NORMAN K. MOON, District Judge.
This matter is before the Court on a motion for default judgment filed by Plaintiff Michael Hummel. On May 2, 2011, Plaintiff filed his complaint, asserting a variety of claims against Defendant David Hall, all of which relate to Defendant's sale of a vehicle to Plaintiff. On July 6, 2011, Defendant was personally served with the summons at his business, Country Motor Sales, which is a used car dealership in Lynchburg, Virginia. The summons warned Defendant that if he did not respond to the complaint's allegations within twenty-one days, judgment by default would be entered against him for the relief demanded by Plaintiff in the complaint.
After failing to appear, plead, or otherwise defend against the action, Defendant's default was entered by the Clerk of the Court on August 31, 2011. A certified copy of the Clerk's entry of default was mailed to Defendant. Subsequently, on March 13, 2012, Plaintiff filed the instant motion for default judgment and mailed a copy to Defendant. Defendant did not respond to the motion, and he did not appear at the hearing I conducted on Plaintiffs motion on May 24, 2012. To date, Defendant has still not entered an appearance in this matter. For the reasons that follow, I will grant Plaintiffs motion for default judgment.
As alleged in the complaint, the facts of this case are as follows. In July 2010, Plaintiff purchased a 1991 Honda Accord from Country Motor Sales. However, in August 2010, the car broke down. Plaintiff contacted Defendant to inform him
In October 2010, Plaintiff began making monthly payments in the amount of $250, purportedly as the parties had discussed. Plaintiff alleges that Country Motor Sales retained the car's title and placed a lien on it with the Virginia Department of Motor Vehicles. At some unspecified point in time, Plaintiff looked at the receipts that he had received from Defendant and noticed that the total balance owed was listed as $6,000. Thereafter, Plaintiff began inquiring about the reason for the high balance. On December 2, 2010, Defendant gave Plaintiff the yellow carbon copy of a retail installment sales contract ("RISC") bearing only the signature of Defendant and a date of September 10, 2010. Plaintiff maintains that prior to December 2, 2010, he had never seen the RISC. According to Plaintiff, Defendant was charging 28% annual interest on the purchase of the car. Between October 2010 and September 2011, Plaintiff paid a total of $3,000 to Defendant for the car.
On the basis of the foregoing facts, Plaintiff asserts that Defendant failed to provide requisite disclosures in violation of the Truth in Lending Act ("TILA"), 15 U.S.C. § 1601 et seq., and that Defendant charged a usurious interest rate in violation of Virginia law. Plaintiff seeks $5,070.23 in damages as well as an order declaring Defendant's security interest in the car invalid. Finally, Plaintiff requests an order commanding Defendant to release the lien on the title to the vehicle, to give the title back to Plaintiff, and to return any keys to the vehicle that Defendant is holding.
"Rule 55 of the Federal Rules of Civil Procedure authorizes the entry of a default judgment when a defendant fails `to plead or otherwise defend' in accordance with the Rules." United States v. Moradi, 673 F.2d 725, 727 (4th Cir.1982). The Clerk of the Court's interlocutory entry of default pursuant to Federal Rule of Civil Procedure 55(a) provides notice to the defaulting party prior to the entry of default judgment by the court. Carbon Fuel Co. v. USX Corp., 1998 WL 480809, at *2 (4th Cir. Aug. 6, 1998). After the entry of default, the non-defaulting party may move the court for default judgment under Rule 55(b) of the Federal Rules of Civil Procedure. Id. "If the plaintiffs claim is for a sum certain or a sum that can be made certain by computation, the clerk — on the plaintiffs request, with an affidavit showing the amount due — must enter judgment for that amount and costs against a defendant who has been defaulted for not appearing...." Fed.R.Civ.P. 55(b)(1). However, when, as here, the sum is not certain, default judgment can only be made by the court. Fed.R.Civ.P. 55(b)(2); Agri-Supply Co. v. Agrisupply.Com, 457 F.Supp.2d 660, 662 (E.D.Va. 2006).
Upon default, the plaintiff's factual allegations are accepted as true for all purposes, excluding the determination of damages. See Ryan v. Homecomings Fin.
