UNITED STATES OF AMERICA v. VO
OPINION. Signed by Judge Noel L. Hillman on 2/8/2016. (dmr)
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
UNITED STATES OF AMERICA,
Civ. A. No. 15-6327 (NLH/KMW)
P.O. BOX 277
BEN FRANKLIN STATION
WASHINGTON, DC 20044
On behalf of Plaintiff
HILLMAN, District Judge
Presently before the Court is the motion for default
judgment filed by Plaintiff United States of America. The United
States seeks to reduce to judgment the tax assessments made
against Defendant Tuyet Vo for unpaid federal income tax
liabilities and their respective statutory additions for tax
years 1999-2002. Plaintiff’s one-count complaint alleges that
despite notice and demand, Defendant failed to pay her tax
liabilities. Plaintiff alleges that as of November 24, 2014, the
amount Defendant owes is $960,687 plus statutory additions,
including interest, accruing after that date. (Compl. ¶ 8.)
Despite the filing of this suit, Defendant failed to respond
to Plaintiff’s complaint, and Plaintiff requested default on
October 19, 2015. [Doc. No. 4.] Plaintiff subsequently obtained
a Clerk’s entry of default against Defendant. Plaintiff now moves
for default judgment. [Doc. No. 5.] For the reasons expressed
below, Plaintiff’s motion will be granted.
Plaintiff raises a claim under the Internal Revenue Code
which provides that “any case where there has been a refusal or
neglect to pay any tax . . . the Attorney General or his
delegate . . . may direct a civil action to be filed in a
district court of the United States.” I.R.C. § 7403.
Accordingly, this Court may exercise jurisdiction over
Plaintiff’s federal claim pursuant to 28 U.S.C. § 1331.
Clerk’s Entry of Default
The first step in obtaining a default judgment is the entry
of default. “When a party against whom a judgment for
affirmative relief is sought has failed to plead or otherwise
defend, and that failure is shown by affidavit or otherwise, the
Clerk must enter the party’s default.” Fed. R. Civ. P. 55(a).
The Clerk entered default against Defendant on October 9, 2015.
“Federal Rule of Civil Procedure 55(b)(2) authorizes courts
to enter a default judgment against a properly served defendant
who fails to a file a timely responsive pleading.” Chanel v.
Gordashevsky, 558 F. Supp. 2d 532, 535 (D.N.J. 2008) (citing
Anchorage Assoc. v. Virgin Is. Bd. of Tax Rev., 922 F.2d 168,
177 n.9 (3d Cir. 1990)). However, a party seeking default
judgment “is not entitled to a default judgment as of a right.”
Franklin v. Nat’l Maritime Union of America, No. 91-480, 1991 WL
131182, at *1 (D.N.J. 1991) (quoting 10 Wright, Miller & Kane,
Federal Practice and Procedure § 2685 (1983)), aff’d, 972 F.2d
1331 (3d Cir. 1992). The decision to enter a default judgment is
“left primarily to the discretion of the district court.” Hritz
v. Woma Corp., 732 F.2d 1178, 1180 (3d Cir. 1984).
Although every “well-pled allegation” of the complaint,
except those relating to damages, are deemed admitted, Comdyne
I. Inc. v. Corbin, 908 F.2d 1142, 1149 (3d Cir. 1990), before
entering a default judgment the Court must decide whether “the
unchallenged facts constitute a legitimate cause of action,
since a party in default does not admit mere conclusions of
law,” Chanel, 558 F. Supp. 2d at 535 (citing Directv, Inc. v.
Asher, No. 03-1969, 2006 WL 680533, at *1 (D.N.J. Mar. 14,
2006)). “Three factors control whether a default judgment should
be granted: (1) prejudice to the plaintiff if default is denied,
(2) whether the defendant appears to have a litigable defense,
and (3) whether defendant's delay is due to culpable conduct.”
Chamberlain v. Giampapa, 210 F.3d 154, 164 (3d Cir. 2000);
United States v. $55,518.05 in U.S. Currency, 728 F.2d 192, 195
(3d Cir. 1984). If a review of the complaint demonstrates a
valid cause of action, the Court must then determine whether
Plaintiff is entitled to default judgment.
