Case: 13-13853    Date Filed: 12/18/2014   Page: 1 of 26


                                                                          [PUBLISH]



               IN THE UNITED STATES COURT OF APPEALS

                        FOR THE ELEVENTH CIRCUIT
                          ________________________

                                No. 13-13853
                          ________________________

                       D.C. Docket No. 4:12-cv-00218-HLM



ENORA PEREZ,
d.b.a. Perez Center,

                                                 Counter Defendant
                                                 Plaintiff - Appellant,

versus

WELLS FARGO N.A.,

                                                  Counter Claimant
                                                  Defendant - Appellee,

FIRST JOHN DOE THROUGH
TENTH JOHN DOE,
inclusive,

                                                 Defendant - Appellee,

UNITED STATES OF AMERICA,

                                                  Third Party Defendant.
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                                ________________________

                       Appeal from the United States District Court
                          for the Northern District of Georgia
                             ________________________

                                    (December 18, 2014)

Before WILSON and ROSENBAUM, Circuit Judges, and SCHLESINGER, *
District Judge.

ROSENBAUM, Circuit Judge:

       A “[r]ose is a rose is a rose is a rose.” 1 And a motion for an entry of default

judgment is a motion for an entry of default judgment is a motion for an entry of

default judgment is a motion for an entry of default judgment—even if its writer

calls it a motion for judgment on the pleadings. So Rule 55’s standard of “good

cause” for setting aside an entry of default judgment—not the higher one of

“excusable neglect” applicable to missed deadlines outside the default context—

governs the court’s determination of whether, despite her one-time error in not

responding to a pleading, the non-moving party should get the opportunity to have

her case considered on the merits before final judgment against her is entered.

       In this case, Defendant-Counterclaimant Wells Fargo, N.A. (Wells Fargo),

in its so-called “motion for judgment on the pleadings,” urged the court to apply

the excusable-neglect standard to preclude Plaintiff-Counter-defendant Enora

       *
         Honorable Harvey E. Schlesinger, United States District Judge for the Middle District
of Florida, sitting by designation.
       1
           Gertrude Stein, Geography and Plays 187 (The Four Seas Press 1922) (1913).
                                                2
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Perez from filing an answer to Wells Fargo’s counterclaim after Perez missed a

single deadline to respond to the counterclaim. Then, because Perez had not been

permitted to file her answer, Wells Fargo argued that the court should deem Wells

Fargo’s allegations in its counterclaim admitted and enter judgment in Wells

Fargo’s favor (a default judgment by any other name). 2 The court granted Wells

Fargo’s motion, effectively entering what amounted to a default judgment against

Perez.

         But process matters. And we have a strong preference for deciding cases on

the merits—not based on a single missed deadline—whenever reasonably possible.

So the order granting judgment on the pleadings and denying Perez the opportunity

to file an answer to Wells Fargo’s counterclaim must be reversed, and Perez must

be given a chance to demonstrate that she should have her case considered on the

merits. We also conclude that the district court’s order denying Perez’s motion to

amend her complaint must be reversed.

                                                  I.

         Perez’s complaint alleges that she owned and operated her own business

called Perez Center. 3 In connection with her business, in May 2012, Perez opened



         2
        Cf. William Shakespeare, “Romeo and Juliet,” act 2, sc. 2 (“a rose by any other name
would smell as sweet”).
         3
         According to a brief that Perez filed in the district court in support of her motion to file
an out-of-time answer to Wells Fargo’s counterclaim, Perez Center was a grocery store that
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three accounts with Wells Fargo: a “Gold Business Services Package Account,” a

“Wells Fargo Simple Business Checking Account,” and a “Business Market Rate

Savings Account.” She used the money that she deposited into these business

accounts to support her family and to continue the operation of Perez Center.

       By letter dated June 19, 2012, though, Wells Fargo informed Perez that it

had blocked all monetary transactions on Perez’s accounts and had deactivated the

ATM cards linked to the accounts because Wells Fargo had made a “business

decision to end [Perez’s] deposit account relationship.” Wells Fargo provided no

further explanation for why it had closed Perez’s accounts. At the time, Perez’s

three accounts held a combined almost $100,000.00.

       In response to the letter, Perez made numerous calls to Wells Fargo to find

out why Wells Fargo had closed her accounts and to try to obtain her money. But,

according to Perez, Wells Fargo would not provide Perez with “any plausible

explanation of why [her] bank accounts . . . were closed,” and it refused to return

the money in her accounts. So Perez filed suit against Wells Fargo in the Superior

Court of Floyd County, Georgia, seeking injunctive and monetary relief.