Faulknier v. Heritage Fin. Corp., 1991 U.S. Dist. LEXIS 15748, at *11-12 (W.D.Va. May 20, 1991) (citing 10 C. Wright, A. Miller & M. Kane, Federal Practice and Procedure §§ 2684-85 (1990)).
As I previously noted, Defendant has completely failed to participate in this litigation. The grounds offered by Plaintiff for the entry of default judgment are clearly established, and Defendant's failure to defend this action does not appear to be the result of excusable neglect or any good-faith mistake on his part. The grounds for Plaintiff's motion are not highly technical, and it is clear that Plaintiff has been prejudiced by Defendant's actions. Although the amount of money involved in this litigation is not inconsequential, it is certainly not so large as to be remarkable. Because of these factors, and in light of Defendant's disregard of Plaintiff's claims, default judgment in Plaintiff's favor is warranted. Accordingly, I proceed to an analysis of Plaintiffs entitlement to the various forms of relief he seeks.
While Plaintiff's factual averments must be accepted as true, his assessment of the damages to which he is entitled need not be. As stated in his motion for default judgment, Plaintiff seeks $5,070.23 in total damages, including $2,000 in statutory damages under TILA and $3,070.23 in damages under Virginia usury law. I will examine these claims in turn.
Congress enacted TILA in order to promote the informed use of credit. 15 U.S.C. § 1601(a). Indeed, the purpose of TILA is:
Id. As a means of effectuating these ends, TILA requires creditors who engage in closed-end consumer credit transactions to
In the case at hand, Plaintiff alleges that Defendant failed to disclose the amount financed, 15 U.S.C. § 1638(a)(2)(A), the finance charge, id. § 1638(a)(3), the annual percentage rate, id. § 1638(a)(4), the total of payments, id. § 1638(a)(5), the payment schedule, id. § 1638(a)(6), and any applicable late fee, id. § 1638(a)(10).
A creditor who fails to comply with certain requirements imposed by 15 U.S.C. § 1638 is, in an individual action, liable for "twice the amount of any finance charge in connection with the transaction." 15 U.S.C. § 1640(a)(2)(A)(i). However, the Supreme Court of the United States has held that the cap on statutory damages found in 15 U.S.C. § 1640(a)(2)(A)(ii) applies to recoveries under § 1640(a)(2)(A)(i). Koons Buick Pontiac GMC, Inc. v. Nigh, 543 U.S. 50, 59-60, 125 S.Ct. 460, 160 L.Ed.2d 389 (2004). The central issue with respect to Plaintiff's claim for damages under TILA is whether the applicable cap is $1,000 or $2,000.
In 2010, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"), Pub. L. No. 111-203, 124 Stat. 1376 (2010). In Title XIV of the Act, which is known as the Mortgage Reform and Anti-Predatory Lending Act, Congress, inter alia, increased the ceiling in TILA's civil liability
However, Plaintiff's entitlement to this damages amount depends on what date the aforementioned increase is considered to have taken effect. Plaintiff asserts that the increase in TILA's civil liability provision took effect on July 22, 2010, and thus before Plaintiffs purchase of the 1992 Honda Accord in September 2010. This issue — that is, deciphering the date on which the increase in TILA's statutory damages cap became (or becomes) effective — appears to be one of first impression. Indeed, it has not been addressed by any of the courts within the Fourth Circuit, and appears not to have been squarely confronted by any courts, nationwide.
Section 4 of the Dodd-Frank Act states: "Except as otherwise specifically provided in this Act or the amendments made by this Act, this Act and such amendments shall take effect 1 day after the date of enactment of this Act." § 4, 124 Stat. at 1390. The Dodd-Frank Act was enacted when it was signed by President Obama on July 21, 2010. Thus, except as otherwise specifically provided, the effective date for the Dodd-Frank Act is July 22, 2010. Correspondingly, the only way that the increase in TILA's civil liability cap would have a different effective date would be if Congress provided one elsewhere in the Act.
