Verdicts and judgments - Defaults and dismissals

Learning Outcomes

This article examines the procedures surrounding defaults and dismissals in federal civil litigation under the Federal Rules of Civil Procedure (FRCP). It details the process for obtaining default judgments, the differences between voluntary and involuntary dismissals, their preclusive effects, and the mechanisms for seeking relief from judgments or orders. After completing this article, you will understand the requirements and consequences associated with defaults and dismissals, enabling you to analyze these issues in MBE fact patterns.

MBE Syllabus

For the MBE, you are required to understand how lawsuits conclude prior to a full trial on the merits through defaults or dismissals, and the implications of these conclusions. This includes familiarity with:

  • The process for entry of default and default judgment under FRCP 55.
  • Distinguishing between dismissal with prejudice and without prejudice.
  • The requirements and effects of voluntary dismissal under FRCP 41(a).
  • The grounds and effects of involuntary dismissal under FRCP 41(b).
  • The standards for setting aside an entry of default or a default judgment under FRCP 55(c) and FRCP 60(b).
  • The basic principles of claim preclusion (res judicata) as applied to dismissals.

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

  1. A defendant fails to plead or otherwise defend an action. The clerk notes this failure on the docket. This notation is referred to as:
    1. Default Judgment
    2. Involuntary Dismissal
    3. Entry of Default
    4. Voluntary Dismissal
  2. Which of the following dismissals typically operates as an adjudication on the merits, barring the plaintiff from refiling the same claim?
    1. Voluntary dismissal by plaintiff before the defendant serves an answer or motion for summary judgment.
    2. Dismissal for lack of subject matter jurisdiction.
    3. Involuntary dismissal for failure to prosecute.
    4. Dismissal for improper venue.
  3. Under FRCP 55, when can the clerk enter a default judgment without involving the judge?
    1. Whenever the defendant fails to appear.
    2. Only if the defendant has appeared but failed to plead.
    3. When the plaintiff's claim is for a sum certain and the defendant has failed to appear.
    4. Never; the judge must always enter a default judgment.
  4. A plaintiff files an action in federal court. Before the defendant answers, the plaintiff files a notice of dismissal. One month later, the plaintiff files the same action against the same defendant in the same federal court. Again, before the defendant answers, the plaintiff files a notice of dismissal. What is the effect of the second notice of dismissal?
    1. It is without prejudice, allowing the plaintiff to file again.
    2. It operates as an adjudication on the merits (with prejudice).
    3. It requires court approval to be effective.
    4. It converts the action into an involuntary dismissal.

Introduction

Not all lawsuits proceed through a full trial to a verdict on the merits. The Federal Rules of Civil Procedure provide mechanisms for terminating actions earlier, either due to a party's failure to participate (defaults) or through various forms of dismissal. Understanding these procedural tools, their requirements, and their consequences—particularly their preclusive effect on future litigation—is essential for tackling Civil Procedure questions on the MBE. This article focuses on default judgments under FRCP 55 and dismissals under FRCP 41.

Defaults and Default Judgments (FRCP 55)

When a defendant fails to plead (e.g., answer) or otherwise defend an action after being properly served, the plaintiff can seek a default judgment. This process involves two stages: entry of default and entry of default judgment.

Key Term: Default A failure by a party (usually the defendant) to respond to pleadings or otherwise defend an action as required by the rules.

Entry of Default (FRCP 55(a))

The first step is obtaining an entry of default. This is a ministerial notation by the clerk on the court docket signifying that the defendant has failed to plead or defend within the time allowed.

  • Procedure: The plaintiff must request the default and show the defendant's failure (typically by affidavit).
  • Effect: Entry of default cuts off the defendant's right to respond but does not automatically entitle the plaintiff to relief.

Entry of Default Judgment (FRCP 55(b))

After entry of default, the plaintiff must seek a default judgment. This is the actual judgment entered in favor of the plaintiff because of the defendant's default. The procedure differs depending on the nature of the claim and whether the defendant has appeared.

Key Term: Default Judgment A binding judgment entered in favor of a plaintiff when the defendant has failed to plead or otherwise defend the action.

  • Entry by Clerk (FRCP 55(b)(1)): The clerk must enter a default judgment if:
    • The plaintiff's claim is for a sum certain (or a sum that can be made certain by computation);
    • The default was entered because the defendant failed to appear;
    • The defaulted defendant is not a minor or incompetent person; and
    • The plaintiff provides an affidavit stating the amount due.
  • Entry by Court (FRCP 55(b)(2)): In all other cases (e.g., claim not for a sum certain, defendant has appeared), the plaintiff must apply to the court (the judge) for a default judgment.
    • Hearing: The court may conduct hearings to determine the amount of damages, establish the truth of allegations, or investigate any other matter.
    • Notice to Appearing Defendant: If the defaulting party has appeared in the action (e.g., filed a motion), that party must be served with written notice of the application for default judgment at least 7 days before the hearing.

Setting Aside Default or Default Judgment (FRCP 55(c), 60(b))

The court has discretion to set aside an entry of default or a default judgment.

