Balch and Bingham LLP v. United States of America et al

Filing 51

ORDER ADOPTING REPORT AND RECOMMENDATIONS,Defendant United States of Americas motion for default judgment (doc. 43), isGRANTED and a judgment is entered against Defendant Holland, who herebyforfeits any claim of entitlement to the funds;Plaintiff Bal ch and Bingham, LLP is DISCHARGED from any further liabilitywith respect to, affecting, or in any way arising out of the funds at issue;; The interpleader defendants are permanently enjoined from instituting orprosecuting any proceeding against Balch and Bingham, LLP with respect to,affecting, or in any way arising out of the funds at issue; and; Final judgment is entered, distributing the interpleader funds Balch and Bingham,LLP deposited into the court registry; Disbursement orders shall be entered separately. Signed by Judge Virginia Emerson Hopkins on 5/3/2016. (KAM, )

FILED
2016 May-03 PM 03:55
U.S. DISTRICT COURT
N.D. OF ALABAMA

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
BALCH AND BINGHAM, LLP,

)
)
)
)
) Case No.: 2:14-CV-2041-VEH
)
)
)
)
)
)
)

Plaintiff,
v.
UNITED STATES OF AMERICA, et
al.,
Defendant.

ORDER ADOPTING MAGISTRATE JUDGE’S REPORT AND
RECOMMENDATION
This is an interpleader action filed by Plaintiff Balch and Bingham, LLP, alleging
it had possession of $7,891.55 in unused retainer belonging to one of three competing
claimants, who Balch named as defendants: The United States of America (“USA”),
Claire Suzanne Holland (“Holland”), and Frank Amodeo (“Amodeo”). Before the court
is the report and recommendation on Defendant USA’s motion for default judgment
against Holland. Amodeo and the USA have resolved their competing claims.
After

conducting

a

careful

and

complete

review

of

the

findings

and

recommendations, a district judge may accept, reject, or modify the magistrate judge’s
report and recommendation. See 28 U.S.C. § 636(b)(1); Williams v. Wainwright, 681
F.2d 732 (11th Cir. 1982). A district judge “shall make a de novo determination of those

portions of the report or specified proposed findings or recommendations to which
objection is made.” 28 U.S.C. § 636(b)(1)(C). This requires that the district judge “give
fresh consideration to those issues to which specific objection has been made by a
party.” Jeffrey S. v. State Bd. of Educ., 896 F.2d 507, 512 (11th Cir. 1990) (citation
omitted).

A district judge must review legal conclusions de novo, even in the absence

of an objection. See Cooper-Houston v. Southern Ry., 37 F.3d 603, 604 (11th Cir.
1994); Castro Bobadilla v . Reno, 826 F. Supp. 1428, 1431-32 (S.D. Fla. 1993), aff’d
28 F.3d 116 (11th Cir. 1994). That said, the court also acknowledges the principle that
“[n]either the Constitution nor the statute requires a district judge to review, de novo,
findings and recommendations that the parties themselves accept as correct.” United
States v. Woodard, 387 F.3d 1329, 1334 (11th Cir. 2004) (citation omitted).
Moreover, absent specific objections, there is no requirement that a district judge review
factual findings de novo.

See Garvey v. Vaughn, 993 F.2d 776, 779 n.9 (11th Cir.

1993) (noting that when a party “did not file specific objections to factual findings by
the magistrate judge, there was no requirement that the district court de novo review
those findings”) (emphasis in original) (citations omitted).
After a complete and independent review of the record and the magistrate judge’s
report and recommendation (attached below), the court concludes tht the magistrate
judge’s report and recommendation will be ADOPTED. It is hereby ORDERED that:

2

1.

Defendant United States of America’s motion for default judgment (doc. 43), is
GRANTED and a judgment is entered against Defendant Holland, who hereby
forfeits any claim of entitlement to the funds;

2.

Plaintiff Balch and Bingham, LLP is DISCHARGED from any further liability
with respect to, affecting, or in any way arising out of the funds at issue;

3.

