                      RECOMMENDED FOR FULL-TEXT PUBLICATION
                           Pursuant to Sixth Circuit Rule 206
                                 File Name: 10a0041p.06

              UNITED STATES COURT OF APPEALS
                              FOR THE SIXTH CIRCUIT
                                _________________


                                                 X
                           Plaintiff-Appellee, -
 UNITED STATES OF AMERICA,
                                                  -
                                                  -
                                                  -
                                                      No. 08-6335
           v.
                                                  ,
                                                   >
                                                  -
                                   Defendant, -
 $22,050.00 UNITED STATES CURRENCY,
                                                  -
                                                  -
 JAMES CHRISTOPHER ROWLAND,                       -
                         Claimant-Appellant. -
                                                  -
                                                  -
                                                 N
                   Appeal from the United States District Court
                 for the Middle District of Tennessee at Nashville.
              No. 08-00180—Thomas A. Wiseman, Jr., District Judge.
                            Submitted: November 19, 2009
                        Decided and Filed: February 16, 2010
                Before: MARTIN, BOGGS, and COLE, Circuit Judges.

                                 _________________

                                      COUNSEL
ON BRIEF: Peter J. Strianse, TUNE, ENTREKIN & WHITE, P.C., Nashville, Tennessee,
for Appellant. Debra Teufel Phillips, ASSISTANT UNITED STATES ATTORNEY,
Nashville, Tennessee, for Appellee.
                                 _________________

                                       OPINION
                                 _________________

       BOYCE F. MARTIN, JR., Circuit Judge. In connection with a drug distribution and
money laundering investigation, the United States Drug Enforcement Administration seized,
among other things, $22,050 in United States Currency from the office of Rowland
Development FLP in Murfreesboro, Tennessee. Claimant James Rowland ran this company.



                                           1
No. 08-6335           United States v. Rowland                                         Page 2


Rowland filed with the DEA an administrative claim to the seized objects, and the DEA
eventually returned all of the items except the $22,050. Instead of returning the money, the
DEA referred the matter to the United States Attorney for the Middle District of Tennessee,
who filed an in rem forfeiture action against the money.

        Because Rowland was a known potential claimant to the money, the government
properly provided him notice of the action via certified mail. However, Rowland swears that
he never received the notice because his secretary did not give it to him. Rowland did not
timely file a verified claim to the funds and did not otherwise timely appear or respond in
the civil action. Five months after filing the action, and four months after the deadline to
respond, the government sought default against the money, which the Clerk entered.

        Apparently Rowland did receive a copy of the government’s motion for default. On
the same day that he received the copy of the motion, before entry of an actual default
judgment, Rowland moved pursuant to Federal Rule of Civil Procedure 55(c) to set aside the
default and also filed a verified claim and answer to the forfeiture action. The government
thereafter moved to strike Rowland’s verified claim as untimely. Incorporating our prior
cases requiring “strict compliance” with the Supplemental Rules for Admiralty or Maritime
Claims and Asset Forfeiture Actions into the Rule 55(c) analysis and relying heavily upon
those cases, the district court denied Rowland’s motion to set aside default, granted the
government’s motion to strike Rowland’s late-filed claim, and entered judgment against the
$22,050 in favor of the United States.

        Rowland now appeals both decisions. Because we believe that the district court
incorrectly focused on case law discussing compliance with the Supplemental Rules instead
of the Rule 55(c) test for setting aside default in general, we REVERSE and REMAND to
the district court.

                                              I.

        On September 20, 2007, the DEA executed a search warrant at the office of Rowland
Development FLP in connection with a money laundering and controlled substance
investigation. The agents seized a Porsche, a Ford sports utility vehicle, $3,482 in cash from
one location in the office and another $22,050 in cash from a different location in the office.
No. 08-6335             United States v. Rowland                                                      Page 3


James Rowland, represented by counsel, timely filed a claim with the DEA asserting an
ownership interest in the seized money and cars. As required by the applicable statutes,
upon receipt of Rowland’s administrative claim, the DEA forwarded the seized money and
cars to the United States Attorney’s office to decide whether to pursue civil forfeiture. On
May 29, 2008, the DEA returned the two cars and the $3,482 to Rowland because the
government had declined to seek forfeiture of those items.

