When a defendant fails to answer a complaint, the plaintiff can seek default judgment. Default judgment is a two-step process governed by G.S. 1A-1, Rule 55. Step one: the plaintiff moves the clerk of superior court to enter default against the defendant. Step two: the plaintiff moves the court to enter default judgment. Sometimes litigants confuse these two steps so it pays to read Rule 55 and the case law interpreting it carefully. For a complete discussion of procedure under Rule 55 in North Carolina, see the Superior Court Judges’ Benchbook.

Today I want to focus on a single clause in Rule 55(d): “[f]or good cause shown, the court may set aside an entry of default[.]” The decision of the North Carolina Court of Appeals (NCCOA) in Swan Beach Corolla, L.L.C. v. Cty. of Currituck, 255 N.C. App. 837 (2017), aff’d per curiam, 371 N.C. 110 (2018), provides helpful guidance to trial courts in interpreting this provision of the rule and avoiding procedural traps.

Note that Rule 55 applies to all claims for affirmative relief in civil actions, including counterclaims, crossclaims, and third-party claims. G.S. 1A-1, Rule 55(e). The defaulting party is not necessarily the defendant; it could be the plaintiff defaulting on a counterclaim or a third-party defendant defaulting on a crossclaim by another defendant. For simplicity’s sake, throughout this post I refer to the party asserting the claim as the plaintiff and the defaulting party as the defendant, as this appears to be a common pattern in the case law. One other note: entry of default probably applies to at least some cases that are not civil actions, including some special proceedings. See Hansley v. Hansley, 297 N.C. App. 764, 770 (2025) (noting that the clerk’s entry of default in a partition action “complied with Rule 55(a)”).  These proceedings use varying deadlines for responsive filings, so litigants must check the appropriate statutes when calculating time to respond. The deadlines I refer to in this post are deadlines set by the Rules of Civil Procedure.

An interlocutory, ministerial step

Entry of default is an intermediate or interlocutory step in civil litigation. Service of the summons and complaint starts a thirty-day clock on the defendant’s time to file an answer. The defendant can pause (but not stop) this clock by filing a motion to dismiss under Rule 12.

If thirty days pass and the defendant has filed neither a motion to dismiss nor an answer, then the plaintiff can move the clerk to enter default. See McIlwaine v. Williams, 155 N.C. App. 426, 429 (2002). The trial judge has concurrent jurisdiction and can also enter default. Ruiz v Mecklenburg Utilities, Inc., 189 N.C. App. 123, 126 (2008). If a defendant files an untimely answer before the plaintiff has moved for entry of default, then the answer is still effective and entry of default is inappropriate. Peebles v. Moore, 302 N.C. 351, 356 (1981) (“[D]efaults may not be entered after answer has been filed, even though the answer be late.”)

When the plaintiff moves for entry of default, the clerk of superior court can consider the plaintiff’s affidavit or anything else when ruling on the motion. Silverman v. Tate, 61 N.C. App. 670 (1983).  In fact, for a clerk to enter default, the clerk need only look at the court’s integrated case management system and see that a complaint was filed and served on the defendant along with a summons, thirty days have passed, and no answer or motion to dismiss has been filed. If the defendant has “failed to plead … the clerk shall enter his default.” G.S. 1A-1, Rule 55(a). Entry of default is a ministerial act of the clerk, which means it does not involve judicial deliberation.

Entry of default creates a number of effects, including that the allegations in the complaint are deemed admitted by the defaulting defendant and the defaulting defendant is no longer entitled to notice of most hearings. Importantly, entry of default does not mean the plaintiff automatically gets whatever relief it asked for in the complaint. The defendant can still challenge the legal sufficiency of the allegations in the complaint. The defendant is also entitled to present evidence on the question of damages, including to a jury when one was demanded.

Since entry of default is interlocutory and ministerial, it is not typically subject to immediate review by an appellate court. If a defendant wants to challenge entry of default immediately, the appropriate way to do so is to file a motion to set aside entry of default under Rule 55(d).

Good cause

A defendant who wants the court to set aside an entry of default must show “good cause,” and what constitutes good cause is left up to the discretion of the district or superior court judge to whom the case is assigned. On appeal, a trial court’s order setting aside or denying the motion to set aside entry of default will be reviewed only for abuse of discretion. A trial court abuses its discretion when it acts in a way that is “manifestly unsupported by reason.” Luke v. Omega Consulting Group, L.L.C., 194 N.C. App. 745, 748 (2002).

So what is good cause? “What constitutes good cause depends on the circumstances in a particular case.” Id. Courts evaluate circumstances based on three factors: “(1) was defendant diligent in pursuit of this matter; (2) did plaintiff suffer any harm by virtue of the delay; and (3) would defendant suffer a grave injustice by being unable to defend the action.” Id. The defendant’s conduct does not need to be “strictly excusable” to create good cause. Id. Note that this is a different, less stringent standard than the “excusable neglect” standard for setting aside a default judgment under G.S. 1A-1, Rule 60(b).

Two traps for litigants

With that background, I turn to a case that identifies two traps that can snare even sophisticated litigants. Let’s consider what happens when a defendant litigates a case vigorously in the trial and appellate courts but still fails to file a responsive pleading. As you might imagine, that leads to a complicated procedural history.

