Branch Banking and Trust Company v. Rossal et al

Filing 94

ORDERED that Defendant's Motion to Vacate Judgments (ECF No. 85 ) is denied. It is further ordered that Plaintiff's motion to file sur-reply (ECF No. 92 ) is denied. Signed by Judge Miranda M. Du on 8/22/2017. (Copies have been distributed pursuant to the NEF - DRM)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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***

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BRANCH BANKING AND TRUST
COMPANY,

ORDER
Plaintiff,

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Case No. 2:12-cv-01298-MMD-GWF

v.
FELICIANO ROSSAL, et al.,

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Defendants.

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I.

SUMMARY

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The Court issued judgment in favor of Plaintiff Branch Banking and Trust (“BB&T”

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and against Defendant Onelia Rossal (“Defendant”) on November 23, 2015, and issued

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an Order granting BB&T’s motion for attorneys’ fees on September 26 2016 (“Fee Award”).

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(ECF Nos. 77, 84.) About a year later after entry of judgment, on November 21, 2016,

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Defendant moved to vacate the judgment and Fee Award. (ECF No. 85.) The Court has

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reviewed BB&T’s response (ECF No. 88) and Defendant’s reply (ECF No. 91). Because

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the Court finds that the issue raised in the reply brief relating to a purposed defense to the

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entry of judgment to be irrelevant to the Court’s consideration of whether to vacate the

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judgment, the Court denies BB&T’s motion to file a sur-reply to address this issue (ECF

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No. 92). For the reasons discussed below, Defendant’s Motion to Vacate Judgments

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(“Motion”) (ECF No. 85) is denied.

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II.

BACKGROUND

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A.

Factual Background

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On December 12, 2005, Defendants Feliciano Rossal (“Rossal”) and Onelia Rossal

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(together, “Borrowers”) executed a promissory note (“Note”) with a principal amount of

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$281,000.00 and delivered it to Colonial Bank, N.A. (ECF No. 67 at 1.) The Note was

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secured by a Deed of Trust that encumbered real property in Clark County, Nevada (“the

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Property”). (Id. at 2.) Defendant Chano’s Landscaping, Inc. (“Chano” or “Gurantor”)

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guaranteed payments under the Note. (Id. at 3.)

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At some point thereafter, Colonial Bank, N.A., was converted from a national

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banking association into a state-chartered bank. (Id. at 4.) Colonial Bank, an Alabama

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banking corporation, became its successor. (Id.) In August 2009, Alabama state officials

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closed Colonial Bank; the Federal Deposit Insurance Corporation (“FDIC”) was named the

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receiver. (Id. at 5.) The FDIC, in turn, assigned its rights under the Note, Deed of Trust,

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and other loan documents to BB&T. (Id. at 6–7.)

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The Borrowers defaulted on the Note in December 2010. (Id. at 8.) At a non-judicial

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trustee’s sale in February 2012, Defendant purchased the Property through a credit bid of

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$144,000.00. (Id. at 9.) The sale only partially compensated for the loan’s outstanding

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balance. (Id. at 10.)

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B.

Procedural Background

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Plaintiff initiated this lawsuit on July 23, 2012, alleging a deficiency against the

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Borrowers, a breach of guaranty against the Guarantor, and a breach of the covenant of

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good faith and fair dealing against the Borrowers and the Guarantor. (ECF No. 1.)

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Defendants filed a motion to dismiss for lack of standing in September 2012 (ECF No. 7),

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which the Court denied. (ECF No. 31.) The parties then filed several motions for summary

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judgment. (ECF Nos. 33, 34, 35, 39.)

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On April 10, 2014, the Court granted Defendants’ attorney’s motion to withdraw.

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(ECF No. 54.) The Court directed the Clerk of the Court to serve Defendants with a copy

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of the April 2014 Order granting their counsel’s motion to withdraw at their last known
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addressed and to add these addresses to the civil docket. (Id.) The Order identified two

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separate last known addresses for Defendant in Las Vegas: 7735 Dean Martin Drive1; and

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1462 Marion Drive. (Id. at 2.) The effect of the April 2014 Order is that until any of the

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Defendants appear through counsel, orders issued by the Court would be mailed to

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Defendants’ last known addresses.

