Concept
Relief Without a Motion
Setting aside a default or default judgment
Relief Without a Motion
The earlier sections assumed a defendant who files a motion, but the rule's text does not always demand one. Rule 55(c) provides that the court "may set aside an entry of default for good cause," and the sentence names no motion and no party who must ask.1 Rule 60(b), which governs a final default judgment, is worded differently: it lets a court relieve a party from a final judgment "on motion."2 The difference raises a question the earlier sections did not need to answer. May a court set aside a default on its own initiative, sua sponte? For an entry of default, the Seventh Circuit says yes. For a final default judgment, the circuits divide.
Judson Atkinson Candies, Inc. v. Latini-Hohberger Dhimantec supplies the answer for entries. The district court there had entered a default against a defendant named LMC and later granted summary judgment for LMC. The Seventh Circuit held that the district court had authority to set aside the entry of default against LMC sua sponte for good cause, and it read the summary judgment ruling as doing exactly that.3 The holding rests on text. Unlike Rule 60(b), Rule 55(c) does not refer to a motion, and a court that has entered a default retains "the power to act in the interest of justice in an unusual case in which its attention has been directed to the necessity of relief by means other than a motion," particularly since Rule 55(c) does not require one.4
The words "unusual case" mark the limit of that power: unprompted relief is the exception, and a court that uses it must say so. The district court in Judson Atkinson did not. It never made clear that it was setting aside the entry of default for good cause, and it never explained its decision to grant summary judgment for LMC, so the Seventh Circuit vacated and remanded for an explanation.5 The authority was real, and the ruling still failed for want of stated reasons.
Good cause can also appear on the face of the record. In Webster Industries v. Northwood Doors, the court concluded that entry of default was improper and that "good cause" had therefore been shown to set it aside.6 The earlier discussion of defective service explains why an entry may be improper.
Once a final default judgment exists, Rule 55(c) points to Rule 60(b), and the "on motion" language comes into play.7 The Seventh Circuit expressly declined to decide whether a district court may set aside a default judgment sua sponte. It observed that relief from a default judgment is usually granted on the defaulting party's motion, and that a majority of the circuits to consider the question have concluded that district courts have discretion to grant Rule 60(b) relief on their own.8 The Sixth Circuit disagrees. Because Rule 60(b) explicitly requires relief to occur "on motion," it reasons, courts may not grant relief except on a motion from the affected party, and the Seventh Circuit cited a Tenth Circuit decision, Dow v. Baird, as contrary authority as well.9 The textual difference explains why the two stages come out differently. Rule 60(b) names a motion; Rule 55(c) does not. The Sixth Circuit's reading stands on that word, and the Seventh Circuit's holding on entries stands on its absence.
Two answers fail on an exam. The first says a court never acts without a motion, which ignores the text of Rule 55(c) and the Seventh Circuit's holding on entries of default. The second says a court may vacate a default judgment on its own because it may set aside an entry, which treats a divided question as settled. A sound answer separates the two stages and, for the entry, adds that the court should say it is finding good cause and explain why.