United States of America v. Gumbaytay et al

Filing 446

MEMORANDUM OPINION AND ORDER as follows: 1. Bahr's Motion to Alter, Amend or Vacate Final Judgment 427 is DENIED. 2. Bahr's Motion to Stay Execution Pending Disposition 443 is DENIED AS MOOT. 3. The United States' Motion to Supplement the Record 433 is GRANTED. 4. The United States' Motion to Seal 436 is GRANTED. Signed by Honorable Judge Mark E. Fuller on 4/19/2012. (Attachments: # 1 Civil Appeals Checklist)(jg, )

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF ALABAMA
NORTHERN DIVISION
UNITED STATES OF AMERICA,
Plaintiff,
v.
MATTHEW BAHR, et al.,
Defendants.

)
)
)
)
)
)
)
)
)

Case No. 2:08-cv-573-MEF
(WO—Publish)

MEMORANDUM OPINION AND ORDER
I. INTRODUCTION
This cause comes before the Court on four motions—two filed by Defendant
Matthew Bahr and two filed by the United States. Bahr’s first motion is a Motion to
Alter, Amend or Vacate Final Judgment Or, in the Alternative, Motion for Relief from
Final Judgment. (Doc. # 427.) His second is a Motion to Stay Execution Pending
Disposition of Motion to Alter, Amend, or Vacate. (Doc. # 443.) The United States’ first
motion is a Motion to Supplement the Record (Doc. # 433) and the second is a Motion to
Seal (Doc. # 436). For the reasons discussed below, both of Bahr’s motions are due to be
denied whereas both of the United States’ motions are due to be granted.
II. BACKGROUND
The Court need not recount all of the facts underlying this case. Many of these
facts are discussed elsewhere, for example in the Court’s Memorandum Opinion and

1

Order on defendant Lori Williams’s motion for summary judgment. (Doc. # 197.) The
Court will assume the parties’ familiarity with those opinions for the sake of brevity. In
short, this case involves a pattern and practice of sex discrimination by Jamarlo
Gumbaytay, a property manager employed by a number of property owners. This led to
the United States bringing suit under the Fair Housing Act, 42 U.S.C. § 3601, against
Gumbaytay and the various property owners.
Important here is that defendant Matthew Bahr—one of the property owners who
employed Gumbaytay—chose not to participate in the underlying lawsuit.1 Due to this
decision, the United States moved to have default judgment entered against Bahr. The
Court granted the motion after conducting an evidentiary hearing. (See Docs. # 418,
419.) The final judgment against Bahr included civil penalties of $10,000 and damages
of $17,000 to be distributed to the victims—$4500 to Loretta Hull; $5,000 to Rita Julian;
$2,500 to Calandra Wright; and $5,000 to Britney Knight. (Doc. # 419.)
Bahr has since moved the Court to vacate the final judgment or to at least fix
various errors that he claims the judgment contains. The basis for this motion is as
follows. The third amended complaint alleged that Bahr employed Gumbaytay as his
agent to manage two of his properties: one located at 3661 Whiting Avenue,
Montgomery, Alabama 36105; the other at 964 North Gap Loop, Montgomery, Alabama
36110. (Doc. # 168 at ¶ 6.) Yet the United States never offered testimony during the
1

Bahr made this decision despite having knowledge of the suit and being served with the
complaint. His wife even appeared to defend against the claims brought against her.

2

evidentiary hearing related to these properties, instead focusing on testimony from
victims of other Bahr-owned and Gumbaytay-managed residences. This evidence
included: Calandra Wright’s testimony that she lived at 817 North Pass Road; Loretta
Hull’s testimony that she lived at 609 Boyce and 2233 E. 4th Street; Rita Julian’s
testimony that she lived at 105 Stuart St. and 649 Cramer Ave.; and Britney Knight’s
testimony that she lived at 105 Stuart St. Bahr has now asserted various arguments about
why these discrepancies call for post-judgment relief.
III. DISCUSSION
A. Bahr’s motion to alter, amend, or vacate the final judgment against him
Bahr asks the Court to do three things in his Motion to Alter, Amend, or Vacate.
First, he wants vacated this Court’s judgment ordering damages against him. (Doc. # 427
at 10.) Second, he seeks a downward revision as to the damages awarded against him
because, he claims, the statute of limitations bars some of the United States’ claims. (Id.
at 10.) Third, he wants a ruling that the Court’s final judgment is “void” for lack of
subject matter jurisdiction. (Id. at 12.) The Court will address each argument in turn.
1. Bahr’s attempt at voiding the judgment against him
Bahr primarily wants the Court to revisit and then vacate the judgment entered
against him. To this end, Bahr argues that, while the United States proved sex
discrimination as to some properties he owned, it did not prove its case as to the
properties listed in the amended complaint. Bahr contends that the Court must fix this

