- If the restaurant's mistake is the only ground for relief, should the court grant the motion?
Answer: No, because a motion under Rule 60(b)(1) must be made within one year after entry of the judgment.
A final default judgment may be set aside under Rule 60(b). A motion based on mistake, inadvertence, surprise, or excusable neglect falls under Rule 60(b)(1), which must be made no more than one year after entry of the judgment. Because the restaurant moved after fourteen months, that ground is untimely. Choice B is overbroad; unilateral mistake can support relief under Rule 60(b)(1) if timely shown. Choice C ignores the one-year deadline, and the reasonableness of the overall delay is not enough for a Rule 60(b)(1) motion after the one-year cut-off. Choice D is wrong because the claim here was for a sum certain and no hearing was required.
- How should the court rule?
Answer: Grant the motion because the judgment is void for insufficient service and may be challenged at any time.
Whenever you see a motion to set aside a default judgment, the first question is whether the judgment is void. A judgment entered without proper service of process is void for lack of personal jurisdiction, and under Rule 60(b)(4) a void judgment may be challenged at any time—there is no time limit. Here, service on a 10-year-old child is not reasonably calculated to give notice to Bishop, so service was improper. The default judgment is void, so the motion should be granted regardless of when it was filed or whether Bishop has a meritorious defense.
Why the other choices fail: "Deny because filed more than one year after entry" misapplies the one-year limit—that applies only to certain grounds like mistake or excusable neglect, not to voidness. "Deny because service at home is reasonably calculated" misunderstands due process—service must be on a person of suitable age and discretion, and a 10-year-old is not that. "Grant only if Bishop shows a meritorious defense" is wrong because voidness alone is enough; you don't need to show a defense.
Study tip: On civil procedure questions, always check for a jurisdictional defect first. If service was defective, the judgment is void, and that's the trump card that beats every other timing or merits argument.
- What is the maximum amount the court may award?
Answer: $100,000, because a default judgment may not exceed the amount demanded in the pleadings.
Whenever you see a default-judgment question, separate liability from damages. An entry of default concedes the well-pleaded factual allegations about liability, but it does not concede the amount of damages. The court may still hold a hearing to determine what the plaintiff actually proved. Here Draper did prove $150,000 in actual damages—so why can't he recover it? Because under Rule 54(c), a default judgment may not exceed the amount demanded in the complaint. Draper's demand for relief asked for only $100,000, so that is the ceiling. The court may not award more, even if the evidence shows higher damages.
The choice saying the court determines damages from the evidence presented at the hearing is half-right: the court does make that determination, but it must do so within the cap set by the pleadings. The choice about failing to support the larger amount with an affidavit invents a requirement—there is no such affidavit requirement here, and the problem is not a proof problem but a pleading-cap problem. The choice saying Egan's default conclusively established damages is the classic trap: default establishes liability, not damages; actual damages still require proof. When you see a default judgment, remember the 54(c) rule: the plaintiff can never recover more than she demanded in the complaint. Write that cap on your procedural cheat sheet.
- Which standard should the court apply?
Answer: The good-cause standard, under which the court weighs willfulness, prejudice, and the existence of a meritorious defense.
This question tests the crucial distinction between an entry of default and a default judgment. Whenever you see a motion to set aside a default, first identify which event occurred: the clerk's entry of default, or a final default judgment. Different standards apply.
Here, only the clerk entered a default—no default judgment was entered. Under Rule 55(c), an entry of default may be set aside "for good cause shown." That is a flexible, equitable standard. The court weighs whether the party's failure was willful, whether setting aside the default would prejudice the plaintiff, and whether the party has a meritorious defense. Ortiz's simple calendaring error and asserted defense fit squarely within that analysis.
The "excusable-neglect standard" is not the governing test at this stage; that standard is more associated with Rule 60(b) relief from a judgment, not an entry of default. "No standard" cannot be right: the court still must exercise discretion, and a lawyer's mistake never compels automatic set-aside, though it may favor good cause. The "stricter standard" reverses the rule: because only an entry of default exists, the standard is more lenient, not stricter, than the standard for vacating a default judgment.
As a study tip, memorize the timeline: entry of default = liberal good-cause standard; default judgment = stricter standards, often requiring excusable neglect or a meritorious defense. Spot that distinction first, and the answer follows.