Title XIV of the Dodd-Frank Act begins with section 1400, which, in pertinent part, states:
§ 1400(c), 124 Stat. at 2136. Under the Dodd-Frank Act, "transfer date" means the date established under section 311, see § 2(17), 124 Stat. at 1390, and section 311 states that unless otherwise provided, the transfer date means "the date that is 1 year after the date of enactment of this Act," § 311(a), 124 Stat. at 1520. Therefore, the designated transfer date is July 21, 2011, see Designated Transfer Date, 75 Fed.Reg. 57252 (Sept. 20, 2010), and the delayed effective date referenced above in section 1400(c)(3) is eighteen months later on January 21, 2013. The question becomes
As I previously mentioned, this precise question does not appear to have been resolved by any other courts to date. However, I am not writing on a completely blank slate. Of particular relevance to the question presented by the instant matter is the district court's opinion in Williams v. Wells Fargo Bank N.A., No. 11-21233-CIV, 2011 WL 4368980 (S.D.Fla. Sept. 19, 2011). In Williams, the plaintiffs brought suit against Wells Fargo for violating section 2605(m) of the Real Estate Settlement and Procedure Act ("RESPA"), 12 U.S.C. § 2601 et seq. Id. at *4. Section 2605(m), which was enacted by section 1463 of the Dodd-Frank Act, relates to charges imposed in connection with force-placed insurance. Id. at *4-5. The plaintiffs contended that the amendments to RESPA enacted by section 1463, including section 2605(m), were governed by the "effective date" of the Dodd-Frank Act itself, and therefore became effective on July 22, 2010. Id. In so arguing, the plaintiff in Williams, like Plaintiff in the case at hand, maintained that section 1400(c) only applies to those sections within Title XIV that call for the promulgation of implementing regulations. Id. at *5. And because section 2605(m) does not require the implementation of any regulations, the plaintiffs asserted that section 1400(c) is inapplicable to it. Id. However, Wells Fargo argued that section 1400(c) of the Dodd-Frank Act sets forth a different effective date applicable to section 1463 (and therefore section 2605(m)). Id. Based on its reading of section 1400(c), Wells Fargo maintained that at the time of the suit, section 2605(m) of RESPA had not yet become effective because the delayed effective date of January 21, 2013, which Wells Fargo maintained was applicable, had not yet passed. Id.
Ultimately, the court agreed with Wells Fargo. Id. In explaining how it read section 1400(c), the court first observed that the plain language of section 1400(c)'s title, "REGULATIONS; EFFECTIVE DATE," indicates that section 1400(c) addresses both regulations and effective dates. Id. at *6. In this vein, the court noted that Congress's use of a semicolon, as opposed to a colon, indicates that "EFFECTIVE DATE" is not a subcategory of "REGULATIONS." Id. "As a result," the court concluded, "a plain reading of the title indicates that section 1400(c) addresses both the regulations required to be implemented under Title XIV and the effective dates for all of the sections under Title XIV, and not ... only the effective dates of those sections of the Title that call for regulations." Id. Thus, even though section 1463 of the Dodd-Frank Act, which enacted section 2605(m) of RESPA, does not require the implementation of regulations, the court found that "it still falls within the scope of section 1400(c) and consequently, does not become effective until 18 months after the designated transfer date." Id.
Clearly, determining the effective date of section 1416 hinges on the interpretation of section 1400(c)(3), providing that: "A section of this title for which regulations have not been issued on the date that is 18 months after the designated transfer date shall take effect on such date." It is well established that in interpreting a statute, the first inquiry that a reviewing court must undertake is "to determine whether the language at issue has a plain and unambiguous meaning with regard to the particular dispute in the case." Robinson v. Shell Oil Co., 519 U.S. 337, 340, 117 S.Ct. 843, 136 L.Ed.2d 808 (1997). Of course, "if the statutory language is unambiguous and `the statutory scheme is coherent and consistent,'" the inquiry ends there. Id. (quoting United States v. Ron Pair Enters., Inc., 489 U.S. 235, 240, 109 S.Ct. 1026, 103 L.Ed.2d 290 (1989)). "The plainness or ambiguity of statutory language is determined by reference to the language itself, the specific context in which that language is used, and the broader context of the statute as a whole." Robinson, 519 U.S. at 341, 117 S.Ct. 843 (citations omitted). In light of these factors, I find that the plain language of section 1400(c)(3) is ambiguous with respect to whether that section applies to all of the sections under Title XIV.
