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Leif Bergman and Bergman Landscape Inc v. Michael P. Tobin

March 23, 2012

LEIF BERGMAN AND BERGMAN LANDSCAPE INC., PLAINTIFFS,
v.
MICHAEL P. TOBIN, HOLLY W. TOBIN, STEEL VENTURES, INC., UNITED STATES OF AMERICA AND BOB VANELLA,
DEFENDANTS.



The opinion of the court was delivered by: Gary S. Austin United States Magistrate Judge

ORDER GRANTING MOTION TO SET ASIDE DEFAULT (Docs. 13 and 25)

ORDER GRANTING MOTION TO STRIKE

INTRODUCTION

Pending before the Court is Michael Tobin and Holly Tobin's ("Defendants") Motion to Set Aside Default. (Doc. 13). Leif Bergman and Bergman Landscape Inc. ("Plaintiffs"), filed an Opposition to the motion on January 27, 2012. (Doc. 18). Defendants filed a Reply on January 30, 2012. (Docs. 20, 21). The matter was set for hearing on February 10, 2012, at 9:30 am. The Court determined that the matter was suitable for decision without oral argument. The matter was taken under submission and the hearing was vacated on February 8, 2012. (Doc. 22).

Shortly after the issuance of the Court's order taking the matter under submission, Plaintiffs filed a Sur-Reply and a Request for Judicial Notice. (Docs. 23 and 24). Defendants filed a Motion to Strike these filings on the basis that they were untimely. (Docs. 25).

As a preliminary matter, Defendants' Motion to Strike Plaintiffs' Sur-Reply and Request for Judicial Notice is GRANTED. At the time Plaintiffs filed these documents, the case had already been taken under submission. Furthermore, Plaintiffs never requested leave to file additional pleadings, nor do the Local Rules allow for such submission. Local Rule 230 (d) and (g). Accordingly, the Sur-Reply and Request for Judicial Notice are STRICKEN. (Docs. 23 and 24). Upon a review of the pleadings, the Court GRANTS Defendants' Motion to Set Aside Default.

PROCEDURAL BACKGROUND

On September 26, 2011, Plaintiffs filed a complaint against Defendants in the Stanislaus County Superior Court. (Doc. 1 at Ex. A). The complaint seeks foreclosure of mortgage on real properly located at 1711 East Hawkeye Avenue, Turlock, California 95830. The complaint alleges that Plaintiff, Leif Bergman is holding a mortgage/lien against the property. The case was removed to this Court by Defendant United States of America on November 9, 2011. (Doc. 1).

The complaint alleges that on June 22, 2009, Defendants delivered a written promissory note ("the note") to Plaintiffs in the principal sum of $205,399.15. The parties signed a security agreement ("Security Agreement") as security for the note. Plaintiffs contends that the security agreement constituted a mortgage and that the parties intended that the property would be hypothecated for full and faithful performance of all obligations under the note. Pursuant to the terms of the note, Defendants promised to make monthly payments of $5,209.45 beginning February 15, 2010, and continuing in subsequent months. The note/mortgage allegedly provides that the if Defendants defaulted, Plaintiffs could demand that all sums owed under the note be paid immediately. The mortgage was duly recorded in the Official Records of Stanislaus County on July 22, 2009.

Plaintiffs allege that Defendants have not paid the amounts owed as required. In accordance with the agreements, Plaintiffs elected to declare the remaining principal and interest payable immediately. The accelerated amount due consists of the principal sum of $209,491.47 plus interest. Plaintiffs further allege that Defendants failed to pay property taxes, assessments, and maintain insurance on the property as required.

Plaintiffs have alleged foreclosure on the mortgage, foreclosure on the equitable mortgage, and reformation as causes of action. They seek $209,491.47 plus interest, attorneys' fees, any additional funds necessary to protect their security interest in the property, reformation ab initio to reflect the intention of the parties that the security was pledged to Bergman Landscape, Inc., rather than Leif Bergman, declaratory relief, an order that the subject mortgage be foreclosed, a judgment against Defendants for any deficiency that remains after applying all of proceeds of the sale of the property, costs, and any other just and proper relief.

Defendants were served with the complaint on October 11, 2011. (Doc. 6 & 7). Defendants failed to timely answer the complaint. On November 21, 2011, Plaintiffs requested that default be entered against Defendants. The Clerk of the Court entered default on November 22, 2011. (Docs. 9 and 10). Defendants filed the instant motion on December 20, 2011. (Doc. 13).

DISCUSSION

The district court has "especially broad" discretion in deciding whether to set aside an entry of default. United States v. Brady , 211 F.3d 499, 504 (9th Cir. 2000). Rule 55(c) of the Federal Rules of Civil Procedure provides that a court may set aside default for "good cause shown." The "good cause" standard that governs vacating an entry of default under Rule 55(c) is the same standard that governs vacating a default judgment under Rule 60(b). Franchise Holding II, LLC v. Huntington Restaurants Group, Inc. , 375 F.3d 922, 925-926 (9th Cir. 2004); TCI Group Life Ins. Plan v. Knoebber , 244 F.3d 691, 696 (9th Cir. 2001). The good cause analysis considers three factors: (1) whether Defendants engaged in culpable conduct that led to the default; (2) whether Defendants have a meritorious defense; or (3) whether reopening the default judgment would prejudice Plaintiff. United States v. Signed Pers. Check No. 730 of Yubran S. Mesle ("Mesle") , 615 F. 3d 1085, 1091 (9 th Cir. 2010) (citing Franchise Holding II, LLC , 375 F.3d at 925-926. The court may deny the motion if any one of these factors exists. Id . In ...


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