  • Setting Aside Entry of Default: The court may set aside an entry of default for good cause. Courts are liberal here, considering factors like whether the default was willful, whether setting it aside would prejudice the plaintiff, and whether the defendant has a meritorious defense.
  • Setting Aside Default Judgment: A default judgment may be set aside under the more stringent standards of FRCP 60(b) (Relief from a Judgment or Order). Grounds include mistake, inadvertence, surprise, excusable neglect, newly discovered evidence, fraud, a void judgment (e.g., lack of jurisdiction), or any other reason that justifies relief. Motions under Rule 60(b)(1)-(3) must generally be made within one year.

Key Term: Relief from Judgment (FRCP 60) A procedural mechanism allowing a court, under specific circumstances (like mistake, fraud, or voidness), to set aside a final judgment, order, or proceeding.

Worked Example 1.1

Plaintiff sued Defendant in federal court for $100,000 for breach of contract (a sum certain based on the contract terms). Defendant was properly served but failed to file an answer or any motion within the required time. Plaintiff filed an affidavit showing Defendant's failure and requested entry of default, which the clerk entered. Defendant has still not appeared. Can the clerk enter a default judgment?

Answer: Yes. Under FRCP 55(b)(1), the clerk must enter default judgment if the claim is for a sum certain, the defendant failed to appear, and the defendant is not a minor or incompetent. Here, the claim is for a sum certain ($100,000), Defendant failed to appear (by not answering or filing any motions), and there's no indication Defendant is a minor or incompetent. Therefore, the clerk can enter the default judgment upon Plaintiff's request and affidavit of the amount due.

Dismissal of Actions (FRCP 41)

Dismissal under FRCP 41 allows for the termination of an action. Dismissals can be voluntary (initiated by the plaintiff) or involuntary (ordered by the court or initiated by the defendant). A key distinction is whether the dismissal is "with prejudice" or "without prejudice."

Key Term: Dismissal With Prejudice A dismissal that operates as an adjudication on the merits, barring the plaintiff from bringing the same claim again against the same defendant.

Key Term: Dismissal Without Prejudice A dismissal that does not operate as an adjudication on the merits, allowing the plaintiff to refile the same claim later (subject to the statute of limitations).

Voluntary Dismissal (FRCP 41(a))

A plaintiff may voluntarily dismiss their own action under certain conditions.

  • Dismissal Without Court Order (FRCP 41(a)(1)):
    • By Notice: The plaintiff can file a notice of dismissal before the opposing party serves either an answer or a motion for summary judgment. This dismissal is without prejudice, unless the plaintiff has previously dismissed the same claim (in any federal or state court). This is the "two-dismissal rule"—a second voluntary dismissal by notice operates as an adjudication on the merits (with prejudice).
    • By Stipulation: All parties who have appeared can sign a stipulation of dismissal. Unless the stipulation states otherwise, the dismissal is without prejudice.
  • Dismissal By Court Order (FRCP 41(a)(2)): If the plaintiff cannot dismiss by notice (because an answer or summary judgment motion has been served), they must obtain a court order. Unless the order states otherwise, the dismissal is without prejudice. If the defendant has pleaded a counterclaim, the action cannot be dismissed over the defendant's objection unless the counterclaim can remain pending for independent adjudication.

Worked Example 1.2

Plaintiff sued Defendant in federal court. Defendant filed an answer. Plaintiff now wishes to dismiss the case but intends to refile it later in state court. Can Plaintiff simply file a notice of dismissal?

Answer: No. Because Defendant has served an answer, Plaintiff can no longer voluntarily dismiss by simply filing a notice under FRCP 41(a)(1)(A)(i). Plaintiff must either obtain a stipulation of dismissal signed by all parties who have appeared (FRCP 41(a)(1)(A)(ii)) or obtain a court order granting dismissal (FRCP 41(a)(2)). Dismissal by court order is typically without prejudice unless the court specifies otherwise.

Involuntary Dismissal (FRCP 41(b))

An action may be dismissed against the plaintiff's wishes.

  • Grounds: A defendant may move to dismiss if the plaintiff fails to prosecute the action, or fails to comply with the Rules or a court order. The court may also dismiss sua sponte on these grounds.
  • Effect: Unless the dismissal order states otherwise, an involuntary dismissal operates as an adjudication on the merits (i.e., with prejudice), barring re-litigation of the same claim.
  • Exceptions: Dismissals for lack of jurisdiction, improper venue, or failure to join a required party under Rule 19 are not adjudications on the merits and are without prejudice.

Key Point Checklist

This article has covered the following key knowledge points:

  • Default involves failure to plead or defend; requires entry of default then default judgment (FRCP 55).
  • Clerk can enter default judgment for a sum certain if defendant failed to appear.
  • Court enters default judgment in other cases; requires notice if defendant appeared.
  • Entry of default set aside for "good cause"; default judgment set aside under FRCP 60(b).
  • Voluntary dismissal by plaintiff (FRCP 41(a)) is usually without prejudice initially.
  • Plaintiff can dismiss by notice before answer or summary judgment motion served.
  • "Two-dismissal rule": Second voluntary dismissal by notice is with prejudice.
  • Involuntary dismissal (FRCP 41(b)) is usually with prejudice (adjudication on merits).
  • Exceptions: Dismissals for lack of jurisdiction, venue, or failure to join party are without prejudice.

Key Terms and Concepts

  • Default
  • Default Judgment
  • Dismissal With Prejudice
  • Dismissal Without Prejudice
  • Relief from Judgment (FRCP 60)
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