       Wells Fargo then removed this action to federal court on the basis of

diversity jurisdiction. In federal court, Wells Fargo filed its answer and affirmative




“cater[ed] to Hispanic shoppers selling food items native to the countries of origin of Hispanics
who have immigrated to the Chattooga County area.”
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defenses and included a counterclaim against Perez and a claim against the United

States for interpleader. 4 Wells Fargo alleged in its counterclaim that it had closed

and frozen Perez’s accounts after several United States Treasury checks had been

deposited into them. According to the counterclaim, the contractual agreement

between Wells Fargo and Perez allowed Wells Fargo to take these actions because

depositing Treasury checks constituted money services business (MSB) activity,

and Perez’s accounts were “not approved for [ ] ‘MSB’ activity.” Wells Fargo did

not quote the contract or attach a copy of it to the counterclaim but instead simply

characterized it.

       The counterclaim further averred that about six weeks after it had frozen and

closed Perez’s accounts, on August 7, 2012, Wells Fargo had received a letter from

the Internal Revenue Service (IRS) notifying Wells Fargo that it had “issued tax

refunds that it should not have issued” and that it claimed an interest in the funds in

Perez’s accounts. This IRS letter is the only communication of any kind between

Wells Fargo and the IRS that the counterclaim alleges. Because, in light of the

August 7, 2012, IRS letter, Perez and the United States both claimed rights to the

funds, Wells Fargo explained, it filed the counterclaim for interpleader to resolve

the dispute. Finally, the counterclaim sought “litigation costs and attorneys’ fees”

from Perez, the United States, or both.

       4
         For the sake of simplicity, we refer to the counterclaim against Perez and the claim
against the United States for interpleader as the “counterclaim.”
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       In response to Wells Fargo’s counterclaim, the United States filed an answer

repudiating any interest in the funds in Perez’s accounts and requesting that the

court deny the requested relief. Although the United States admitted that the IRS

had sent the August letter to Wells Fargo claiming an interest in the funds in

Perez’s accounts, it stated that, upon further examination, the IRS had determined

that the United States had “no right” to the funds in Perez’s accounts.

       So, nearly six months after it originally froze Perez’s bank accounts and six

weeks after the United States disclaimed any interest in the funds in Perez’s

accounts, on December 14, 2012, Wells Fargo returned to Perez part of the monies

in Perez’s accounts. Specifically, Wells Fargo tendered a check to Perez in the

amount of $88,770.99—keeping about $10,000.00 for itself for “costs” and

“attorneys’ fees” incurred in freezing and closing Perez’s accounts and in

defending against Perez’s attempts to get her money back.5 By stipulation, the

United States was dismissed from the case.                     Perez did not respond to the

counterclaim.

       When Perez did not file a response to Wells Fargo’s counterclaim, Wells

Fargo moved under Federal Rule of Civil Procedure 12(c) for judgment on the

pleadings. In support of its motion, Wells Fargo argued that the court should deem

       5
         Before the court entered its order, Wells Fargo returned $88,770.99 to Perez but
retained $10,130.64 to cover its attorney’s fees. Because Wells Fargo concedes Perez’s
entitlement to the funds in her account, the parties agree that her claim for injunctive relief is
now moot.
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admitted all of its allegations in the counterclaim since Perez had not filed a timely

response to the pleading.      Once deemed admitted, Wells Fargo asserted, the

allegations in the counterclaim established that Perez’s claim for wrongful closure

of her accounts and withholding of her funds necessarily failed as a matter of law.

Wells Fargo reasoned that, under the deemed-admitted allegations of the

counterclaim, the contract governing Perez’s accounts entitled Wells Fargo to

freeze Perez’s accounts since, in Wells Fargo’s view, Perez had used her accounts

for MSB activity, and her accounts were not approved for that purpose.

      Perez timely filed a response to Wells Fargo’s motion for a Rule 12(c)

judgment on the pleadings and requested leave to file an out-of-time answer to the

counterclaim. Although no default had been entered against Perez, she argued that

not permitting her to respond out of time and instead deeming the allegations of the

counterclaim admitted in ruling on the motion for judgment on the pleadings

would be tantamount to entering a default against her.

      So Perez urged the court to invoke Rule 55 and asserted that good cause

existed to allow her to file an answer. Perez averred that her failure to answer was

neither willful nor culpable but rather resulted from her attorney’s mistake. As

Perez explained the circumstances, she originally had filed her action in Georgia

state court, where her attorneys were accustomed to practicing, and Georgia does

not require the filing of an answer to a counterclaim. Perez also contended that she


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sought leave to file her response soon after the error was brought to her attention

and that Wells Fargo would suffer no prejudice by allowing her to answer. In

addition, Perez urged that, even in the absence of a response to the counterclaim,

her complaint contained sufficient facts to rebut Wells Fargo’s allegations. Perez

also separately filed a motion for leave to amend her complaint, seeking relief

specifically for breach of contract, conversion, and negligence.

