United States of America v. Shore et al
Filing
44
FINDINGS and RECOMMENDATIONS Recommending the Grant of the Government's Motion for Default Judgment 39 , signed by Magistrate Judge Sandra M. Snyder on 2/23/12. Referred to Judge Ishii.(Verduzco, M)
1
2
3
4
5
6
UNITED STATES DISTRICT COURT
7
EASTERN DISTRICT OF CALIFORNIA
8
9
UNITED STATES OF AMERICA,
10
Plaintiff,
11
12
CASE NO. 1:11-cv-01038-AWI-SMS
FINDINGS AND RECOMMENDATIONS
RECOMMENDING THE GRANT OF
THE GOVERNMENT’S MOTION FOR
DEFAULT JUDGMENT
v.
WILMA SHORE, et al.,
13
Defendants.
(Doc. 39)
/
14
15
Plaintiff United States of America (“Government”) moves for Entry of Default Judgment
16
against Defendants Wilma V. Shore Family Trust, A & N Diesel, Lyro, and Steel Truss and
17
Supply (collectively, the “Defendants”), ordering that the Defendants cannot object to the
18
foreclosure, that the foreclosure will be free and clear of the Defendants’ interests, and that the
19
Defendants will receive no distribution from the proceeds of any foreclosure sale. This Court has
20
reviewed the papers and has determined that this matter is suitable for decision without oral
21
argument pursuant to Local Rule 78-230(h). Having considered all written materials submitted,
22
the undersigned recommends that the Government’s motion be granted.
23
I.
24
Background
The Government seeks foreclosure of federal tax liens and entrance of a judgment lien
25
against real property located at 3705-3777 Meadow View Drive, Redding, Shasta County,
26
California 96002 (‘the subject property”), which is owned by Defendant Wilma Shore. It filed its
27
complaint in this Court on June 22, 2011. Pursuant to 26 U.S.C. § 7403(b), in addition to
28
Defendant Shore, the Government named as defendants the Wilma V. Shore Family Trust, Mid1
1
Valley Services, Inc., A & N Diesel, CARRCORR, GEN III, Ramon Hernandez, International
2
Web Coating, LeTourneau, Lyro, Mountain Fire Crew, Northern CA Veterans Museum,
3
Precision Auto Body, Redding Printing, Salvation Army, SHHIP, and Steel Truss and Supply,
4
each of which could claim an interest in the subject property.
5
Thereafter, the Government and lien holder Mid-Valley Services stipulated to the
6
priorities of their liens. The Government and the following entities named as defendants
7
stipulated that the sale of the subject property would be subject to their leases: CARRCORR,
8
International Web Coating, LeTourneau, Mountain Fire Crew, Northern CA Veterans Museum,
9
Redding Printing, Salvation Army, and SHHIP. The Government dismissed Ramon Hernandez,
10
GEN III, and Precision Auto Body since none of these parties had an interest in the subject
11
property.
12
On July 11, 2011, the Government personally served A & N Diesel with a copy of the
13
summons and complaint. A & N Diesel did not file a timely answer or response to the
14
complaint. The Clerk entered default against A & N Diesel on November 23, 2011.
15
On July 11, 2011, the Government personally served Lyro with a copy of the summons
16
and complaint. Lyro did not file a timely answer or response to the complaint. The Clerk
17
entered default against Lyro on November 23, 2011.
18
On July 13, 2011, the Government personally served Steel Truss and Supply with a copy
19
of the summons and complaint. Steel Truss and Supply did not file a timely answer or response
20
to the complaint. The Clerk entered default against Steel Truss and Supply on November 23,
21
2011.
22
On August 24, 2011, the Wilma V. Shore Family Trust’s counsel executed a waiver of
23
service. Wilma V. Shore Family Trust did not file a timely answer or response to the complaint.
24
The Clerk entered default against Wilma V. Shore Family Trust’s on November 9, 2011.
25
On December 8, 2011, the Government served copies of its requests for entry of judgment
26
against the Defendants and copies of the entries of default. None of the Defendants responded.
27
///
28
///
2
1
2
3
4
II.
Legal Standard for Default Judgment
The Government moves for entry of default judgment pursuant to F.R.Civ.P.55(b)(2),
which provides that judgment may be entered:
10
(2) By the Court. In all other cases the party entitled to judgment by default shall
apply to the Court therefor; but no judgment shall be entered against an infant or
incompetent person unless represented in the action by a general guardian,
committee, conservator, or other such representative who has appeared therein. If
the party against whom judgment by default is sought has appeared in the action,
the party (or, if appearing by representative, the party’s representative) shall be
served with written notice of the application for judgment at least 3 days prior to
the hearing on such application. If, in order to enable the Court to enter judgment
or to carry it into effect, it is necessary to take an account or to determine the
amount of damages or to establish the truth of any averment by evidence or to
make an investigation of any other matter, the Court may conduct such hearings or
order such references as it deems necessary and proper and shall accord a right of
trial by jury to the parties when and as required by any statute of the United States.
