Matrix Financial Services Corporation v. Hall et al

Filing 29

MEMORANDUM OPINION and ORDER GRANTING DEFAULT JUDGMENT and REFORMING DEED OF TRUST granting Matrix Financial Services Corporation's 23 MOTION for Order Granting Default Judgment by the Court against James C. Hall, III and Reforming Deed of Tru st; directing that the Deed of Trust is equitably reformed as more fully set forth herein, effective as of the date the Deed of Trust was first executed, March 31, 2008; further directing that the tax liens recorded by the United States Department of Treasury and the West Virginia Department of Tax and Revenue against defendant Hall are hereby subordinated to the Deed of Trust as reformed by this Order; further directing the Clerk's Office to accept and record a certified copy of this Order to provide notice of the reformation of the Deed of Trust; further directing that this matter be DISMISSED and REMOVED from the docket of the court. Signed by Magistrate Judge Cheryl A. Eifert on 7/25/2017. (cc: James C. Hall, III; counsel of record) (jsa)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA
HUNTINGTON DIVISION
MATRIX FINANCIAL SERVICES
CORPORATION,
Plaintiff,
v.

Case No.: 3:16-cv-09438

JAMES C. HALL, III;
UNITED STATES DEPARTMENT
OF TREASURY, INTERNAL
REVENUE SERVICE;
WEST VIRGINIA DEPARTMENT
OF TAX AND REVENUE,
Defendants.
MEMORANDUM OPINION and ORDER
GRANTING DEFAULT JUDGMENT and
REFORMING DEED OF TRUST
Plaintiff Matrix Financial Services Corporation (“Matrix”) filed the instant action
seeking an Order from the court reforming a Deed of Trust. (ECF No. 1). Pending before
the Court is Matrix’s Motion for Order Granting Default Judgment Against Defendant
James C. Hall III and Reforming Deed of Trust, and its Memorandum of Law in support
of its request for entry of default judgment against defendant James C. Hall, III, (“Hall”).
Defendants United States Department of Treasury, Internal Revenue Service, and West
Virginia Department of Tax and Revenue do not oppose the requested relief as indicated
by the signatures of their respective counsel to the Motion requesting relief. The parties
have consented to disposition of this action by a United States Magistrate Judge. (ECF
No. 17 at 3). Therefore, for the reasons that follow, the Court GRANTS the Motion for
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Default Judgment against James C. Hall, III, and further GRANTS the relief sought by
Matrix and consented to by the United States Department of Treasury, Internal Revenue
Service, and the West Virginia Department of Tax and Revenue.
I.

Relevant History
According to the Complaint, on March 31, 2008, defendant Hall executed a Deed