Swan Beach Corolla, L.L.C. v. Cty. Of Currituck resulted in the NCCOA issuing three detailed opinions:

• 255 N.C. App. at 838 (Swan Beach III);
• 234 N.C. App. 617 (2014) (Swan Beach I)); and
• COA15-293, 244 N.C. App. 545, 2015 WL 8747777 at *1 (Dec. 15, 2015) (unpublished) (Swan Beach II).

In the trial court, the defendants moved to dismiss the plaintiffs’ claims under Rule 12(b)(1) and (6). Recall that filing a motion to dismiss under Rule 12 pauses the clock on the defendants’ time to file an answer. After the trial court dismissed the case, the NCCOA in Swan Beach I reversed the dismissal of two of those claims, remanding the case to the trial court. After remand, the parties continued to negotiate.

Mid-negotiation, the clerk entered default against the defendants on motion of the plaintiffs. The defendants in Swan Beach moved to set aside entry of default, contending that G.S. 1-298 required the trial court to enter an order modifying its original judgment and restarting the clock on time to file an answer. The trial court denied the motion, and the defendants appealed. In an unpublished opinion, the NCCOA held that this appeal was interlocutory and dismissed the part of the appeal challenging what I think of as the “clock issue”—that is, when the defendant’s clock to file an answer begins to run again after remand by the NCCOA. Swan Beach II, 244 N.C. App. 545, 2015 WL 8747777 at *5. After this second remand, the trial court entered a default judgment in favor of plaintiffs for almost $40 million.

In Swan Beach III, the defendants raised the clock issue again. 255 N.C. App. at 841. In other words, the parties in Swan Beach III asked the question: does the clock to file an answer begin as soon as the mandate from the NCCOA issues or does it only begin to run after the trial court enters “an order effectuating the modification of its prior order following a decision by” the NCCOA? Id. As I discuss later in this post, this is still an open question.

According to Swan Beach III, the trial court failed to apply the “good cause” standard by denying the defendants’ motion to set aside entry of default without identifying any reason for its decision. The NCCOA considered both the written order and a recording of the hearing and reasoned that the trial court had denied the defendants’ motion only because the court was uncertain of the proper procedure. Remember that the “abuse of discretion” standard means that a trial court’s order on a motion to set aside entry of default will only be reversed if it is manifestly unsupported by reason—a trial court entering an order on such a motion must take care to consider the defendant’s diligence, the harm to the plaintiff, and any grave injustice suffered by the defendant.

The NCCOA in Swan Beach III goes further to hold that even if the trial court had applied the good cause standard, the defendants had shown good cause to set aside entry of default. By the time default was entered, the defendants had been litigating the case for two years, negotiating with the plaintiffs even as the clerk entered default, and working to schedule discovery. Importantly, the defendants showed they were prepared to file an answer within six days of entry of default. Also important is the size and nature of the default judgment: the defendants faced a $40 million judgment and the inability to defend against constitutional claims.

But this highlights another trap for litigants: even though the entry of default in Swan Beach III was set aside for good cause, this case does not hold that vigorous litigation is enough to show good cause. In a more recent case involving entry of default after remand, “the trial court found that the defendant had vigorously litigated this action and asserted meritorious defenses,” and yet still denied a motion to set aside the entry of default. Jones v. Jones, 263 N.C. App. 606, 612 (2019). Jones considered a breach of contract action that was pending while an alienation of affection action between the same parties was also pending. In affirming the trial court’s decision to let the entry of default stand, the NCCOA reasoned that the defendant’s activity following remand was limited to the alienation of affection case and not to the breach of contract action, in which the defendant had defaulted. Litigants and attorneys may think of a dispute involving multiple actions as a singular case, but for purposes of entry of default, actions under different court file numbers are distinct from each other, so careful attention to pleading deadlines is critical to avoid default.

The clock issue remains open

Most interesting to me is that neither Swan Beach III nor Jones settled the clock issue. How long a defendant has to file an answer after the issue of a mandate from an appellate court remains an open question in North Carolina. Prior to the General Assembly enacting the Rules of Civil Procedure, a defendant would have needed to “answer within 30 days after the receipt of the certificate from the Supreme Court” overruling a demurrer, the predecessor to the modern motion to dismiss. McDaniel v. Fordham, 264 N.C. 62, 63 (1965). The Swan Beach III plaintiffs alleged that the defendants’ clock to file an answer restarted automatically once the NCCOA’s mandate issued. Under G.S. 1A-1, Rule 12(a)(1)a,  defendants have twenty days “after notice of the court’s action in ruling on the motion [to dismiss]” to file an answer. On the other hand, G.S. 1-298 states that “[i]n civil cases, at the first session of the superior or district court after a certificate of the determination of an appeal is received, if the judgment is affirmed the court below shall direct the execution thereof to proceed, and if the judgment is modified, shall direct its modification and performance” (emphasis added). Does “shall direct its modification and performance” mean that the trial court must enter an order restarting the clock? I am not aware of a North Carolina case that answers this question.

To avoid running afoul of the clock issue, litigants who need to file an answer after remand should do so within twenty days after the issuance of the mandate or move for an extension of time. Trial courts have the discretion to fix different times for the filing of responsive pleadings following Rule 12 motions. Courts can use that power to clarify the litigants’ responsibilities if, several years into litigation, the case remains in the pleadings stage.