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3. Is the court likely to grant the plumber's motion?
Sixty days after the court's order denying the motion to dismiss, the company asked the clerk to enter default, and the clerk did so. The company applied to the court for the entry of a default judgment and notified the plumber three days before the default judgment hearing. After an ex parte hearing in which the court received evidence on the damages amount, the court entered a default judgment for the full amount sought. Ten days later, the plumber filed a motion to set aside the default judgment.
A company incorporated and headquartered in State A sued a plumber domiciled in State B in a federal court in State A, alleging that the plumber had negligently installed pipes in a manner that resulted in $250,000 in damage to the company's headquarters building. In response to the complaint, the plumber filed a motion to dismiss for lack of personal jurisdiction. The court denied the motion. Thereafter, the plumber did not file an answer or any other response to the company's action.
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An entry of default may be set aside for «good cause shown.» Although not specifically required by the rules, a majority of courts will require that the defendant have a meritorious defense. A default judgment may be set aside as provided in Federal Rule of Civil Procedure (FRCP) 60 (relief from judgments).
C is correct. If a party against whom relief is sought has failed to plead or defend, the clerk of the court must enter a default of that party. A default means that there has been no answer within the required time period. Even after a default has been entered, the damages may still be determined by a default judgment after a hearing on damages. If the defendant has appeared but not answered, he must be notified at least seven days before the hearing for default judgment. In this case, the clerk properly entered a default against the plumber. However, because the plumber appeared by filing a motion to dismiss, he was entitled to notice seven days before a hearing. The company notified the plumber just three days before the default judgment hearing. As such, the default judgment should be set aside because the plumber was not given proper notice.
A is incorrect. It is true that a court could fix the amount of damages, even without hearing the plumber's evidence. However, in this instance, the plumber was not given the proper notice before the hearing.
B is incorrect. Because the plumber failed to plead or otherwise defend against the company's action, a default may be entered against the plumber. However, the plumber was entitled to notice seven days before the hearing on damages.
D is incorrect. The federal court sitting in State A would have jurisdiction over the plumber because the work in question, the installation of the pipes, was done in State A.