Bank of New York Mellon v. SFR Investments Pool 1, LLC et al

Filing 95

ORDER granting 67 Motion for Default Judgment; DEFAULT JUDGMENT in favor of SFR Investments Pool 1, LLC against John Edward Bostaph, Jr. Signed by Judge Gloria M. Navarro on 9/30/2020. (Copies have been distributed pursuant to the NEF - JM)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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BANK OF NEW YORK MELLON,
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Case No.: 2:16-cv-00847-GMN-DJA
Plaintiff,
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vs.
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ORDER
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SFR INVESTMENTS POOL 1, LLC, et al., )
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Defendants.
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Pending before the Court is Defendant/Cross-Claimant SFR Investments Pool 1, LLC’s

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(“SFR”) Motion for Default Judgment as to John Edward Bostaph, Jr. (“Debtor”), (ECF No.

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67). For the reasons discussed below, SFR’s Motion is GRANTED.

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I.

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BACKGROUND
This case arises out of the non-judicial foreclosure sale of real property located at 10949

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Sospel Place, Las Vegas, Nevada 89141, Parcel No. 176-36-311-035 (the “Property”). (See

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DOT, Ex. A to Pl.’s Mot. Summ. J. (“MSJ”), ECF No. 85-1). Debtor purchased the Property

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by way of a loan for $302,400.00, secured by a deed of trust (“DOT”). (Id.). Plaintiff became

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the beneficiary of the DOT through an assignment from Royal Crown Bancorp recorded on

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February 16, 2012. (See Assignment, Ex. C to Pl.’s MSJ, ECF No. 85-3).

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Upon Debtor’s failure to pay all amounts due, Montagne Marron Community

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Association (“HOA”), through its agent Alessi & Koenig, LLC (“A&K”), initiated foreclosure

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proceedings on the Property. Pursuant to NRS Chapter 116, A&K recorded a notice of

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delinquent assessment lien, followed by a notice of default and election to sell, and a notice of

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sale. (Notice of Delinquent Assessment Lien, Ex. 1B to Mot. Default J., ECF No. 67-3);

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(Notice of Default and Election to Sell, Ex. 1C to Mot. Default J., ECF No. 67-4); (Notices of

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Sale, Exs. 1D–E, ECF Nos. 67-5–6). SFR now moves for default judgment against Debtor,

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seeking a declaration that its interest in the Property is senior to that of Debtor. (Mot. Default J.

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5:25–6:4).

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II.

LEGAL STANDARD
Obtaining a default judgment is a two-step process governed by Rule 55 of the Federal

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Rules of Civil Procedure. Eitel v. McCool, 782 F.2d 1470, 1471 (9th Cir. 1986). First, the

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moving party must seek entry of default from the clerk of court. Fed. R. Civ. P. 55(a). Then,

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after the clerk of court enters default, a party must separately seek entry of default judgment

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from the court in accordance with Rule 55(b). Fed R. Civ. P. 55(b). Upon entry of clerk’s

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default, the court takes the factual allegations in the complaint as true. ME2 Prods., Inc. v.

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Sanchez, No. 2:17-cv-667-JCM-NJK, 2018 U.S. Dist. LEXIS 61961, 2018 WL 1763514, at *2

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(D. Nev. Apr. 12, 2018). Nonetheless, while the clerk’s entry of default is a prerequisite to an

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entry of default judgment, “a plaintiff who obtains an entry of default is not entitled to default

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judgment as a matter of right.” Warner Bros. Entm’t Inc. v. Caridi, 346 F. Supp. 2d 1068, 1071

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(C.D. Cal. 2004) (citation omitted). Instead, whether to grant a default judgment is in the

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court’s discretion. Id.
The Ninth Circuit has identified several relevant factors in determining whether to grant

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default judgment including: (1) the possibility of prejudice to the movant; (2) the merits of the

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movant’s substantive claims; (3) the sufficiency of the movant’s complaint; (4) the sum of

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money at stake in the action; (5) the possibility of a dispute concerning material facts; (6)

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whether the default was due to excusable neglect; and (7) the strong public policy favoring

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decisions on the merits. Eitel, 782 F.2d at 1471–72.

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III.

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DISCUSSION
SFR moves for default judgment against Debtor, requesting declaratory relief with

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respect to its crossclaims. SFR has initiated the two-step process required under Rule 55 by

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moving for clerk’s entry of default against Debtor, (see ECF No. 63), which the Clerk

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subsequently entered, (See ECF No. 64). In accordance with Rule 55(b), SFR brings the

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present Motion.