      The district court denied Perez’s motion to file an answer to the

counterclaim.     Applying Rule 6(b)(1)(B)’s “excusable neglect” standard, the

district court concluded that even if Perez had not acted culpably and Wells Fargo

faced little prejudice if Perez were provided with an opportunity to respond, Perez

nonetheless had failed to show excusable neglect because her attorney’s proffered

reason for the delay in filing was insufficient to relieve Perez of the consequences

of the missed deadline.

      Then, because Perez had not timely filed a response to the counterclaim, the

district court deemed admitted the allegations in the counterclaim and relied on

them in evaluating Wells Fargo’s motion for judgment on the pleadings. The

district court determined that Wells Fargo was entitled to judgment as a matter of

law on its counterclaim because, under the deemed-admitted allegations of the

counterclaim, the Business Account Agreement, as characterized by Wells Fargo

in its counterclaim, authorized Wells Fargo to close Perez’s accounts and freeze


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the monies within them. The district court did not consider the language of the

actual Business Account Agreement.

      With respect to Perez’s complaint, the district court again invoked the

counterclaim’s deemed-admitted characterization of the Business Account

Agreement as having authorized Wells Fargo’s actions in closing Perez’s accounts

to find that Perez could not plausibly argue—as her complaint alleged—that Wells

Fargo’s actions were wrongful or unlawful.       As a result, the district court also

determined that Wells Fargo was entitled to judgment on the pleadings on Perez’s

complaint.

      Additionally, the district court denied Perez’s motion to amend. Relying for

the third time on the deemed-admitted counterclaim characterization of the

Business Account Agreement as having authorized Wells Fargo to freeze the funds

in Perez’s accounts, the court concluded that no amendment of the complaint could

enable Perez to establish that Wells Fargo’s actions were wrongful. Therefore, the

court determined that any amendment of the complaint would be futile.

      The district court then directed Wells Fargo to file an affidavit detailing the

attorney’s fees and expenses it had incurred. In ruling on the issue of attorney’s

fees, the district court did not permit Perez to argue Wells Fargo’s entitlement to

fees. Rather, relying on the fact that the Business Account Agreement contains an

attorney’s fees provision, it determined that Wells Fargo could recover its litigation


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expenses. The district court focused on only the amount that Wells Fargo was

allegedly owed under the Business Account Agreement. After determining the

applicable rates and hours worked, the district court found that Wells Fargo was

entitled to $9,955.00 in fees and costs and ordered Wells Fargo to return $175.64

to Perez.

                                          II.

      In this appeal, Perez raises three issues: (1) whether Wells Fargo’s motion

for judgment on the pleadings should have been granted, (2) whether Perez’s

motion to file an amended complaint should have been denied on futility grounds,

and (3) whether the district court’s award of attorney’s fees was proper. We

address each question in turn.

A. Wells Fargo’s Motion for Judgment on the Pleadings

      We review de novo an order granting judgment on the pleadings. Cannon v.

City of W. Palm Beach, 

, 1301 (11th Cir. 2001). “Judgment on the

pleadings is appropriate where there are no material facts in dispute and the

moving party is entitled to judgment as a matter of law.” 

whether a party is entitled to judgment on the pleadings, we accept as true all

material facts alleged in the non-moving party’s pleading, and we view those facts

in the light most favorable to the non-moving party. See Hawthorne v. Mac

Adjustment, Inc., 

, 1370 (11th Cir. 1998). If a comparison of the


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averments in the competing pleadings reveals a material dispute of fact, judgment

on the pleadings must be denied. See Stanton v. Larsh, 

, 106 (5th Cir.

1956). 6

       In considering Wells Fargo’s motion for judgment on the pleadings, the

district court first denied Perez’s motion to file an out-of-time answer to Wells

Fargo’s counterclaim because it concluded that Perez had failed to establish

“excusable neglect” for not timely filing her answer. As a result, no answer to

Wells Fargo’s counterclaim existed, so the district court deemed admitted all of the

allegations in Wells Fargo’s counterclaim when it considered Wells Fargo’s

motion for judgment on the pleadings.

       This was error for two reasons: First, by taking as true all of the allegations

in the counterclaim for purposes of considering the motion for judgment on the

pleadings as it pertained to the counterclaim, the district court essentially

conducted the analysis for determining whether a motion for default judgment

should be granted after the clerk of court has entered a default under Rule 55. So it

was necessary to evaluate whether Perez could file an out-of-time answer under

Rule 55(c)’s standard for setting aside the clerk of court’s default. Second, even if

Wells Fargo’s motion could have been properly considered as a motion for


       6
         Opinions of the Fifth Circuit issued prior to October 1, 1981, are binding precedent in
the Eleventh Circuit. Bonner v. City of Prichard, 

, 1209 (11th Cir. 1981) (en
banc).
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judgment on the pleadings, Wells Fargo’s characterization of the Business Account

Agreement as having fully authorized Wells Fargo’s actions and its entitlement to

attorney’s fees and costs, which drove the entry of judgment on the pleadings for

Wells Fargo, was a legal conclusion not amenable to being deemed admitted. We

discuss each issue in turn.