of Trust, granting a security interest in real property located at 2219 Jefferson Avenue,
Point Pleasant, West Virginia to secure repayment of a loan obtained by Hall from
Flagstar Bank. (ECF No. 1). The Deed of Trust explicitly referenced a legal description of
the real property, which was supposed to be attached to the Deed of Trust, but when the
Deed of Trust was recorded with the Clerk of the County Commission of Mason County,
West Virginia, the legal description was not attached. (Id.).
In 2011, Flagstar Bank became aware that the legal description of the real property
was inadvertently omitted when the Deed of Trust was recorded. Therefore, a Corrective
Deed of Trust was recorded on June 10, 2011, which had the legal description attached.
However, Flagstar Bank failed to obtain Hall’s acknowledgment of the Corrective Deed
before recording it. (Id.).
In December 2015, Matrix was assigned the Deed of Trust. Recognizing that Hall’s
acknowledgment was missing from the Corrective Deed of Trust, Matrix filed the present
civil action seeking to reform the original Deed of Trust recorded in 2008 to attach the
legal description that should have been included at the time of recording. Matrix claims
that reformation of the original Deed of Trust will remove any potential impediment to
title and will allow Matrix to obtain the contemplated benefits of the Deed of Trust. (Id.).
Matrix joined the United States Department of Treasury, Internal Revenue Service, and
the West Virginia Department of Tax and Revenue as defendants, because each entity has
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a recorded tax lien against Hall. (Id.).
Hall was personally served with the summons and complaint in this case on
December 13, 2016. (ECF No. 14). On January 25, 2017, Hall participated in a Rule 26(f)
meeting, in which he and the other parties consented to resolution of the case by a United
States Magistrate Judge. (ECF No. 17 at 3, 5). On February 1, 2017, the parties stipulated
that Hall would have an extension through and including March 1, 2017 in which to
answer or otherwise respond to the complaint. Despite receiving the extension, Hall never
filed a responsive pleading or motion.
On May 30, 2017, Matrix filed an application for entry of default. (ECF No. 26). A
motion for entry of default judgment was already pending. (ECF Nos. 23). On June 16,
2017, the Clerk of Court entered a default as to defendant Hall and sent a copy of the entry
of default to Hall at the address on record. (ECF No. 27). However, the entry was returned
undeliverable and with no forwarding address. (ECF No. 28). More than five months have
passed since entry of the parties’ stipulation of extension and more than three months
have passed since Matrix filed its motion seeking an order of default judgment.
Consequently, Matrix’s motion is ready for disposition.
II. Discussion
Federal Rule of Civil Procedure 55 sets forth a two-step process for entry of a
default judgment. First, the plaintiff, or party seeking default judgment, must request that
the Clerk of Court enter a default “[w]hen 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.” Fed. R. Civ. P. 55(a). Second, after entry of default, the plaintiff
must apply for a default judgment. Fed. R. Civ. P. 55(b). When the relief sought is for a
sum certain or can be ascertained by computation, the request for default judgment may
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be made to the Clerk. However, “[a] plaintiff's assertion of a sum in a complaint does not
make the sum ‘certain’ unless the plaintiff claims liquidated damages.” Lopez v. XTEL
Const. Grp., LLC, No. CIV. PWG-08-1579, 2011 WL 6330053, at *2 (D. Md. Dec. 16, 2011).
In all other instances, the party seeking default must apply to the court, Fed. R. Civ. P.
55(b)(2), and “the complaint must be supported by affidavit or documentary evidence.”
Lopez, 2011 WL 6330053, at *2. The court may conduct hearings on the motion for default
judgment when the court needs to “conduct an accounting;” “determine the amount of
damages;” “establish the truth of any allegation by evidence;” or “investigate any other
matter.” Id. If the party against whom a default judgment is sought has appeared
personally or by a representative, the party or representative must be given seven days’
notice of any hearing.
When the party against whom a default judgment is sought fails to make an
appearance or fails to respond to the motion for default judgment, the court must
determine if default judgment is appropriate based upon the allegations of the pleading.
Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780-81 (4th Cir. 2001). The court
must accept well-pleaded factual allegations as true and must evaluate whether the
allegations support the relief sought. Id. Despite “a strong preference that, as a general
matter, defaults be avoided and that claims and defenses be disposed of on their merits,”
Colleton Preparatory Acad., Inc. v. Hoover Universal, Inc., 616 F.3d 413, 417 (4th Cir.
2010), “default judgment may be appropriate when the adversary process has been halted
because of an essentially unresponsive party.” S.E.C. v. Lawbaugh, 359 F. Supp. 2d 418,
421 (D. Md. 2005); Lopez, 2011 WL 6330053, at *2 (collecting cases). The decision to
enter a default judgment rests within the sound discretion of the court. Id. (citing Dow v.
Jones, 232 F.Supp.2d 491, 494 (D. Md. 2002).
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Here, Matrix has provided an affidavit and documentary evidence in support of its
Complaint and Motion for Default Judgment. Having reviewed the evidence, the
undersigned finds that the allegations of the Complaint are well supported, and a hearing
on the matter is not necessary. Furthermore, the record establishes that defendant Hall
was served with the Complaint and was fully aware of his obligation to respond to the
Complaint no later than March 1, 2017, but failed to do so. Moreover, Matrix served Hall
with the Motion for an Order Granting Default Judgment and Reforming Deed of Trust
on April 25, 2017, and Hall has made no effort to oppose the motion. Accordingly, the
Court GRANTS the motion for entry of default judgment against defendant Hall.
III. Order Reforming Deed of Trust and Dismissing Action
The Court hereby GRANTS judgment in favor of Matrix and ORDERS as follows:
With the consent of defendants United States Department of Treasury and West
Virginia Department of Tax and Revenue, the Deed of Trust executed March 31, 2008 by
defendant James C. Hall III and recorded April 4, 2008, in the Office of the Clerk of the
County Commission of Mason County, West Virginia, at Book 339, Page 726 is equitably
reformed to attach as Exhibit “A” or otherwise include the legal description, which shall
read:
Situate in the City of Point Pleasant, Mason County, West Virginia, and
more particularly bounded and described as follows to-wit:
Being Lot No. Ten (10) in Block “T” as designated on the plat of North Point
Pleasant which said plat is of record in the Office of the Clerk of the County
Court of Mason County, West Virginia in Deed Book 70, at Page 168.
and it is further
ORDERED that, by stipulation and agreement, the tax liens recorded by the
United States Department of Treasury and the West Virginia Department of Tax and
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Revenue against defendant Hall are hereby subordinated to the Deed of Trust as reformed
by this Order; and it is further
ORDERED that the above reformation is effective as of the date the Deed of Trust
was first executed, March 31, 2008; and it is further
ORDERED that the Clerk’s Office is DIRECTED to accept and record a certified
copy of this Order to provide notice of the reformation of the Deed of Trust as noted above.
Lastly, because reformation of the Deed of Trust resolves all matters in
controversy, the Court ORDERS that this matter be DISMISSED and REMOVED
from the docket of the court.
The Clerk is instructed to provide a copy of this Order to James C. Hall, III, and to
counsel of record.
ENTERED: July 25, 2017

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