Section 1400(c)(3) can be read in one of two different ways. On the one hand, "[a] section of this title for which regulations have not been issued" could be interpreted to mean "a section of this title for which regulations have not been issued, whether or not they are required at all." Under that reading of section 1400(c)(3), the delayed effective date prescribed in that section applies to all sections under Title XIV. On the other hand, "[a] section of this title for which regulations have not been issued" could be interpreted to mean "a section of this title for which regulations have not yet been issued, when they are required." Under such a reading of section 1400(c)(3), the delayed effective date embodied in that section does not apply to those sections under Title XIV, like section 1416, that do not require implementing regulations.
To resolve this ambiguity, I must look beyond the text of section 1400(c)(3). I begin with the structure of section 1400(c). In Williams, the court found great significance in Congress's decision to separate "REGULATIONS" and "EFFECTIVE DATE" with a semicolon. 2011 WL 4368980, at *6. According to the
Returning to section 1400(c), I observe that neither its structure nor the relationship between its constituent parts necessarily indicates how it should be interpreted and applied. In Williams, the court stated that the semicolon in section 1400(c)'s heading indicated that "EFFECTIVE DATES" is not a subcategory of "REGULATIONS." However, one need not rely on Congress's utilization of a semicolon to arrive at that conclusion. Indeed, the very structure of the subsection plainly reveals that the "effective date" subparagraphs — that is, sections 1400(c)(2) and (3) — are not subcategories of the "regulations" subparagraph; structurally, all three subparagraphs — (1), (2), and (3) — line up. But that does not necessarily lead to the conclusion that section 1400(c)(3), which I acknowledge is rather curiously buried deep within section 1400, applies to all of Title XIV's sections.
One might argue that, had Congress intended for section 1400(c)(3) to apply to all sections of Title XIV, it could have simply created a new section or subsection (for example, subsection (d)) that would have more clearly applied to the entirety of Title XIV. To be sure, doing so would have been consistent with section 4 of the Dodd-Frank Act, which, at the very beginning of the Act, states that "[e]xcept as otherwise specifically provided in this Act or the amendments made by this Act, this Act and such amendments shall take effect 1 day after the date of enactment of this Act." § 4, 124 Stat. at 1390 (emphasis added). However, the task before me is not to question the wisdom behind the manner in which Congress drafted this legislation or to reach a conclusion by negative implication on the basis of what Congress chose not to do. Rather, my charge is to discern what Congress intended with respect to section 1400(c) so that I can determine the effective date of section 1416's amendment of the civil liability provision in TILA.
Like section 1400(c)'s structure, the relationship between its subparagraphs does not, upon close examination, supply an answer to the question presented. Subparagraph (1) discusses the regulations that are required to be prescribed under Title XIV, and effectively states that their final forms must be set out by January 21, 2013, which is, again, eighteen months after the designated transfer date. Further, subparagraph
On March 26, 2009, a bill which, inter alia, proposed an increase in the cap for civil damages under TILA from $1,000 to $2,000 was introduced in the United States House of Representatives. Mortgage Reform and Anti-Predatory Lending Act, H.R. 1728, 111th Cong. § 210(a) (1st Sess. 2009). The particular title of the bill under which this proposal fell also stated that "[t]he amendments made by this title shall apply to transactions consummated on or after the effective date of the regulations specified in section 209." Id. § 217. Section 209 of that title, in its entirety, provided:
Id. § 209. The similarity between these sections and the subparagraphs that were consolidated under section 1400(c) of the Dodd-Frank Act is undeniable. Moreover, the foregoing sections reveal that at the time H.R. 1728 was submitted, its authors intended amendments, such as the amendment of TILA's cap on statutory damages, to become effective only once the regulations required by other sections had been promulgated and made effective. On May 7, 2009, H.R. 1728 passed the House of Representatives with the aforementioned sections in the same form.