          However, the DEA did not return the $22,050 because, unbeknownst to Rowland,
the government had initiated an in rem forfeiture action approximately three months earlier,
on February 21, 2008. The government sent notice of the forfeiture action to Rowland via
certified mail to his business, i.e. the place from which the money was seized, on March 10,
      1
2008. The certified mail return receipt indicates that the notice was received and signed
for by a Ms. Landry, who is Rowland’s secretary. Rowland claims, via sworn affidavit,
that he never actually received the notice. Ms. Landry further claims via affidavit that
she apparently never opened the envelope from the United States Attorney’s office and
therefore never gave it to Rowland.

          In addition to providing notice directly to Rowland, the government also sent
notice of the forfeiture action to Rowland’s attorney by regular mail. Rowland’s
attorney, again via sworn affidavit, claims never to have received the notice.2 Although
Rowland now claims that the government could have done more to ensure that he
received actual notice of the forfeiture action, it is uncontested that the government
complied with the applicable rules for providing notice of the forfeiture.

          Pursuant to Rule G(5) of the Supplemental Rules for Admiralty or Maritime
Claims and Asset Forfeiture Actions, Rowland had thirty-five days from the date that the


          1
           Under the Supplemental Rules, the government does not have to comply with the formal service
of process provisions of Federal Rule of Civil Procedure 4 when providing notice of forfeiture to potential
claimants. This is because potential claimants are not defendants in an in rem action, the seized objects
or assets are. Instead, all that is required is that the government provide notice of the action “to any person
who reasonably appears to be a potential claimant on the facts known to the government . . . by means
reasonably calculated to reach the potential claimant.” FED. R. CIV. P. SUPP. R. G(4)(b). Thus, certified
mail was sufficient.
          2
          As required, the government also published notice of the forfeiture proceeding in the Daily News
Journal of Murfreesboro, Tennessee for three consecutive weeks from March 25th through April 8, 2008.
No. 08-6335         United States v. Rowland                                      Page 4


government sent Rowland notice of the action via certified mail, March 10, 2008, to file
a verified claim to the money as stipulated by the notice. Thus, Rowland’s verified
claim was due by April 15th. Because he claims to have never received notice of the
action, Rowland did not timely file a verified claim.

        As stated above, the DEA returned the cars and the $3,482 to Rowland on May
28th, but did not return the $22,050. Several more months passed with, apparently, no
action. Then, on August 7th, the government moved under Federal Rule of Civil
Procedure 55(a) for entry of default, which the Clerk entered the next day. Importantly,
default judgment was not entered until after Rowland had made an appearance, filed a
verified claim and answer, and moved to set aside the default.

        Rowland received a copy of the motion for default on August 12th and
immediately called his attorney. That same day, Rowland moved to set aside the default
and also filed a verified claim and answer to the underlying forfeiture action. The
motion to set aside default is relatively paltry. It describes the chronology of events
leading up to the default and obliquely argues that service of the original notice was
inadequate. The motion does not assert that Rowland has meritorious defenses to the
forfeiture claim and does not discuss whether the government would be prejudiced by
setting aside the default.

        However, along with the motion to set aside default, Rowland filed a verified
claim to the money in which he swore under penalty of perjury that he had an ownership
interest in the money. Rowland also filed an answer to the forfeiture complaint that
generally denies the allegations and asserts that Rowland had not violated any drug or
money laundering laws. The answer further asserts three affirmative defenses—that the
complaint fails to state a claim, that the complaint violates the Eighth Amendment’s
excessive fines clause, and that the money was the fruit of an illegal search and seizure
and thus subject to suppression by Supplemental Rule G(8)(a)—but does not provide any
factual allegations to substantiate these defenses. Aside from Rowland’s sworn assertion
of an ownership interest in the money, Rowland submitted no proof, such as affidavits
No. 08-6335            United States v. Rowland                                                   Page 5


or documents, in support of his motion or claim.3 Nevertheless, it is undisputed that
Rowland’s claim and answer comply with all of the requirements of Supplemental Rule
G, save, of course, timeliness.

