U.S. Commodity Futures Trading Commission v. Allied Markets, LLC et al

Filing 55

ORDER denying without prejudice 52 Motion for Default Judgment. Signed by Magistrate Judge Monte C. Richardson on 10/14/2015. (ADM)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
JACKSONVILLE DIVISION
U.S. COMMODITY FUTURES
TRADING COMMISSION,
Plaintiff,
v.

CASE NO. 3:15-cv-5-J-34MCR

ALLIED MARKETS LLC, JOSHUA
GILLILAND, and CHAWALIT
WONGKHIAO,
Defendants.
_________________________________/
ORDER
THIS CAUSE is before the Court on Plaintiff’s Motion for Entry of Default
Judgment, Permanent Injunction, Civil Monetary Penalty, and Equitable Relief
Against Defendant Allied Markets LLC (“Motion”) (Doc. 52). For the reasons
stated herein, the Motion is due to be DENIED without prejudice.
I.

Background

Plaintiff initiated this action for injunctive relief, civil monetary penalty, and
other equitable relief against Allied Markets LLC, Joshua Gilliland, and Chawalit
Wongkhiao on January 12, 2015. The five-count Complaint alleges fraud by
misrepresentation, omission, and misappropriation in violation of 7 U.S.C. §
6b(a)(2)(A), (C) and 17 C.F.R. § 5.2(b); fraud by a commodity pool operator in
violation of 7 U.S.C. § 6o(1) and 17 C.F.R. § 4.41(a); failure to register as a
commodity pool operator in violation of 7 U.S.C. §§ 2(c)(2)(C)(iii)(I)(cc), 6m(1)

and 17 C.F.R. § 5.3(a)(2)(i); failure to register as associated persons in violation
of 7 U.S.C. §§ 2(c)(2)(C)(iii)(I)(cc), 6k(2) and 17 C.F.R. §§ 3.12 and 5.3(a)(2)(ii);
and failure to operate commodity pool as a separate legal entity, improper
acceptance of funds, and commingling of pool funds in violation of 17 C.F.R. §
4.20(a)-(c). (Doc. 3.)
The Complaint alleges that as early as January 2012, Joshua Gilliland and
Chawalit Wongkhiao, individually and as principals of Allied Markets LLC,
engaged in a fraudulent scheme to solicit more than $1 million from members of
the public to participate in a supposed commodity pool purportedly trading
leveraged or margined retail off-exchange foreign currency contracts, commonly
known as “forex.” (Id. at 1.) As part of the scheme, Defendants allegedly
misappropriated pool participants’ funds to pay the individual Defendants’
personal expenses. (Id. at 1-2.) Defendants allegedly misrepresented their
trading expertise and profits, and failed to disclose that only a small portion of the
funds would be used to trade forex. (Id. at 2.) Defendants, who have never been
registered as required with the United States Commodity Futures Trading
Commission (“CFTC”), allegedly lured their victims into sending funds by
fraudulently guaranteeing specific trading returns and by representing that their
forex trading was generating large profits. (Id.)
Defendants, through counsel, answered the Complaint on January 22 and
23, 2015. (Docs. 19-21.) However, on June 3, 2015, the Court allowed
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Defendants’ counsel to withdraw from the case. (Doc. 44.) As of the date of that
Order, the two individual Defendants were deemed to proceed pro se. On July
21, 2015, the Court entered an Order striking Allied Markets LLC’s Answer and
directing the Clerk of Court to enter a default against it for its failure to obtain
counsel as directed by previous Court Orders and failure to show cause why
sanctions should not be imposed therefor. (Doc. 50.) On July 22, 2015, the
Clerk entered a default against Allied Markets LLC. (Doc. 51.)
On September 14, 2015, Plaintiff filed the present Motion seeking a final
default judgment, a permanent injunction, restitution, and a civil monetary penalty
against Allied Markets LLC. (Doc. 52.) The same day, the Motion was served on
Defendants via electronic mail and US mail. (Id. at 23.) To date, Defendants
have not filed a response to the Motion. On October 2, 2015, Plaintiff filed a
Motion for Summary Judgment against Defendants Joshua Gilliland and Chawalit
Wongkhiao. (Doc. 53.)
II.