On June 29, 2010, a conference report to accompany H.R. 4173 was issued proposing the Dodd-Frank Wall Street Reform and Consumer Protection Act. H.R. Rep. No. 111-517, at 1 (2010) (Conf. Rep.), 2010 U.S.C.C.A.N. 722. By this point, the amendment of TILA's civil damages cap had been incorporated at section 1416 in Title XIV (the Mortgage Reform and Anti-Predatory Lending Act). Id. at 790. Significantly, this version of the Act also included section 1400 in the same form that it presently exists. Id. at 773-74. In other words, the sections regarding regulations and effective dates that had previously been distinct from each other were consolidated.
On June 30, 2010, the House of Representatives agreed to the conference report on H.R. 4173. 156 Cong. Rec. H5261 (daily ed. June 30, 2010). And on July 15, 2010, the Senate closed debate and also agreed to the conference report on H.R. 4173. 156 Cong. Rec. S5933 (daily ed. July 15, 2010). Significantly, before debate ceased and prior to the vote being taken in the Senate, Senator Dodd, one of the legislation's co-sponsors, stated:
Id. at S5928 (statement of Sen. Dodd). Thus, according to Senator Dodd's statement, which he made just six days before President Obama signed the Dodd-Frank Act into law, it was the intention of the conferees — that is, those members from the Senate and the House of Representatives who served on the conference committee — that provisions in Title XIV, like section 1416, for which regulations are not required, should not become effective immediately upon the Act's enactment. Because even one day after the designated transfer date, July 21, 2011, would have been well after Plaintiff purchased the 1992 Honda Accord from Defendant in September 2010, Plaintiff would not, under such a reading of section 1400(c), be eligible for more than $1,000 in statutory damages under TILA.
Lending credence to the view that the increase in the relevant cap on statutory damages has not yet gone into effect is the version of 15 U.S.C. § 1640 supplied by the Government Printing Office ("GPO"). In its version of TILA, the GPO acknowledges the Dodd-Frank Act's amendment of the civil liability cap. In a section entitled "Effective Date of 2010 Amendment," which refers to the Act, the GPO states:
15 U.S.C. § 1640 (available at http://www. gpo.gov/fdsys/pkg/USCODE-2010-title15/ pdf/ USCODE-2010-title15-chap41.pdf). While this language basically seems to parrot section 1400(c) of the Dodd-Frank Act, it is worth observing that the GPO (and, incidentally, the United States Code Annotated and the United States Code Service) lists the cap in 15 U.S.C. § 1640(a)(2)(A)(ii) as $1,000, not $2,000, thus implying that the increase in the cap has not yet gone into effect. Concededly, this fact is not dispositive of whether the cap increase has become effective, and the manner in which these services elect to present provisions of the United States Code is not controlling. However, when considered in conjunction with the foregoing legislative history, the fact that all three services have not yet changed the cap to $2,000 certainly militates in favor of finding that the increase has not yet gone into effect.
Stepping back from Title XIV, I observe that in other parts of the Dodd-Frank Act, Congress made it clear that it was setting out different effective dates for provisions that require the promulgation of implementing regulations or rules and provisions that do not. For example, sections 754 and 774, in their entirety, both state that unless otherwise provided,
§§ 754, 774, 124 Stat. at 1754, 1802. In formulating this effective date language, Congress clearly indicated not only that it was setting forth exceptions to the default effective date embodied in section 4 of the Dodd-Frank Act, but also that it wished to distinguish between provisions that require the implementation of regulations, and those that do not. The clarity with which Congress established these alternative effective dates contrasts with the lack of distinction between Title XIV provisions that require the implementation of regulations, and those that do not. And, one could argue, the lack of such distinction in section 1400(c) is indicative of Congress's intention to have the same effective date rules apply for all sections of Title XIV.
Ultimately, in light of the consistency with which previous iterations of the Dodd-Frank Act addressed the effective date of provisions under what eventually came to be Title XIV of the Act, and because of the explicit statement of the conferees' intent as related in the Congressional Record, I conclude that, contrary to Plaintiff's contention, and despite the ambiguity of section 1400(c)'s plain language, the increase in TILA's civil liability cap did not become effective on July 22, 2010.
