UNITED STATES OF AMERICA v. CHANDLER
OPINION. Signed by Judge Robert B. Kugler on 1/10/2017. (dmr)
NOT FOR PUBLICATION
(Doc. No. 5)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
UNITED STATES OF AMERICA,
Civil. No. 15-8537 (RBK/KMW)
Kugler, United States District Judge:
This suit arises from Bronnell Chandler (“Defendant”)’s failure to pay adequate income
taxes for tax years 1999-2004, 2006-2007, and 2013-2014. Plaintiff, the United States of
America, brings this suit against Defendant to reduce to judgment the tax assessments made
against Defendant by the Internal Revenue Service. Presently before the Court is the United
States’s motion for entry of default judgment against Defendant as to Count I. (Doc. No. 5). For
the reasons set forth below, Plaintiff’s Motion is GRANTED.
I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY
The United States avers that Defendant has failed to meet his tax liabilities. An agent of
the Secretary of the Treasury (“the Secretary”) has made a number of income tax assessments
against Defendant. Compl. ¶ 7 (Doc. No. 1).1 The Secretary provided Defendant with lawful
The Secretary’s agent assessed tax liabilities of $7,466 for tax year 1999, $17,020 for tax year 2000, $11,893 for
tax year 2001, and $11,932 for tax year 2002 on December 12, 2005. Id. The Secretary’s agent then assessed tax
liabilities of $8,566 for tax year 2003, $3,666 for tax year 2004, and $9,801 for tax year 2006 on January 12, 2009.
Id. The Secretary’s agent assessed tax liability of $4,618 for tax year 2007 on October 12, 2012. Id. Finally, the
notice and demand for payment of his tax liabilities. Id.¶ 8. Defendant has not satisfied these tax
liabilities and the liabilities have accrued statutory penalties and interest. Id. ¶ 9. As of July 1,
2016, Defendant owed the United States $137,239.40, plus costs and interests that continue to
accrue. Id. ¶ 10.
The United States brought this suit against Defendant on December 9, 2015. Compl.
Defendant was served on January 16, 2016. (Doc. No. 3). The Clerk entered a default against
Defendant for failure to plead or otherwise defend the action on March 15, 2016. (Doc. No. 4).
The United States moved for default judgment as to Count I of its complaint on July 15, 2016.
(Doc. No. 5). Defendant has not made an appearance or otherwise responded to the instant
Federal Rule of Civil Procedure 55(b)(2) allows the Court, upon plaintiff’s motion, to
enter default judgment against a defendant that has failed to plead or otherwise defend a claim
for affirmative relief. The Court should accept as true all well-pleaded factual allegations in the
complaint by virtue of the defendant’s default except for those allegations pertaining to damages.
Chanel, Inc. v. Gordashevsky, 448 F. Supp. 2d 532, 536 (D.N.J. 2008) (citing Comdyne I, Inc. v.
Corbin, 908 F.2d 1142, 1149 (3d Cir. 1990)). The Court also does not adopt Plaintiff’s legal
conclusions because whether the facts set forth an actionable claim is for the Court to decide.
Doe v. Simone, No. 12-5825, 2013 WL 3772532, at *2 (D.N.J. July 17, 2013).
While the decision to enter default judgment is left principally to the discretion of the
district court, there is a well-established preference in the Third Circuit that cases be decided on
the merits rather than by default judgment whenever practicable. Hritz v. Woma Corp., 732 F.2d
Secretary’s agent assessed tax liability of $2,105 for tax year 2013 and $1,589 for tax year 2014 on October 12,
1178, 1180-81 (3d Cir. 1984). Consequently, the Court must address a number of issues before
deciding whether a default judgment is warranted in the instant case. If the Court finds default
judgment to be appropriate, the next step is for the Court to determine a proper award of
III. DISCUSSION AND ANALYSIS
A. Appropriateness of Default Judgment
i. The Court’s Jurisdiction
First, the Court must determine whether it has both subject matter jurisdiction over
Plaintiff’s cause of action and personal jurisdiction over the defendant. See U.S. Life Ins. Co. in
N.Y.C. v. Romash, No. 09–3510, 2010 WL2400163, at *1 (D.N.J. June 9, 2010).
In this case, the United States is the Plaintiff. As such, this Court has jurisdiction pursuant
to 28 U.S.C. section 1345. This case also regards the Internal Revenue Code, leading to
jurisdiction pursuant to 28 U.S.C. section 1340. Furthermore, section 7402 of the Internal
Revenue Code states that “district courts of the United States at the instance of the United States
shall have such jurisdiction to make and issue in civil actions . . . to render such judgments and
decrees as may be necessary or appropriate for the enforcement of the internal revenue laws.”
I.R.C. § 7402(a). Thus, this Court has subject matter jurisdiction over the instant action. This
Court also has personal jurisdiction over the Defendant in the form of general jurisdiction
because Defendant has “continuous and substantial” contacts with the forum state as a citizen of
New Jersey. See Provident Nat’l Bank v. Fed. Sav. & Loan Ass’n 819 F.2d 434, 437 (3d Cir.
1987) (citations omitted).
ii. Entry of Default
Second, the Court must ensure that the entry of default under Rule 55(a) was appropriate.
