UNITED STATES OF AMERICA v. SPRING HOUSE ASSOCIATES et al

Filing 18

AMENDED ORDER deferring ruling on 16 Motion for Default Judgment. This Amended Order corrects a clerical error in the Order on Motion for Default Judgment dated 8/13/2015 (ECF No. 17). Please see footnote 1 of this Amended Order for the correction. By JUDGE JOHN A. WOODCOCK, JR. (MFS)

UNITED STATES DISTRICT COURT
DISTRICT OF MAINE
UNITED STATES OF AMERICA,

)
)
Plaintiff,
)
)
v.
)
)
SPRING HOUSE ASSOCIATES,
)
a Maine Limited Partnership,
)
David R. Cope, General Partner,
)
Michael A. Liberty, General Partner,)
Liberty Group, Inc.,
)
Defendant.
)

1:15-cv-00057-JAW

AMENDED1 ORDER ON MOTION FOR DEFAULT JUDGMENT
In this foreclosure action against a state of Maine limited partnership, where
the United States requests that the Court issue a default judgment against a general
partner, the Court defers ruling for thirty days to allow the United States to respond
to certain questions: (1) whether the Court may issue a default judgment against a
general partner who is referenced in the complaint but not named as a defendant; (2)
whether the United States has complied with First Circuit law concerning the entry
of an appearance on behalf of a defaulted person; and, (3) what specific relief the
United States is requesting in the form of a default judgment.
I.

BACKGROUND
On February 10, 2015, the United States of America filed a foreclosure

complaint against Spring House Associates, a Maine Limited Partnership, including

The Court corrects a clerical error in the caption of the Order to track the caption in the original
Complaint and clarify that there is only one Defendant named in the Complaint.
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David R. Cope as general partner, Michael A. Liberty, as general partner, and Liberty
Group, Inc. Compl. for Foreclosure (ECF No. 1). The Complaint demands judgment
and asks for the following relief: (1) a judicial determination of default under the
promissory note and a breach of condition of the mortgage, security agreement, and
loan agreement; (2) a judicial determination of the amount due under the promissory
note, security agreement, loan agreement, and mortgage; (3) a judicial determination
of the order of priority of such other parties as may appear; (4) a foreclosure of the
mortgaged premises, (5) the potential appointment of a receiver; (5) the monies from
any sale be brought to the Court; and, (6) the United States be paid the amount
adjudged to be due to it. Id. at 9-10.
On July 13, 2015, Attorney David Johnson entered his appearance on behalf of
Spring House Associates and on August 4, 2015, Attorney Johnson answered the
Complaint on behalf of Spring House Associates. Consented to Mot. to Extend Time
to Ans. or File Responsive Pleading (ECF No. 10); Ans. to Compl. for Foreclosure (ECF
No. 13). On July 15, 2015, the United States served Donald R. Cope with a summons
and the foreclosure complaint and on July 17, 2015, the United States filed an
affidavit of service with the Court. Process Receipt and Return (ECF No. 12). On
August 6, 2015, the United States filed a motion for entry of default against Mr. Cope
and on August 7, 2015, the Deputy Clerk granted the motion. Request to Clerk to
Enter Default (ECF No. 14); Order Granting Mot. for Entry of Default (ECF No. 15).
On August 10, 2015, the United States moved for default judgment. Mot. for Entry
of Default J. as to General Partner David Cope (ECF No. 16) (Mot. for Default J.).

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II.

DISCUSSION
The United States’ motion for default judgment raises a number of questions

and the Court defers action on the pending motion for thirty days to allow the United
States to respond to its concerns.
A.