Plaintiff also seeks damages for Defendant's unilateral imposition of a 28% interest rate, which, Plaintiff contends, exceeds the statutory cap under Virginia law. As a general matter, Virginia law provides that, except as otherwise permitted in the Virginia Code, "no contract shall be made for the payment of interest on a loan at a rate that exceeds 12 percent per year." Va. Code § 6.2-303(A). However, "when there is an obligation to pay interest and no express contract to pay interest at a specified rate ...," the legal rate of interest shall be implied. Id. § 6.2-301(B). The legal rate of interest is set at an annual rate of 6%. Id. § 6.2-301(A). When interest above the statutory maximum is paid, the person paying may recover from the person receiving such payments:
Id. § 6.2-305(A).
As I mentioned in note 4, supra, on the basis of an amortization table attached as an exhibit to his motion for default judgment, Plaintiff claims that of the $3,000.00 that he paid during the year in which he made monthly payments on the car, $1,023.41 was in the form of interest. Under the legal rate of interest of 6%,
Under Virginia law, a security interest is enforceable against the debtor only if value has been given, the debtor has rights in the collateral, and the debtor has authenticated a security agreement that provides a description of the collateral. Va. Code § 8.9A-203(b)(1)-(3). A security agreement is one that "creates or provides for a security interest." Id. § 8.9A-102(a)(73). Under the Virginia Code, to authenticate a document simply means to sign it. Id. § 8.9A-102(a)(7)(A). Because Plaintiff did not sign a security agreement, Plaintiff maintains that Defendant has no enforceable security interest in the car. I agree; without such a security interest, it was improper for Defendant to place a lien on the title to the car. Accordingly, I will enter an order declaring Defendant's security interest in the car void and unenforceable. Further, that order will direct Defendant to release the lien, to give the car's title back to Plaintiff, and to return to Plaintiff any keys to the vehicle that he is holding.
For the foregoing reasons, Plaintiffs motion for default judgment shall be granted. An order will be entered awarding Plaintiff damages in the amount of $2,106.44. Additionally, Defendant's security interest in the 1992 Honda Accord will be declared void and unenforceable. Finally, Defendant will be ordered to release the lien he has placed on the car's title, to give the title back to Plaintiff, and to return to Plaintiff any keys to the vehicle that he possesses.
The Clerk of the Court is hereby directed to send a certified copy of this memorandum opinion and the accompanying order to all counsel of record. Additionally, to the extent that it is possible, the Clerk of the Court is hereby directed to send certified copies of these documents to Defendant.
This matter is before the Court on a motion to set aside default judgment filed by David Hall ("Defendant").
On May 2, 2011, Plaintiff filed his complaint, asserting a variety of claims against Defendant, all of which related to Defendant's sale of a vehicle to Plaintiff. On July 6, 2011, Defendant was personally served with the summons at his business, Country Motor Sales, which is a used car dealership in Lynchburg, Virginia. The summons explicitly warned Defendant that, if he did not respond to the complaint's allegations within twenty-one days, judgment by default would be entered against him for the relief demanded by Plaintiff in the complaint. Defendant failed to comply with this directive, and no answer or responsive pleading has been filed to date.
At an unstated point in time after Plaintiff filed his complaint, the parties evidently began discussing a potential settlement of Plaintiffs claims. On July 15, 2011, counsel for Plaintiff faxed and emailed a copy of a settlement offer to Defendant. In the letter, Plaintiffs counsel made it abundantly clear that the offer would only remain open for seven days. Although the precise order of events that followed is unclear, it appears that Defendant declined to accept Plaintiff's offer, and instead submitted a counteroffer on August 1, 2011. However, on August 8, 2011, Plaintiff rejected Defendant's counteroffer.
