Nebraska Data Centers, LLC v. Khayet

Filing 200

MEMORANDUM AND ORDER: The Findings and Recommendation issued by Magistrate Judge Cheryl R. Zwart, ECF No. 195 , are modified in accordance with this Memorandum and Order; Defendants Leo Khayet and Timber Ventures, LLC, must file an answer to the Second Amended Complaint on or before July 17, 2018; and The Clerk of Court shall mail a copy of this Memorandum and Order to Defendants Leo Khayet and Timber Ventures, LLC, at their last known addresses. Ordered by Chief Judge Laurie Smith Camp. (Copies mailed as directed)(ADB)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA

NEBRASKA DATA CENTERS, LLC, and
AMERICAN NEBRASKA LIMITED
PARTNERSHIP,

8:17CV369

Plaintiffs,
MEMORANDUM AND ORDER
vs.
LEO KHAYET, and TIMBER VENTURES,
LLC,
Defendants.

This matter is before the Court on the Findings and Recommendation issued by
Magistrate Judge Cheryl R. Zwart, ECF No. 195, on June 25, 2018. For the reasons
stated below, the Court will modify the action proposed in the Findings and
Recommendation.
BACKGROUND
On May 5, 2018, the Court granted, in part, Defendant Leo Khayet’s Motion to
Dismiss Plaintiff Nebraska Data Centers’ (NDC) Amended Complaint. Mem. & Order,
ECF No. 158. The Order permitted NDC to file a second amended complaint, which it
did on May 25, 2018. Second Am. Comp., ECF No. 166. On June 11, 2018, the
Magistrate Judge issued a text order instructing Khayet to answer or otherwise respond
to the Second Amended Complaint by June 15, 2018, and instructing Defendant Timber
Ventures, LLC, to answer or otherwise respond by June 19, 2018.1

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Defendant Timber Ventures, LLC, was added to this action in the Second Amended Complaint,
and service of process was affected on May 29, 2018, ECF No. 171.

Since the Second Amended Complaint was filed, Khayet has filed several
repetitive motions2 requesting various forms of relief, including dismissal, transfer, and a
stay of this case, but each of those motions was summarily denied and he has yet to file
an answer to the Second Amended Complaint. He also declined participation in a
scheduled show-cause hearing before the Magistrate Judge on June 19, 2018. ECF No.
189. No appearance or filings have been made on behalf of Timber Ventures, LLC.
Accordingly, the Magistrate Judge has recommended that the Court enter default
judgment against Khayet and Timber Ventures, LLC, because they have failed to answer
the Second Amended Complaint.

Khayet did not object to the Findings and

Recommendation under 28 U.S.C. § 636(b)(1), but submitted a Notice of Fraud on the
Court, ECF No. 196, and other related filings, ECF No. 197, 199, persisting in his
demands for transfer or dismissal of this case.
STANDARD OF REVIEW
Under 28 U.S.C. § 636(b)(1)(C), the Court must make a de novo determination of
those portions of the Findings and Recommendation to which the Defendant has
objected. The Court may accept, reject, or modify, in whole or in part, the Magistrate
Judge’s findings or recommendation. The Court may also receive further evidence or
remand the matter to the Magistrate Judge with instructions.
DISCUSSION
Rule 55 prescribes a two-step process for obtaining a default judgment. “When a
party ‘has failed to plead or otherwise defend’ against a pleading listed in Rule 7(a), entry

ECF Nos. 173 (“Motion to Restore Justice”), 181 (“Motion to Stay and Vacate”), 183 (“Motion for
Reconsideration”), 190 (“Motion to Affirm Willingness to Assert NEGenR. 1.1(c) and Fed Rule 1”).
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of default under Rule 55(a) must precede grant of a default judgment under Rule 55(b).”
Johnson v. Dayton Elec. Mfg. Co., 140 F.3d 781, 783 (8th Cir. 1998); see also Tollefson
v. Pladson, 508 F. App’x 593, 595 (8th Cir. 2013) (concluding that the district court erred
by entering “default judgment without first directing a clerk’s entry of default under Rule
55(a)”). Further, the Court cannot enter default judgment absent a motion by the party
seeking the judgment. Fed. R. Civ. P. 55(b) (stating a “party must apply to the court for
a default judgment”). There has been no entry of default under Rule 55(a) and no
application for default judgment under Rule 55(b) in this case. Default judgment under
Rule 55(b) is, therefore, premature.
Nevertheless, Timber Ventures, LLC, has yet to make an appearance, and Khayet
must not be permitted to persist in his repetitive motions and notice-filings requesting
dismissal, transfer, or a stay of the case, delaying its progression. See Fed. R. Civ. P. 1
(The Federal Rules must be employed “to secure the just, speedy, and inexpensive
determination of every action and proceeding.”). Accordingly, the Court will modify the
Findings and Recommendation to direct Khayet and Timber Ventures, LLC, to file an
answer to the Second Amended Complaint on or before July 17, 2018. If no answer is
filed, the Clerk of Court will be directed to enter default against Khayet and Timber
Ventures, LLC,3 under Fed. R. Civ. P. 55(a). If default is entered, the Plaintiffs may then
move the Court to enter a default judgment in accordance with Rule 55(b), and Khayet

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The Court notes that Khayet has chosen to proceed pro se in this case, but he may not represent
Timber Ventures, LLC; only a licensed attorney may do so. See, e.g., Rowland v. Cal. Men’s Colony, Unit
II Men’s Advisory Council, 506 U.S. 194, 202 (1993).

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and Timber Ventures, LLC, may also move to set aside the default for “good cause” under
Rule 55(c).
IT IS ORDERED:
1. The Findings and Recommendation issued by Magistrate Judge Cheryl R.
Zwart, ECF No. 195, are modified in accordance with this Memorandum and
Order;
2. Defendants Leo Khayet and Timber Ventures, LLC, must file an answer to the
Second Amended Complaint on or before July 17, 2018; and
3. The Clerk of Court shall mail a copy of this Memorandum and Order to
Defendants Leo Khayet and Timber Ventures, LLC, at their last known
addresses.

Dated this 10th day of July, 2018.

BY THE COURT:
s/Laurie Smith Camp
Chief United States District Judge

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