US Securities and Exchange Commission v. Patel et al

Filing 357

ORDER denying 354 Motion for Default Judgment. So Ordered by Judge Steven J. McAuliffe.(lat)

UNITED STATES DISTRICT COURT
DISTRICT OF NEW HAMPSHIRE
United States Securities
and Exchange Commission,
Plaintiff
v.

Case No. 07-cv-39-SM
Opinion No. 2013 DNH 066

Hor Chong (David) Boey,
and Jerry A. Shanahan,
Defendants
O R D E R
The government seeks a default judgment against Defendant
Hor Chong (David) Boey, and relief in the nature of a permanent
injunction, disgorgement, civil penalties and an officer and
director bar.

Document no. 354.

As explained below, the clerk’s

default, entered on January 18, 2008, is a nullity.

The motion

for default judgment, therefore, is denied.

On February 9, 2007, the government filed its original civil
complaint, naming Boey and nine others as defendants.

Because

Boey “failed to plead or otherwise respond” to the original
complaint, the clerk of the court entered default against Boey on
January 18, 2008, pursuant to Fed. R. Civ. P. 55(a) and Local
Rule 55.1.

See Doc. No. 122.

The clerk’s default order stated

that “[a] damages hearing will be scheduled upon adjudication of
all the remaining claims or parties.”

Id.

Nine months later, on October

15, 2008, the government

filed its First Amended Complaint, naming Boey as a defendant,
along with the nine others named in the original complaint.1
doc. no. 150.

See

The amended complaint did not incorporate the

original complaint by reference, and was served upon Boey’s
attorney-of-record, consistent with federal rules of procedure.
Boey is now the single remaining defendant in this case.

The amended complaint superceded the original complaint.
See reasoning of and federal cases collected in TD BankNorth,
N.A. v. Hawkins, 5 A.3d 1042, 1047-48 (Me. 2010).
complaint is, therefore, a nullity.

The original

The clerk’s default, based

on Boey’s failure to answer or otherwise respond to the original
complaint, which was entered months before the amended complaint
was filed, is likewise a nullity.

See id.; see also Winston v.

City of Laurel, 2012 WL 5381346 (S.D. Miss. Oct. 31, 2012)
(“[T]he filing of the Amended Complaint mooted the Clerk’s Entry
of Default.”).

The government has never moved for entry of

default against Boey relative to the amended complaint, and none

1

The government carefully specified in its amended
complaint that “no new claims” were being brought against
Defendants Barber, Gagalis, and Kay, because judgment had entered
against them. Doc. no. 150 at 4. Had the government taken the
same approach with respect to Boey, it likely would not be facing
further procedural hurdles.
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has been entered.

The government’s motion for default judgment,

therefore, must be denied.

See id.

Under these circumstances, the government has two basic
options: (1) move to dismiss the amended complaint with or
without prejudice as to Boey or (2) file a motion for default
under Rule 55(a) with respect to the amended complaint, and,
subsequently, in compliance with the service requirements of Rule
55(b), file a motion for default judgment and for specific
relief.

If the government chooses the second of these options,

it shall include in a supporting brief a complete and wellsupported justification for the relief sought, and, particularly,
should show cause why the following relief might be
inappropriate:

disgorgement of $29,576.40; no prejudgment

interest; a civil penalty of $120,000; a ten-year officer and
director bar; and no injunction related to future compliance with
existing legal requirements.

And, the government should expect a

hearing on damages before any judgment is entered.

SO ORDERED.
____________________________
Steven J. McAuliffe
United States District Judge
April 25, 2013

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cc:

Peter D. Anderson, Esq.
John R. Baraniak, Jr., Esq.
Conrad W. P. Cascadden, Esq.
William Cintolo, Esq.
Philip G. Cormier, Esq.
Victor W. Dahar, Esq.
Maria R. Durant, Esq.
Nancy J. Gegenheimer, Esq.
Andrew Good, Esq.
Steven M. Gordon, Esq.
Miranda Hooker, Esq.
Leslie J. Hughes, Esq.
Lucy J. Karl, Esq.
William H. Kettlewell, Esq.
John C. Kissinger, Esq.
Diana K. Lloyd, Esq.
James Lux, Esq.
Jeffrey S. Lyons, Esq.
Richard J. McCarthy, Esq.
Peter B. Moores, Esq.
Ann Pauly, Esq.
Michelle R. Peirce, Esq.
James W. Prendergast, Esq.
Michael D. Ramsdell, Esq.
Jeffrey B. Rudman, Esq.
James A. Scoggins, II, Esq.
Jonathan A. Shapiro, Esq.
Kevin E. Sharkey, Esq.
Bruce A. Singal, Esq.
Elizabeth H. Skey, Esq.
Peter A. Spaeth, Esq.

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