- How should the court proceed?
Answer: Dismiss the action for lack of subject matter jurisdiction because complete diversity is absent.
Whenever you see a federal court question, always check subject matter jurisdiction first—before anything about default or merits. Jurisdiction is a threshold requirement the court must confirm on its own, even if no party raises it. Here, Ross and Tran are both citizens of New Jersey, so complete diversity is absent. The amount in controversy ($200,000) exceeds $75,000, but that alone doesn't help because diversity requires each plaintiff to be diverse from each defendant. The court lacks subject matter jurisdiction and must dismiss the action.
The correct answer is to dismiss for lack of subject matter jurisdiction. A default judgment cannot cure a jurisdictional defect. The entry of default and the motion for default judgment are irrelevant because the court never had power to hear the case.
The choice that says default admits all well-pleaded facts, including jurisdictional allegations, is wrong: default admits only well-pleaded factual allegations, not legal conclusions like jurisdiction. The court must independently verify jurisdiction. The choice that says enter default judgment for the amount demanded because Tran failed to appear is also wrong—default judgments are proper only when the court has jurisdiction, and the amount must be proven or supported, not automatically awarded. Transferring to state court is incorrect because the federal court's lack of jurisdiction typically leads to dismissal, not transfer (and transfer would not be automatic here).
On the bar exam, when you see a default judgment question, immediately ask: "Is there subject matter jurisdiction?" If not, the answer is dismissal.
- Which of the following is correct?
Answer: The clerk may enter the default, but only the court may enter a default judgment because Beagle appeared by filing the motion to dismiss.
This question tests the two-stage process under Rule 55: entry of default versus entry of default judgment. When a defendant fails to plead or otherwise defend, the clerk may enter default. But a default judgment is a separate, harsher step.
Here, Beagle filed a Rule 12(b)(6) motion, which is a response but not a pleading. After the court denied the motion, Rule 12(a)(4)(A) gave Beagle 14 days to serve an answer. When Beagle missed that deadline, United was entitled to have the clerk enter default for failing to plead. However, because Beagle had "appeared" by filing its motion to dismiss, Rule 55(b)(2) applies: the clerk cannot enter a default judgment; the court must enter it. So the statement that the clerk may enter the default, but only the court may enter a default judgment, is correct.
The answer saying the clerk may enter both is wrong because the clerk's default-judgment power under Rule 55(b)(1) applies only when the defendant has never appeared, even if the claim is for a sum certain. The answer saying the clerk may not enter the default because the motion to dismiss was a response is wrong: a motion to dismiss does not satisfy the duty to plead after denial; it only extends the answer deadline. Finally, the answer saying the clerk may enter a default judgment after seven days' notice confuses the rule: the seven-day notice applies to a party who has appeared, but the court, not the clerk, enters that judgment.
On exam day, remember: "appeared" changes the default-judgment path, not the entry of default itself.
- Is the clerk authorized to enter a default judgment, and if so, for how much?
Answer: Yes, for $100,000, because the clerk may enter judgment for a sum certain but a default judgment may not exceed the amount demanded in the complaint.
Whenever you see "clerk" entering a default judgment, think Federal Rule of Civil Procedure 55(b)(1): the clerk may act only in a narrow lane. The claim must be for a sum certain, and the defendant must have been defaulted for failure to appear. Here the contract's liquidated-damages formula provides an amount that can be made certain by computation, so the claim qualifies. But the clerk has no authority to award more than the complaint demanded. The complaint demanded judgment for $100,000, so even though the affidavit says $150,000 is due, the clerk's entry is capped at $100,000.
The "No, because the claim is not for a sum certain" choice misses that a formula calculation satisfies the sum-certain requirement. The "Yes, for $150,000" choices both misunderstand the clerk's role: the clerk is not bound by the affidavit, and a defendant's failure to appear admits well-pleaded facts but does not allow the judgment to exceed the amount the plaintiff actually demanded in the complaint. The default judgment cannot be for more than the demand, so the $150,000 figures are traps.
Study tip: on civil procedure questions, remember the "demand cap" for clerk default judgments—if the amount sought in the complaint is X, a clerk cannot enter more than X, regardless of later proof.
- May the clerk enter the default judgment for the credit union?