         The government responded to the motion to set aside default and also moved to
strike Rowland’s verified claim for failure to comply with the timing requirements of
Supplemental Rule G. The court, primarily focusing on the requirements of Rule G,
declined to set aside the default and granted the government’s motion to strike. United
States v. $22,050.00 United States Currency, No. 3:08-cv-180, 2008 U.S. Dist. LEXIS
75702 (M.D. Tenn. Aug. 26, 2008). In its opinion, the court found that the government
had satisfied its duty to take adequate steps to provide Rowland with notice of the
forfeiture action but made no finding as to whether Rowland or his counsel had actual
notice. Citing United States v. Thirty-Five Firearms, 123 F. App’x 204, 206-07 (6th Cir.
2005), the court also rejected Rowland’s argument that his filing of a claim with the
DEA, before the forfeiture action had even been initiated, was sufficient to satisfy the
forfeiture claim rules. Finally, the court credited the government’s contention that
setting aside the default would prejudice the government because it would set a bad
precedent.

                                                   II.

         Rowland appeals the district court’s denial of his Rule 55(c) motion to set aside
default as well as the grant of the government’s Supplemental Rule G motion to strike
his verified claim and answer. Both decisions are reviewed for abuse of discretion.
Thirty-Five Firearms, 123 F. App’x at 205-06 (Rule G motion to strike claim); O.J.
Distrib., Inc. v. Hornell Brewing Co., 340 F.3d 345, 352 (6th Cir. 2003) (Rule 55(c)
motion to set aside default). Furthermore, the two motions essentially presented the
same question to the district court—whether to excuse Rowland’s untimely filing of a




         3
          The affidavits from Rowland, Ms. Landry, and Rowland’s counsel, all referenced above, were
submitted in connection with Rowland’s motion for reconsideration filed after the district court had denied
Rowland’s motion to set aside default.
No. 08-6335           United States v. Rowland                                                Page 6


verified claim and answer. Thus, the appeal of the two decisions also presents the same
basic question.

        However, our cases discussing the two rules establish materially different
standards in determining whether to excuse noncompliance or to adhere strictly to the
rules. In general, our cases discussing motions to set aside default under Rule 55(c) are
extremely forgiving to the defaulted party and favor a policy of resolving cases on the
merits instead of on the basis of procedural missteps. See, e.g., O.J. Distributing, 340
F.3d at 353 (stating that the standard for setting aside a default is less strict than the
standard for setting aside a default judgment and that the district court has “considerable
latitude” to grant relief from a default); United States v. Bridwell’s Grocery & Video,
195 F.3d 819, 820 (6th Cir. 1999) (stating, in a civil forfeiture case, that the Sixth Circuit
has a “strong preference for trials on the merits” as opposed to default judgments)
(internal quotation marks omitted).

        On the other hand, our cases discussing motions to strike claims under
Supplemental Rule G favor strict adherence to the rules and generally do not excuse
even technical non-compliance with the rules. See, e.g., Thirty-Five Firearms, 123 F.
App’x at 206 (stating that in an in rem forfeiture proceeding “a claimant is held to ‘strict
compliance with the provisions of C(6).’”4) (quoting United States v. One Assortment
of Eighty-Nine Firearms, 846 F.2d 24, 26 (6th Cir. 1988)). Thus, we believe that
whether the district court should have excused Rowland’s failure to timely file a claim
turns on whether we view this case through the more permissive lens of Rule 55(c) or
the stricter lens of Supplemental Rule G. The first question, therefore, is under which
rubric courts should approach these kinds of cases, i.e. when a known claimant fails to
timely file a verified claim but, after entry of default, moves to set aside default and files
a claim that complies in all technical respects with Supplemental Rule G.