Discussion

A review of the docket demonstrates that although a default has been
entered against Allied Markets LLC, Plaintiff’s claims against Joshua Gilliland and
Chawalit Wongkhiao are still pending before the Court. Plaintiff’s Motion for
Summary Judgment against the two individual Defendants was filed on October
2, 2015. Because Plaintiff’s claims against the individual Defendants are still
pending, the Court is precluded from entering a default judgment against Allied
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Markets LLC at this stage of the proceedings in light of the provisions of Rule
54(b) of the Federal Rules of Civil Procedure and the Supreme Court’s decision
in Frow v. De La Vega, 82 U.S. (15 Wall.) 552 (1872).
Rule 54(b) of the Federal Rules of Civil Procedure provides in relevant part:
When an action presents more than one claim for relief—whether as
a claim, counterclaim, crossclaim, or third-party claim—or when
multiple parties are involved, the court may direct entry of a final
judgment as to one or more, but fewer than all, claims or parties only
if the court expressly determines that there is no just reason for
delay.
Fed.R.Civ.P. 54(b) (emphasis added).
In determining whether to certify a judgment under Rule 54(b), a district
court must engage in a two-step analysis. Curtiss-Wright Corp. v. Gen. Elec. Co.,
446 U.S. 1, 7-8 (1980). “A district court must first determine that it is dealing with
a ‘final judgment.’” Id. at 7 (quoting Sears, Roebuck & Co. v. Mackey, 351 U.S.
427, 436 (1956)). Only then may the court proceed to the second step “to
determine whether there is any just reason for delay.” Id. at 8. The determination
of whether there is no “just reason for delay” is left to the discretion of the district
court. Lloyd Noland Found., Inc. v. Tenet Health Care Corp., 483 F.3d 773, 77778 (11th Cir. 2007); In re Se. Banking Corp., 69 F.3d 1539, 1550 (11th Cir. 1995).
In deciding whether there is no “just reason for delay,” the Court should consider
“the historic federal policy against piecemeal appeals” and “the equities involved.”
Lloyd Noland, 483 F.3d at 778 (internal quotation marks omitted).

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Assuming Plaintiff has satisfied the first step of the two-part inquiry by
seeking a final default judgment against Allied Markets LLC, Plaintiff has not
shown there is no just reason for delay. In fact, Plaintiff has not even addressed
this issue. Pursuant to Frow, the Court is prohibited from entering a default
judgment against less than all Defendants until the case is adjudicated as to the
remaining Defendants. See Frow, 82 U.S. at 554. Because “Frow has been
interpreted to apply only where there is a risk of inconsistent adjudications,” Drill
South, Inc. v. Int’l Fidelity Ins. Co., 234 F.3d 1232, 1237 n.8 (11th Cir. 2000) (per
curiam), and it appears there is such a risk in this case,1 the Motion is due to be
denied without prejudice to refiling at a later time.2
Accordingly, it is ORDERED:
The Motion (Doc. 52) is DENIED without prejudice.
DONE AND ORDERED at Jacksonville, Florida, on October 14, 2015.

1

There is a significant overlap in Plaintiff’s allegations against Defendants given
that Joshua Gilliland and Chawalit Wongkhiao allegedly engaged in the fraudulent
scheme both individually and as principals/agents of Allied Markets LLC.
2

In light of this conclusion, the Court does not address the m erits of the Motion.
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Copies to:
Counsel of Record
Allied Markets, LLC
Care of: Joshua Gilliland
1311 Bailey Ave
Chattanooga, TN 37404
[e-mail]
Joshua Gilliland
1311 Bailey Ave
Chattanooga, TN 37404
[e-mail]
Chawalit Wongkhiao
9241 Arbolita Way
Jacksonville, FL 32256
[e-mail]
[e-mail]
Chawalit Wongkhiao
c/o Nassau County Jail
76212 Nicholas Cutinna Road
Yulee, FL 32097

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