United States District Court, W.D. Tennessee, Western Division
ORDER ADOPTING THE REPORT AND RECOMMENDATION ON DEFENDANT HARRISON'S FUNERAL HOME, INC.'S MOTION FOR RELIEF FROM DEFAULT JUDGMENT AND PLAINTIFF'S MOTION FOR VERIFIED AWARD OF JUDGMENT AND TAXATION OF COST, FEES, AND DAMAGES
JOHN T. FOWLKES, Jr., District Judge.
Before the Court comes Defendant Harrison's Funeral Home, Inc.'s Motion for Relief from Default Judgment filed on March 25, 2014, ECF No. 75, and Plaintiff Michael Hooker's Motion for Verified Award of Judgment and Taxation of Cost, Fees, and Damages filed on February 14, 2014, ECF No. 68. Plaintiff filed a Response to Defendant's Motion for Relief on April 14, 2014. (ECF No. 77). On September 20, 2013, this Court referred all pretrial matters within the Magistrate Judge's jurisdiction pursuant to 28 U.S.C. § 636(b)(1)(A) for determination; and all other pretrial matters for a report and recommendation pursuant to 28 U.S.C. § 636(b)(1)(B-C). (ECF No. 50). On July 9, 2014, the Magistrate Judge issued his Report and Recommendation that Defendant's Motion for Relief be granted and Plaintiff's Motion for Award and Costs be denied. (ECF No. 84). Plaintiff filed objections to the Magistrate's Report and Recommendation on July 17, 2014. (ECF No. 85).
For the following reasons, the Court finds the Magistrate's Report and Recommendation be adopted and Defendant's Motion for Relief GRANTED; Plaintiff's Motion for Award and Costs DENIED as MOOT.
I. FACTUAL HISTORY
The Plaintiff filed no objections to the Magistrate Judge's proposed facts. Therefore, the Court adopts the Magistrate Judge's proposed findings of fact as the factual history. (ECF No. 84 at 1-6).
II. STANDARD OF REVIEW
The district court has the authority to "designate a magistrate judge to conduct hearings, including evidentiary hearings, and to submit to a judge of the court proposed findings of fact and recommendations for the disposition, by a judge of the court, of any motion." 28 U.S.C. § 636(b)(1)(B). "The district judge may accept, reject, or modify the recommended disposition; receive further evidence; or return the matter to the magistrate judge with instructions." Fed.R.Civ.P. 72(b)(3).
The district court has appellate jurisdiction over any decisions the magistrate judge issues pursuant to such a referral. 28 U.S.C. § 636(b); Fed.R.Civ.P. 72. The standard of review that is applied by the district court depends on the nature of the matter considered by the magistrate judge. See Fed R. Civ. P. 72(b)(3) ("The district judge must determine de novo any part of the magistrate judge's disposition that has been properly objected to."); Baker v. Peterson, 67 Fed.App'x 308, 310 (6th Cir. 2003) ("A district court normally applies a clearly erroneous or contrary to law' standard of review for nondispositive preliminary measures. A district court must review dispositive motions under the de novo standard." (internal citations omitted)).
A. The Magistrate's Report and Recommendation
In his Report and Recommendation, the Magistrate examined whether Defendant's Motion for Relief should be granted. (ECF No. 84). The Magistrate construed Defendant's Motion as a motion to set aside entry of default rather than a motion to set aside default judgment, as Plaintiff's Motion for Award and Costs was not yet entered to make a complete judgment. To this point, Defendant was in default, but Defendant was not yet subject to a default judgment. (ECF No. 84 at 6-8). Defendant's Motion for Relief sought relief under Fed.R.Civ.P. 60(b)(1) as excusable neglect. (ECF No. 75-3). Defendant Harrison's Funeral Home was located at 2647 Carnes Avenue, Memphis, TN 38114, until there was a fire on or about June 25, 2013. Id. Since that time, Defendant has had difficulty receiving all court notices regarding this case. Id. Additionally, Defendant Harrison provided an Answer to Plaintiff's Complaint under the mistaken belief that an individual could represent a business entity pro se. Id.
The Magistrate's proposed conclusions of law recommended that Defendant's Motion for Relief be granted. In his Report and Recommendation, the Magistrate concluded that Defendant had satisfied the standard under Fed.R.Civ.P. 55(c) for setting aside an Entry of Default. See United States v. Goist, 378 F.Appx. 517, 519 (6th Cir. 2010) (considering "whether: (1) plaintiff will be prejudiced; (2) defendant has a meritorious defense; and (3) defendant's culpable conduct led to the default" (citing Berthelsen v. Kane, 907 F.2d 617, 620 (6th Cir. 1990)); see also Goist, 378 F.Appx. at 519 ("Although these are the same factors considered by a court in deciding whether to set aside a subsequent default judgment, the factors should be applied more leniently to relieve a party from procedural entry of default, reflecting the strong preference for trial on the merits." (citing Shepard Claims Serv., Inc. v. William Darrah & Assocs., 796 F.2d 190, 193-94 (6th Cir. 1986))). The Magistrate indicated that the Defendant had satisfied the three factors: (1) Plaintiff will not be prejudiced, (2) the Defendant has a meritorious defense, and (3) the Defendant's conduct was not culpable. (ECF No. 84 at 8). Specifically, the Magistrate's proposed conclusions of law are as follows:
1. Plaintiff will not be Prejudiced
The Magistrate concluded that the Plaintiff will suffer no more than a simple delay in advancing the case, which is insufficient to show prejudice. Burrell v. Henderson, 434 F.3d 826, 835 (6th Cir. 2006) (citing United Coin Meter Co. v. Seaboard C. Railroad, 705 F.2d 839, 845 (6th Cir. 1983)). There must be some showing of "loss of evidence, increased opportunities for fraud, or discovery difficulties." Id. (citing Berthelsen, 907 F.2d 621); see also Krowtoh II LLC v. ExCelsius Int'l Ltd., 330 F.Appx. 530, 535 (6th Cir. 2009) (citing INVST Fin. Grp., Inc. v. ...