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The next month, in May 2014, Rossal and Chano’s notified the Court that they had

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filed for bankruptcy. (ECF Nos. 58, 59, 62.) On July 17, 2014, BB&T filed a status report

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(“Status Report”), notifying the Court that it cannot take any action against Rossal and

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Chano because of the automatic stay, but that it intends to seek judgment against

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Defendant because Defendant “has not filed a bankruptcy petition, and in fact is a creditor”

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in Rossal’s bankruptcy case2. (ECF No. 61.) In response, on July 21, 2014, the Court

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stayed the case with respect to Rossal and Chano, but declared that the action is not

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stayed with respect to Defendant. (ECF No. 62.)

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On September 23, 2014, the Court heard oral argument on the pending motions for

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summary judgment and for a deficiency hearing on September 23, 2014. (ECF No. 64.)

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Defendant did not appear for the hearing. In light of her absence and the recent bankruptcy

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filings, the Court denied the parties’ summary judgment motions without prejudice, and

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denied Plaintiff’s motion for a deficiency hearing as moot. (Id.) Plaintiff moved for voluntary

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dismissal of Chano’s in August 2015, which the Court granted. (ECF Nos. 70, 71.)

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On November 17, 2014, Plaintiff again moved for summary judgment against

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Defendant and a deficiency hearing, and moved to dismiss Rossal. (ECF Nos. 67, 68, 65.)

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On September 29, 2015, the Court granted Plaintiff’s motion to dismiss Rossal, motion for

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summary judgment as to the deficiency claim against Defendant and set a hearing to

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determine the fair market value of the Property. (ECF No. 72.) The fair market value

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This is the same address as one of the two last known addresses for Rossal. (ECF No.
54 at 1.)

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The certificate of service shows the Status Report was sent to Defendant at one of the
two last known addresses identified in the April 2014 Order: 1462 Marion Drive. (ECF
No. 61 at 3.)
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hearing was held on October 28, 2015. (ECF No. 75.) On November 23, 2015, the Court

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entered judgment against Defendant. (ECF No. 77.) The next month, on December 7,

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2015, BB&T moved for attorney’s fees (ECF No. 78), which the Court granted on

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September 26, 2016 (ECF No. 84.)
On November 21, 2016, Defendant, through counsel, moved to vacate the

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judgment and the Fee Award. (ECF No. 85.)

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III.

DISCUSSION

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Defendant argues that the Court should grant her requested relief pursuant to Fed.

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R. Civ. P 60(b)(1) because her failure to appear in this case was due to “excusable

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neglect.” (ECF No. 85 at 5-9.) She asserts that she thought the obligation owed to BB&T

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was discharged in Rossal’s bankruptcy and she only recently learned of the entry of the

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judgment because she was not living at the service address by the time she was served

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with BB&T’s Status Report3. (Id.) As to this latter point, BB&T countered that Defendant

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failed to identify when she moved or whether she had her mail forwarded to her. (ECF No.

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88 at 13.)

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In order to preserve the finality of judgments, the Federal Rules of Civil Procedure

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limit a party's ability to seek relief from a final judgment. Phelps v. Alameida, 569 F.3d

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1120, 1135 (9th Cir. 2009). Fed. Civ. P. 60(b) lists six grounds under which a party may

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seek relief from a final judgment. Defendant relies on Rule 60(b)(1), which “must be made

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within a reasonable time—and . . . . no more than a year after the entry of the judgment or

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order or the date of the proceeding.” Fed. R. Civ. P. 60(c)(1).

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Here, Defendant’s Motion under Rule 60(b)(1) is one day shy of a year from the

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entry of judgment but over a year from the granting of summary judgment upon which the

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judgment was based. Thus, it is not clear that Defendant’s Motion is timely because

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vacating the judgment necessarily requires vacating the order granting summary judgment

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which the Court issued on September 29, 2015. (ECF No. 72.) Even accepting that

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The service address was one of the two listed in the Court’s Order: 1462 Marion Drive.
(ECF No. 85-1 at 8.)
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Defendant’s Motion is timely under Rule 60(b)(1), the delay in bringing the Motion is

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certainly concerning, particularly when Defendant does not explain when or how she

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learned of the entry of judgment4. Defendant states in her declaration that she “only

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recently learned about the judgments.” (ECF No. 85-1 at 15.)

