Valley Mining, LLC v. United States of America
AMENDED ORDER affirming and adopting 100 ORDER and REPORT AND RECOMMENDATION. Defendant United States of America's 58 MOTION for Sanctions Against ARC of Minnesota and Defendants Christensons is granted in part and denied in part as set forth by the Magistrate Judge. The Clerk of Court is DIRECTED to enter default judgment against Gerald and Anita Christenson (Written Opinion). Signed by Judge John R. Tunheim on March 1, 2012. (HAM)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
VALLEY MINING, LLC, a Minnesota
Limited Liability Company,
Civil No. 06-3667 (JRT/FLN)
UNITED STATES OF AMERICA,
ARC OF MINNESOTA, Limited
GERALD O. CHRISTENSON, and
ANITA R. CHRISTENSON,
ARC OF MINNESOTA, Limited
UNITED STATES OF AMERICA,
John L. Neveaux, Jr., NEVEAUX & ASSOCIATES, 1421 East Wayzata
Boulevard, Suite 210, Wayzata, MN 55391, for plaintiff.
Hilarie E. Snyder, UNITED STATES DEPARTMENT OF JUSTICE,
TAX DIVISION, CTS, Central Region, P.O. Box 7238, Ben Franklin
Station, Washington D.C. 20044, for United States of America.
Bruce N. Crawford, HUFFMAN USEM SABOE CRAWFORD &
GREENBERG, 5101 Olson Memorial Highway, Suite 1000, Minneapolis,
MN 55422; Thomas E. Brever, FOSTER & BREVER, PLLC, 2855
Anthony Lane South, Suite 200, St. Anthony, MN 55418, for ARC of
Gerald O. Christenson and Anita R. Christenson, 25896 County Road 1
East, Wendell, MN 56590, defendants pro se.
This case is before the Court on objections to an Order and Report and
Recommendation filed by United States Magistrate Judge Franklin L. Noel on
February 13, 2008. Objections have been filed by defendants Gerald O. Christenson and
Anita R. Christenson and by defendant United States of America. For the reasons set
forth below, the Court overrules those objections and affirms and adopts the Order and
Report and Recommendation of the Magistrate Judge.
This Order adopting the Order and Report and Recommendation of the Magistrate
Judge was previously filed on May 23, 2008. Because of concerns regarding the timing
of the filing of the Order, which, unknown to the Court, occurred just after Gerald and
Anita Christenson had filed a petition in Bankruptcy Court thus triggering an automatic
stay, the Court reissues the Order. The automatic stay was lifted in September, 2010.
Plaintiff Valley Mining, LLC (“Valley Mining”) filed this interpleader action
against defendants United States of America (“United States”), ARC of Minnesota
(“ARC”), Gerald O. Christenson and Anita R. Christenson, after receiving a notice of
levy from the Internal Revenue Service (“IRS”). The IRS sought funds being paid
monthly to defendant ARC of Minnesota, which the IRS believes is the alter ego of
defendants Gerald O. Christenson and Anita R. Christenson. The United States filed an
answer claiming an interest in the funds, the Christensons both filed answers seeking
discharge from the case, and ARC filed a cross-claim against the United States
challenging the levy. The funds at issue are currently being deposited into a registry of
the Court in accordance with a stipulation of the parties.
Defendants ARC, Gerald O. Christenson, and Anita R. Christenson have
repeatedly failed to provide satisfactory responses to the discovery requests of defendant
United States, despite three separate orders by the Magistrate Judge ordering their
cooperation. On October 25, 2007, the United States moved for the Court to sanction
defendants ARC and the Christensons by granting default judgment. The Magistrate
Judge granted the motion in part and denied it in part. As to defendant ARC, the
Magistrate Judge denied the motion to the extent that it sought default judgment.
However, the Magistrate Judge ordered defendant ARC to pay defendant United States’
attorney’s fees and costs expended in bringing the motion, ordered it to complete any
outstanding discovery “including depositions,” and indicated that it would consider
granting default judgment if defendant ARC again failed to comply with discovery. As
to defendants Gerald O. Christenson and Anita R. Christenson, the Magistrate Judge
recommended that this Court enter default judgment against both defendants.
objections of both the United States and the Christensons followed.