Whether plaintiff has stated a cause of action
In Plaintiff’s complaint, the following claims are pleaded
Count One – Reduce Federal Income Tax
Assessment to Judgment
In accordance with 26 U.S.C. § 6203, a
delegate of the Secretary of the Treasury of the
United States made the following federal income
tax assessments against the taxpayer:
Despite being given notice and demand for
payment, the taxpayer has not paid the tax
7. Statutory interest and penalties have accrued
and will continue to accrue on the tax
As of November 24, 2014, the amount the
taxpayer owes is $960,687, plus penalties and
interest that continue to according to law.
WHEREFORE, the United States prays that this
A. Render a judgment in favor of the United
States and against the taxpayer Tuyet Vo for
the income tax liability set forth above, in
the amount of $960,687, as of November 24,
2014, plus statutory additions, including
interest, accruing after that date;
B. Grant such other and further relief as the
Court deems just and equitable.
(Compl. at 2-3 [Doc. No. 1].)
In order to determine whether Plaintiff stated a valid
cause of action against Defendant, Plaintiff’s allegations must
be accepted as true and applied to the standards for determining
whether federal income tax liabilities are permitted to be
reduced to judgment.
Any tax imposed by the Internal Revenue Code may be
collected by a proceeding in court so long as the proceeding
commenced “within 10 years after the assessment of the tax.”
I.R.C. § 6502. A prima facie case of tax liability may be
established “by introducing into evidence certified copies of
the certificates of tax assessment.”
United States v. Stuler,
396 F. App’x. 798, 801 (3d Cir. 2010); see also Freck v. IRS, 37
F.3d 986, 991 n.8 (3d Cir. 1994). An “assessment” is the
Internal Revenue Service’s determination of a specified amount a
taxpayer owes to the federal government. United States v. Fior
D'Italia, Inc., 536 U.S. 238, 242 (2002). These assessments are
entitled to a legal presumption of correctness. Id. “Once a
prima facie case has been made, the taxpayer bears the burden of
proving that the assessment is incorrect.” Stuler, 396 F. App'x
at 801 (citing Francisco v. United States, 267 F.3d 303, 319 (3d
Cir. 2001) (“Here, the District Court correctly reasoned that
the Government met its burden of demonstrating a prima facie
case, and that Stuler failed to introduce any evidence that the
assessments against him were incorrect.”).
Based on the facts as pleaded in the complaint, Plaintiff
stated a valid claim for a judgment on Defendant’s federal
income tax liabilities. Plaintiff, filed its complaint on August
21, 2015 to collect unpaid taxes assessed on September 5, 2005
and December 12, 2005, thus the proceeding commenced within 10
years after the assessment of the tax. In support of Plaintiff’s
claims, Plaintiff attached to its motion for default judgment
copies of certificates of tax assessments for tax years 19992002 [Doc. No. 5. at 8-16], therefore establishing a prima facie
case of tax liability. Accepted as true, these claims state a
valid cause of action for the reduction of federal income tax
assessment to judgment.
Whether plaintiff is entitled to a default judgment
Now that it has been determined that Plaintiff stated a
viable claim for the reduction of federal income taxes to
judgment, it must be determined whether Plaintiff is entitled to
a default judgment. As stated above, prior to entering judgment
where a valid cause of action has been established, three
factors must be considered: (1) prejudice to the plaintiff if
default judgment is not granted; (2) whether the defendant has a
meritorious defense; and (3) whether the defendant’s delay was
the result of culpable misconduct. Chamberlain, 210 F.3d at 164.
Prejudice to plaintiff
When a defendant fails to respond to a plaintiff’s claims,
the plaintiff will be prejudiced absent a default judgment
because plaintiff will be left with no other means to vindicate
his or her claims. Smith v. Kroesen, No. 10-5723, 2015 WL
4913234, at *5 (D.N.J. Aug. 18, 2015). Here, Defendant refused
to participate in this matter, and at present, this delay may
stretch on indefinitely. Thus, denying this motion for default
judgment will prejudice Plaintiff.