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Upon reviewing the documents and pleadings on file in this matter, the Court finds that

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the Eitel factors support entry of default judgment in favor of SFR and against Debtor. The

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first Eitel factor weighs in favor of default judgment. A defendant’s failure to respond or

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otherwise appear in a case “prejudices a plaintiff’s ability to pursue its claims on the merits,”

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and therefore satisfies the first factor. See, e.g., Nationstar Mortg. LLC v. Operture, Inc., No.

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2:17-cv-03056-GMN-PAL, 2019 U.S. Dist. LEXIS 33632, 2019 WL 1027990, at *2 (D. Nev.

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Mar. 4, 2019); ME2 Prods., 2018 U.S. Dist. LEXIS 61961, 2018 WL 1763514, at *1; see also

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PepsiCo, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1172, 1177 (C.D. Cal 2002) (“If Plaintiffs’

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motion for default judgment is not granted, Plaintiffs will likely be without other recourse for

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recovery.”).

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Regarding the second and third Eitel factors, the Court finds SFR’s crossclaim for quiet

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title, which requests declaratory relief, is sufficiently pleaded and meritorious as to Debtor. “A

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plea to quiet title does not require any particular elements, but ‘each party must plead and prove

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his or her own claim to the property in question’ and a ‘plaintiff’s right to relief therefore

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depends on superiority of title.’” Chapman v. Deutsche Bank Nat’l Tr. Co., 129 Nev. 314, 302

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P.3d 1103, 1106 (Nev. 2013) (quoting Yokeno v. Mafnas, 973 F.2d 803, 808 (9th Cir. 1992)).

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SFR alleges that to the extent Debtor purports to claim an interest in the Property, SFR’s

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purchase of the same extinguished those interests by operation of NRS Chapter 116. (See SFR’s

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Answer 14:5–23, ECF No. 18). SFR’s claim for declaratory relief is sufficiently meritorious

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because SFR has introduced evidence that it purchased the Property by quitclaim deed from

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HOA, the foreclosure sale buyer, after HOA validly foreclosed on the superpriority portion of

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its lien. (Chris Hardin Aff. ¶¶ 6–10, Ex. 1 to Mot. Default J., ECF No. 67-1); (NRS Chapter 116

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Notices, Exs. 1-B–E to Mot. Default J., ECF Nos. 67-3–6); (Foreclosure Deed, Ex. 1-F to Mot.

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Default J., ECF No. 67-7); (Quitclaim Deed and Correction, Exs. 1G–H, ECF Nos. 67-8–9).

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Accordingly, SFR has shown that it would likely be meritorious against any claim to title of the

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Property that Debtor may raise.

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The fourth factor weighs in favor of default judgment because SFR seeks only

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declaratory relief and no monetary damages against Debtor. (SFR’s Answer 14:5–23); (See also

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Mot. Default J. 6:5–18). The fifth Eitel factor, which concerns the possibility of a dispute

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regarding material facts, favors SFR. Courts have recognized that, “[o]nce the clerk enters a

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default, the well-pleaded factual allegations of the [moving party’s] complaint are taken as true,

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except for those allegations relating to damages.” ME2 Prods., 2018 U.S. Dist. LEXIS 61961,

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2018 WL 1763514, at *2 (quoting O’Brien v. United States, No. 2:07-cv-00986-GMN-GWF,

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2010 U.S. Dist. LEXIS 101941, 2010 WL 3636171, at *4 (D. Nev. Sept. 9, 2010)). Taking

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SFR’s Cross-Complaint’s allegations as true, Debtor possessed an interest in the Property,

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which was subsequently extinguished by HOA’s purchase at the foreclosure sale. (SFR’s

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Answer 14:12–14).

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With respect to the sixth Eitel factor, the Court finds that Debtor’s failure to appear was

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not the result of excusable neglect. Debtor was served on July 15, 2016, and his answer was

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due on August 5, 2016. (See Summons Returned Executed, ECF No. 25). The Clerk of Court

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entered default against Debtor on January 13, 2020, (ECF No. 64). SFR filed its present

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Motion, (ECF No. 67), on February 5, 2020. Debtor’s failure to appear or otherwise file

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anything with respect to this action during the time period counsels against finding excusable

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neglect. ME2 Prods., 2018 U.S. Dist. LEXIS 61961, 2018 WL 1763514, at *3; O’Brien, 2010

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U.S. Dist. LEXIS 101941, 2010 WL 3636171, at *6.

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The seventh and final Eitel factor concerns public policy considerations. While public

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policy generally favors disposition on the merits, the Court concludes that default judgment is

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appropriate in light of the other Eitel factors.

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IV.

CONCLUSION
IT IS HEREBY ORDERED that SFR’s Motion for Default Judgment against John

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Edward Bostaph, Jr., (ECF No. 67), is GRANTED.

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DATED this _____ day of September, 2020.

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___________________________________
Gloria M. Navarro, District Judge
United States District Court

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