        4
         The in rem forfeiture Supplemental Rules were renumbered in 2006. The provisions that are
now located in Rule G were previously located in Rule C(6). Thus, the older cases discuss adherence to
Rule C(6).
No. 08-6335             United States v. Rowland                                                     Page 7


         Neither Rowland nor the government focuses on this question. Instead, Rowland
takes the position that his situation qualifies for relief under either the Rule 55(c) line of
cases or the Rule G line of cases. The government, of course, disagrees, arguing that
Rowland fails both tests.

         We disagree with both the government and Rowland. Instead, we think that, if
we rely exclusively on the Rule 55(c) cases, the district court may have abused its
discretion in not allowing Rowland’s claim to proceed on the merits. However, if we
incorporate the more strict Supplemental Rule G cases into the analysis, then the district
court did not abuse its discretion in proceeding to enter judgment for the United States.

         There is no firmly established “test” under the Supplemental Rule G case law to
determine whether to excuse noncompliance generally, and untimeliness specifically.
Although Thirty-Five Firearms mentions that the district court had considered
“numerous factors before granting the United States’ motion to strike the answer,
including the time the [claimants] became aware of the seizures, whether the government
encouraged the delay, the reasons for the delay, whether the [claimants] advised the
court and the government of their interest in the property before the claim deadline, and
whether the government would be prejudiced by the late filing,” 123 F. App’x at 207,
the opinion hardly establishes these considerations as the “test” to use in these kinds of
cases. Instead, most cases—which are factually distinguishable from this case because
they do not involve a proper, but untimely, verified claim and answer5—simply intone
the requirement of strict compliance with the forfeiture rules without explaining why
strict adherence is necessary in that particular case.



         5
            The Supplemental Rule G cases supporting the court’s grant of the government’s motion to strike
Rowland’s claim are factually distinguishable, in that they deal with a response that is timely filed but is
technically deficient for some reason. For example, in Thirty-Five Firearms, the claimant knew of and
timely responded to the forfeiture action but did not file a verified claim. Instead, the claimant only
answered the forfeiture complaint. 123 F. App’x at 205. Under those facts, we held that it was not an
abuse of discretion to strike the claim because we require “strict compliance” with the supplemental rules
as a prerequisite for statutory standing to challenge a forfeiture action. Id. at 206-07. Similarly, in United
States v. $5.730.00 in U.S. Currency, the claimant timely filed an answer to the forfeiture complaint but
failed to file a verified claim. 109 F. App’x 712, 713-14 (6th Cir. 2004). Again we found that it was not
an abuse of discretion to strike the claimant’s answer and enter judgment against the res in favor of the
government. Neither of these cases deals with our fact pattern, in which a known claimant failed to file
anything because he did not know of the forfeiture action to begin with.
No. 08-6335         United States v. Rowland                                         Page 8


        On the other hand, Rule 55(c) exists to handle this exact scenario of a technically
compliant but untimely filing in federal civil cases generally. The question is thus
whether there is anything functionally different about civil forfeiture cases that compels
us to treat untimely response in these cases differently than untimely response in all
other civil cases. And on this point, despite the obvious fact that there are additional
rules for in rem forfeiture cases, we find no compelling functional difference between
forfeiture cases involving known claimants and other civil cases with regard to how to
deal with late response. We can see no less of a preference for seeing forfeiture cases
decided on their merits than civil cases generally, and we find no greater prejudice due
to delay in forfeiture cases than in civil cases generally.

