Satriano v. Countrywide Home Loans, Inc.
Filing
33
ORDER; 29 Plaintiff's Motion for Judgment by Default is GRANTED. Accordingly, IT IS FURTHER ORDERED that the Clerk of Court shall enter default as to Unknown Persons. Fed. R. Civ. P. 55(a). IT IS FURTHER ORDERED that, after default is ente red, default judgment shall be entered in favor of Plaintiff and against Unknown Persons. Fed. R. Civ. P. 55(b)(2). Uponentry of this judgment, any and all interests Unknown Persons have in the Subject Property shall be extinguished, by Magistrate Judge Kristen L. Mix on 4/23/15.(morti, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 14-cv-02216-KLM
ELIZABETH D. SATRIANO,
Plaintiff,
v.
COUNTRYWIDE HOME LOANS, INC., a New York corporation, and all unknown persons
who claim any interest in the subject matter of this action,
Defendant.
_____________________________________________________________________
ORDER
_____________________________________________________________________
ENTERED BY MAGISTRATE JUDGE KRISTEN L. MIX
This matter is before the Court on Plaintiff’s Motion for Judgment by Default [#29]1
(the “Motion”). In the Motion, Plaintiff seeks entry of default judgment against “all unknown
persons who claim any interest in” certain real property (“Unknown Persons”) pursuant to
Fed. R. Civ. P. 55(b)(2).2 Motion [#29] at 1. The Court has reviewed the Motion, the entire
case file, and the applicable law, and is fully advised in the premises. Accordingly, for the
reasons set forth below, the Motion [#29] is GRANTED.
I. Background
1
“[#29]” is an example of the convention the Court uses to identify the docket number
assigned to a specific paper by the Court’s case management and electronic case filing system
(CM/ECF). This convention is used throughout this Order.
2
It appears to be immaterial whether these persons are listed as “Unknown Persons” or
as “John Doe” defendants in the caption for purposes of this quiet title action. See, e.g., Bain v.
U.S. Dep’t of Treasury-I.R.S., No. 12-cv-02111-REB-KLM, 2013 WL 4729239 (D. Colo. June 10,
2013); Barker v. Bd. of Cnty. Comm’rs of Cnty. of La Plata, Colo., 24 F. Supp. 2d 1120, 1124 (D.
Colo. 1998).
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On July 8, 2014, Plaintiff filed a quiet title action in state court which was removed
to this Court by Defendant. See Notice of Removal [#1] at 1. The real property that is the
subject of this action is located at 6452 East Mississippi Avenue, Denver, Colorado 80224
(the “Subject Property”). Compl. [#4] ¶ 6. Plaintiff and Defendant Countrywide Home
Loans, Inc. agree that Plaintiff holds record title to the Subject Property. See Joint Motion
for Entry of Judgment [#30] at 1.
II. Analysis
Pursuant to Fed. R. Civ. P. 55(a), default may enter against a party who fails to
appear or otherwise defend the case brought against it. However, even after an entry of
default, the Court must decide “whether the unchallenged facts create a legitimate basis
for the entry of a judgment.” See Greenwich Ins. Co. v. Daniel Law Firm, No. 07-cv-2445LTB-MJW, 2008 WL 793606, at *1 (D. Colo. Mar. 22, 2008) (citations omitted). “[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.” Id. at *2 (quoting Cablevision of S.
Conn., Ltd. P’ship v. Smith, 141 F. Supp. 2d 277, 281 (D. Conn. 2001)).
Pursuant to Fed. R. Civ. P. 55(b), in considering the Motion, the decision to enter
default judgment is “committed to the district court’s sound discretion . . .” Olcott v. Del.
Flood Co., 327 F.3d 1115, 1124 (10th Cir. 2003) (quotation omitted). When exercising that
discretion, the Court considers that “[s]trong policies favor resolution of disputes on their
merits.” Ruplinger v. Rains, 946 F.2d 731, 732 (10th Cir. 1991) (internal quotation and
citation omitted). Further, “[t]he default judgment must normally be viewed as available
only when the adversary process has been halted because of an essentially unresponsive
party.” Id.