Rule 55(a) directs the Clerk of the Court to enter a party’s default when that 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.” In this case, Defendant was properly served with a
summons in December 2015 and has made no attempt to answer or defend the action.
Accordingly, the Clerk appropriately issued the entry of default under Rule 55(a).
iii. Fitness of Defendants to be Subject to Default Judgment
Third, the Court will confirm that the defaulting parties are not infants or incompetent
persons, or persons in military service exempted from default judgment. See Fed. R. Civ. P.
55(b)(2); 50 U.S.C. App. § 501 et seq. (2006) (codification of the Servicemembers Civil Relief
Act of 2003). In this case, Plaintiff's counsel avers that Defendant is neither an infant nor an
incompetent person. Decl. of Beatriz T. Saiz ¶ 6 (Doc. No. 4-2). Counsel states this upon
information and belief, and her good faith affirmation is sufficient to comply with Rule 55(b)(2).
See Firstbank Puerto Rico v. Jaymo Props., LLC, 379 F. App'x 166, 170 (3d Cir. 2010). Further,
Plaintiff's counsel has submitted documentation from the Department of Defense Manpower
Data Center indicating that Defendant has never performed military service that would trigger
the protections against default judgment afforded by the Servicemembers Civil Relief Act. Saiz
Decl, Ex. A (Doc. No. 4-3).
iv. Plaintiff’s Cause of Action
Fourth, the Court must determine whether Plaintiff’s Complaint states a proper cause of
action against Defendant. In performing the inquiry into a cause of action, the Court accepts as
true a plaintiff’s well-pleaded factual allegation while disregarding its mere legal conclusions.
See Directv, Inc. v. Asher, No. 03–1969, 2006 WL 680533, at *1 (D.N.J. Mar. 14, 2006) (citing
10A Charles A. Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure
§ 2688, at 58-59 (3d ed. 1998)). Plaintiff has plead that the Secretary of the Treasury authorized
and requested that the instant action be pursued by the Attorney General pursuant to Internal
Revenue Code § 7401. Compl. Plaintiff has also adequately plead the amount of Defendant’s
assessed tax and Plaintiff’s previous demand for such taxes. Compl. ¶¶ 1, 7-10. The Court notes
that it is “well established” that the government’s tax assessments are “entitled to a legal
presumption of correctness[.]” United States v. Fior D’Italia, Inc., 536 U.S. 238, 242 (2002).
Accordingly, the Court finds that the allegations set forth in the complaint to recover unpaid
taxes are sufficient to state a claim against Defendant.
v. Emcasco Factors
Finally, the Court must consider the so-called Emcasco factors when determining
whether to enter default judgment. The Court considers: (1) whether the defaulting party has a
meritorious defense; (2) the prejudice suffered by the plaintiff seeking default; and (3) the
defaulting party’s culpability in bringing about default. Bridges Fin. Grp., Inc. v. Beech Hill Co.,
Inc., No. 09-2686, 2011 WL 1485435, at *3 (D.N.J. Apr.18, 2011) (citing Doug Brady, Inc. v.
N.J. Bldg. Laborers Statewide Funds, 250 F.R.D. 171, 177 (D.N.J. 2008) (citing Emcasco Ins.
Co. v. Sambrick, 834 F.2d 71, 74 (3d Cir. 1987))). The Court finds that all three factors favor
granting default judgment.
First, there is no showing that Defendant has a cognizable defense to Plaintiff’s claim for
deficient taxes. Second, because Defendant has wholly failed to answer the Complaint or
otherwise appear, Plaintiff suffers prejudice if it does not receive a default judgment because it
has no alternative means of vindicating its claim against the defaulting party. See Directv v.
Asher, 2006 WL 680533, at *2. Third, the Defendant’s failure to respond permits the Court to
draw an inference of culpability on his part. See Surdi v. Prudential Ins. Co. of Am., No. 08-225,
2008 WL 4280081, at *2 (D.N.J. Sept. 8, 2008) (citing Palmer v. Slaughter, No. 99-899, 2000
WL 1010261, at *2 (D. Del. July 13, 2000)). Therefore, the Emcasco factors weigh in favor of
entering default judgment. Plaintiff is entitled to a default judgment against Defendants
Plaintiff seeks actual damages of $137,239.40 of tax debt, plus pre-judgment and postjudgment interest as allowed by Internal Revenue Code section 6621. The Court has already
noted that that the government’s tax assessments are “entitled to a legal presumption of
correctness[.]” Fior D’Italia, Inc., 536 U.S. at 242. The United States submitted documentation
supporting their contention that Defendant owes $137,239.40 for deficient taxes. Decl. of Beatriz
T. Saiz ¶ 4. Therefore, the Court will award the United States $137,239.40, the balance owed for
Plaintiff also requests pre- and post-judgment interest pursuant to 28 U.S.C. section
1961(c)(1) and Internal Revenue Code section 6621. This interest is prescribed by federal law.
Therefore, the Court awards Plaintiff pre- and post-judgment interest as calculated by Internal
Revenue Code section 6621.
For the reasons stated above, the United States’s Motion for Default Judgment against
Defendant is GRANTED. An appropriate order shall issue.
s/ Robert B. Kugler
ROBERT B. KUGLER
United States District Judge
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