OLCOTT HOLDINGS, LLC et al v. GALESI et al

Filing 43

LETTER-ORDER denying 30 Motion for Default Judgment. Signed by Judge Esther Salas on 12/3/13. (DD, )

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

CHAMBERS OF

MARTIN LUTHER KING
COURTHOUSE
50 WALNUT ST.
ROOM 5076
NEWARK, NJ 07101
973-297-4887

ESTHER SALAS
UNITED STATES DISTRICT JUDGE

December 3, 2013
LETTER ORDER
Re:

Olcott Holdings, LLC & the Estate of Bernard Olcott v. M. Michael Galesi et al.
Civil Action No. 12-cv-04206 (ES)

Dear Counsel:
Pending before this Court is Plaintiffs Olcott Holdings LLC (“Olcott Holdings”) & the
Estate of Bernard Olcott (“Estate”)’s (collectively, “Plaintiffs”) motion for default judgment
against Defendants George Kirkham (“Kirkham”), Dora Wong (“Wong”), and Richard Spetnagel
(“Spetnagel”) (collectively, “Defendants”). (D.E. No. 30, Motion for Default Judgment as to
Defendants G. Kirkham, Dora Wong & R. Spetnagel (“Motion for Def.”)). The Court DENIES
Plaintiffs’ motion.
Briefly, this case “is an interpleader action to determine the ownership of certain funds
being held in escrow . . . pursuant to an order entered by the United States District Court for the
Northern District of Oklahoma on January 29, 2002.” (D.E. No. 1, Complaint for Interpleader &
for Injunctive Relief (“Compl.”) ¶ 1). In the underlying action, the Northern District of
Oklahoma entered judgment “in favor of Bernard Olcott [(“Mr. Olcott”),]” a limited partner in
partnerships for oil exploration and drilling. (Id. ¶¶ 1, 3). The judgment’s principal amount was
“$1,077,014.70 plus substantial pre-judgment interest of $2,573,975.” (Id. ¶ 3). While Mr.
Olcott executed certain bank accounts allegedly belonging to the Judgment Debtor, there was an
issue on whether the executed funds belonged to the Judgment Debtor “or to certain limited
partner investors of the Judgment Debtors who had not settled, compromised, or assigned their
interests with the Judgment Debtors.” (Id.). Kirkham, Spetnagel, and Wong “are persons or
entities who may have a claim of ownership to some of the escrowed funds.” (Id. ¶ 11).
However, these three Defendants failed to answer the complaint. (D.E. No. 30-1, Certification in
Support of Motion for Default Judgment (“Certification”) ¶¶ 14, 17, 20; see also D.E. No. 30-3,
Affidavit of Due Diligence for Kirkham (“Kirkham Due Diligence”); D.E. No. 30-4, Certified
Mail for Kirkham (“Kirkham Certified”); D.E. No. 30-5, Affidavit of Service for Spetnagel
(“Spetnagel Affidavit”); D.E. No. 30-6, Affidavit of Service for Wong (“Wong Affidavit”)).
Because other Defendants have answered, this matter is ongoing. (See, e.g., D.E. No. 11; D.E.
No. 18).
“[I]f default is entered against some defendants in a multi-defendant case, the preferred
practice is for the court to withhold granting default judgment until the action is resolved on its
merits against non-defaulting defendants: if plaintiff loses on merits, the complaint should then

be dismissed against both defaulting and non-defaulting defendants.” See Animal Sci. Prods.,
Inc. v. China Nat’l Metals & Minerals Imp. & Exp. Corp., 596 F. Supp. 2d 842, 849 (D.N.J.
2008); See generally Shanghai Automation Instrument Co. v. Kuei, 194 F. Supp. 2d 995, 1005-11
(N.D. Cal. 2001) (discussing multi-defendant default judgment jurisprudence in different federal
courts); Phoenix Renovation Corp. v. Gulf Coast Software, Inc., 197 F.R.D. 580, 582-83 (E.D.
Va. 2000) (same).
Here, the analysis of the claims against the non-defaulting Defendants requires the Court
to preliminarily rule on the defaulting Defendants’ liability. Thus, the claims of the defaulting
and non-defaulting Defendants are intertwined and it would be inappropriate to grant default
judgment against the defaulting Defendants. Plaintiffs’ motion is therefore DENIED.
The Clerk of the Court shall terminate Docket Entry No. 30.
SO ORDERED.
s/Esther Salas
Esther Salas, U.S.D.J.

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