After failing to appear, plead, or otherwise defend against the action, Defendant's default was entered by the Clerk of the Court on August 31, 2011. A certified copy of the Clerk's entry of default was mailed to Defendant at the address for Country Motor Sales, which Defendant has since indicated to the Court is his preferred address for receiving correspondence sent in connection with this matter. At some unspecified point after the entry of default, Defendant renewed his efforts to reach a settlement of the matter. On September 16, 2011, Plaintiff's counsel emailed Defendant to express his opinion that a reasonable offer had been extended, but rejected. Counsel for Plaintiff added: "As you saw from the most recent notice to you, the clerk has noted the default on your part. If settlement is [sic] cannot be reached, I will need to move the court for Default Judgment on [Plaintiff]'s claims. Please let me know your position on potential terms of settlement," However, the parties did not reach a settlement.
On March 13, 2012, Plaintiff filed a motion for default judgment and mailed a copy to Defendant at the same address to which all correspondence had previously been sent. Defendant did not respond to the motion, and he did not appear at the hearing I conducted on Plaintiff's motion on May 24, 2012, despite the fact that Plaintiffs counsel sent him a notice describing the date of the hearing, the time at which it would take place, and where it would occur. In a memorandum opinion
Under the Federal Rules of Civil Procedure, a "court ... may set aside a default judgment under Rule 60(b)." Fed. R.Civ.P. 55(c). Rule 60(b) sets forth six grounds pursuant to which a court may relieve a party from a final judgment.
"When making a motion under Rule 60(b), the party moving for relief must clearly establish the grounds therefor [sic] to the satisfaction of the district court ... and such grounds must be clearly substantiated by adequate proof." In re Burnley, 988 F.2d 1, 3 (4th Cir.1992) (citations and internal quotation marks omitted). Rule 60(b) does not provide parties with an opportunity to pursue issues not previously litigated, and it is not a mechanism for the relitigation of issues unfavorably decided. See CNF Constructors, Inc. v. Donohoe Constr. Co., 57 F.3d 395, 401 (4th Cir.1995). At bottom, relief under Rule 60(b) is an "extraordinary remedy" that "is only to be granted in exceptional circumstances." Wilson v. Thompson, 138 Fed.Appx. 556, 557 (4th Cir.2005) (citing Compton v. Alton S.S. Co., 608 F.2d 96, 102 (4th Cir.1979)).
At the outset, I find that Defendant has plainly met the timeliness element that represents the first prong of the three-part threshold test articulated by the United States Court of Appeals for the Fourth Circuit. As previously described, I entered default judgment against Defendant on June 19, 2012, and he subsequently moved to have it set aside approximately one month later. A motion made under Rule 60(b) must be made "within a reasonable time," and, for certain of the permissible grounds for relief listed under that subsection, "no more than a year after the entry of the judgment...." Fed.R.Civ.P. 60(c)(1). The fact that Defendant filed his motion within a few weeks of entry of the default judgment indicates that he acted within such a reasonable time. See Augusta Fiberglass Coatings, Inc. v. Fodor Contracting Corp., 843 F.2d 808, 812 (4th Cir.1988) (concluding that the filing of a motion for relief within two weeks of the
With respect to Defendant's obligation to show a meritorious defense, the Fourth Circuit has stated that a "meritorious defense requires a proffer of evidence which would permit a finding for the defaulting party or which would establish a valid counterclaim." Id. In his motion, Defendant argues that Plaintiff did, in fact, sign all of the relevant paperwork related to his purchase of the vehicle from Country Motor Sales. Correspondingly, Defendant maintains that, contrary to Plaintiff's allegation, Plaintiff was aware of the applicable interest rates tied to his purchase of the vehicle. Accepting these facts as true, it is impossible for me to say, without further factual development, that Defendant would be incapable of mounting a legitimate defense to Plaintiffs claim that Defendant failed to provide requisite disclosures in violation of the Truth in Lending Act ("TILA"), 15 U.S.C. § 1601 et seq., and to Plaintiff's claim that Defendant charged a usurious interest rate in violation of Virginia law. Moreover, Defendant's contention that Plaintiff was trying to "pilfer" the vehicle indicates that, were I to set aside the default judgment, Defendant might very well lodge a counterclaim against Plaintiff. Again, without more, I cannot say, as a matter of law, that Defendant would be incapable of stating a counterclaim against Plaintiff. Therefore, I find that Defendant has satisfied the second aspect of the threshold inquiry for Rule 60(b) motions.
