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United States of America v. Teresa Marty

September 12, 2011

UNITED STATES OF AMERICA, PLAINTIFF,
v.
TERESA MARTY, DEFENDANT.



ORDER AND FINDINGS AND RECOMMENDATIONS

This case was referred to the undersigned pursuant to Eastern District of California Local Rule 302(c)(19) and 28 U.S.C. § 636(b)(1) for hearing on plaintiff's second motion for entry of default judgment against defendant Teresa Marty. Dckt. No. 13.

On July 20, 2011, the court heard plaintiff's original motion for default judgment. Dckt. No. 7. Attorneys Yoshinori Himel and Guy Jennings appeared at the hearing on plaintiff's behalf; defendant appeared in pro se. The court construed defendant's appearance at the hearing as a motion pursuant to Federal Rule of Civil Procedure 55(c) to set aside the clerk's entry of default and as an opposition to plaintiff's motion for default judgment. Dckt. No. 11. At the hearing, plaintiff's counsel indicated that it would withdraw the motion for default judgment and would stipulate to set aside the clerk's entry of defendant's default. The court then gave defendant a deadline for filing an answer to plaintiff's complaint, and stated that once defendant filed an answer, the clerk's entry of default against her would be set aside. Id. However, on August 1, 2011, defendant filed a notice with the court indicating that she is "choosing not to file an objection" to the case. Dckt. No. 12. Accordingly, on August 3, 2011, plaintiff filed its second motion for default judgment, and noticed the motion for hearing on September 14, 2011. Dckt. No. 13.

For the reasons stated herein, as well as for the reasons stated at the July 20, 2011 hearing on plaintiff's original default judgment motion, the court vacates the September 14, 2011 hearing on plaintiff's second default judgment motion and recommends that the motion be granted.

I. BACKGROUND

On October 18, 2010, the United States filed a complaint against Teresa Marty, seeking "to obtain a judicial declaration that certain documents filed by defendant Teresa M. Marty with the Secretary of State of the State of California against certain employees of the United States are null, void and without legal effect; to expunge public records of the filings; and to enjoin the defendant from all future filings of similar documents." Dckt. No. 1, Compl. ¶ 1. The action is brought pursuant to 26 U.S.C. § 7402.

The complaint alleges as follows: * In 2009, defendant Teresa M. Marty was an Enrolled Agent preparing tax returns for herself and others using a fraudulent tax refund scheme. This Court entered an injunction against Marty to bar her from acting as a tax return preparer for others and to forbid her from making any false claims on her tax returns. United States v. Teresa M. Marty, Civil Case No. 2:09-CV-00600 FCD EFB (E.D. Cal. 2010) (Doc. 64) (the "injunction suit")." Compl. ¶ 5.

* "On January 25, 2009, Teresa M. Marty filed with the Secretary of State of the State of California a UCC Financing Statement, Document Number 09-7185584360, ("UCC Financing Statement"). She then filed a series of amendments to the initial filing . . . . The UCC Financing Statements had the effect of falsely describing as debtors the following persons: (1) John R. Monroe, (2) Hon. Lawrence G. Brown, (3) David P. Alito, (4) Dean H. Prodromos, and (5) Richard Stefanski (hereinafter collectively, the "named persons"). The UCC Financing Statements also contain private and personal information of the named persons." Compl. ¶ 6.

* "In 2009, Alito, Prodromos, and Stefanski were officers or employees of the Internal Revenue Service who were involved in (1) obtaining an injunction against Marty or (2) the collection of unpaid tax from defendant Marty. John R. Monroe is an attorney in the United States Department of Justice, Tax Division, who litigated the injunction suit against Marty. The Honorable Lawrence G. Brown at the time of the injunction suit was the United States Attorney for the Eastern District of California. Lawrence G. Brown is now a judge for the Sacramento Superior Court." Compl. ¶ 7.

