FILED
NOT FOR PUBLICATION
APR 16 2021
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
GEMCAP LENDING I, LLC, a Delaware No. 20-55642
limited liability company,
D.C. No.
Plaintiff-Appellee, 2:19-cv-01472-JFW-PJW
v.
MEMORANDUM*
WILLIAM SHANE PERTL, an individual;
MINDY J. MONTGOMERY, an
individual,
Defendants-Appellants,
and
BANCCENTRAL NATIONAL
ASSOCIATION, a national association;
MARTIN MCNEIL, an individual;
JONATHON W. DAVIS, an individual;
CHRISTOPHER TUCKER, an individual;
VAN OSDOL, PC, a Missouri
professional corporation; DOES, 1-25,
inclusive,
Defendants.
Appeal from the United States District Court
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
for the Central District of California
John F. Walter, District Judge, Presiding
Argued and Submitted April 7, 2021
Pasadena, California
Before: W. FLETCHER, WATFORD, and HURWITZ, Circuit Judges.
William Shane Pertl and Mindy Montgomery (the “Defendants”) appeal
from the district court’s denial of their motion to set aside a default, and its entry of
default judgment in favor of GemCap Lending I, LLC (“GemCap”) for
$19,209,394.28. We review both of the district court’s decisions for abuse of
discretion. See United States v. Signed Pers. Check No. 730 of Yubran S. Mesle,
615 F.3d 1085, 1091 (9th Cir. 2010). We have jurisdiction pursuant to 28 U.S.C.
§ 1291 and affirm.
Federal Rule of Civil Procedure 55(c) provides that a “court may set aside an
entry of default for good cause, and it may set aside a final judgment under Rule
60(b).” We have previously explained that the “factors derived from the ‘good
cause’ standard that governs the lifting of entries of default under [Rule] 55(c)
govern the vacating of a default judgment under Rule 60(b) as well.” TCI Grp.
Life Ins. Plan v. Knoebber, 244 F.3d 691, 696 (9th Cir. 2001). To determine
whether good cause exists to set aside these orders, we consider the three factors
drawn from Falk v. Allen, 739 F.2d 461, 463 (9th Cir. 1984): “(1) whether the
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party seeking to set aside the default engaged in culpable conduct that led to the
default; (2) whether it had no meritorious defense; or (3) whether reopening the
default judgment would prejudice the other party.” Mesle, 615 F.3d at 1091
(internal quotation marks and alterations omitted). This standard is “disjunctive,
such that a finding that any one of these factors is true is sufficient reason for the
district court to [have] refuse[d] to set aside the default.” Id. The district court
acted within its discretion when it resolved each of these factors in GemCap’s
favor.
First, the Defendants’ culpable conduct led to the default. The Defendants
do not contest that they were served with the original California Superior Court
complaint in December 2018, before the suit was removed to federal district court.
They requested and were provided with a copy of the amended complaint over
e-mail in January 2019, and were personally served with that complaint in August
2019. They were thus aware of the proceedings, yet they did not attempt to answer
until after the entry of default in September 2019. In the intervening months, the
Defendants sought and obtained an extension to answer the original complaint,
they provided sworn declarations in support of removal, and Mr. Pertl’s attorney in
the related Kansas litigation was updated by GemCap about the suit. The district
court permissibly concluded that Defendants intentionally failed to answer in a
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timely fashion. See Mesle, 615 F.3d at 1092 (quoting TCI, 224 F.3d at 697)
(explaining that conduct is construed as culpable where the defendant “received
actual . . . notice of the filing of the action and intentionally failed to answer”).
Second, the Defendants failed to raise to the district court any potentially
meritorious defenses regarding the breach of contract claims upon which the
default judgment was based.
Finally, because the Defendants did not raise any potentially meritorious
defenses, “nothing but pointless delay can result from reopening the judgment,”
which would prejudice GemCap. TCI, 244 F.3d at 697.
We therefore conclude that the Defendants have not demonstrated good
cause to vacate the default judgment or set aside the entry of default.
AFFIRMED.
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