It serves to protect a plaintiff against “interminable delay and continued
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uncertainty as to [her] rights.” Id. at 733.
A.
Jurisdiction
In determining whether entry of default judgment is warranted here, the Court must
first consider whether the Court has subject matter and personal jurisdiction. Dennis
Garberg & Assocs. v. Pack-Tech Int’l Corp., 115 F.3d 767, 772 (10th Cir. 1997); Williams
v. Life Sav. & Loan, 802 F.2d 1200, 1202-03 (10th Cir. 1986). The Court must do so in
consideration of the well-established law that “a judgment is void if the court that enters it
lacks jurisdiction over either the subject matter of the action or the parties to the action.”
Williams, 802 F.2d at 1203.
1.
Subject Matter Jurisdiction
Defendant removed this action to this Court pursuant to 28 U.S.C. §§ 1332, 1441,
and 1446 based on diversity jurisdiction. Am. Notice of Removal [#12] at 1. Diversity
jurisdiction is governed by 28 U.S.C. § 1332(a), which provides in pertinent part that “[t]he
district courts shall have original jurisdiction of all civil actions where the matter in
controversy exceeds the sum or value of $75,000, exclusive of interests and costs, and is
between . . . (1) citizens of different states; [or] (2) citizens of a State and citizens of a
foreign state.” 28 U.S.C. § 1332(a). The amount in controversy, i.e., the value of the real
property, well over the $75,000 jurisdictional limit. Compl. [#4] ¶ 7; Notice of Removal [#12]
¶ 10 (citing Baker v. Sears Holdings Corp., 557 F. Supp. 2d 1208, 1212 (D. Colo. 2007);
quoting Lovell v. State Farm Mut. Auto. Ins. Co., 466 F.3d 893, 897 (10th Cir. 2006)).
The Complaint alleges that Plaintiff is an individual residing in Denver, Colorado, and
that Defendant Countrywide Home Loans, Inc. is a New York corporation. [#4] ¶¶ 1-2. The
presence of “John Doe” defendants, or in this case “Unknown Persons,” at the
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commencement of an action is not an impediment to removal under the federal removal
statutes. McPhail v. Deere & Co., 529 F.3d 947, 951 (10th Cir. 2008) (citing 28 U.S.C. §
1441(a) (“[T]he citizenship of defendants sued under fictitious names shall be
disregarded.”); Australian Gold, Inc. v. Hatfield, 436 F.3d 1228, 1234-35 (10th Cir. 2006)).
Thus, the diversity of citizenship between Plaintiff and Defendant Countrywide Home
Loans, Inc. is sufficient to support the statutory diversity requirement.
The Court is unaware of any case addressing entry of default judgment against John
Doe defendants in an action which is removed to federal court based on diversity
jurisdiction. However, in McPhail v. Deere & Co., the Tenth Circuit appears to imply that
this is permissible. In McPhail, the plaintiff named three defendants as “John Does” in the
original complaint. They were later identified as in-state distributors who, if added to the
lawsuit, would have destroyed diversity jurisdiction over the case. 529 F.3d at 951. The
Tenth Circuit held that, in the absence of a request to amend the complaint to replace John
Doe defendants with the names of actual persons or entities, even when the identities of
those persons and entities are known and adding them would destroy diversity jurisdiction,
the district court retained jurisdiction over the entire action. Id. at 952. Here, the Unknown
Persons have neither been identified with specificity nor added to this lawsuit by an
amendment to the complaint. Under such circumstances, it appears that the Court retains
full jurisdiction to adjudicate all aspects of this matter, including entering default judgment
against any defendant.3
3
In this case, because jurisdiction is based on diversity, the law of the forum state is
applied. McPhail, 529 F.3d at 957. As discussed below, the law of the forum state, i.e., Colorado,
permits entry of default judgment under the circumstances present in this matter.
