Karl Lutomski and Mary Lutomski v. Panther Valley Coin Exchange and Joseph Snisky

The issue in this diversity case is whether the district court erred in denying a motion to set aside a default judgment entered against defendants-appellants, Panther Valley Coin Exchange and Joseph Sinsky. We hold that because the requirements of Fed. R.Civ.P. 55(b)(2) were not observed, the judgment must be set aside in part and the case remanded for further proceedings.

Plaintiffs, Karl and Mary Lutomski, filed suit against defendants for fraud and breach of contract for defendants’ failure to send plaintiffs fifty gold coins purchased by mail. Defendants sent them just twenty coins, and…