OBJECTION OF DEFENDANTS GERALD AND ANITA CHRISTENSON
Defendants Gerald O. Christenson and Anita R. Christenson object to the
Magistrate Judge’s recommendation that this Court enter default judgment. The Court
reviews this recommendation de novo. See 28 U.S.C. § 636(b)(1)(C); D. Minn. LR
72.2(b). Where a party fails to obey a discovery order, Rule 37 of the Federal Rules of
Civil Procedure permits the Court to issue sanctions against the party, including a
judgment by default. Fed. R. Civ. P. 37(b)(2)(A)(vi). Default judgment is appropriate
“where the party against whom the judgment is sought has engaged in willful violations
of court rules, contumacious conduct, or intentional delays.” Forsythe v. Hales, 255 F.3d
487, 490 (8th Cir. 2001).
Here, the Magistrate Judge recommended default judgment against the
Christensons after noting that they had failed to comply with three prior orders directing
them to cooperate with discovery. The only comment the Christensons offer in objection
is that they served “Silent Judicial Notice” upon both this Court and the Magistrate Judge
in 2007. The Christensons provide no explanation of the significance of this “notice,”
nor of how it excuses their repeated failures to comply with discovery. In light of those
failures, this Court agrees that the sanction of default judgment is appropriate.
Accordingly, the Magistrate Judge’s recommendation that default judgment be entered
against defendants Gerald O. Christenson and Anita R. Christenson is adopted.
OBJECTION OF DEFENDANT UNITED STATES
United States seeks clarification of the discovery requirements the Magistrate
Judge imposed on defendant ARC. Specifically, the United States seeks assurance that
defendants Gerald O. Christenson and Anita R. Christenson will still be required to
comply with outstanding document and deposition requests, despite the entry of default
judgment against them individually. The United States notes that this evidence will be
critical in assessing whether defendant ARC is indeed an alter ego of the Christensons.
The Court finds that the relief sought by the United States is already required in
the Order and Report and Recommendation of the Magistrate Judge. In discussing
defendant ARC, the Magistrate Judge ordered the completion of “[o]utstanding
discovery, including depositions.”
(Order and Report and Recommendation dated
February 13, 2008, at 2.) The Court finds no indication that this requirement excluded
any discovery requests relevant to the case against defendant ARC merely because those
requests were served on the Christensons. Such a limitation would have been particularly
unusual in light of the contention that defendant ARC is the Christensons’ alter ego, and
also would have been inconsistent with the Magistrate Judge’s specific reference to
Accordingly, the Court finds that the Order and Report and
Recommendation requires the Christensons to respond to any outstanding discovery
requests, and that any modification of that Order and Report and Recommendation would
The United States also suggests that this Court add two findings to the Report and
Recommendation, concluding that defendant ARC was created for the purpose of
concealing the Christensons’ assets and that ARC is the Christensons’ alter ego.
However, adding these findings would essentially amount to granting default judgment
against defendant ARC, a result the Magistrate Judge deemed premature. The Court
agrees with the Magistrate Judge that it is appropriate to first give defendant ARC a final
opportunity to comply with discovery. Accordingly, this Court overrules the United
States’ objection, and affirms the Magistrate Judge’s order requiring completion of all
Based on the foregoing, the submissions of the parties, and all of the files, records,
and proceedings herein, the Court OVERRULES defendants Gerald O. Christenson and
Anita R. Christenson’s objection [Docket No. 101] and defendant United States of
America’s objection [Docket No. 104] and AFFIRMS and ADOPTS the Order and
Report and Recommendation of the Magistrate Judge [Docket No. 100].
Accordingly, IT IS HEREBY ORDERED that:
Defendant United States of America’s Motion for Sanctions Against ARC
of Minnesota and defendants Christensons [Docket No. 58] is GRANTED in part and
DENIED in part as set forth by the Magistrate Judge.
The Clerk of Court is DIRECTED to enter default judgment against
Gerald and Anita Christenson.
DATED: March 1, 2012
at Minneapolis, Minnesota.
s/ John R. Tunheim
JOHN R. TUNHEIM
United States District Judge
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