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Accordingly, the Court finds that the presence of Unknown Persons does not deprive
it of diversity jurisdiction. Therefore, complete diversity and an adequate amount in
controversy are present, and the Court may exercise subject matter jurisdiction over this
dispute pursuant to 28 U.S.C. § 1332(a).
2.
Personal Jurisdiction
Before analyzing personal jurisdiction, the Court must first address the adequacy of
service of process. See United States v. Elsberg, No. 08-cv-00522-MSK-KLM, 2010 WL
5177439, at *2 (D. Colo. Aug. 17, 2010). In the Motion [#29], Plaintiff seeks entry of a
default judgment against Unknown Persons. On July 21, 2014, Plaintiff’s request for an
order authorizing service by publication was granted. Order [#6] at 1. Plaintiff filed an
Affidavit of Publication demonstrating that notice to Unknown Persons was published in the
Your Hub for Denver Downtown/East (including the counties of Denver, Arapahoe, and
Adams) on five non-consecutive days from August 7, 2014 to September 4, 2014. See Aff.
of Publication [#29-1] at 2.
The Court is satisfied that notice by publication as conducted here is sufficient
service in a proceeding to quiet title such as the case at hand. See Fed. R Civ. P. 4(e)(1),
4(h)(1)(A); Colo. R. Civ. P. 4(g). “An elementary and fundamental requirement of due
process in any proceeding which is to be accorded finality is notice reasonably calculated,
under all the circumstances, to apprise interested parties of the pendency of the action and
afford them an opportunity to present their objections.” Mullane v. Central Hanover Bank
& Trust Co., 339 U.S. 306, 314 (1950) (holding that notice by publication was constitutional
as to trust accounts for which the names of all owners were not known). Of course,
“process which is a mere gesture is not due process,” but “where conditions do not
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reasonably permit [personal] notice, [and] the form chosen is not substantially less likely
to bring home notice than other of the feasible and customary substitutes,” such notice may
be defended because it is “reasonably certain to inform those affected . . .” Id. at 315.
Where as here, “it is not reasonably possible or practicable to give more adequate
warning,” because Plaintiff seeks to provide notice to “persons missing or unknown,
employment of an indirect and even a probably futile means of notification is all that the
situation permits and creates no constitutional bar to a final decree foreclosing their rights.”
Id. at 317 (citing Cunnius v. Reading Sch. Dist., 198 U.S. 458 (1905); Blinn v. Nelson, 222
U.S. 1 (1911); Jacob v. Roberts, 223 U.S. 261 (1912)); see also In re Read, 221 F.3d 1352,
at *2 (10th Cir. July 14, 2000) (unpublished table decision) (finding that notice by
publication was constitutional with regard to default judgment entered against former
husband in divorce proceeding requiring him to pay child support when whereabouts of
husband where unknown).
Regarding personal jurisdiction, the movants “need only make a prima facie showing
[of personal jurisdiction] if the motion [for default judgment] is decided only on the basis of
the parties’ affidavits and other written materials.” Dennis Garberg & Assocs., Inc., 115
F.3d at 773. As alleged in the pleadings, the Subject Property is located in Colorado and
Plaintiff resides in Colorado. Compl. [#1] ¶¶ 1, 6. Service by publication was proper.
Therefore, the Court is satisfied that it may exercise personal jurisdiction in this matter.
B.
Entry of Default
As a threshold issue, the Court examines whether default should be entered in this
case against Unknown Persons. See Fed. R. Civ. P. 55(a). Plaintiff seeks a default
judgment against Unknown Persons in order to extinguish any interest they may have in
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the Subject Property in order to quiet title. Motion [#29] at 2. Service of process by
publication upon Unknown Persons was completed on September 4, 2014. See Aff. of
Publication [#29-1]; Fed. R Civ. P. 4(e)(1), 4(h)(1)(A); Colo. R. Civ. P. 4(g). No response
from any Unknown Person was filed in this matter. Accordingly, the Court finds that default
should be entered against Unknown Persons.
C.
