United States District Court, D. Montana, Great Falls Division
Johnston, United States Magistrate Judge
Stenzel originally filed this action in Montana's Eight
Judicial District, Cascade County, and, as Montana law
requires, served Montana's Commissioner of Securities and
Insurance (Commissioner) with a copy of the summons and
complaint on January 23, 2017. (Doc. 20-1) The Commissioner
sent a copy of the summons and complaint to Metropolitan Life
Insurance Company's (Met Life) designated agent for
service of process, CT Corporations Systems (CT Corp.), on
January 25, 2017, via certified mail to the address Met Life
provided to the Commissioner. (Id.) The summons and
complaint were returned as undeliverable. (Id.) On
or about February 24, 2017, the Commissioner sent the summons
and complaint to CT Corp. at an address in Missoula, Montana.
(Id.) CT Corp. received the summons and complaint on
February 27, 2017. (Doc. 22 at 2)
Life did not file an appearance in the state court action
within 30 days of Mr. Stenzel serving the Commissioner.
Therefore, on March 1, 2017, Mr. Stenzel requested the
Cascade County Clerk of Court to enter default against Met
Life. (Doc. 4-3 at 1) In response to this request, the Clerk
of Court entered Met Life's default on March 1, 2017.
Life removed the case to the Great Falls Division of the
District of Montana on March 22, 2017. (Doc. 1) Met Life then
filed a Motion to Set Aside Default arguing the Court should
set aside default because Met Life has a meritorious defense
and its delay in responding to Mr. Stenzel's complaint
did not cause him any prejudice. (Doc. 13) Mr. Stenzel filed
a Motion to Remand arguing Met Life's Notice of Removal
was untimely. (Doc. 19.) The parties fully briefed the
motions, and the Court conducted a hearing on the motions on
June 6, 2017.
Service and Removal
Montana law, the Commissioner receives service of legal
process on behalf of insurers conducting business in Montana.
Mont. Code Ann. § 33-1-601(1). The Commissioner then
forwards a copy of the summons and complaint to a person or
entity the insurer designates to act as its agent for service
of process. Mont. Code Ann. § 33-1-603(1). When the
Commissioner forwards the summons and complaint to the
insurer's agent, service is complete. Mont. Code Ann.
§ 33-1-603(3). A defendant insurer then has thirty days
to respond. Id.
U.S.C § 1446 governs the time for removal and provides
that a notice of removal “shall be filed within 30 days
after receipt by the defendant, through service of process or
otherwise, a copy of the initial pleading.” While the
Ninth Circuit has not determined whether service on a
statutory agent, like the Commissioner, starts the time
running on the 30 day removal period, district courts have
held that the removal period does not begin to run until the
defendant or its designated agent actually receives the
summons and complaint. Pilot Trading Co. v. Hartford Ins.
Group, 946 F.Supp. 834, 836 (D. Nev. 1996).
of the Federal Rules of Civil Procedure states that if
“a party against whom a judgment for affirmative relief
is sought has failed to plead or otherwise defend, and that
failure is shown by affidavit or otherwise, the clerk must
enter the party's default.” Service of process on
an insurer is complete when the Commissioner forwards a copy
of the summons and complaint to the insurer. Montana Code
Ann. § 33-1-603(3). The insurer then has thirty days to
appear in the action. Id.
disfavors default, and whenever possible, a case should be
decided on the merits. Falk v. Allen, 739 F.2d 461,
463 (9th Cir. 1984). Thus, a court may set aside an entry of
default for good cause. Fed R. Civ. P. 55(c). When
determining whether good cause exist to set aside default, a
court must look to three factors: (1) whether the defendant
engaged in culpable conduct that led to default; (2) whether
the defendant has a meritorious defense to the claims; and
(3) whether setting aside default would prejudice the
plaintiff. Falk, 739 F.2d at 463. When a state clerk
of court enters default and the case is then properly removed
to federal court, the federal court has jurisdiction to set
aside the default. Edna H. Pagel, Inc. v. Teamsters Loc.
Union 595, 667 F.2d 1275, 1278 (9th Cir. 1982).
Life argues that (1) its Notice of Removal was timely because
it filed the notice within thirty days of its designated
agent actually receiving the summons and complaint (Doc. 22
at 2) and (2) the Court should set aside default because its
conduct was not culpable, it has a meritorious defense to the
claims, and its delay in responding to service did not cause
Mr. Stenzel any prejudice. (Doc. 20 at 7-14.) Mr. Stenzel
argues that (1) Met Life's Notice of Removal was not
timely because it was filed more than thirty days after the
Commissioner first mailed a copy of the summons and complaint
to Met Life's designated agent for service (Doc. 20 at
7), and (2) the Court should not set aside default because
Met Life's conduct was culpable in not providing ...