Individual Assurance Co v Iriarte [2003] FMSC 54; 12 FSM Intrm. 215 (Pon. 2003) (30 October 2003)

FEDERATED STATES OF MICRONESIA
SUPREME COURT TRIAL DIVISION
Cite as Individual Assurance Co. v. Iriarte, [2003] FMSC 54; 12 FSM Intrm. 215 (Pon. 2003)

[2003] FMSC 54; [12 FSM Intrm. 215]

INDIVIDUAL ASSURANCE CO.,
Plaintiff,

vs.

WILLIAM IRIARTE, LILLY JEAN IRIARTE,
and EMMY SANTOS,
Defendants.

CIVIL ACTION NO. 2003-023

ORDER SETTING ASIDE ENTRY OF DEFAULT

Andon L. Amaraich
Chief Justice

Decided: October 30, 2003

APPEARANCES:

For the Plaintiff:
Fredrick L. Ramp, Esq.
Law Office of Fredrick L. Ramp
P.O. Box 1480
Kolonia, Pohnpei FM 96941

For the Defendants (Iriartes):
Mary Berman, Esq.
P.O. Box 163
Kolonia, Pohnpei FM 96941

For the Defendant:
Andrea Hillyer, Esq. (Santos)
P.O. Drawer D
Kolonia, Pohnpei FM 96941

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HEADNOTE

Civil Procedure - Defaults and Default Judgments
For good cause shown, the court may set aside an entry of default. When, even though the defendant’s counsel has not sought to explain why she failed to request an enlargement of time and her failure to ask either opposing counsel or the court for an enlargement of time to answer was not excusable, the standard to be applied when determining whether to set aside an entry of default suggests that the defendants should not be penalized for the inexcusable neglect of their attorney where giving sufficient time to the defendants will provide necessary information to assist the court in a complicated case involving hundreds of thousands of dollars, and when the plaintiff has not opposed the request, the court will set aside an entry of default. Individual Assurance Co. v. Iriarte, [2003] FMSC 54; 12 FSM Intrm. 215, 216 (Pon. 2003).

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[12 FSM Intrm. 216]

COURT’S OPINION

ANDON L. AMARAICH, Chief Justice:

A complaint alleging conversion, breach of contract and breach of fiduciary duty was filed by plaintiff on August 20, 2003. Defendant Santos filed a settlement agreement on August 21, 2003. Defendants William and Lilly Jean Iriarte did not file an answer or otherwise appear. On September 17, 2003, a Default was entered against the Iriartes, pursuant to FSM Civil Rule 55(a).

On September 22, 2003, the Iriartes (hereafter, "the defendants") filed an Opposition to Motion for Default and Default Judgment in which their attorney, Mary Berman, Esq., states that she was off-island until September 6, received a copy of the complaint from her clients on September 8, her computer "crashed" on September 8, and it was not repaired until September 18. She contends that she was therefore unable to file an answer in this matter by the September 10 deadline. However, she also states that as a result of settlement discussions between herself and plaintiff’s counsel, Fred Ramp, Esq., and assurances she received that no default would be applied for by plaintiff’s counsel, she presented a letter of proposed settlement to Mr. Ramp on September 15. Ms. Berman notes that opposing counsel did not provide her with notice, as required by FSM Civil Rule 6(d), prior to filing the motion for default.

The defendants request that this Court act pursuant to FSM Civil Rule 55(c), which provides in relevant part that "[f]or good cause shown the court may set aside an entry of default[.]" They point to the fact that the claims in this matter involve hundreds of thousands of dollars, are based upon auditing events that took place over five or more years, and deserve independent audit to properly determine the facts in this complicated case.

Defendant’s counsel has not sought to explain why she failed to request an enlargement of time, hand-written or otherwise, on or before the deadline for filing an answer in this matter. Neither has she explained how settlement discussions should be deemed to excuse her from failing to seek leave of the Court.

Ms. Berman’s failure to ask either opposing counsel or the court for an enlargement of time to answer was not excusable. FSM Dev. Bank v. Gouland, [2000] FMSC 32; 9 FSM Intrm. 375, 377 (Chk. 2000). However, the standard to be applied when determining whether to set aside an entry of default suggests that the defendants should not be penalized for the inexcusable neglect of their attorney where giving sufficient time to the defendants will provide necessary information to assist the court, and plaintiff has not opposed the request. See Medabalmi v. Island Imports Co., [2001] FMSC 53; 10 FSM Intrm. 32, 35 (Chk. 2001).

The Court will treat defendants’ misnamed Opposition to Motion for Default and Default Judgment as if it were a Motion to Set Aside the Entry of Default, and will grant the motion. The Entry of Default dated September 17, 2003, is hereby set aside.

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