedly warned Defendants that
their actions may result in default judgment. See
ECF No. 50 (outlining an overview of Defendants' conduct
in this case).
reasons that follow, this Court concludes default judgment is
appropriate in this case because Defendants have failed to
participate in the adversary process at nearly every turn
despite being given repeated opportunities to do so.
determine if default judgment is appropriate as a discovery
sanction, the Fourth Circuit has instructed courts to apply
the four Wilson v. Volkswagen of Am., Inc., 561 F.2d
494 (4th Cir. 1977) factors. Mut. Fed. Sav. & Loan
Ass'n v. Richards & Assocs., Inc., 872 F.2d 88,
92 (4th Cir. 1989) (citing Wilson, 561 F.2d at
503-06). The four Wilson factors are:
(1) whether the noncomplying party acted in bad faith;
(2) the amount of prejudice his noncompliance caused his
adversary, which necessarily includes an inquiry into the
materiality of the evidence he failed to produce;
(3) the need for deterrence of the particular sort of
noncompliance; and (4) the effectiveness of less drastic
Id. (citing Wilson, 561 F.2d at 503-06).
The four Wilson factors “insure that only the
most flagrant case, where the party's noncompliance
represents bad faith and callous disregard for the authority
of the district court and the Rules, will result in the
extreme sanction” of default judgment. Id.
(citing Wilson, 561 F.2d at 504). Therefore, if the
four Wilson factors weigh in favor of sanctioning
defendants with default judgment pursuant to Federal Rules of
Civil Procedure 16(f)(1) and 37(b)(2)(A), this Court may so
sanction. See, e.g., Id. at 302.
Defendants have unquestionably “fail[ed] to obey”
the pretrial order -- among several others. Fed.R.Civ.P.
have acted in bad faith in their repeated failure to comply
with prior Orders. See Mut. Fed. Sav. & Loan
Ass'n, 872 F.2d at 93. An overview of
Defendants' lack of ...