                                          1.

      Once the district court denied Perez’s motion to file an answer to the

counterclaim out of time and accordingly deemed admitted the allegations in the

counterclaim, the court essentially conducted the analysis applicable on a motion

for default judgment following the entry of a clerk’s default under Rule 55, not the

analysis applicable on a motion for judgment on the pleadings. A comparison of

the rule governing a motion for default judgment with the rule pertaining to a

motion for judgment on the pleadings shows why this is so.

      Rule 55, governing “Default; Default Judgment,” applies specifically to

situations where the defendant or counter-defendant has failed to answer.

Subsection (a) provides, “[w]hen a party against whom a judgment for affirmative

relief is sought has failed to plead or otherwise defend, and that failure is shown by

affidavit or otherwise, the clerk must enter the party’s default.” Fed. R. Civ. P.

55(a). “Rule 55 . . . appl[ies] . . . where only the first step has been taken—i.e., the

filing of a complaint—[because] the court thus has only allegations and no


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evidence before it.” D.H. Blair & Co. v. Gottdiener, 

, 107 (2d Cir.

2006) (internal citation omitted). As the Second Circuit has explained, “Rule 55

tracks the ancient common law axiom that a default is an admission of all well-

pleaded allegations against the defaulting party.”      

internal

quotation marks omitted).

      Federal Rule of Civil Procedure 12(c), “Motion for Judgment on the

Pleadings,” on the other hand, provides “a means of disposing of cases when . . . a

judgment on the merits can be achieved by focusing on the content of the

competing pleadings . . . .” 5C Charles Alan Wright & Arthur R. Miller, Federal

Practice and Procedure § 1367 (3d ed. 2004) (emphasis added). When only a

single pleading has been filed, “competing pleadings” do not exist, so a motion for

judgment on the pleadings is not appropriate. Cf. 

n.10 (compiling case

law demonstrating that judgment on the pleadings is proper after the defendant has

answered).

      Rule 12(c) incorporates this principle by permitting motions for judgment on

the pleadings only after the pleadings have “closed”: “After the pleadings are

closed—but early enough not to delay trial—a party may move for judgment on

the pleadings.” Fed. R. Civ. P. 12(c). So here we must determine whether the

pleadings were closed at the time that Wells Fargo sought judgment on the

pleadings.


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      Rule 7(a), in turn, governs pleadings and sets forth a limited list of

permissible pleadings: “Only these pleadings are allowed: “(1) a complaint; (2) an

answer to a complaint; (3) an answer to a counterclaim designated as a

counterclaim; (4) an answer to a crossclaim; (5) a third-party complaint; (6) an

answer to a third-party complaint; and (7) if the court orders one, a reply to an

answer.” Fed. R. Civ. P. 7(a). The rule’s express provision for an answer to a

counterclaim anticipates that the pleadings do not “close” until an answer has been

filed by the counter-defendant (unless the court orders a reply to the answer). See

Flora v. Home Fed. Sav. & Loan Ass’n, 

, 211 n.4 (7th Cir. 1982)

(“Fed. R. Civ. P. 7(a) prescribes when the pleadings are closed. In a case such as

this when, in addition to an answer, a counterclaim is pleaded, the pleadings are

closed when the plaintiff serves his reply.”) (citing 2A Moore’s Federal Practice ¶

12.15 (2d ed. 1982)); see also Doe v. United States, 

, 1061 (9th Cir.

2005) (“[T]he pleadings are closed [under Rule 7(a)] for the purposes of Rule 12(c)

once a complaint and answer have been filed, assuming . . . that no counterclaim or

cross-claim is made.”) (citing Fed. R. Civ. P. 12(c); 5C Wright & Miller, § 1367;

n.4)); 5 Wright & Miller, § 1184 at 24 n.1 (compiling case

law that supports this proposition); see 5A Wright & Miller, § 1189 at 41; 5C

Wright & Miller, § 1367 at 213.




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      The rationale underlying Rule 12(c) further supports this notion: that

competing pleadings pertinent to the counterclaim be available for the court to

consider on a motion for judgment on the pleadings. See Sovereign Bank v.

