Quintero Community Association Inc. et al v. Federal Deposit Insurance Corporation as Receiver for Hillcrest Bank et al

Filing 47

ORDER CLARIFYING THE COURT'S MAY 18TH ORDER re 46 Plaintiffs' motion to clarify. Plaintiffs shall submit a consolidated petition on or before June 15, 2012. Signed on 5/25/12 by District Judge Greg Kays. (Francis, Alexandra)

IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MISSOURI
QUINTERO COMMUNITY
ASSOCIATION, INC., et al.,
Plaintiffs,
v.
HILLCREST BANK, et al.,
Defendants.

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No. 04-11-CV-00893-DGK

ORDER CLARIFYING THE COURT’S MAY 18th ORDER
Pending before the Court is Plaintiffs’ “Motion to Reconsider or Otherwise Clarify the
Court’s May 18th Order and for Extension of Time” (Doc. 46). In the Court’s May 18th Order
(Doc. 45), the Court ordered Plaintiffs to file an amended petition, “includ[ing] all allegations
against all Defendants, except those for whom a default judgment has already been rendered.”
Plaintiffs now ask the Court to reconsider its order, arguing that “in granting relief to one set of
defendants in one case the Court has reached across to a different case and granted unrequested
relief to a different defendant.”
The Court disagrees with Plaintiffs’ characterization of this case. Plaintiffs argue that the
Court has no authority to sua sponte order them to repudiate or amend their Second Amended
Petition after the Defendant FDIC has answered it. However, to the Court’s best knowledge,
Plaintiffs’ Second Amended Petition was never properly filed.1 If a Second Amended Petition

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The Court recognizes that the FDIC responded to what it titled, “Plaintiffs’ Second Amended Petition” in its
December 6, 2011 Answer (Doc. 12). However, although the state court granted Plaintiffs’ motion to file a Second
Amended Complaint against the FDIC on January 4, 2011, the Court finds no evidence that a Second Amended
Complaint was ever properly filed in state court or in this Court.

was properly filed, Plaintiffs should provide the Court with a copy of this document and
evidence of when it was filed.2
Secondly, the Court notes that it did not order Plaintiffs to amend their petition sua
sponte. Rather, the FDIC itself complained that Plaintiff had never filed an amended complaint:
To date, plaintiffs have not filed an amended complaint. At this time, it is
unknown how plaintiffs will amend their claims in order to more clearly narrow
and define their claims. The discovery process will be eased on all parties if the
scope of the issues and parties involved in the case are narrowed and more clearly
defined as is expected by plaintiffs’ amended petition.
(Doc. 27). It is unclear whether the FDIC is referring to Plaintiffs’ complaint against the
Hillcrest Board of Directors, Plaintiffs’ original complaint against the FDIC, or Plaintiffs’
alleged “Second Amended Complaint” against the FDIC which was never properly filed. What
is clear is that this case has become unnecessarily complicated. The efficient administration of
justice requires that Plaintiffs allegations against each Defendant be clearly made.
Accordingly, the Court orders that one petition be filed that is non-duplicative and clearly
states each claim against each Defendant. In combining the two petitions against the FDIC and
Hillcrest Board of Directors, the Court does not expect Plaintiffs to rewrite the complaints
entirely. What the Court seeks is for Plaintiffs to clarify their claims against the Hillcrest Board
of Directors, as requested by those Defendants in Doc. 31, and to combine those allegations with
their claims against the FDIC in one petition so that the Court and parties can avoid the
duplication and unnecessary complexity of multiple petitions, some of which are properly filed
and some of which are not.

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The Court notes that a document entitled “Second Amended Petition” was found in the voluminous paper record
the parties provided to the Court. For future reference, if a controlling document is repeatedly referred to in the
parties’ briefings to the Court, the parties should ensure that the Court has easy access to such document through
attachment of the document and clear identification of it on ECF.

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The Plaintiffs also move for clarification of the Court’s instruction to exclude allegations
against the Quintero/McClung entities. Plaintiff maintains that only one Plaintiff, Lyle Phillips,
has obtained a default judgment against those entities and that other Plaintiffs retain their claims
against those entities. The Court directs Plaintiff to Document 16 where Plaintiffs jointly
requested the Clerk of the Court enter a default against the Quintero/McClung entities. On
January 19, 2012, the Clerk entered a default in accordance with this request with regard to all
Plaintiffs as against all Quintero/McClung Defendants (Doc. 17). Plaintiffs then requested the
Clerk of the court enter a default judgment in the amount of $2,000,000 on behalf of Plaintiffs
Lyle Phillips and Peggy Phillips against the Quintero/McClung Defendants (Doc. 19). The
Court granted this motion on April 6, 2012 (Doc. 33) Thus, currently outstanding, there is a
default judgment entered on behalf of Plaintiffs Lyle Phillips and Peggy Phillips against the
Quintero/McClung Defendants and a default on behalf of the remaining Plaintiffs against the
Quintero/McClung Defendants.
The entry of a default against a defendant cuts off that defendant’s right to appear in the
case to contest liability. See Taylor v. City of Ballwin, 859 F.2d 1330, 1332 (8th Cir. 1988)
(finding that “it is the law that once a default is entered, a defendant on default has no further
standing to contest the factual allegations of plaintiff’s claim for relief) (internal citations
omitted). Once default is entered, the defendant’s only recourse is filing a motion to set aside the
entry of default. Fed. R. Civ. P. 55(c). On appeal, the defendant may contest whether the
complaint states a claim upon which relief can be granted. Black v. Lane, 22 F.3d 1395, 1399
(7th Cir. 1994). Here, the Court finds no reason to allow Plaintiffs to amend their complaint
against the Quintero/McClung Defendants when a default has already been entered against them.
While not every Plaintiff had its damage claims liquidated, the Quintero/McClung Defendants

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have already lost their right to contest liability in the case. Thus, Plaintiffs claims against them
are unnecessary in the amended complaint. If Plaintiffs have authority stating that claims against
these Defendants should be included in the Second Amended Complaint, Plaintiffs may provide
additional briefing on the matter.
However, Plaintiffs also maintain that they “should be able to set forth [allegations
against the Quintero Entities] in support of their claims against the FDIC and the board members
as underlying torts to support those claims.” The Court agrees. If Plaintiffs find it necessary to
discuss the Quintero entities and their claims against them in setting forth claims against the
FDIC and the Hillcrest Board of Directors, they may do so.
Plaintiffs also request an extension of time to rewrite the two petitions into one. This
request is granted. Plaintiffs shall submit a consolidated petition on or before June 15, 2012.
IT IS SO ORDERED.
/s/ Greg Kays
GREG KAYS, JUDGE
UNITED STATES DISTRICT COURT
Dated: May 25, 2012

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