USA v. Stock Asylum LLC et al

Filing 18

ORDER granting 12 Plaintiff's Motion for Default Judgment. By Judge William J. Martinez on 2/13/2015.(alowe)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge William J. Martínez
Civil Action No. 14-cv-1979-WJM-NYW
UNITED STATES OF AMERICA,
Plaintiff,
v.
STOCK ASYLUM LLC, and
RONALD ROVTAR,
Defendants.

ORDER GRANTING PLAINTIFF’S MOTION FOR ENTRY OF DEFAULT JUDGMENT

Plaintiff United States of America (“Plaintiff” or “Government”) brings this action
against Defendants Stock Asylum LLC and Ronald Rovtar (“Defendants”) arising out of
a loan that was guaranteed in part by the Small Business Administration (“SBA”).
(Compl. (ECF No. 1).)
This matter is before the Court on the Government’s Motion for Entry of Default
Judgment (“Motion”). (ECF No. 12.) For the reasons set forth below, the Motion is
granted.
I. PROCEDURAL HISTORY
The Government filed this action on July 16, 2014 alleging that Defendants
defaulted on a loan guaranteed by the SBA and seeking judgment in its favor for the
unpaid debt. (Compl. pp. 2-3.) On August 1, 2014, Defendants were both served with a
copy of the Complaint and Summons, which triggered an answer date of August 18,
2014. (ECF Nos. 7-8.) Defendants did not file any responsive papers or otherwise

appear to defend against the Government’s claim.
The Government then moved for entry of default. (ECF No. 15.) The Clerk
entered default against both Defendants on September 8, 2014. (ECF No. 16.) The
Government filed the instant Motion on August 27, 2014 (ECF No. 12), and no
responsive papers were filed by Defendants. As the date for responding to the Motion
as long since passed, the Motion is now ripe for consideration.
II. LEGAL STANDARD
Pursuant to Rule 55(b)(1), default judgment must be entered by the clerk of court
if the claim is for “a sum certain”; in all other cases, “the party must apply to the court for
a default judgment.” Fed. R. Civ. P. 55(b)(2). “[D]efault judgment must normally be
viewed as available only when the adversary process has been halted because of an
essentially unresponsive party. In that instance, the diligent party must be protected
lest he be faced with interminable delay and continued uncertainty as to his rights. The
default judgment remedy serves as such a protection.” In re Rains, 946 F.2d 731, 73233 (10th Cir. 1991) (internal quotation marks and citation omitted). Further, “a party is
not entitled to a default judgment as of right; rather the entry of a default judgment is
entrusted to the ‘sound judicial discretion’ of the court.” Greenwich Ins. Co. v. Daniel
Law Firm, 2008 WL 793606, at *2 (D. Colo. Mar. 22, 2008) (internal citation omitted).
III. ANALYSIS
Before granting a motion for default judgment, the Court must take several steps.
First, the Court must ensure that it has personal jurisdiction over the defaulting
Defendants and subject matter jurisdiction over the action. See Williams v. Life Sav. &
Loan, 802 F.2d 1200, 1202-03 (10th Cir. 1986). Next, the Court should consider
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whether the well-pleaded allegations of fact—which are admitted by Defendants upon
default—support a judgment on the claims against the defaulting Defendants. See Fed.
Fruit & Produce Co. v. Red Tomato, Inc., 2009 WL 765872, *3 (D. Colo. March 20,
2009) (“Even after entry of default, however, it remains for the court to consider whether
the unchallenged facts constitute a legitimate basis for the entry of a judgment.”)
(citations omitted). “In determining whether a claim for relief has been established, the
well-pleaded facts of the complaint are deemed true.” Id. (citing Dundee Cement Co. v.
Howard Pipe & Concrete Prods., Inc., 722 F.2d 1319, 1323 (7th Cir. 1983)). Once the
Court is satisfied that default judgment should be entered, it has the discretion to hold a
hearing to determine the amount of damages. See Fed. R. Civ. Pro. 55(b)(2).
Generally, a damages hearing is not needed when the damages requested are for a
sum certain. See United States v. Craighead, 176 F. App’x 922, 925 (10th Cir. 2006).
A.