Sturgis, 

, 80 (D. Mass. 2012) (“In the instant case,

counterclaims have been filed but [the plaintiff-counter-defendant] has not yet

responded to them, so the pleadings are not yet closed.”). Indeed, the name of

Rule 12(c), which incorporates the plural of “pleading”—“Motion for Judgment on

the Pleadings,” Fed. R. Civ. P. 12(c) (emphasis added)—along with the use of the

plural “pleadings” as opposed to the singular “pleading” throughout the rule,

supports the idea that judgment on the pleadings is inappropriate when only a

single pleading related to a claim (whether alleged in a complaint or counterclaim)

has been filed.

      In short, Rule 55(a) authorizing default judgments dovetails with Rule 12(c)

allowing for judgments on the pleadings. When a defendant fails to answer, Rule

12(c) precludes a judgment on the pleadings because the pleadings have not yet

closed, and competing pleadings do not exist. But the plaintiff is not left to twist in

the wind; rather, Rule 55(a) mandates the entry of default so that “the adversary

process [will not be] halted because of an essentially unresponsive party.” H.F.

Livermore Corp. v. Aktiengesellschaft Gebruder Loepfe, 

, 691 (D.C.

Cir. 1970) (per curiam). Rule 55(a)—and not Rule 12(c)—protects the diligent


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party. 

see 5C Wright & Miller, § 1367 at 214 (“Since the plaintiff

cannot move under Rule 12(c) until [the pleadings close], the proper course for the

plaintiff in a case in which the defendant fails to answer is to move for a default

judgment under Rule 55 rather than seek a judgment on the pleadings.”).

       Here, under the plain language of Rule 55(a), had Wells Fargo sought a

clerk’s default as it should have since Perez had not filed an answer to the

counterclaim, the district-court clerk would have been required to enter default

against Perez because (1) Wells Fargo’s motion sought a judgment for affirmative

relief; (2) Perez failed to plead or otherwise defend against Wells Fargo’s

counterclaim; and (3) that failure was shown by Wells Fargo’s motion. Wells

Fargo’s decision not to seek the entry of a clerk’s default did not somehow alter the

fact that Perez was nonetheless in default on the counterclaim. “[A] defendant

who fails to answer within the time specified by the rules is in default even if that

fact is not officially noted.” 10A Wright & Miller, § 2692 at 85. So “a motion for

relief under Rule 55(c) [setting aside a default] is appropriate . . . even [when]

there has not been a formal entry of default . . . .” 

under Rule 55(c)’s “good cause” standard 7 is precisely what

Perez sought in this case, even though no default had formally been entered. The


       7
         Rule 55(c) provides that a court “may set aside an entry of default for good cause . . . .”
Fed. R. Civ. P. 55(c). We have previously noted that “‘[g]ood cause’ is a mutable standard,
varying from situation to situation.” Compania Interamericana Export-Import, S.A. v. Compania
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district court, however, declined to apply Rule 55(c) and instead applied Rule

6(b)(1)(B)’s “excusable neglect standard” 8 because Wells Fargo had not “requested

entry of default (or . . . an entry of default judgment).”                   But Wells Fargo’s

characterization of its motion as a motion for judgment on the pleadings did not

somehow change the nature of the relief that Wells Fargo actually sought—

effectively, a default judgment. A motion for entry of default judgment is a motion

for entry of default judgment, regardless of what it is called. So Perez was entitled

to have her motion to file an out-of-time answer to the counterclaim considered

under the “good cause” standard applicable to setting aside a default rather than

under the “more rigorous,” “excusable neglect” standard. See E.E.O.C. v. Mike




Dominicana de Aviacion, 

, 951 (11th Cir. 1996) (citation omitted). While the
standard must be construed to have substance, we have nonetheless described it as a “liberal
one.” 

As we have explained, “‘good cause’ is not susceptible to a precise
formula . . . .” 

evaluate various factors that may be applicable in a given case.
See 

courts generally consider whether the default was culpable or willful,
whether setting it aside would prejudice the non-moving party, and whether the defaulting party
may have a meritorious defense. 

the circumstances, courts have also
considered factors such as “whether the public interest was implicated, whether there was
significant financial loss to the defaulting party, and whether the defaulting party acted promptly
to correct the default.” 

On the other hand, where a party demonstrates an
intentional or willful disregard of the judicial proceedings, good cause to set aside the default
does not exist. 

       8
          Rule 6(b)(1)(B) applies generally, when a more precise rule does not govern the
situation. See Fed. R. Civ. P. 6(b)(1)(B) (“Extending Time. (1) In General. When an act may
or must be done within a specified time, the court may, for good cause, extend the time: . . . (B)
on motion made after the time has expired if the party failed to act because of excusable
neglect.”) (bold and italics in original, underline added). Rule 55(c), however, which speaks
directly to the particular issue of setting aside defaults, applies instead of Rule 6(b)(1)(B) where
a party seeks to set aside a default.
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Smith Pontiac GMC, Inc., 

, 528 (11th Cir. 1990) (noting that the

“excusable neglect” standard is “more rigorous” than the “good cause” standard).

