United States of America v. DeFazio

Filing 13

ORDER granting 9 Plaintiff's Motion for Summary Judgment; denying 11 Defendant's Motion for Oral Argument. The Clerk is directed to enter judgment against Defendant for $254,516.43 in principal and $21,923.00 in interest th rough January 21, 2011, plus interest from January 22, 2012 through the date of judgment in the amount of $3,967.60, plus interest from the date of judgment at.21% compounded annually until the judgment is satisfied. Plaintiff is also entitled to costs incurred herein. Signed by Judge David G Campbell on 5/31/12.(DMT)

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1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 United States of America, Plaintiff, 10 11 ORDER v. 12 No. CV11-0529-PHX-DGC Robert A. DeFazio, Defendant. 13 14 In this action, the government seeks to collect more than $200,000 in loans made 15 by the Department of Education. The government filed a motion for summary judgment 16 on January 17, 2012, pursuant to Rule 56 of the Federal Rules of Civil Procedure. 17 Doc. 9. Defendant Robert A. DeFazio filed a motion requesting oral argument on the 18 government’s motion. Doc. 11. The Court entered an order explaining to Defendant the 19 requirements of Rule 56 and the relevant Local Rules of Civil Procedure, and ordered 20 Defendant to file a response to the government’s motion for summary judgment by May 21 11, 2012. Doc. 12. Defendant has not responded. For the reasons that follow, the Court 22 will grant summary judgment in favor of the government.1 23 I. Legal Standard. 24 A party seeking summary judgment “bears the initial responsibility of informing 25 the district court of the basis for its motion, and identifying those portions of [the record] 26 27 28 1 Defendant’s request for oral argument (Doc. 11) is denied because the issues have been fully briefed and oral argument will not aid the Court’s decision. See Fed. R. Civ. P. 78(b); Partridge v. Reich, 141 F.3d 920, 926 (9th Cir. 1998). 1 which it believes demonstrate the absence of a genuine issue of material fact.” Celotex 2 Corp. v. Catrett, 477 U.S. 317, 323 (1986). Summary judgment is appropriate if the 3 evidence, viewed in the light most favorable to the nonmoving party, shows “that there is 4 no genuine issue as to any material fact and that the movant is entitled to judgment as a 5 matter of law.” Fed. R. Civ. P. 56(c)(2). Summary judgment is also appropriate against a 6 party who “fails to make a showing sufficient to establish the existence of an element 7 essential to that party’s case, and on which that party will bear the burden of proof at 8 trial.” Celotex, 477 U.S. at 322. Only disputes over facts that might affect the outcome 9 of the suit will preclude the entry of summary judgment, and the disputed evidence must 10 be “such that a reasonable jury could return a verdict for the nonmoving party.” 11 Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). 12 II. Preliminary Issue. The government filed its complaint on March 22, 2011. Doc. 1. The summons 13 14 and complaint were returned to the Court unexecuted on June 10, 2011. Doc. 7. 15 Defendant filed an answer on May 31, 2011. Doc. 6. In his answer, Defendant denied 16 receiving formal service, but acknowledged that he was aware of the complaint and stated 17 that he would return a request for waiver of service. Doc. 9, at 3 (citing Doc. 6, at 1). 18 This history of the case raises a question about whether the Court may assert personal 19 jurisdiction over Defendant. 20 A defendant waives the defenses of insufficiency of service of process and lack of 21 personal jurisdiction by filing an answer without first raising the defenses. Fed. R. Civ. 22 P. 12(h); Jackson v. Hayakawa, 682 F.2d 1344, 1347 (9th Cir. 1982); Hays v. United 23 Fireworks Mfg. Co., 420 F.2d 836, 844 (9th Cir. 1969). Defendant waived any issue of 24 personal jurisdiction by appearing voluntarily and filing an answer. 25 III. Discussion. 