11
None of the Defendants against whom this motion is brought is an infant or incompetent
5
6
7
8
9
12
person, or in the military service or otherwise exempted under the Soldiers’ and Sailors’ Civil
13
Relief Act of 1940 (Doc. 27-2, ¶¶ 7 & 8). Further, “upon default, the well pleaded allegations of
14
the complaint relating to liability are taken as true.” Dundee Cement Co. v. Highway Pipe and
15
Concrete Products, 722 F.2d 1319, 1323 (7th Cir. 1983). See also TeleVideo Systems, Inc. v.
16
Heidenthal, 826 F.2d 915, 917 (9th Cir. 1987). Thus, “[a]t the time of entry of default, the facts
17
alleged by the plaintiff in the complaint are deemed admitted.” 10 J. Moore, Moore’s Federal
18
Practice § 55.11 (3d ed. 2000).
19
When exercising discretion as to the entry of a default judgment, courts may consider
20
(1) the possibility of prejudice to the plaintiff, (2) the merits of plaintiff’s substantive claim, (3)
21
the sufficiency of the complaint, (4) the sum of money at stake in the action, (5) the possibility of
22
a dispute concerning material facts, (6) whether the default was due to excusable neglect, and (7)
23
the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the
24
merits. Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986).
25
This Court has evaluated the factors listed above and finds that the facts of this case favor
26
our granting default judgment. First, the Government would suffer prejudice if the Court does
27
not enter default judgment since Defendants have not participated in this litigation and the
28
Government has no other means of addressing their potential interests in the subject property.
3
1
Second, the Government’s complaint properly alleges the necessary elements of the cause of
2
action, satisfying the second and third factors, the merits of the substantive claim and the
3
sufficiency of the complaint. Because a significant amount of money is at stake in this action and
4
because the Government has demonstrated that its actions are authorized by law and has proven
5
the amount of damages, the fourth factor has also been satisfied.
6
Finally, although cases should be decided on the merits when reasonably possible, that
7
preference alone does not preclude the entry of default judgment. PepsiCo, Inc. v. California
8
Security Cans, 238 F.Supp.2d 1172, 1177 (C.D.Cal. 2002). Because the Defendants’ interest in
9
the property is solely that of lessees, entering default judgment is appropriate in that it resolves
10
Defendants’ interests in the property in light of forthcoming foreclosure of the underlying
11
ownership interest of their lessor and prevents them from objecting to the subject property’s sale,
12
which would greatly prejudice the Government..
13
III.
Foreclosure of Judgment Lien and Defendants’ Potential Interest in Subject
Property
14
When the Secretary of the Treasury has requested that the Government sue to enforce a
15
tax liability, the Court has jurisdiction to enforce the lien and subject the property to payment of
16
tax. 26 U.S.C. § 7403 (a). This jurisdiction includes the power for the Court to determine all
17
claims or liens on the subject property, to order the property sold when appropriate, and to
18
distribute the sale proceeds. Because the Defendants have not answered, pled, or otherwise
19
appeared in this action, entry of default judgment against them is the appropriate means to
20
resolve issues relating to their potential interests in the subject property.
21
IV.
Recommendation
22
Accordingly, the undersigned HEREBY RECOMMENDS that:
23
1.
The Government’s motion for the entry of default judgment against Defendants Wilma V.
24
Shore Family Trust, A & N Diesel, Lyro, and Steel Truss and Supply be granted.
25
2.
Defendants Wilma V. Shore Family Trust, A & N Diesel, Lyro, and Steel Truss and
26
Supply be precluded from objecting to any foreclosure of the subject property in this case;
27
3.
The foreclosure of the subject property be free and clear of any interest of Defendants
28
Wilma V. Shore Family Trust, A & N Diesel, Lyro, and Steel Truss and Supply;
4
1
4.
Defendants Wilma V. Shore Family Trust, A & N Diesel, Lyro, and Steel Truss and
2
Supply be denied any distribution from the proceeds of any sale of the subject property
3
These Findings and Recommendations are submitted to the Honorable Anthony W. Ishii,
4
United States District Court Judge, pursuant to the provisions of 28 U.S.C. § 636(b)(1)(B) and
5
Rule 72-304 of the Local Rules of Practice for the United States District Court, Eastern District
6
of California. Within thirty (30) days after being served with a copy, any party may file written
7
objections with the Court, serving a copy on all parties. Such a document should be captioned
8
“Objections to Magistrate Judge’s Findings and Recommendations.” The Court will then review
9
the Magistrate Judge’s ruling pursuant to 28 U.S.C. § 636(b)(1)(C). The parties are advised that
10
failure to file objections within the specified time may waive the right to appeal the District
11
Court’s order. Martinez v. Ylst, 951 F.2d 1153 (9th Cir. 1991).
12
13
14
15
IT IS SO ORDERED.
16
Dated:
icido3
February 23, 2012
/s/ Sandra M. Snyder
UNITED STATES MAGISTRATE JUDGE
17
18
19
20
21
22
23
24
25
26
27
28
5
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?