3

discrepancy and that “Rule 59 is the proper mechanism for . . . relief.” (Doc. # 441 at 1.)
But this is incorrect: the “exclusive . . . method for attacking a default judgment in the
district court is by way of a Rule 60(b) motion.” Gulf Coast Fans, Inc. v. Midwest Elec.
Importers, Inc., 740 F.2d 1499, 1507 (11th Cir. 1984).
This leaves Bahr with Rule 60(b) as the only procedural mechanism for relief.
Under Rule 60(b), “the court may relieve a party . . . from a final judgment” for one of
five specific reasons or for “any other reason that justifies relief.” Fed. R. Civ. P.
60(b)(1)–(6). Here, Bahr cannot meet any of the first five reasons for granting relief from
the default judgment entered against him. So he can seek relief only through the “any
other reason” catchall contained in Rule 60(b)(6). “[R]elief under this clause is an
extraordinary remedy which may be invoked only upon a showing of exceptional
circumstances.” Cavaliere v. Allstate Ins. Co., 996 F.2d 1111, 1115 (11th Cir. 1993)
(quotations omitted).
Bahr can make no such showing. He made a conscious decision to ignore the
lawsuit filed against him. That he dislikes the negative consequences tied to this decision
does not make his circumstances exceptional. See, e.g., Ackermann v. United States, 340
U.S. 193, 198 (1950) (“His choice was a risk, but calculated and deliberate and such as
follows a free choice. Petitioner cannot be relieved of such a choice because hindsight
seems to indicate to him that his decision not to appeal was probably wrong . . .”);
Aghassi v. Holden & Co., 92 F.R.D. 98, 100 (D. Mass. 1981) (“The consequences of

4

neglectfulness on the plaintiff’s part will not ordinarily constitute the kind of extreme
hardship contemplated by Rule 60(b)(6)”). Bahr’s main argument—that the damages
awarded to four of his tenants should be vacated because the amended complaint did not
identify the tenant’s addresses specifically—is an objection appropriately raised during
adversarial proceedings. His failure to do so does not justify granting relief. Cf. Dowell v.
State Farm Fire and Cas. Auto. Ins., 774 F. Supp. 996, 1001 (S.D. W. Va. 1991) (“we do
not find extreme hardship that would compel granting relief inasmuch as the Plaintiff
knowingly and voluntarily passed over the means to protect his interest in litigation and
possibly achieve his desired outcome.”).
It is also unclear whether the technicality related to the tenant’s addresses is even
relevant. A party can move at the end of trial to amend the pleadings to conform with the
evidence presented during the proceeding; this allows federal courts to avoid the problem
Bahr now complains of. Borden, Inc. v. Fla. E. Coast Ry. Co., 772 F.2d 750, 758 (11th
Cir. 1985). In fact, the Federal Rules of Civil Procedure “permit[] amendments to the
pleadings even after judgment if the issues involved are tried by the express or implied
consent of the parties.” Diaz v. Jaguar Restaurant Group, LLC, 627 F.3d 1212, 1214
(11th Cir. 2010) (emphasis added) (quoting Fed. R. Civ. P. 15(b)). Since Bahr did not
deign to appear in the case, he gave implicit consent to the United States to prove the
claims that it did. “The fact that no formal amendment of the pleadings took place is of
no consequence.” Proctor v. Gissendaner, 579 F.2d 876, 885 n.20 (5th Cir. 1978).

5

At bottom, “[t]here must be an end to litigation someday, and free, calculated,
deliberate choices are not to be relieved from.” Ackermann, 340 U.S. at 211–12. Bahr
had an opportunity to defend himself and chose not to. It would serve neither equity nor
efficiency to open the floodgates now to a new round of motions and hearings in this
case due to a technicality related to the specifics of the pleadings. This is especially true
seeing how Bahr, had he showed up to defend himself, could have pointed out this defect
then. Bahr’s motion is therefore due to be denied on the first ground he raises.
2. Bahr’s statute of limitations argument
Bahr next asserts that “all damages based on events that occurred before July 28,
2006[,] are barred by the statute of limitations.” (Doc. # 427.) From there, he appears to
argue that the Court should reduce the plaintiffs’ damages accordingly. This argument is
meritless. The statute of limitations is an affirmative defense that a defendant waives by
failing to plead it. Fed. R. Civ. P. 8(c)(1); Day v. Liberty Nat’l Life Ins. Co., 122 F.3d
1012, 1015 (11th Cir. 1997) (citing cases holding “failure to plead the bar of the statute
of limitations constitutes a waiver of the [statute of limitations] defense”). Besides, as
discussed above, both Rule 59(e) and Rule 60(b) are unavailable to Bahr, so he has no
procedural means to bring this argument properly before the Court. His motion is due to
be denied on this ground too.
3. Bahr’s arguments centered on subject-matter jurisdiction
Bahr lastly seeks relief under Rule 60(b)(4), which allows a court to relieve a

