Judge sets aside default against hotel management company in wrongful termination action

By Nicholas Malfitano | Jul 23, 2017

PHILADELPHIA – A federal judge has nullified an entry of default against a hotel management company, which had been originally levied due to its non-response to a wrongful termination suit filed by a former hotel director.

On July 17, U.S. District Court for the Eastern District of Pennsylvania Judge Gerald J. Pappert set aside an Entry of Default entered against Remington Lodging & Hospitality, LLC for what the judge believed to be good cause, per a federally-based, three-pronged standards test.

Plaintiff Frank Flowers worked as the Director of Food and Beverage for an Embassy Suites Hotel in Philadelphia, which is managed by Remington and owned by Ashford Philly LP. In July 2016, Flowers filed suit against Ashford and others in the Philadelphia County Court of Common Pleas, to recover for injuries he allegedly suffered in a March 2015 fall at the Hotel. Remington was not named as a defendant in that still-pending lawsuit, but received a copy of the complaint, which it delivered to Ashford.

On March 10, Flowers sued Remington in federal court for wrongful termination n under Title VII of the Civil Rights Act of 1964, and on March 21, Flowers properly served a supervisor at the Hotel with the complaint. The supervisor in question emailed a copy of the complaint to Remington’s paralegal, Brandon Stewart, who mistakenly believed the complaint was related to Flowers’s already-pending lawsuit against Ashford.

Stewart then forwarded the complaint to Ashford, which replied it was not named in the complaint, but nevertheless, Stewart failed to recognize that further action was required from Remington and as such, Remington never responded to the complaint.

On May 23, Flowers filed a Request for Entry of Default, and the Clerk of Court entered default the same day. Three days later, Remington moved to set aside the entry of default, and Flowers had not responded to Remington’s motion.

Pappert said Federal Rule of Civil Procedure 55 allows a Court to set aside an entry of default “for good cause.” Whether good cause exists depends on three factors: (1) Whether the plaintiff will be prejudiced if the default is set aside; (2) Whether the defendant has a meritorious defense; and (3) Whether “the default was a product of the defendant’s culpable or inexcusable conduct.”

“Setting aside the entry of default will not prejudice Flowers. Prejudice exists when setting aside an entry of default would impair a plaintiff’s ability to pursue his claim. The ‘loss of available evidence, the increased potential for fraud or collusion, and the plaintiff’s substantial reliance on the default’ support a finding of prejudice. Being forced to ‘litigate an action on the merits rather than proceed by default does not,’ however, ‘constitute prejudice,” according to Pappert.

“Flowers has not responded to Remington’s motion to set aside the entry of default and therefore has not shown the loss of any available evidence since the entry of default against Remington. And given the relatively short time between entry of default and the Court’s decision on this motion, it is doubtful that any available evidence will ultimately be lost. Nor does the record suggest an increased potential for fraud or substantial reliance on the default. Granting Remington’s motion to set aside the entry of default will merely require Flowers to litigate his claim on the merits,” Pappert said.

Pappert stated Remington has a meritorious defense and that it asserts, among other affirmative defenses, that “Flowers has failed to state a claim upon which relief can be granted”, which “therefore weighs in favor of granting Remington’s motion to set aside the entry of default.”

“Finally, the entry of default was not the result of Remington’s culpable or inexcusable conduct…when Stewart received Flowers’s complaint in this case, he mistakenly believed the complaint related to the already-pending case between Flowers and Ashford Philly, LP. Despite Ashford’s explanation to the contrary, Stewart failed to take any further action, and Remington therefore failed to respond. Nothing in the record supports the conclusion that this error was the result of deliberate misconduct or bad faith,” Pappert said.

“Remington’s failure appears instead to be attributable to Stewart’s mere negligence. Remington filed its motion to set aside the entry of default and attached its proposed answer to the complaint three days after the default was entered, suggesting unintentional neglect of Flowers’s complaint as well as a willingness to comply with the applicable procedures and deadlines going forward,” Pappert stated.

The plaintiff is represented by James A. Bell IV of Bell & Bell, in Philadelphia.

The defendant is represented by Donald D. Gamburg and L. Evan Van Gorder of Ogletree Deakins, also in Philadelphia.

U.S. District Court for the Eastern District of Pennsylvania case 2:17-cv-01087

From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nickpennrecord@gmail.com

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