        In sum, our review of the two lines of cases and the policies animating the
differing approaches leads us to conclude that the proper way to analyze this case is to
focus on the general Rule 55(c) test for setting aside default in the case of a known
claimant filing a technically compliant but untimely verified claim and answer, without
regard to the Supplemental Rule G cases. We therefore hold that in civil forfeiture cases
such as this one, where the question is whether to excuse a known claimant’s failure to
file a verified claim and answer in the allotted time, district courts should analyze the
case using the generally applicable Federal Rules rather than under our requirement of
“strict compliance” with the forfeiture rules.

                                            III.

        Having decided that the district court should have analyzed this case solely under
the Rule 55(c) case law, we turn now to the question of whether the district court’s
refusal to set aside the default was an abuse of discretion under the Rule 55(c) cases.
Although we review a district court’s decision to deny a Rule 55(c) motion to set aside
default for abuse of discretion, due to the policy of favoring judgments on the merits, “‘a
‘glaring abuse’ of discretion is not required for reversal of a court’s refusal to relieve a
party of the harsh sanction of default.’” Berthelsen v. Kane, 907 F.2d 617, 620 (6th Cir.
1990) (quoting United Coin Meter v. Seaboard Coastline R.R., 705 F.2d 839 (6th Cir.
1983)); Shepard Claims Serv., Inc. v. William Darrah & Assocs., 796 F.2d 190, 193 (6th
No. 08-6335         United States v. Rowland                                          Page 9


Cir. 1986) (“[A] strong preference for trials on the merits in federal courts has led to the
adoption of a somewhat modified standard of review where defaults are involved.”).
Furthermore, we have often highlighted the difference between default and default
judgments:

        [I]t is important to distinguish between an entry of default and a default
        judgment. That is, a stricter standard of review applies for setting aside
        a default once it has ripened into a judgment. Specifically, once the court
        has determined damages and a judgment has been entered, the district
        court’s discretion to vacate the judgment is circumscribed by public
        policy favoring finality of judgments and termination of litigation as
        reflected in Rule 60(b).
Frontier Ins. Co. v. Blaty, 454 F.3d 590, 595 (6th Cir. 2006) (quoting O.J. Distrib., 340
F.3d at 353).

        In this case, Rowland moved to set aside default and filed a verified claim and
answer to the forfeiture complaint within four days of the Clerk’s entry of default, well
before the court had entered judgment. Therefore, the applicable standard of review in
this case is Rule 55(c)’s less deferential species of abuse of discretion rather than the
normal abuse of discretion review.

        Under Rule 55(c), a district court should set aside default upon a showing of
“good cause.” FED. R. CIV. P. 55(c). In determining whether good cause exists, the
district court must consider: “(1) [w]hether culpable conduct of the defendant led to the
default, (2) [w]hether the defendant has a meritorious defense, and (3) [w]hether the
plaintiff will be prejudiced.” Waifersong, Ltd. v. Classic Music Vending, 976 F.2d 290,
292 (6th Cir. 1992). Although “[a]ll three factors must be considered in ruling on a
motion to set aside an entry of default,” when a defendant has a meritorious defense and
the plaintiff would not be prejudiced, “it is an abuse of discretion for a district court to
deny a Rule 55(c) motion in the absence of a willful failure of the moving party to
appear and plead.” Shepard, 796 F.2d at 194. Because our cases make clear that
prejudice to the plaintiff and the presence of a meritorious defense are the two most
important considerations, we address those first.
No. 08-6335            United States v. Rowland                                                 Page 10


A.       Would the Government Have Been Prejudiced by Setting Aside the Default?

         In its briefing to the district court, the government never concretely asserted that
any prejudice would result from setting aside default. However, in its brief on appeal,
the government points to two supposedly prejudicial consequences that would befall it
if Rowland’s claim were allowed to proceed to resolution on the merits: delay resulting
in increased litigation cost, and bad precedent. Neither argument persuades us.