Existence of meritorious defense
“A claim, or defense, will be deemed meritorious when the
allegations of the pleadings, if established at trial, would
support recovery by plaintiff or would constitute a complete
defense.” Poulis v. State Farm Fire and Cas. Co., 747 F.2d 863,
869-70 (3d Cir. 1984); accord $55,518.05 in U.S. Currency, 728
F.2d at 195; Feliciano v. Reliant Tooling Co., 691 F.2d 653,
657; Farnese v. Bagnasco, 687 F.2d 761, 764 (3d Cir. 1982).
Here, the Court cannot consider Defendant’s defenses if any
exist because Defendant failed to respond to this action. See
Prudential Ins. Co. of America v. Taylor, No. 08-2108, 2009 WL
536403, at *1 (D.N.J. 2009) (“[B]ecause Ms. Ducker has not
answered or otherwise appeared in this action, the Court was
unable to ascertain whether she has any litigable defenses.”).
Thus, no meritorious defense presently exists with respect to
deciding this motion for default judgment.
3. Whether defendant’s delay is the result of culpable
“Culpable conduct is dilatory behavior that is willful or
in bad faith.” Gross v. Stereo Component Sys., Inc., 700 F.2d
120, 123 (3d Cir. 1983). “A properly served defendant has an
obligation to defend himself against a plaintiff's claims, or he
must expect that a judgment may be entered against him.” Smith,
2015 WL 4913234, at *5.
Here, Plaintiff served Defendant with its complaint on
August 28, 2015 and Defendant failed to respond. Nonresponsiveness and refusal by Defendant to engage in the
litigation process constitutes culpable conduct because
Defendant is obligated to defend against Plaintiff’s claims.
Consequently, because the Court finds that Plaintiff will be
prejudiced if default judgment is not granted, Defendant has no
meritorious defense, and Defendant’s failure to appear in this
case is the result of her culpable conduct, the Court finds in
favor of Plaintiff’s motion.
In order to determine what damages Plaintiff is entitled to
for its judgment against Defendant, the Court may “conduct
hearings or make referrals - preserving any federal statutory
right to a jury trial - when, to enter or effectuate judgment, it
needs to . . . determine the amount of damages.” Fed. R. Civ. P.
55(b)(2); cf. Fed. R. Civ. P. 55(b)(1) (“If the plaintiff's claim
is for a sum certain or a sum that can be made certain by
computation, the clerk - on the plaintiff's request, with an
affidavit showing the amount due - must enter judgment for that
amount and costs against a defendant who has been defaulted for
not appearing and who is neither a minor nor an incompetent
person.”); Smith, 2015 WL 4913234, at *5 (quoting Jonestown Bank
and Trust Co. v. Automated Teller Mach., Services, Inc., 2012 WL
6043624, *4 (M.D. Pa. Dec. 5, 2012) (citing 10 James Wm. Moore,
et al., Moore's Federal Practice § 55.32[c] (Matthew Bender
ed. 2010) (“[T]he ‘hearing’ may be one in which the court asks
the parties to submit affidavits and other materials from which
the court can decide the issue.”)).
To support its motion for default judgment, Plaintiff
provided a declaration from a Revenue Officer of the Internal
Revenue Service and the relevant Account Transcripts which
calculate Defendant’s tax liabilities to amount to $973,658 as of
November 2, 2015. The Court finds that Plaintiff’s documents
provided in support of default judgment demonstrate Plaintiff is
entitled to the reduction of the tax liabilities to judgment.
Plaintiff may submit updated affidavits and Account Transcripts
for consideration of the Court with respect to statutory
additions and interest accruing after November 2, 2015.
Consequently, for the reasons expressed above, Plaintiff’s
motion for default judgment against Defendant will be granted as
to Plaintiff’s claim for a judgment on Defendant’s tax liability.
An appropriate Order will be entered.
Date: February 8, 2016
At Camden, New Jersey
s/ Noel L. Hillman
NOEL L. HILLMAN, U.S.D.J.
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