Meyer v. Bayles et al

Filing 66

RULING re 63 MOTION for Default Judgment as to Arbor and Terrace of Louisiana filed by Rose Meyer. Signed by Judge Robert G James on 5/15/13. (crt,DickersonSld, D)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
MONROE DIVISION
ROSE MEYER

CIVIL ACTION NO. 12-0043

VERSUS

JUDGE ROBERT G. JAMES

FRED BAYLES, ET AL.

MAG. JUDGE KAREN L. HAYES
RULING

Pending before the Court is Plaintiff Rose Meyer’s (“Meyer”) Motion for Default Judgment
[Doc. No. 63]. For the following reasons, the Motion is DENIED.
I.

FACTS AND PROCEDURAL HISTORY
This suit arises from Meyer’s efforts to collect a judgment from a previous action. In the first

suit, captioned Meyer v. The Arbor and Terrace Senior Center of Ruston, LLC, Civil Action No. 080268, Meyer sued The Arbor and Terrace Senior Center of Ruston, LLC (“the LLC”) for
discriminatory termination. The LLC failed to appear in the action, and Meyer obtained a default
judgment in the amount of $82,333.00 on September 2, 2010.
Since then, Meyer has been unable to collect her judgment against the LLC. Meyer now
brings this action against Defendants Fred M. Bayles (“Bayles”), Susan Swinea, Joanne Caldwell
Bayles (“Caldwell”), and Arbor Terrace of Louisiana, Inc. (“Arbor Terrace”). She seeks to hold
Defendants liable for the LLC’s debts, alleging that Defendants created Arbor Terrace as a shell to
avoid paying her judgment. Meyer alleges that Caldwell and Bayles transferred all assets of the LLC
to Arbor Terrace for nominal consideration, knowing that the transfer would deplete the LLC of the
assets necessary to cover its debts.
Defendants Bayles, Swinea, and Caldwell have all appeared in this action. The claims

against Swinea and Caldwell have been dismissed with prejudice. [Doc. Nos. 21, 61]. The action
as to Bayles has been stayed pending a bankruptcy action. [Doc. No. 30]. Arbor Terrace has never
appeared.
On October 10, 2012, the Clerk of Court filed a Notice of Entry of Default against Arbor
Terrace. [Doc. No. 29]. On April 17, 2013, the Clerk of Court filed a Notice fo Intent to Dismiss
Arbor Terrace for Failure to Take Default 60 Days After Service. [Doc. No. 62]. The next day,
Meyer filed this Motion for Default Judgment. [Doc. No. 63].
II.

LAW AND ANALYSIS
A.

Default Judgment

An entry of default is appropriate “[w]hen a party against whom a judgment for affirmative
relief is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or
otherwise.” FED . R. CIV . P. 55(a).
After 14 days have elapsed since the Clerk’s entry of default, a plaintiff may move for default
judgment under Rule 55(b). If the plaintiff’s claim is for a “sum certain or a sum that can be made
certain by computation,” then the Clerk of Court, on the plaintiff’s request with a supporting
affidavit, must enter judgment for that amount and costs against a defendant who has been defaulted.
FED . R. CIV . P. 55(b)(1). However, when the plaintiff’s claim does not involve a sum certain, the
plaintiff must “apply to the court for a default judgment.” FED . R. CIV . P. 55(b)(2).
While a plaintiff is not entitled to a default judgment as a matter of right, the Court accepts
the well-pleaded allegations of fact in the plaintiff’s complaint in determining whether default
judgment should be entered. See Nishimatsu Constr. Co. v. Houston Nat’l Bank, 515 F.2d 1200,
1206 (5th Cir. 1975) (A “defendant, by his default, admits the plaintiff’s well pleaded allegations
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of fact.”).
The Court finds that default was properly entered in this case because Arbor Terrace failed
to defend this suit by filing a sufficient answer. See FED . R. CIV . P. 55(a). The Court must examine
whether a default judgment should be entered.
Although Meyer has not made clear the basis for her claim against Arbor Terrace, Magistrate
Judge Hayes has already noted that it resembles a revocatory action. [Doc. No. 15]. Under Louisiana
law, an obligee, such as Meyer, has a right to annul an act of her obligor that causes the obligor’s
insolvency. LA . CIV . CODE . ART . 2036; see also Traina v. Whitney Nat’l Bank, 109 F.3d 244, 247-48
(5th Cir. 1997). To succeed in a revocatory action, an obligee “must prove that the offending
transaction: (1) was made or effected after the right of the obligee arose and (2) caused or increased
the obligor’s insolvency.” In re Home Inspectors, Inc., 348 B.R. 354, 361 (Bankr. E.D. La. 2005)
(citing Traina, 109 F.3d at 247). Additionally, the obligee must prove prejudice, injury, or damage
as a result of the act. Parish Nat’l Bank v. Wilks, 2004-1439 (La.App. 1 Cir. 8/3/05); 923 So.2d 8,
15. However, “[i]f preferred claims against the property exceed its value, the donation should not
be revoked because it does not injure or prejudice an unsecured creditor.” Id.
Here, Meyer has offered evidence that her right arose before the LLC transferred its property
to Arbor Terrace. She filed her complaint against the LLC in the original action on February 26,
2008, and the wrongful conduct alleged in that Complaint occurred on or about April 25, 2005.
Bayles and Caldwell executed the agreement transferring the LLC’s assets to Arbor Terrace on
December 29, 2009. [Doc. No. 63-2]. Thus, the contested transaction occurred after Meyer’s right
arose.
Next, Meyer alleges that the transfer left the LLC with no assets to cover the liability
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resulting from her judgment. The transfer documents show that the LLC’s property was transferred
to Arbor Terrace for a consideration of $100.00. These facts and Meyer’s allegations accepted as
true show that the transfer caused or increased the LLC’s insolvency.
However, Meyer has failed to carry her burden of proving that she suffered prejudice, injury,
or damage.

The transfer documents also show that Kilpatrick Life Insurance Company

(“Kilpatrick”) has a preferred claim against the property in the amount of $5,500,000.00. There is
no evidence that Arbor Terrace’s property is worth an amount in excess of $5,500,000.00. Meyer’s
judgment against the LLC would be secondary to Kilpatrick’s preferred claim. Thus, Meyer has not
shown that she had any possibility of collecting her judgment, even if the transfer had not occurred,
and, therefore, she cannot prevail on her claim for revocatory action.
III.

REMAINING CLAIMS
In light of the foregoing, it appears that Meyer cannot prevail against Arbor Terrace or

Bayles. The same rationale that defeats Meyer’s revocatory claim against Arbor Terrace applies to
defeat such a claim against Bayles. Therefore, the Court gives notice of its intent to sua sponte
dismiss this case with prejudice. If any party opposes dismissal of this case, it may file a
memorandum within fourteen (14) days of the date of this Ruling and Order.
IV.

CONCLUSION
Plaintiff Rose Meyer’s Motion for Default Judgment [Doc. No. 63] is DENIED.
MONROE, LOUISIANA, this 15th day of May, 2013.

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