       Applying Rule 55(c)’s “good cause” standard to Perez’s motion, as opposed

to Rule 6(b)(1)(B)’s more exacting “excusable neglect” standard, also squares with

our decision in Betty K Agencies, Ltd. v. M/V MONADA, 

(11th Cir.

2005), where we held that a failure to answer a counterclaim should not, by itself,

“justify the draconian remedy of dismissal with prejudice.” 

Although

Betty K involved the district court’s sua sponte dismissal of the counter-plaintiff’s

complaint under Rule 41, the rationale grounding the analysis in Betty K applies

here with equal force.

       In Betty K, this Court analyzed the effect of a counter-defendant’s failure to

answer a counterclaim. 9 We reasoned that the failure to respond to a counterclaim

did not warrant a dismissal with prejudice where the counter-defendant’s failure to

answer was not “willful or contumacious.” See 

We also opined that

dismissal with prejudice is “plainly improper unless and until the district court

finds a clear record of delay or willful conduct and that lesser sanctions are

inadequate to correct such conduct.” 

took account of the fact that


       9
         The counter-defendant maintained that it served the counter-plaintiff’s counsel with its
answer by hand. 

The counter-plaintiff’s counsel denied this contention. 

was undisputed that the counter-defendant did not file its answer to the
counterclaim with the clerk of court. 

analysis, this Court proceeded under the
assumption that the counter-defendant had “wholly failed” to respond to the counterclaim, just as
Perez wholly failed to answer Wells Fargo’s counterclaim here. See 

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the record did not suggest that the counter-defendant, “rather than its attorney, was

in any way responsible for [the] failure to answer the counterclaim.” 

We concluded this section of our analysis by noting that “failure to file a pleading

is generally corrected by an order to compel filing.” 

Wright &

Miller, § 1152) (internal quotation marks omitted).

      Here, Perez’s conduct did not appear to be “willful or contumacious.” Soon

after learning of her failure to file an answer to Wells Fargo’s counterclaim, she

filed her motion to file an out-of-time answer. Additionally, the record lacks

evidence suggesting a pattern of delay or willful conduct by Perez. Despite her

failure to answer, Perez had been actively litigating her case. She and Wells Fargo

submitted their joint discovery report shortly before Wells Fargo filed its motion,

and Perez had already propounded written discovery. Finally, as in Betty K, the

record suggests that Perez’s attorney, and not Perez herself, was responsible for the

failure to answer the counterclaim.

      We do not suggest that we excuse Perez’s failure to file an answer to the

counterclaim. Attorneys who practice in federal court are responsible for knowing

the rules governing the practice. But a party’s claims should not be subjected to

default under a standard higher than that applicable to default. And we have long

expressed our “strong policy of determining cases on their merits” when




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reasonably possible. Fla. Physician’s Ins. Co., Inc. v. Ehlers, 

, 783

(11th Cir. 1993) (per curiam).

       In sum, then, Perez defaulted on Wells Fargo’s counterclaim when she failed

to file a timely answer. So her request for leave to file an out-of-time answer to

Wells Fargo’s counterclaim should have been analyzed as a motion to set aside an

entry of default under the more forgiving Rule 55(c) standard as opposed to the

more exacting Rule 6(b)(1)(B) standard. And, because Perez’s failure to respond

to Wells Fargo’s counterclaim meant that the pleadings had not yet closed, 10 the

district court’s evaluation of Wells Fargo’s motion for judgment on the pleadings

was premature. For these reasons, we reverse the district court’s order granting

Wells Fargo’s motion for judgment on the pleadings and remand so that the court

can consider Perez’s motion under Rule 55(c).



       10
           Nor were the pleadings closed with respect to Perez’s complaint, since Wells Fargo
had filed a counterclaim and Perez had not filed an answer to the counterclaim. Because the
counterclaim related to the same subject matter as Perez’s complaint, and a ruling on the
complaint would necessarily create law of the case for purposes of the issues raised in the
counterclaim, it would make little sense to decide the claims at issue in the complaint without
simultaneously considering the claims at issue in the counterclaim. Apparently, for this reason,
where a counterclaim is filed, the pleadings are not closed until a response to the counterclaim is
filed. 5C Wright & Miller, § 1367 (“Rule 7(a) [] provides that the pleadings are closed upon the
filing of a complaint and an answer . . . , unless a counterclaim . . . is interposed, in which event
the filing of a reply to a counterclaim . . . normally will mark the close of the pleadings.”)
(emphasis added). Since the pleadings as they related to Perez’s complaint were not closed, the
motion for judgment on the pleadings was premature under Rule 12(c). Fed. R. Civ. P. 12(c)
(“After the pleadings are closed . . . a party may move for judgment on the pleadings.”)
(emphasis added); cf. 