Default Judgment
After confirming the propriety of entry of default, the Court must decide “whether the
unchallenged facts create a legitimate basis for the entry of a judgment.” Greenwich Ins.
Co., 2008 WL 793606 at *1 (citations omitted). “‘[T]he default 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, 733-34 (10th
Cir. 1991) (quoting H.F. Livermore Corp. v. Aktiengesellschaft Gebruder Loepfe, 432 F.2d
689, 691 (D.C. Cir.1970)).
“[A] party is not entitled to a default judgment as of right; rather the entry of default
judgment is entrusted to the ‘sound judicial discretion’ of the court.” Greenwich Ins. Co.,
2008 WL 793606 at *2 (quoting Cablevision of S. Conn., Ltd. P’ship v. Smith, 141 F. Supp.
2d 277, 281 (D. Conn. 2001)). Where the complaint states an adequate legal basis for
relief against a party in default, default judgment is appropriate. Id. (citing Weft, Inc. v. G.C.
Inv. Assocs., 430 F. Supp. 1138, 1143 (E.D.N.C. 1986)).
Upon review of a motion for default judgment, assuming default was properly
entered, the moving party enjoys the benefit of deferential pleading interpretation. The
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Court deems the well-pled facts (as opposed to merely conclusory statements) of the
Complaint in this matter to be true. Id. at *1 (citing Dundee Cement Co. v. Howard Pipe &
Concrete Prods., Inc., 722 F.2d 1319, 1323 (7th Cir. 1983)). The Court also accepts as
undisputed any facts set forth by the moving party in affidavits and exhibits. Id.
Here, Plaintiff seeks to quiet title to the Subject Property so Plaintiff and Defendant
Countrywide Home Loans, Inc. can continue with this litigation without concern that a third
party will later claim a right to the Subject Property after adjudication of the dispute between
Plaintiff and Defendant Countrywide Home Loans, Inc. In the more than seven months
since notice was published, no party has come forward to claim an interest in the Subject
Property. In such a case, a default judgment against any such unknown person is
appropriate. See, e.g., Barker v. Bd. of Cnty. Com’rs of Cnty. of La Plata, Colo., 24 F.
Supp. 2d 1120, 1123 (D. Colo. 1998) (noting that the Court previously entered a default
judgment against individuals and “all unknown persons who claim any interest in the
subject matter of this action” declaring that they “have no right, title, or interest in the real
property that is the subject of this quite title action.”) (internal quotations omitted). While
the Court is mindful that “[t]he preferred disposition of any case is upon its merits and not
by default judgment,” Gomes v. Williams, 420 F.2d 1364, 1366 (10th Cir. 1970), here, no
party has come forward in response to the published notice and the parties desire to
resolve their dispute regarding the Subject Property. Further, a “default judgment serves
to protect a [party] against ‘interminable delay and continued uncertainty as to [its] rights.’”
U.S. v. Gunnison Alpine Constractors, Inc., Civil Action No. 08-cv-02568-PAB-BNB, 2010
WL 965310, at *1 (D. Colo. Mar. 15, 2012) (quoting Ruplinger v. Rains, 946 F.2d 731, 732
(10th Cir. 1991)). The Court finds that Plaintiff is entitled to such protection in this case.
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Accordingly, the Court enters default judgment in favor of Plaintiff and against Unknown
Persons. Upon entry of judgment, any and all interests Unknown Persons have in the
Subject Property shall be extinguished.
III. Conclusion
For the foregoing reasons,
IT IS HEREBY ORDERED that the Motion [#29] is GRANTED. Accordingly,
IT IS FURTHER ORDERED that the Clerk of Court shall enter default as to
Unknown Persons. Fed. R. Civ. P. 55(a).
IT IS FURTHER ORDERED that, after default is entered, default judgment shall be
entered in favor of Plaintiff and against Unknown Persons. Fed. R. Civ. P. 55(b)(2). Upon
entry of this judgment, any and all interests Unknown Persons have in the Subject Property
shall be extinguished.
Dated: April 23, 2015
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