Default Versus Default Judgment

Setting Aside Defaults

Default Versus Default Judgment

Rule 55(c) packs two standards into one sentence: the court "may set aside an entry of default for good cause, and it may set aside a final default judgment under Rule 60(b)."¹ Each clause governs a different event in a defaulted case. A motion to undo an entry of default goes to the court's discretion under a good cause standard. A motion to undo a final default judgment must satisfy Rule 60(b), the rule under which a court may relieve a party from a final judgment on motion.² Before applying either standard, identify which event the defendant wants undone.

A default and a default judgment are different things. A default is a failure to respond as the rules require, and the entry of default is the clerk's official notation of that failure.³ A missed deadline counts: answering or moving late does not cure the failure, because the Rules set the time, and a defendant who misses it by even a few days is in default.⁴ The notation gives the plaintiff nothing to enforce. It is only a step toward a default judgment, and the plaintiff cannot collect damages on it.⁵ Judson Atkinson Candies, Inc. v. Latini-Hohberger Dhimantec draws the same line. The district court there entered a default against one defendant but no default judgment, and the court relied on Seventh Circuit authority that "an order of default is not a final judgment, though a default judgment is."⁶

The default judgment is a later, separate step, and it is final. Once default has been entered, most rules let the clerk enter judgment when the complaint shows that a certain sum, and only that sum, is due. That condition is typically met by a reasonable, liquidated amount, as in some contract actions.⁷ In most other cases the plaintiff must apply to the court, which will require proof of the damages or other relief sought.⁸

The two defendants missed the same deadline and landed under different standards. Only one fact moved the answer: whether a final judgment exists. At the entry stage, courts have been quite generous in finding good cause in clerical errors, communication lapses, attorney vacations, and sometimes nothing more than the press of business.⁹ They view defaults with disfavor, and they are especially hesitant to find pro se litigants in default when the default results from a good faith misunderstanding of the rules.¹⁰ In Colleton Preparatory Academy, the appeals court stressed the contrast between the Rule 55(c) and Rule 60(b) contexts and instructed that the Rule 55(c) context calls for more leniency from courts.¹¹

Leniency has limits. The rules leave the setting aside of a default, or of a judgment entered on it, to the court's discretion, and the court balances two policies. Default judgments are not favored, and courts exist to do justice and are reluctant to lend their processes to enforce an unjust judgment. Yet the rules requiring timely responses serve important social goals, and a party should not flout them with impunity.¹² A court therefore will not reopen a default judgment merely because the defaulting party asks. It should require the party to show both a good reason for the default and a meritorious defense, and the sections that follow take up those showings in turn.¹³

A problem that says only that a defendant "is in default" does not tell you which standard applies. Ask whether a final judgment has been entered.