(holding that the plaintiff’s motion for judgment on
the pleadings was premature and should have been denied because it was filed before the
defendant filed an answer).
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                                                 2.

       Even if Wells Fargo’s motion could have been properly considered as a

motion for judgment on the pleadings, it should have been denied. Although a

defaulted defendant is deemed to have admitted the movant’s well-pleaded

allegations of fact, she is not charged with having admitted “facts that are not well-

pleaded or . . . conclusions of law.” Cotton v. Mass. Mut. Life Ins. Co., 

, 1278 (11th Cir. 2005) (citations omitted) (quoting Nishimatsu Constr. Co. v.

Houston Nat’l Bank, 

, 1206 (5th Cir. 1975)).

       Here, Wells Fargo alleged that it was “authorized by the applicable

[Business Account Agreement] governing [Perez’s] relationship with Wells Fargo”

to close Perez’s accounts and freeze Perez’s funds. But under Georgia law, which

governs the contract at issue here, “[t]he construction of a contract is a question of

law for the court.” O.C.G.A. § 13-2-1. So whether Wells Fargo’s actions were

authorized by the contract was a legal assertion couched as a factual allegation, and

it should not have been deemed admitted. 11 This is particularly true here because

Wells Fargo’s counterclaim did not quote any part of the contract and instead


       11
           We recognize that, as Wells Fargo pointed out in its appellate brief, Perez did not raise
this issue for the first time until the case was on appeal. Normally, we would not entertain an
entirely new argument raised for the first time on appeal. Here, however, we are remanding this
case for further proceedings in the district court solely because the “good cause” standard must
be applied to determining Perez’s motion to file an out-of-time answer. So it appears that the
issue of whether Wells Fargo’s characterization of the Business Account Agreement can be
accepted as a “fact” not in dispute may well arise again. In the interests of judicial economy,
therefore, we address the issue of whether such an allegation may be accepted as a “fact.”
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merely characterized the Business Account Agreement.                       But, because the

construction of a contract is a question of law for the court, the contents of the 65-

page Agreement itself must be evaluated in determining whether Wells Fargo was

entitled to judgment as a matter of law on its motion for judgment on the

pleadings. 12

B. Perez’s Motion to Amend her Complaint

       We review de novo an order denying a plaintiff leave to amend because of

futility. Hollywood Mobile Estates Ltd. v. Seminole Tribe of Fla., 

,

1264 (11th Cir. 2011).

       Under Rule 15(a)(2), courts should freely give leave to amend the pleadings

“when justice so requires.” A court may consider several factors when deciding

whether to grant a motion to amend, including “undue delay, bad faith or dilatory

motive . . . , repeated failure to cure deficiencies by amendments previously

       12
           Wells Fargo filed the Business Account Agreement in support of its motion for
judgment on the pleadings. The district court was under the impression that it could not consider
the Business Account Agreement in ruling on the motion for judgment on the pleadings since the
Agreement was not attached to the pleadings. But, on a motion for judgment on the pleadings,
documents that are not a part of the pleadings may be considered, as long as they are central to
the claim at issue and their authenticity is undisputed. See Horsley v. Feldt, 

,
1134–35 (11th Cir. 2002) (applying the doctrine that allows documents outside the pleadings to
be considered on a motion to dismiss under Rule 12(b)(6) only when the documents are central
to the claim and undisputed to the motion-for-judgment-on-the-pleadings context under Rule
10(c)); cf. Day v. Taylor, 

, 1276 (11th Cir. 2005) (affirming the district court’s
reliance on a contract that was not attached to the parties’ complaint but was submitted by the
defendants along with their motion to dismiss under Rule 12(b)(6), because the contract was
central to the plaintiffs’ complaint, and its authenticity was not in dispute). Here, both
requirements were satisfied because the Business Account Agreement, which the counterclaim
referenced, was central to Wells Fargo’s counterclaim, and the parties did not dispute its
authenticity.
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allowed, undue prejudice to the opposing party by virtue of allowance of the

amendment, [and] futility of amendment.” Equity Lifestyle Props., Inc. v. Fla.

Mowing & Landscape Serv., Inc., 

, 1241 (11th Cir. 2009) (alteration

in original) (quoting Forman v. Davis, 

, 182, 

, 230

(1962)).

      The district court expressly concluded that Perez had not filed her motion to

amend “in bad faith or with dilatory motive,” that Wells Fargo would not be

unduly prejudiced by allowing the amendment, and that the case “[did] not involve

any repeated failures to cure deficiencies or undue delay” in seeking to amend the

complaint. Instead, the district court denied Perez’s motion to amend because it

concluded that amendment would be futile.           In particular, the district court

reasoned that, against the deemed-admitted counterclaim allegation that the

Business Account Agreement authorized Wells Fargo to close Perez’s accounts

and freeze her funds, Perez could not conceivably prevail on any claims that Wells

Fargo’s actions were wrongful.