Jurisdiction
The Court finds that jurisdiction exists in this case pursuant to 28 U.S.C. § 1345

because the United States of America is a party to this action. The Court further finds
that it has personal jurisdiction over Defendants, as Stock Asylum is a Colorado limited
liability corporation with its principal place of business in Boulder, Colorado and
Defendant Rovtar resides in Boulder, Colorado. (Compl. ¶¶ 3-4.) Accordingly, the
Court is satisfied that it has both subject matter jurisdiction over the case, and personal
jurisdiction over the Defendants.
B.

Plaintiff’s Claims
Plaintiff alleges that it is entitled to recover a debt from Defendants pursuant to

the Federal Debt Collection Procedure Act, 28 U.S.C. §§ 3001, et seq. (“FDCPA”).
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(Compl. p. 1.) The FDCPA provides the “civil procedures for the United States . . . to
recover a judgment on a debt.” 28 U.S.C. § 3001(a)(1). “Debt” is “an amount that is
owing to the United States on account of a fee, duty, lease, rent, service, sale of real or
personal property, overpayment, fine, assessment, penalty, restitution, damages,
interest, tax, bail bond forfeiture, reimbursement, recovery of a cost incurred by the
United States, or other source of indebtedness to the United States.” 28 U.S.C. §
3002(3).
Taking the facts pled in Plaintiff’s Complaint as true, the Court finds that the
Government has established that it is entitled to judgment on a debt owed by
Defendants. The Government has shown that Defendant Rovtar, acting on behalf of
Defendant Stock Asylum, signed a promissory note for a Small Business Administration
Express Loan Business Line of Credit in the amount of $70,000. (Compl. ¶ 6; ECF No.
1-3.) The SBA guaranteed half of that loan, or $35,000, and Defendant Rovtar signed
an unconditional guaranty on the loan. (Compl. ¶¶ 7-8; ECF No. 1-3.) Thus, the
Government has shown that Defendants incurred the debt at issue in this case.
The Complaint also states that Defendant Rovtar defaulted on his obligation to
pay the loan in October 2012. (Compl. ¶ 10.) On these facts, the Court finds that the
Government has proven that it is entitled to judgment in its favor on its FDCPA claim.
C.

Default Judgment for Sum Certain Damages
The Court further finds that a default judgment should be entered for the sum

certain damages that the Government seeks. Actual proof must support any default
judgment for money damages. See Klapprott v. United States, 335 U.S. 601, 611-12
(1949). Here, the Government has supplied a Declaration showing that it is entitled to
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recover a principal amount of $32,41.81 plus $10,364.18 in fees, as well as interest
accruing at the note rate from the date of judgment. (ECF No. 12-1 ¶ 5.) Thus, the
Court concludes that the Government is entitled to judgment in its favor in the amount of
$42,796.62, plus interest from the date of judgment at the applicable note rate.
D.

Surcharge
The Government also asks the Court to award it a 10% surcharge on the debt

pursuant to 28 U.S.C. § 3011. (ECF No. 12 at 2.) The FDCPA allows for recovery of
this surcharge “to cover the cost of processing and handling the litigation and
enforcement” of the claim for the debt. 28 U.S.C. § 3011(a). The Government is not
entitled to recover the surcharge if it is otherwise awarded attorneys’ fees or costs to
cover the processing and handling of litigation. Id. at § 3011(b).
In this case, the Government does not ask the Court for an award of attorneys’
fees, and there is no indication that it will otherwise be compensated for the work
required to process and enforce this litigation. Accordingly, the Court finds that the 10%
surcharge is appropriate, and will include it in the judgment.
E.

Costs
Finally, the Government requests costs in the amount of $400 pursuant to 28

U.S.C. § 2412(a)(2), which allows the United States to recover its filing fees when it
prevails in a civil action. (ECF No. 12 at 1.) The Court concludes that the Government
is entitled to this award, and will include it in the judgment.

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IV. CONCLUSION
For the reasons set forth above, the Court ORDERS as follows:
1.

The Government’s Motion for Entry of Default Judgment (ECF No. 12) is
GRANTED;

2.

The Clerk shall enter a default judgment in favor of the United States and against
Defendants, jointly and severally, for the following:
a.

$42,796.62 in principal, plus interest from the date of judgment at the
applicable note rate;

b.

$400 in costs; and

c.

A surcharge of 10% of the debt.

Dated this 13th day of February, 2015.
BY THE COURT:

William J. Martínez
United States District Judge

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