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More importantly, Defendant fails to make a showing that relief from the judgment

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is warranted in this case. To determine whether the party seeking relief under Rule

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60(b)(1) satisfies the “excusable neglect” equitable standard, courts consider four factors:

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“(1) the danger of prejudice to the opposing party; (2) the length of the delay and its

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potential impact on the proceedings; (3) the reason for the delay; and (4) whether the

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movant acted in good faith.” Bateman v. United States Postal Service, 231 F.3d 1220,

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1223-24 (9th Cir. 2000). These four factors are “not exclusive, but that they provide a

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framework with which to determine whether missing a filing deadline constitutes

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‘excusable’ neglect.” Id. (citation and internal quotation marks omitted). The Court finds

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that a balancing of these factors compel denial of Defendant’s Motion.

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First, the Court agrees with BB&T that the danger of prejudice to BB&T is

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significant. BB&T litigated the merits of its deficiency claim against Defendant for about

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fifteen months—from April 2014 when the Court granted Defendants’ counsel’s motion to

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withdraw to November 23, 2015 when the Court entered judgment. It took another ten

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months for BB&T to obtain the Fee Award. (ECF Nos. 78, 84.) Vacating the judgment and

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Fee Award would result in further delay and would necessarily result in prejudice to BB&T.

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Second, the length of the delay here is significant. As noted, Defendant waited

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almost a year after entry of judgment to bring her Motion and asserted vaguely that she

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“only recently” learned of the judgment. (ECF No. 85-1 at 15.) But the delay here is not

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limited to the virtual year delay in bringing the Motion, it includes the delay from the time

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the April 2014 Order was issued granting Defendant’s former counsel’s motion to withdraw

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Ironically, Defendant places the blame on BB&T as to why she “only recently”
discovered the judgment, positing that she would have learned of it sooner had BB&T
attempted to collect on the judgment. (ECF No. 91 at 4.)
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to the entry of judgment in November 2015 and the Fee Award in September 2016.

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Between the April 2014 Order and the September 2016 Fee Award, BB&T litigated the

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merits of the deficiency claim, presented evidence of the fair market value of the Property

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and presented evidence supporting for its fees requested.

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Third, the reason for the delay is suspect at worst and weak at best. Defendant

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asserts that she thought the obligation owed to BB&T was discharged in Rossal’s

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bankruptcy and had not received the Status Report or the Court’s July 21, 2014 Order to

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know that the case was not stayed against her because she was no longer at the service

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address of 1462 Marion Drive. (ECF No. 85 at 5-9; ECF No. 85-1 at 8, 9.) However, as

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BB&T aptly pointed out, Defendant did not address when she moved or whether she had

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her mail forwarded to her. (ECF No. 88 at 13.) And, if she failed to have her mail forwarded

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to her, she failed to explain the reason for not doing so. Moreover, the Court’s July 21,

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2014 Order, and all subsequent orders issued by the Court, would have been sent to both

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the 1462 Marion Drive address and the other last known address identified in the April

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2014 Order. Yet, none of these orders, including the July 21, 2014 Order, the order

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granting summary judgment and the judgment, were returned to the Court as

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undeliverable. For these reasons, the Court questions Defendant’s explanation for why

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she failed to make an appearance in this case until almost a year after the entry of

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judgment.

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The fourth factor considers whether Defendant acted in good faith. Because of the

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length of delay and the weak reason for the delay, the Court cannot find that Defendant

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has acted in good faith.

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V.

CONCLUSION

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The Court notes that Defendant made several arguments and cited to several cases

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not discussed above. The Court has reviewed these arguments and cases and determines

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that they do not warrant discussion as they do not affect the outcome of Defendant’s

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Motion.

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It is ordered that Defendant’s Motion to Vacate Judgments (ECF No. 85) is denied.
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It is further ordered that Plaintiff’s motion to file sur-reply (ECF No. 92) is denied.

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DATED THIS 22nd day of August 2017.

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MIRANDA M. DU
UNITED STATES DISTRICT JUDGE

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