The Proper Party Defendants to the Lawsuit

The Court’s first concern is the nature of the lawsuit and the proper parties to
the lawsuit. The United States’ Complaint for foreclosure lists only one defendant in
the caption, namely the Maine Limited Partnership of Spring House Associates. The
allegations in the Complaint refer to “Defendant” in the singular, which must mean
Spring House Associates, and this sole-named defendant is not subject to default
because it has answered the Complaint.
The Complaint against Spring House Associates as a Maine Limited
Partnership seems appropriate. Maine law provides that “[a] limited partnership is
an entity distinct from its partners.” 31 M.R.S. § 1304(a). It also provides that a
limited partnership has the “power to sue, be sued and defend in its own name . . . .”
31 M.R.S. § 1305. To this end, Maine law requires each limited partnership to
maintain a registered agent within the state of Maine, 31 M.R.S. § 1314-A, and
provides that the partnership may be served process through the registered agent.
31 M.R.S. § 1317-A; 5 M.R.S. § 113(1). It also may be appropriate to include as party
defendants the general partners of a limited partnership; however, it would be helpful

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for the United States to clarify under what circumstances a general partner of a
limited partnership is an appropriate defendant, as opposed to the limited
partnership.
The Court’s most pressing question, however, is whether the Complaint for
foreclosure as currently drafted with one named defendant fairly places Mr. Cope and
the other general partners on notice that they are parties to the case and have a
separate interest to protect in this lawsuit. The Complaint contains two references
to Mr. Cope, first in paragraph 3, which alleges that he is a general partner and
recites his address, and second in paragraph 16, which states that the United States
made demand upon him for the entire indebtedness due and payable under the
promissory note.
The Court is concerned that the Complaint as currently drafted does not allow
for a default judgment against a person not listed as a named defendant. Although
the United States may be correct that the general partner, as opposed to a limited
partner, of a limited partnership, may stand in the shoes of the partnership for
purposes of suit, the Court will require the United States to demonstrate that this is
correct as a matter of law and that Mr. Cope, as general partner, is subject to this
action.
B.

Compliance with Key Bank of Maine v. Tablecloth Textile Co.
Corp.

In Key Bank of Maine v. Tablecloth Textile Co. Corp., the First Circuit broadly
interpreted Federal Rule of Civil Procedure 55(b) to include an indication on the part
of the defendant that he or it has “a clear purpose to defend the suit.” 74 F.3d 349,
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353 (1st Cir. 1996). In light of Key Bank, this Court has required that a party seeking
default produce satisfactory proof that the defaulted party has not appeared in the
action within the meaning of Rule 55(b). See Joseph Skilken & Co. v. Oxford Aviation,
Inc., No. 2:13-cv-00322-JAW, 2013 U.S. Dist. LEXIS 163662, at *1 (D. Me. Nov. 18,
2013); CSXT Intermodal, Inc. v. Mercury Cartage, LLC, 271 F.R.D. 400, 402 n.1 (D.
Me. 2010); Shaw v. 500516 N.B. Ltd., 668 F. Supp. 2d 237, 250 (D. Me. 2009). Before
issuing a default judgment, the Court will require the United States to demonstrate
compliance with Key Bank.
C.

Proposed Default Judgment

The United States attached to its motion for default judgment a short and
generic proposed order of default judgment, stating merely that its motion for default
judgment is granted. See Mot. for Default J. Attach. 1, Order for Default J. (ECF No.
16-1). The Court is unclear what the United States is requesting here. As noted
earlier, in its Complaint, the United States demanded an array of relief, ranging from
foreclosure to a judicial determination of the amount owed.

Yet the proposed

judgment contains no mention of the specific relief being ordered. Before the Court
will issue a judgment, the Court will require the United States to be specific as to
what relief it is asking the Court to reduce to judgment.
III.

CONCLUSION
The Court defers ruling on the Plaintiff’s Motion for Entry of Default Judgment

as to General Partner David Cope (ECF No. 16) for a period not to exceed thirty days.

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SO ORDERED.
/s/ John A. Woodcock, Jr.
JOHN A. WOODCOCK, JR.
UNITED STATES DISTRICT JUDGE
Dated this 14th day of August, 2015

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