6

party from a final judgment where “the judgment is void.” Fed. R. Civ. P. 60(b)(4). The
Court never had subject-matter jurisdiction, Bahr claims, because the United States “did
not establish a pattern or practice of discrimination at [his] properties.” (Doc. # 427 at
12.) This, however, is not the test for assessing the Court’s subject-matter jurisdiction.
The relevant statute, 42 U.S.C. § 3614(a), confers standing on the Attorney
General to bring suit in certain circumstances. One of which is where the Attorney
General “has reasonable cause to believe that any person or group of persons is engaged
in a pattern or practice of” violating the Fair Housing Act. 42 U.S.C. § 3614(a); United
States v. Bob Lawrence Realty, Inc., 474 F.2d 115, 122–23 (5th Cir. 1973).2 For
jurisdictional purposes, the statute does not require actual proof of the pattern or practice
of discrimination; the Attorney General need only “reasonable cause” to believe that it
occurred. See United States v. Pelzer Realty Co., Inc., 484 F.2d 438, 444 (5th Cir. 1973).
A number of allegations in the third amended complaint support the Attorney
General’s reasonable-cause determination. For example, the United States alleged that
Gumbaytay managed two properties owned by Bahr (Doc. # 168 at ¶ 5); that Bahr
employed Gumbaytay as his agent to manage those properties (id. at ¶¶ 6–20); that
Gumbaytay subjected female tenants to sexual harassment there (id. at ¶ 23); that Bahr
knew or should have known of this harassment (id. at ¶ 24); and that Bahr owned other

2

In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc), the Eleventh
Circuit adopted as binding precedent all Fifth Circuit decisions handed down before the close of business
on September 30, 1981.

7

dwellings in which he employed Gumbaytay and in which Gumbaytay engaged in similar
discriminatory conduct (id. at ¶ 29). Because Bahr defaulted, he admitted all of these
allegations. Nishmatsu Const. Co. v. Houston Nat’l Bank, 515 F.2d 1200, 1206 (5th Cir.
1975) (“defendant, by his default, admits the plaintiff’s well-pleaded allegations of
fact”). These facts, taken as true, establish that the Attorney General had reasonable
cause to believe a pattern or practice of sex discrimination took place.
Furthermore, the Court has already addressed whether the Attorney General had
reasonable cause to bring the action, and in doing so, found that he did. (See Doc. # 197
at 10.) Bahr’s arguments, as the United States points out, relate to whether particular
victims should have received a damages award after an evidentiary hearing. This has
nothing to do with whether the United States had the ability to bring the action initially.
Accordingly, because the Attorney General satisfied the statutory standard, Bahr’s Rule
60(b)(4) motion is due to be denied.
B. The United States’ motion to supplement
After Bahr filed his motion to alter, amend, or vacate the judgment entered against
him, the United States moved to supplement the record. The newly provided evidence
would further support the damages award against Bahr. Specifically, the evidence
provides more proof that Bahr owned the properties at issue, employed Gumbaytay to
manage them, and harmed the victims awarded damages by the Court. Bahr of course
disputes the propriety of granting the United States’ motion.

8

A defendant’s decision to ignore a lawsuit against him prejudices not only himself
but also his opponent by depriving the adverse party of the ability to obtain important
evidence. See Venegas-Hernandez v. Sonolux Records, 370 F.3d 183, 187 (1st Cir.
2004). Allowing the absentee defendant to then come along and nitpick the sufficiency
of the evidence supporting the judgment against him would turn the litigation process on
its head. Indeed, “[i]t would usher in a new era in the dynamics of litigation if a party
could suffer a default judgment to be entered against it and then go about its business as
if the slate was wiped clean and a new day had dawned.” Trans World Airlines, Inc. v.
Hughes, 449 F.2d 51, 63–64 (2d Cir. 1971), rev’d on other grounds, 409 U.S. 363
(1973). Thus the Eleventh Circuit allows district courts to create a record after default to
support “whatever award of damages it deems appropriate.” Adolph Coors Co. v.
Movement Against Racism and the Klan, 777 F.2d 1538, 1544 (11th Cir. 1985).
Here, the Court sees no reason to revisit its damages award against Bahr. The
evidence adduced at the damages hearing, standing alone, supports the judgment. Yet,
out of an abundance of caution, the Court has reviewed the newly submitted evidence
filed by the United States. This evidence shows that Wright, Cates, Julian, and Knight
lived in Bahr-owned properties that Gumbaytay managed on his behalf. Because it does,
and since Bahr’s absence deprived the United States of the opportunity to obtain
evidence from him, the motion to admit the supplemental evidence is due to be granted.
And because this evidence contains personal information, the United States’ motion to

9

seal is likewise due to be granted.
IV. CONCLUSION
After having fully considered the parties’ arguments, and for the reasons discussed
above, it is hereby ORDERED as follows:
1.

Bahr’s Motion to Alter, Amend or Vacate Final Judgment (Doc. # 427) is
DENIED.

2.

Bahr’s Motion to Stay Execution Pending Disposition (Doc. # 443) is
DENIED AS MOOT.

3.

The United States’ Motion to Supplement the Record (Doc. # 433) is
GRANTED.

4.

The United States’ Motion to Seal (Doc. # 436) is GRANTED.

DONE this the 19 th day of April, 2012.
/s/ Mark E. Fuller
UNITED STATES DISTRICT JUDGE

10