MEMORANDUM OF DECISION AND ORDER ON DEFENDANT'S MOTION TO SET ASIDE DEFAULT AND FILE LATE ANSWER

LANCE E. WALKER, District Judge.

Defendant, Netherlands Insurance Company moves to set aside the default entered against it on March 23, 2018 and to file a late answer. The Plaintiff, Patricia Harnden, opposes that request. For the following reasons, the Court GRANTS Defendant's Motion to Set Aside Default and File Late Answer.

PROCEDURAL BACKGROUND

On January 10, 2018, Harnden filed a complaint against National General Insurance seeking a declaratory judgment and asserting claims for breach of contract, violation of the Maine Unfair Claims Settlement Practices Act, and violation of the Maine Unfair Trade Practices Act. Complaint (ECF No. 1). On February 6, 2018, Harnden filed her First Amended Complaint which removed National General Insurance as a defendant and named two new defendants: Netherlands Insurance Company and York Insurance Company of Maine. Amended Complaint (ECF No. 6). On March 23, 2018, Harnden moved for default against Netherlands and submitted a Proof of Service indicating that Netherlands had been served through its agent of service, Corporation Service Company ("CSC"), on February 8, 2018. Motion for Default (ECF No. 15, #45); Motion for Default, Ex. A, 2 (ECF No. 15-1, #49). When no response was received from Netherlands, a clerk's default was entered on March 23, 2018. Order Granting Motion for Entry of Default (ECF No. 16). Harnden then moved for Default Judgment on April 13, 2018, and a damages hearing was scheduled for February 11, 2019. Motion for Default Judgment (ECF No. 19); Notice of Damages Hearing (ECF No. 41).

Pursuant to this Court's order, Harnden served Netherlands with notice of the damages hearing on December 18, 2018, once again serving Netherlands through CSC. Proof of Service (ECF No. 46). On December 21, 2018, Netherlands filed the instant motion. Motion for Leave to File Late Answer (ECF No. 45). On January 3, 2019, Netherlands filed a memorandum in support of its motion asserting that it "did not receive notice of the complaint or the instant action when CSC was originally served." Memorandum in Support of Defendant's Motion ("Motion Memo"), 2 (ECF No. 48, #115).

DISCUSSION

Under Federal Rule of Civil Procedure 55(a), the clerk must enter default against a party who has "failed to plead or otherwise defend." However, in cases where "good cause" is shown, the Court may set aside the entry of default. Fed. R. Civ. P. 55(c).

The phrase "good cause" is construed liberally1 and Courts are not required to adhere to a rigid or "mechanical formula" when considering whether good cause exists. In re Game Tracker, Inc., 746 F.Supp.2d 207, 217 (D. Me. 2010). In this determination, courts are permitted to consider a variety of relevant factors, which often include: "(1) whether the default was willful, (2) whether setting it aside would prejudice the adversary, (3) whether the defaulting party presents a meritorious defense, (4) the explanation for the default, (5) the good faith of the parties, (6) the amount of money involved, and (7) the timing of the motion." Lucerne Farms v. Baling Techs., Inc., 208 F.R.D. 463, 465 (D. Me. 2002) (citing Coon v. Grenier, 867 F.2d 73, 76 (1st Cir. 1989)). As the overriding philosophy of the federal rules is that "actions should ordinarily be resolved on their merits," I must "resolve doubts in favor of a party seeking relief from the entry of a default." Coon, 867 F.2d at 76 (citations omitted).

I. JUSTIFICATION FOR DEFAULT

Three of the "good cause" factors—namely the proffered explanation for default, whether the default was "willful," and whether the defaulting party acted in "good faith"— concern whether Netherlands has offered an adequate "justification for its default" and I will consider them together. See Lucerne Farms, 208 F.R.D. at 465.

In its motion, Netherlands asserts it was not aware of the instant lawsuit until it received notice of the damages hearing on December 18, 2018. Netherlands explains:

Motion Memo, 2 (ECF No. 48, #115) (record citations omitted). These assertions are supported by affidavits of representatives from CSC3 as well as Liberty Mutual Group, Inc.4 Affidavit of Caitlin Alaburda (ECF No. 48-1, #121), Affidavit of Janet Nolan (ECF No. 48-4, #151). Harnden denies Netherlands' "specious argument," instead asserting that "the proofs of service clearly indicate that each Defendant was served with separate process of the Amended Complaint." Plaintiff's Objection, 4 (ECF No. 55, #247).

Resolving doubts in favor of the movant, Netherland's proffered explanation provides "reasonable justification" for their initial lack of response. Snyder v. Talbot, 836 F.Supp. 26, 29 (D. Me. 1993) (citing Coon, 867 F.2d at 76). The circumstances leading to Netherlands' failure to respond—specifically CSC's failure to provide any form of notice to Netherlands pursuant to its internal protocols—were "out of [Netherlands'] control." Winslow Marine, Inc. v. J. Supor & Son Trucking & Rigging, Inc., 2016 WL 7235670, at *2 (D. Me. Dec. 14, 2016) (granting a motion to vacate default judgment when a corporation received no notice of the suit filed against them due to their "inadvertent oversight" of failing to update their corporate address with their registered agent).