According to the Fourth Circuit, the last element, prejudice to the plaintiff, is of "lesser importance." Nat'l Credit Union Admin. Bd. v. Gray, 1 F.3d 262, 265 (4th Cir.1993); see also Compton, 608 F.2d at 102 ("The court should in every case give some, though not controlling, consideration to the question whether the party in whose favor the judgment has been entered will be unfairly prejudiced by the vacation of his judgment."). While setting aside the default judgment here would certainly be an unwelcome outcome from Plaintiffs perspective, it cannot be said that it would represent unfair prejudice to him. Indeed, every time a court vacates a judgment, an invariable consequence is that a party is prejudiced, but that is "not the type of prejudice contemplated by the rule." Werner v. Carbo, 731 F.2d 204, 207 (4th Cir.1984). Though setting aside the default judgment here would require Plaintiff to expend time and incur costs in an effort to secure the relief so far obtained, there could be no unfair prejudice in requiring him to prove his case against Defendant (or in obliging him to defend against any counterclaim asserted by Defendant). Finding that Defendant has passed the threshold test, I proceed to an analysis of whether he has demonstrated that he is entitled to have the default judgment vacated pursuant to the grounds set forth in Rule 60(b).
Defendant represents that, after Plaintiff filed the complaint against him, he sought the services of an attorney. Thus, Defendant, who does not dispute that he was personally served with the summons in this matter, admits that he knew of the action pending against him. According to Defendant, the attorney he contacted could not represent him because of a conflict, and so Defendant initially tried to obtain different counsel, but ultimately decided to proceed pro se, just as he does for purposes of the instant motion.
I first observe that Defendant does not address the fact that all correspondence from the Court, as well as all communications from Plaintiff's counsel (including a notice of hearing), were mailed to Defendant at the same address where he was personally served with the summons. What is more, that address also happens to be the address for his business and the address that he recently provided to the Court as the address at which he wished to receive future correspondence. Even assuming, arguendo, that Defendant did not receive correspondence from the Court or communications from Plaintiffs counsel, that fact neither explains nor excuses his failure to appear, plead, or otherwise defend against this action that he admits he knew was pending against him.
Dilatory conduct and refusal to respond to the allegations in a complaint do not amount to excusable neglect. Indeed, they could not, because neither the Federal Rules of Civil Procedure nor the efficient operation of the courts permit a defendant who has been properly served with a complaint to wait on the sidelines, deigning to engage with the matter only upon its unfavorable resolution. See Jae-Young Lee v. Tae Shin, 231 Fed.Appx. 225, 226 (4th Cir.2007) ("[The defendant's actions did not constitute `excusable neglect' under Rule 60(b)(1) because he knowingly failed to obtain meaningful legal representation, declined to address the claims made against him, and neglected to apprise himself of the developments in the litigation, despite being served with the summons and complaint and receiving correspondence from opposing counsel admonishing him to respond.");
For the foregoing reasons, Defendant's motion to set aside default judgment shall be denied.
The Clerk of the Court is hereby directed to send a certified copy of this memorandum opinion and the accompanying order to Defendant and all counsel of record.
Id. § 226.2(a)(20).
15 U.S.C. § 1640(a). Absent from this list is paragraph (10), which addresses any applicable late fee. "This accords with Congress's desire to `narrow a creditor's civil liability for statutory penalties to only those disclosure[s] which are of central importance in understanding a credit transaction's costs or terms." In re Ferrell, 539 F.3d 1186, 1191 (9th Cir.2008) (quoting S. Rep. No. 96-73, at 7 (1979), reprinted in 1980 U.S.C.C.A.N. 280, 285) (alteration in original). While Plaintiff cannot recover statutory damages for Defendant's purported failure to disclose any applicable late fee, the harm caused by Defendant's other failures to disclose is compensable.
Fed.R.Civ.P. 60(b).