      As we have previously explained, though, deeming admitted Wells Fargo’s

counterclaim allegation that purported to characterize the legal contents of the

Business Account Agreement without quoting it was error because, among other

reasons, the allegation constituted a legal conclusion. And under Georgia law,

“[t]he construction of a contract is a question of law for the court.” O.C.G.A. § 13-


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2-1. For this reason, the district court was required to review the actual contract at

issue in evaluating whether amendment of the complaint would necessarily be

futile.

          While we recognize that we can affirm the district court’s ruling on any

basis in the record, a review of the contract at issue does not allow us to affirm the

denial of the motion to amend on futility grounds. We express no opinion on the

strength or lack thereof of Perez’s claims but merely note that we cannot say after

review of the Business Account Agreement that any amendment of her complaint

would necessarily be futile.13            We therefore reverse the district court’s order


          13
           For example, we note that in its motion for judgment on the pleadings, Wells Fargo
quoted a portion of the Business Account Agreement. While we do not suggest that Wells Fargo
did anything improper, it could appear from the excerpt that all of the quoted material is part and
parcel of a single section of the Agreement and that that section authorizes an award of
attorney’s fees and costs for, among other things, expenses associated with the freezing of a
depositor’s accounts “when the Bank suspects that irregular, unauthorized, or unlawful activities
may be occurring in connection with [the depositor’s account] . . . .” In fact, however, a review
of the actual Agreement reveals that the part of the Agreement authorizing this particular type of
freezing of accounts arguably does not contain a provision permitting the award of attorney’s
fees and costs. Instead, the fee-and-cost provision appears in what is arguably another section of
the Agreement, which states that fees and costs may be imposed if the bank freezes accounts
because “there is a dispute over matters such as . . . the authority to withdraw funds from [the]
account.” Wells Fargo alleged that it froze Perez’s accounts because “numerous United States
Treasury checks for tax refunds were deposited into the accounts, reflecting unauthorized MSB
activity.” This averment arguably may not allege the existence of a “dispute” since other
allegations in the counterclaim demonstrate that the IRS had not made a claim (and did not for
another six weeks) to the funds in Perez’s accounts at the time that Wells Fargo closed and froze
the accounts, and the counterclaim does not allege that a “dispute” between Perez and anyone
else existed at the time that Wells Fargo closed and froze Perez’s accounts. Nor, arguably, does
it allege that Perez was improperly “withdraw[ing] funds” from the accounts. Instead, the
challenged activity may arguably fall under the provision authorizing Wells Fargo to freeze
accounts when it suspects that unlawful activities may be occurring in connection with them.
That provision, however, does not provide for an award of attorney’s fees and costs. We do not
opine on the strength of such a construction but identify it solely to illustrate the point that it is at
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denying the motion to amend and remand for further proceedings consistent with

this opinion.

C. Attorney’s Fees

       We review “an award of attorney's fees for abuse of discretion; nevertheless,

that standard of review still allows us to closely scrutinize questions of law decided

by the district court in reaching a fee award.” Villano v. City of Boynton Beach,

, 1304 (11th Cir. 2001) (citation omitted).                  Because we have

reversed the order granting judgment on the pleadings for Wells Fargo, on which

the award of attorney’s fees was based, we remand the attorney’s fees issue to the

district court for further proceedings consistent with this opinion.

                                             III.

       This Circuit expresses a “strong preference that cases be heard on the

merits,” Wahl v. McIver, 

, 1174 (11th Cir. 1985) (per curiam), and

“strive[s] to afford a litigant his or her day in court, if possible.” Betty 

. Because Wells Fargo filed what was in nature a motion for default

judgment, the court was obligated to apply the standard for setting aside a default

in determining whether Perez should have been permitted to file an out-of-time

answer. To allow the district court to conduct the analysis for setting aside a


least arguable that the Business Account Agreement may not have authorized the charging of
attorney’s fees and costs to Perez under the circumstances, so we cannot say that the Agreement
necessarily authorized Wells Fargo’s actions and that any attempt to amend the complaint would
necessarily be futile.
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default, we reverse the district court’s order denying Perez’s motion to file an out-

of-time answer with instructions for the district court to reconsider the motion,

applying Rule 55(c)’s “good cause” standard. We also reverse the district court’s

order granting judgment on the pleadings to Wells Fargo and awarding it costs and

attorney’s fees, as well the district court’s order denying Perez’s motion to file an

amended complaint. We remand the case for further proceedings consistent with

this opinion.

      REVERSED AND REMANDED.




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