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United States v. Abernathy

United States District Court, E.D. California

August 18, 2014

UNITED STATES OF AMERICA, Plaintiff,
v.
HARVEY M. ABERNATHY, et al., Defendants.

FINDINGS AND RECOMMENDATIONS

DALE A. DROZD, Magistrate Judge.

This matter came before the court on November 22, 2013, for hearing of plaintiff's motion for default judgment against defendant the State of California Employment Development Department, defendant Colorado Compensation Insurance Authority AKA Pinnacol Authority AKA Pinnacol Assurance, and defendant Superior Electric Supply Co., a division of Rose Electric Supply, Inc. (Dkt. No. 22.) U.S. Department of Justice Tax Division Trial Attorney Adam Smart appeared telephonically on behalf of the plaintiff. No appearance was made by or on behalf of any defendant. At that time oral argument was heard and the motion was taken under submission.[1] Having considered all written materials submitted with respect to the motion, and after hearing oral argument, the undersigned recommends that the motion for default judgment be granted.

PROCEDURAL BACKGROUND

Plaintiff initiated this action on March 26, 2013, to reduce tax assessments to judgment and to foreclose federal tax liens on real property pursuant to 26 U.S.C. ยงยง 7401, 7403. (Dkt. No. 1.) The real property that is the subject of this action is located at 9472 Blackswain Place, in Stockton, CA 95219 ("Blackswain Property"). Named as defendants in the complaint are Harvey M. Abernathy, Julie D. Abernathy, the State of California Employment Development Department, Livingston & Mattesich Law Corp., Superior Electric Supply Co., a division of Rose Electric Supply, Inc., the Colorado Compensation Insurance Authority, aka Pinnacol Assurance, and San Joaquin County.

According to plaintiff's compliant, defendant Harvey Abernathy was named as a defendant because his tax liabilities are the subject of the action. The remaining defendants were named as defendants because they may have claimed at one time an interest in the Blackswain Property. (Compl. (Dkt. No. 1) at 3.[2]) As evidenced by the proofs of service filed by plaintiff, defendants were served with a copy of plaintiff's complaint and summons. (Dkt. Nos. 6 & 16.)

On May 24, 2013, defendant San Joaquin County filed a notice disclaiming any right, title, or interest in the Blackswain Property. (Dkt. No. 4.) On May 30, 2013, plaintiff and defendant Livingston & Mattesich Law Corp., also filed a stipulated disclaimer of interest, stipulating that it disclaimed any right, title, or interest in the Blackswain Property. (Dkt. No. 5.) On June 4, 2013, defendant Harvey Abernathy filed an answer. (Dkt. No. 7.) On June 10, 2013, defendant Julie Abernathy filed an answer. (Dkt. No. 9.)

On June 20, 2013, plaintiff filed a request for entry of default as to defendants Colorado Compensation Insurance Authority and the State of California Employment Development Department. (Dkt. No. 13.) The Clerk of the Court entered default as to those two defendants on June 24, 2013. (Dkt. No. 14.) On September 18, 2013, plaintiff filed a request for entry of default as to defendant Superior Electric Supply Co. (Dkt. No. 20.) The Clerk of the Court entered default as to that defendant on September 19, 2013. (Dkt. No. 21.)

Plaintiff filed the motion for default judgment now pending before the court on September 23, 2013, and it first came for hearing before the undersigned pursuant to Local Rule 302(c)(19) on November 8, 2013. (Dkt. Nos. 22 & 25.) Despite being served with all papers filed in connection with plaintiff's motion for default judgment (Dkt. No. 22 at 3; Dkt. No. 23 at 3; Dkt. No. 24 at 3) there was no opposition to the motion for default judgment filed by defendants Colorado Compensation Insurance Authority, the State of California Employment Development Department or Superior Electric Supply Co., (collectively "defaulting defendants"), nor did any of the three defaulting defendants appear at the November 8, 2013 hearing on plaintiff's motion for default judgment.[3]

Thereafter, the hearing of plaintiff's motion for default judgment was continued to November 22, 2013. (Dkt. No. 25.) On November 18, 2013, plaintiff filed a supplemental memorandum, which was also served on the defaulting defendants.[4] (Dkt. No. 18.) On November 22, 2013, the matter again came on for a hearing of plaintiff's motion before the undersigned and again there was no appearance by any defendant.

LEGAL STANDARDS

Federal Rule of Civil Procedure 55(b)(2) governs applications to the court for default judgment. Upon entry of default, the complaint's factual allegations regarding liability are taken as true, while allegations regarding the amount of damages must be proven. Dundee Cement Co. v. Howard Pipe & Concrete Prods. , 722 F.2d 1319, 1323 (7th Cir. 1983) (citing Pope v. United States , 323 U.S. 1 (1944); Geddes v. United Fin. Group , 559 F.2d 557 (9th Cir. 1977)); see also DirectTV v. Huynh , 503 F.3d 847, 851 (9th Cir. 2007); TeleVideo Sys., Inc. v. Heidenthal , 826 F.2d 915, 917-18 (9th Cir. 1987).

Where damages are liquidated, i.e., capable of ascertainment from definite figures contained in documentary evidence or in detailed affidavits, judgment by default may be entered without a damages hearing. Dundee , 722 F.2d at 1323. Unliquidated and punitive damages, however, require "proving up" at an evidentiary hearing or through other means. Dundee , 722 F.2d at 1323-24; see also James v. Frame , 6 F.3d 307, 310-11 (5th Cir. 1993).

Granting or denying default judgment is within the court's sound discretion. Draper v. Coombs , 792 F.2d 915, 924-25 (9th Cir. 1986); Aldabe v. Aldabe , 616 F.2d. 1089, 1092 (9th Cir. 1980). The court is free to consider a variety of factors in exercising its discretion. Eitel v. McCool , 782 F.2d 1470, 1471-72 (9th Cir. 1986). Among the factors that may be considered by the court are

(1) the possibility of prejudice to the plaintiff, (2) the merits of plaintiff's substantive claim, (3) the sufficiency of the complaint, (4) the sum of money at stake in the action; (5) the possibility of a dispute concerning material facts; (6) whether the default was due to excusable neglect, and (7) the strong policy ...

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