The interpleader defendants are permanently enjoined from instituting or
prosecuting any proceeding against Balch and Bingham, LLP with respect to,
affecting, or in any way arising out of the funds at issue; and

4.

Final judgment is entered, distributing the interpleader funds Balch and Bingham,
LLP deposited into the court registry, including any interest accruing on those
funds, as follows:
a.

$3,945.78 to Defendant Frank Amodeo; and

b.

$3,945.77, plus all interest, less the Administrative Assessment Fee, to
Defendant United State of America.

Separate orders of disbursement will issue.
DONE and ORDERED this 3rd day of May, 2016.

VIRGINIA EMERSON HOPKINS
United States District Judge

3

MAGISTRATE JUDGE’S REPORT AND RECOMMENDATION
Plaintiff Balch and Bingam, LLP (“Balch”) filed this interpleader action on
October 23, 2014, alleging it had possession of $7,891.55 in unused retainer that
belonged to one of three competing claimants, who Balch named as defendants: the
United States of America (“the Government”), Claire Suzanne Holland (“Holland”), and
Frank Amodeo (“Amodeo”). (Doc. 1). Balch’s complaint seeks discharge from any
liability related to, and enjoining any future action against Balch regarding, the unused
retainer. (Doc. 1 at 4). The Government now moves for a default judgment against
Holland pursuant to Rule 55(b) of the Federal Rules of Civil Procedure, (doc. 43), and
the parties other than Holland have filed a stipulation of settlement of the remaining
issues, (doc. 45). Based on the following, the undersigned recommends the motion for
default judgment be GRANTED, the relief Balch seeks be GRANTED, and the funds
disbursed as stipulated.
I. Background
Around 2006, Balch accepted a retainer to represent Amodeo and Holland in a
residential construction dispute, and, at the end of the representation, $7,891.55
remained in Balch’s general account. (Doc. 1 at ¶¶ 7-8). In 2008, Balch received notice
of a seizure warrant issued by United States Magistrate Judge David A. Baker in the
United States District Court for the Middle District of Florida, for proceeds held for

4

Amodeo in Balch’s trust account. (Id. at ¶ 9). Balch delivered these funds, but the unused
retainer in Balch’s general account was not responsive to the warrant and remained in the
account. (Id. at ¶ 10).
As a result, Balch filed the instant complaint, contending it was unable to
determine the proper beneficiary of the unused retainer and that it was at risk of multiple
liability due to the competing claims. (Id. at ¶ 11). Balch deposited the unused retainer
with the Court. (Doc. 5). After the complaint was filed, summonses were issued for all
three defendants. (Docs. 6, 7, & 8). The Government and Amodeo were served, (docs. 9
& 10), and both appeared, claiming entitlement to the funds, (docs. 22 & 37). The
summons directed to Holland was returned “not deliverable as addressed,” (doc. 11), and
an alias summons was issued, (doc. 12). Holland was served on November 21, 2014.
(Doc. 20 & 43-2). To date, Holland has not answered or otherwise defended against the
complaint, and, at the Government’s request, the Clerk entered default on March 17,
2016. (Docs. 43 & 44). On April 11, 2016, the parties who have appeared filed a
stipulation of settlement of the remaining issues. (Doc. 45).
II. Analysis
A. Motion for Default Judgment Against Holland
The Government asserts in the declaration attached to its motion for default that
Holland has failed to plead or otherwise defend this action and she is not an infant or