Answer: No, because the clerk may not enter a default judgment against a minor who has not appeared; the credit union must apply to the court instead.
Rule 55(b)(1) expressly limits the clerk's authority to a defendant who is neither a minor nor an incompetent person. Here, the customer is a minor, so the clerk may not enter the judgment. The credit union must apply to the court under Rule 55(b)(2), and the court may enter a default judgment against a minor or incompetent person only if represented by a guardian, conservator, or other like fiduciary. Choice A ignores the minor-status exception. Choice B states the opposite of the rule. Choice D is wrong because a court hearing is not automatically required; rather, court rather than clerk action is required, with protection through representation.
- May the clerk enter the requested default judgment?
Answer: No, because the clerk may enter a default judgment only against a defendant who has never appeared in the action.
Whenever a default-judgment question appears, focus on who may enter the judgment: the clerk has very limited power, while the judge has broader discretion. Under Federal Rule of Civil Procedure 55(b)(1), the clerk may enter a default judgment only when the defendant has never appeared and the claim is for a sum certain. Here, the distributor filed a motion to dismiss, which counts as an appearance. Once a party appears, the clerk loses authority to enter a default judgment; the plaintiff must instead apply to the court under Rule 55(b)(2). So the "No" answer is correct because the clerk may enter default judgment only against a defendant who has never appeared in the action.
The first wrong choice, "Yes, because the claim is for a sum certain and the distributor failed to plead after the motion was denied," ignores that the sum-certain rule applies only when the defendant has not appeared. The second, "Yes, because failure to file an answer constitutes an admission of liability," confuses the effect of a default with the clerk's limited authority; a default may establish liability, but that does not let the clerk act after an appearance. Finally, "No, because the court must first hold an evidentiary hearing on the amount" is wrong because the judge may determine damages by affidavit or hearing—a hearing is not automatically required.
Remember: appearance = judge decides; no appearance + sum certain = clerk decides.
- Which of the following is correct regarding the investor's motion?
Answer: The court may enter a default judgment and conduct a hearing to determine both the proper amount of compensatory damages and whether punitive damages should be awarded.
When the claim is not for a sum certain, the plaintiff must apply to the court for a default judgment under Rule 55(b)(2). The court may conduct hearings, receive evidence, and otherwise determine the amount of damages. Default admits the well-pleaded factual allegations on liability, but it does not admit the plaintiff's theory or amount of damages. Thus the court must determine compensatory damages, and it may also decide whether punitive damages are recoverable under the governing law. Choice A is wrong because a default judgment is not limited to a sum certain; court proceedings exist precisely for unliquidated claims. Choice C is wrong because damages are not admitted by default. Choice D is wrong because punitive damages are not categorically prohibited in a default judgment.
- How should the court rule on the contractor's motion?
Answer: Grant the motion, because an entry of default may be set aside for good cause, and the contractor has shown a meritorious defense and a reasonable explanation for the late filing.
Rule 55(c) distinguishes between an entry of default and a final default judgment. An entry of default may be set aside for good cause, a more lenient standard than Rule 60(b). Good cause is assessed by factors such as whether the default was willful, whether the defendant has a meritorious defense, and whether setting aside the default would prejudice the plaintiff. The contractor's prompt motion, plausible explanation, and asserted meritorious defense support relief. Choice A applies the wrong standard; Rule 60(b) governs relief from a final default judgment, not an entry of default. Choice B improperly adds a near-conclusive prejudice requirement. Choice D is wrong because the clerk properly entered a default after the defendant failed to plead within the time required.
- Did the court's entry of the default judgment violate the borrower's rights?
Answer: Yes, because the borrower had appeared and was entitled to written notice of the default-judgment application at least seven days before the hearing.
Under Rule 55(b)(2), when the party against whom a default judgment is sought has appeared in the action, that party must be served with written notice of the application for default judgment at least seven days before the hearing. The borrower appeared by filing a motion to dismiss, so the omission of notice is a procedural error. Choice A is wrong because once the defendant has appeared, the clerk may not enter judgment; the application properly went to the court. Choice C incorrectly treats an entry of default as extinguishing the right to notice for a party who has appeared. Choice D is wrong because the notice requirement, where applicable, is mandatory, and no hearing is required only when the court can act on the papers properly before it.