* "The UCC Financing Statements were filed by defendant Marty in retaliation for the acts performed by the officers and employees of the United States as part of their official duties, under their authority as officers, or under the direction of officers, of the United States of America." Compl. ¶ 8.

* "The UCC Financing Statements, which purport to encumber the real and personal property of the named persons in a lien amount exceeding $84,000,000, are specifically designed to cause substantial interference with the enforcement of the laws of the United States pertaining to the internal revenue and to molest, interrupt, hinder, intimidate or impede employees or officers of the United States in the good faith performance of their official duties." Compl. ¶ 9.

* "The UCC Financing Statements are without any legal basis whatsoever, and are solely designed to harass federal officers and employees in their personal lives for the performance of their official duties, and thus impose immediate and irreparable harm upon them." Compl. ¶ 10.

* "The UCC Financing Statements impose an immediate and irreparable injury upon the United States of America by impeding, obstructing and impairing the execution of the official duties of its employees or officers." Compl. ¶ 11.

* "The public interest will be served by an order declaring the UCC Financing Statements to be null and void, and permanently enjoining the defendant, Teresa M. Marty, and all those in active concert or participation with her from filing, or attempting to file, any document or instrument which (1) purports to create a nonconsensual lien against the property of any federal officer or employee, or which (2) contains any personal information (such as the social security number or the residence address) of any federal officer or employee." Compl. ¶ 12.

The motion for default judgment also contends that Dean Prodromos, named in the UCC Financing Statements, is a Revenue Officer for the Internal Revenue Service who was assigned to collect a fraudulently-obtained refund from defendant. Dckt. No. 7-5, Decl. of Dean Prodromos in Supp. of Mot. for Default J., ¶¶ 1-2. Officer Prodromos had no contact or relationship with Marty other than in his official capacity with the Internal Revenue Service, and there are no facts which would support the filing by Marty of a UCC Financing Statement against Prodromos. Id. ¶¶ 3-4. Prodromos is concerned that the disclosures of his personal information in the UCC filings may have exposed him to identity theft and that the UCC filings may have a negative impact on his credit record. Id. ¶ 5.

Additionally, John R. Monroe is an attorney in the United States Department of Justice, Tax Division, who litigated the injunction suit against Marty. Dckt. No. 7-3, Decl. of John Monroe in Supp. of Mot. for Default J., ¶¶ 1-2. As with Officer Prodromos, Monroe had no contact or relationship with Marty other than in Monroe's official capacity as a trial attorney for the United States Department of Justice, and there are no other facts which would support the filing by Marty of a UCC Financing Statement against Monroe. Id. ¶¶ 3-4. Monroe is concerned that the UCC filings may have a negative impact on his credit record. Id. ¶ 5.

A certificate of service, filed November 15, 2010, demonstrates that the summons and complaint were personally served on defendant Marty on November 10, 2010. Dckt. No. 4. On February 4, 2011, pursuant to plaintiff's request, the Clerk of Court entered the default of defendant Marty. Dckt. Nos. 5, 6. On June 6, 2011, plaintiff filed a motion for default judgment, and mail served a copy of the motion on defendant. Dckt. No. 7. Defendant appeared at the July 20, 2011 hearing on that motion, but thereafter indicated that she would not be filing an answer to plaintiff's complaint. Dckt. No. 12. Plaintiff then filed a second motion for default judgment, which was also mail served on defendant. Dckt. No. 13. Defendant has not filed any opposition to the motion.

Plaintiff's second motion for default judgment seeks a declaration that the following UCC Financing Statements and amendments are null, void, of no legal effect, and shall be expunged by the California Secretary of State so that the personal identity and information on the filings cannot be retrieved electronically:

* UCC-1 -- Filing No. 09-7185584360 -- filed on January 25, 2009;

* UCC-3 -- Filing No. 09-72182211 -- filed on March 12, 2009;

* UCC-3 -- Filing No. 09-72178432 -- filed on December 23, 2009;

* UCC-3 -- Filing No. 09-72178435 -- filed on ...


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