5

incompetent person and has not been in the United States military service since, or for
a period of six months prior to, the filing of this action. (Doc. 43-3 at ¶ 3). As such, she
is in default and subject to default judgment under Rule 55(b), FED. R. CIV. P.
The Eleventh Circuit has set out the law regarding default judgments as follows:
While “a default is not treated as an absolute confession by
the defendant of his liability and of the plaintiff’s right to
recover,” a defaulted defendant is deemed to “admit[ ] the
plaintiff’s well-pleaded allegations of fact.’ The defendant,
however, “is not held to admit facts that are not well-pleaded
or to admit conclusions of law.” Thus, before entering a
default judgment for damages, the district court must ensure
that the well-pleaded allegations in the complaint, which are
taken as true due to the default, actually state a substantive
cause of action and that there is a substantive, sufficient basis
in the pleadings for the particular relief sought.
Tyco Fire & Sec., LLC v. Alcocer, 218 F. App’x 860, 863 (11th Cir. 2007) (quoting
Nishimatsu Constr. Co. v. Houston Nat’l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975))
(internal citations and footnotes omitted) (emphasis in original). Under this law, the
Court must examine the factual allegations, deeming them admitted, to determine
whether there is sufficient basis to award the relief sought.
Balch has alleged it was in possession of money in which it does not claim any
interest, (doc. 1 at ¶¶ 8 & 13), and it is aware of competing interests in the money
between its former clients (Holland and Amodeo), who originally gave it the money, and
the Government, who has sought to seize funds belonging to Amodeo, (id. at ¶¶ 7-9).

6

These well-pleaded allegations, taken as true, establish Balch is at risk of multiple
liability from the competing claims and is entitled to pay the money into court and obtain
a judgment discharging it from any further liability. See 28 U.S.C. § 1335; 28 U.S.C. §
2410(a)(5); FED. R. CIV. P. 22; Protective Life Ins. Co. v. Tinney, No.
2:14-CV-02251-TMP, 2015 WL 1402464, at *3 (N.D. Ala. Mar. 25, 2015).
Accordingly, Balch’s motion for default judgment against Holland is due to be granted.
See Tinney, No. 2:14-CV-02251-TMP, 2015 WL 1402464, at *3.
When default judgment is granted against a named and served defendant in an
interpleader case, the defaulting defendant forfeits any claim to the res. Id. at *4 (and
cases cited therein). Because Holland is in default and default judgment is due to be
entered against her, she has forfeited any claim to the unused retainer paid into court.
B. Stipulation of the Remaining Parties
On April 11, 2016, the remaining interpleader defendants stipulated to Balch’s
discharge of liability and to distribution of the $7,891.55 in interpleader proceeds as
follows: $3,945.78 to Defendant Frank Amodeo and $3,945.77, plus all interest, less the
Administrative Assessment Fee, to the United State of America.
III. Recommendation
Based on the foregoing, the undersigned RECOMMENDS:
1.

Defendant United States of America’s motion for default judgment, (doc. 43), be
GRANTED and a judgment be entered against Defendant Holland, forfeiting any
7

claim of entitlement to the funds;
2.

Plaintiff Balch and Bingham be DISCHARGED from any further liability with
respect to, affecting, or in any way arising out of the funds at issue;

3.

The interpleader defendants be permanently enjoined from instituting or
prosecuting any proceeding against Balch and Bingham with respect to, affecting,
or in any way arising out of the funds at issue; and

4.

Final judgment be entered distributing the interpleader funds Balch and Bingham
deposited into the court registry, including any interest accruing on those funds,
as follows:
a.

$3,945.78 to Defendant Frank Amodeo; and

b.

$3,945.77, plus all interest, less the Administrative Assessment Fee, to
Defendant United State of America.
IV. Notice of Right to Object

Pursuant to 28 U.S.C. § 636(b)(1)(C) and Rule 72(b)(2), FED. R. CIV. P., any party
may file specific written objections to this report and recommendation within fourteen
(14) days from the date it is filed in the office of the Clerk. Failure to file written
objections to the proposed findings and recommendations contained in this report and
recommendation within fourteen (14) days from the date it is filed shall bar an aggrieved
party from attacking the factual findings on appeal, except for plain error. Written
objections shall specifically identify

the portions of the proposed findings and

recommendation to which objection is made and the specific basis for objection. A copy
of the objections must be served upon all other parties to the action.

8

DONE this 12th day of April 2016.
________________________________
JOHN H. ENGLAND, III
UNITED STATES MAGISTRATE JUDGE

9