         The government first argues that delay leads to increased litigation costs. This
argument has two pieces: delay and increased cost. As for delay, this argument seems
disingenuous. The government filed its complaint on February 21, 2008 and provided
Rowland notice of the action in early- to mid-March, although he denies ever actually
having received it. Rowland’s deadline to file a claim was April 15th and the deadline
for the general public to make a claim was May 8th. No one filed a claim, so the
government could have sought default on May 9th.6 Yet the government apparently did
nothing until August 7th when it moved for entry of default, and Rowland filed his claim
August 12th. If delay is so problematic in this case, it is unclear why the government
waited three months to take the next step of seeking default. But given its decision to
wait three months to advance the case, the government may not now complain of a three-
month delay.

         As for increased litigation costs, the government points to Thirty-Five Firearms
to support its argument that increased cost is the kind of prejudice that can support
sustaining entry of default. However, Thirty-Five Firearms is not a Rule 55(c) case; it
is a Supplemental Rule G case. Thus, it is inapposite for the reasons set forth above.
Furthermore, it does not make intuitive sense that simply claiming an increase in
litigation cost should be sufficient to establish prejudice. Setting aside default will
always increase litigation cost to the plaintiff because the plaintiff will actually have to


         6
            We do not mean to imply that the government should have sought default on May 9th, just that
it theoretically could have done so. It is a common and praiseworthy practice for plaintiffs to wait a few
days or weeks beyond the actual deadline to proceed with seeking default. However, waiting three months
is entirely different than waiting a few weeks, so the fact remains that one cannot complain of a three-
month delay in responding to a complaint when one waited those same three months to move the case
forward.
No. 08-6335         United States v. Rowland                                         Page 11


litigate the case. Yet, this Court encourages setting aside default to allow for resolution
on the merits, which will necessarily drive up litigation costs. The government never
explains how setting aside default in this case would increase litigation costs to a greater
degree than would naturally occur in all cases of setting aside default. Thus, neither
delay nor increased litigation cost seems especially prejudicial in this case.

        The government also argues that setting aside default here would create bad
precedent that would “undermine” the entire civil forfeiture system, leading to all
potential claimants and their attorneys ignoring properly served forfeiture claims.
Chicken Little would be proud of this logic. Our precedent for setting aside default has
been around for quite a while, and applying precedent does not somehow create bad
precedent. Furthermore, excusing Rowland’s tardiness in this case will not undermine
the efficient operation of civil forfeiture. If this case had more egregious facts—such
as the claimant intentionally ignoring the forfeiture, an unreasonable delay between entry
of default and the claimant making an appearance, or some other indicia that the
claimant was intentionally gaming the system—then the government would be correct
in asserting that setting aside the default would undermine the system. But, based on the
record currently before the Court, this case has none of those facts, and, if those facts
were present, we would no doubt affirm the entry of default. However, under these
facts, setting aside default would not have resulted in the forfeiture sky falling.

B.      Does Rowland Have a Meritorious Defense?

        The second important Rule 55(c) consideration is whether the defendant has a
meritorious defense. Consistent with our permissive stance in setting aside defaults, a
defense is meritorious if “there is some possibility that the outcome of the suit after a full
trial will be contrary to the result achieved by the default.” Burrell v. Henderson, 434
F.3d 826, 834 (6th Cir. 2006) (citations omitted). We have previously stated that a
defense is meritorious if it is “good at law,” regardless of whether the defense is actually
likely to succeed on the merits. Williams v. Meyer, 346 F.3d 607, 614 (6th Cir. 2003)
(citations omitted).
No. 08-6335        United States v. Rowland                                       Page 12


       In this case, Rowland’s motion to set aside default did not highlight any defenses.
Thus, if assessed standing alone, the motion would fail to meet its burden of establishing
one of the three Rule 55(c) requirements. But, in his answer to the forfeiture complaint,
filed the same day as the motion to set aside default, Rowland denied that there was any
violation of the controlled substance or money laundering laws, which was the operative
portion of the forfeiture complaint. He also asserted three affirmative defenses—failure
to state a claim, excessive fine in violation of the Eighth Amendment, and illegal search
and seizure—although he provided no factual allegations in support of these defenses.
Thus, although Rowland has asserted defenses, he has done so very conclusorily.