Without notice of the lawsuit, Netherlands' default can hardly be considered `willful' or to "show contempt for the court's procedures or an effort to evade the court's authority." Lucerne, 208 F.R.D. at 466. Furthermore, the record lacks allegations or indications of bad faith. In my view, the facts as asserted lead to the opposite conclusion— by responding once it was aware of Harnden's claims, Netherlands acted in good faith and exhibited a willingness to participate fully in the ongoing legal process.

II. MERITORIOUS DEFENSE

In order to allege a meritorious defense, "a party seeking relief from entry of default must present more than general denials or conclusory statements." Curtin v. Proskauer, Rose Goetz & Mendelsohn Grp. Long Term Disability Plan, 2002 WL 273300, at *3 (D. Me. Feb. 27, 2002) (citing Maine Nat'l Bank v. F/V Cecily B, 116 F.R.D. 66, 69 (D. Me.1987)). Courts set aside an entry of default when "it appears that the defaulting party might prevail if the case were allowed to proceed" or, in other words, when a party's assertions "plausibly suggest the existence of facts which, if proven at trial, would constitute a cognizable defense." Lucerne Farms, 208 F.R.D. at 466 (quoting Coon, 867 F.2d at 77).

Netherlands asserts that under the terms of the insurance policies at issue, "Netherlands is entitled to the full amount of the offset, which in practice serves to eliminate any responsibility of Netherlands to pay Plaintiff."5 Motion Memo, 4 (ECF No. 48, #117). To support their argument, Netherlands cites to the record6 as well as established caselaw.7 Harnden contests Netherlands entitlement to an offset and counters that the Court cannot evaluate Netherlands claims because Netherlands has not provided a copy of the York policy. Plaintiff's Objection, 5-6 (ECF No. 55, #248-49).

Without predicting the outcome of this case, it is clear Netherlands has provided specific denials to liability and has "plausibly suggest[ed] the existence of facts which, if proven at trial, would constitute a cognizable defense"—the fundamental requirements of a meritorious defense. Coon, 867 F.2d at 77; see also Phillips v. Weiner, 103 F.R.D. 177, 181 (D. Me. 1984) (relying on the moving party's assertions and finding that "neither further factual inquiry nor review of state law is necessary in order to reach the conclusion that the proffered defenses have merit for pleading purposes").

III. PREJUDICE TO PLAINTIFF

Harnden makes two primary arguments regarding the prejudice she would suffer if the default were lifted. First, she asserts that "[w]hen a defendant is late filing an answer for months or years, prejudice should be presumed." Second, she argues that because she "relied on the existing state of affairs" when settling with York Insurance—primarily, the assumption that "[t]here was up to $100,000 in coverage available from Netherlands"— her ability to litigate her claim has been impaired. Plaintiff's Objection, 7 (ECF No. 55, #250).

Harnden's first claim of prejudice clearly fails. It is well established that "prejudice cannot be inferred merely from the passage of time." Snyder v. Talbot, 836 F.Supp. 26, 30 (D. Me. 1993).

Likewise, Harnden's second claim of prejudice is insufficient. While it is true that "[p]rejudice exists if circumstances have changed since entry of the default such that plaintiffs' ability to litigate their claims is now impaired in some material way or if relevant evidence has become lost or unavailable," the record in this case is devoid of facts indicating that Harnden's ability to litigate her claims will actually be impaired. In re Game Tracker, Inc., 746 F. Supp. 2d at 218 (citations and alterations omitted). Traditionally, courts look to factors such as "whether `witnesses have died,' `memories have dimmed beyond refreshment,' a `discovery scheme has been thwarted,' or `evidence has been lost' during the time that elapsed from a party's default" to determine if a party will be prejudiced—none of which are alleged in this case. Snyder, 836 F. Supp. at 30 (citing Coon, 867 F.2d at 77); see also In re Game Tracker, Inc., 746 F. Supp. 2d at 218 (indicating a plaintiff would be prejudiced because "six years ha[d] passed since default was entered" and the plaintiff would be forced to shoulder the "additional burden of finding new witnesses").

Despite her heated assertions to the contrary, Harnden will not be prejudiced if the default is set aside. When she settled with York, Harnden "took a chance" that the default would not be set aside. See Winslow Marine, Inc., 2016 WL 7235670, at *3 (finding no prejudice to the third-party plaintiff even though the third-party plaintiff relied on the assumption that the third-party defendant's default would allow it to recover some of the funds it owed to the plaintiff when it entered into a settlement agreement). The fact that this risk did not pan out in Harnden's favor does not form the basis of prejudice. Id. By setting aside the default, Harnden will be obligated to litigate her claim against Netherlands—a burden no greater than what was required of her when she filed her lawsuit.

CONCLUSION

After consideration of the "good cause" factors and in light of the emphasis placed on deciding disputes on their merits, I find Netherlands has made a showing of "good cause" that justifies setting aside the entry of default. Accordingly, I GRANT Netherlands' Motion to Set Aside Default and File a Late Answer (ECF No. 45), thereby mooting Plaintiff's Motion to Continue Damages Hearing (ECF No. 54).

SO ORDERED.