26 Under LRCiv 7.2(i) of the Local Rules of Civil Procedure, if the opposing party to 27 a motion “does not serve and file the required answering memoranda . . . such non- 28 compliance may be deemed a consent to the denial or granting of the motion and the -2- 1 Court may dispose of the motion summarily.” LRCiv 7.2(i). The Ninth Circuit has held 2 that it is an abuse of discretion to grant a motion pursuant to such a local rule where the 3 movant’s papers are insufficient to support the motion or on their face reveal a genuine 4 issue of material fact. Henry v. Gill Indus., Inc., 983 F.2d 943, 950 (9th Cir. 1993). 5 To recover on a promissory note, the government must establish that: (1) the 6 defendant signed the note, (2) the government is the current owner or holder of the note, 7 and (3) the note is in default. United States v. Petroff-Kline, 557 F.3d 285, 290 (6th Cir. 8 2009); United States v. Lawrence, 276 F.3d 193, 197 (5th Cir. 2001). To make this prima 9 facie showing, “the government may introduce evidence of the note and a sworn 10 transcript of the account or certificate of indebtedness.” Petroff-Kline, 557 F.3d at 290. 11 Once a prima facie case is established, the defendant has the burden of proving the 12 nonexistence, extinguishment, or variance in payment of the obligation. Id. 13 The government contends that it is entitled judgment “in the sum of $276,439.43 14 consisting of $254,516.43 principal, plus $21,923 interest computed through January 21, 15 2011, with interest continuing to accrue from January 21, 2011, plus interest from the 16 date of judgment as provided by law and all costs in this action.” Doc. 9, at 5. To 17 support its motion for summary judgment, the government has submitted the relevant 18 loan applications and promissory notes (Doc. 10-2, at 2-7 (Ex. 1)), and a Certificate of 19 Indebtedness, certified pursuant to 28 U.S.C. § 1746(2) under penalty of perjury 20 (Doc. 10-2, at 9 (Ex. 2)). 21 The government’s evidence establishes that on or about May 15, 2003 and 22 September 1, 2004, Defendant executed promissory notes to secure direct consolidation 23 loans from the Department of Education. Doc. 10-2, at 2. Under the promissory notes, 24 Defendant “promise[d] to pay to the U.S. Department of Education . . . all sums disbursed 25 under the terms of this Promissory Note,” including interest and fees as well as collection 26 of costs if Defendant failed to make payment on the note when due. See id. On 27 October 8, 2004, the loan was disbursed in the amounts of $104,702.95 and $120,778.63, 28 at 4.38 percent interest per annum. Doc. 10-2, at 9. On or about September 3, 2009, -3- 1 Defendant defaulted on his loan obligation. Doc. 10, at 2, ¶ 9. Pursuant to 34 C.F.R. 2 § 685.202(b), a total of $29,072.14 in unpaid interest was capitalized and added to the 3 principal balance. Id. The Department of Education has credited a total of $87.29 in 4 payments from all sources, including Treasury Department offsets. 5 After application of these payments, Defendant owes the United States a total debt of 6 $276,439.43 as of January 21, 2011, consisting of $254,516.43 in principal and $21,923 7 in interest, with interest accruing on the principal at a rate of $30.52 per day. Id. Doc. 10-2, at 9. 8 The government has shown that Defendant signed the promissory note, that the 9 government currently holds the note, and that the note is in default. There is sufficient 10 evidence for the government to recover on the note. 11 IV. Conclusion. 12 The time to respond to the government’s motion for summary judgment has 13 expired, and Defendant has not filed a response. Review of the record indicates that the 14 government’s motion is facially meritorious and demonstrates the absence of genuine 15 issues of material fact. The motion is thus well taken and supports summary judgment 16 pursuant to LRCiv 7.2(i). 17 IT IS ORDERED: 18 1. Plaintiff’s motion for summary judgment (Doc. 9) is granted. 19 2. Defendant’s request for oral argument (Doc. 11) is denied. 20 3. The Clerk is directed to enter judgment against Defendant for $254,516.43 21 in principal and $21,923.00 in interest through January 21, 2011, plus interest from 22 January 22, 2012 through the date of judgment in the amount of $3,967.60, plus interest 23 from the date of judgment at .21% compounded annually until the judgment is satisfied. 24 Plaintiff is also entitled to costs incurred herein. 25 Dated this 31st day of May, 2012. 26 27 28 -4-

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