       However, our cases discussing meritorious defenses in the context of setting
aside default do not require that a defense be supported by detailed factual allegations
to be deemed meritorious. Instead, all that is needed is “‘a hint of a suggestion’ which,
proven at trial, would constitute a complete defense.” Invst Fin. Group v. Chem-Nuclear
Sys., 815 F.2d 391, 399 (6th Cir. 1987) (quoting Keegel v. Key West & Caribbean
Trading Co., 627 F.2d 372, 374 (D.C. Cir. 1980)). This is because likelihood of success
is irrelevant. Id. All that matters is whether a well-stated defense, if sustained, would
change the outcome.

       Under these facts, the outcome would be different if it were true that neither the
controlled substance nor the money laundering laws had been violated. The outcome
also would be different if the seized currency were the fruit of an unlawful search and
seizure. FED. R. CIV. P. SUPP. R. G(8)(a). Furthermore, that Rowland acted so quickly
in moving to set aside default, filing a verified claim, and filing an answer on the same
day that he realized that default had been entered shows that Rowland actually intends
to defend against the forfeiture. Thus, we are satisfied that Rowland has asserted
meritorious defenses to the forfeiture claim.
No. 08-6335         United States v. Rowland                                       Page 13


C.      Did Rowland’s Culpable Conduct Lead to the Default?

        Of the three Rule 55(c) considerations, whether his conduct led to the default
presents the biggest problem for Rowland. Two facts cut against him. First, Rowland
asserts that, although his secretary did receive the government’s notice of the forfeiture,
for unexplained reasons he never saw it. He also asserts that his attorney never received
a copy of the notice even though the government swears to having placed it in the mail.
This coincidence is somewhat difficult to accept, but the government has not produced
any evidence that Rowland’s story is false.

        Second, the DEA returned everything except the $22,050 to Rowland on May 29,
2008. Yet, over the next two months, apparently neither Rowland nor his attorney
inquired as to why the $22,050 had not been returned. The closest Rowland comes to
explaining this failure to make reasonable inquiry is his professed belief that, by filing
an administrative claim with the DEA, he had preserved his claim and thus needed to do
nothing further. Minds could certainly differ whether this was a reasonable belief.

        However, in the context of Rule 55(c), mere negligence or failure to act
reasonably is not enough to sustain a default. “[I]t is not absolutely necessary that the
neglect or oversight offered as reason for the delay in filing a responsive pleading be
excusable.” Shepard, 796 F.2d at 194. Instead, for the defendant to be deemed culpable
for the default, he “must display either an intent to thwart judicial proceedings or a
reckless disregard for the effect of its conduct on judicial proceedings.” Thompson v.
Am. Home Assur. Co., 95 F.3d 429, 433 (6th Cir. 1996) (citations omitted); see also
Shepard, 796 F.2d at 194 (stating that when a defendant has a meritorious defense and
the plaintiff would not be prejudiced, “it is an abuse of discretion for a district court to
deny a Rule 55(c) motion in the absence of a willful failure of the moving party to
appear and plead”). On this question, the district court made no finding as to Rowland’s
culpability or lack thereof, as the court analyzed the issue under the incorrect standard.
Though there is no evidence currently in the record to suggest that Rowland was
culpable for the delay in the sense described in Shepard and Thompson, we believe it
nevertheless to be the better course, now that we have instructed it on the proper
No. 08-6335         United States v. Rowland                                          Page 14


analysis, to allow the district court to pass upon this question in the first instance if it be
so advised.

                                             IV.

        For the reasons set forth above, we REVERSE the judgment of the district court
and REMAND with instructions to determine whether Rowland was culpable under
Rule 55(c) for the default by willfully failing to appear and plead or, else, vacate the
judgment against the $22,050 and adjudicate Rowland’s claim on its merits.
