RSDC Holdings, LLC v. Steinberg et al, No. 2:2016cv09381 - Document 19 (E.D. La. 2017)
Court Description: ORDER & REASONS: Plaintiff's motion for default judgment is GRANTED. Judgment is entered against defendants. The Court will separately enter a declaratory judgment consistent with this opinion. Signed by Judge Sarah S. Vance on 1/12/2017.(mmm)
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RSDC Holdings, LLC v. Steinberg et al Doc. 19 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA RSDC HOLDINGS, LLC VERSUS CIVIL ACTION NO. 16-9381 RON STEINBERG, debis FINANCIAL SERVICES, INC., AND GANIS CREDIT CORPORATION SECTION “R” (2) ORD ER AN D REASON S Plaintiff RSDC Holdings, LLC m oves the Court to enter a default judgm ent declaring the m ortgages originally granted in favor of defendant debis Financial Services, Inc. and defendant Ganis Credit Corporation against the vessel Tuna Taxi are satisfied. 1 For the following reasons, the Court GRANTS plaintiff’s m otion. I. BACKGROU N D On J une 6, 20 16, plaintiff filed this action for declaratory judgment under 28 U.S.C. § 220 1. 2 Plaintiff seeks a declaration that plaintiff is the rightful owner of the Tuna Taxi and that the ship m ortgages in favor of defendants debis Financial Services, Inc. and Ganis Credit Corporation are 1 2 R. Doc. 8. R. Doc. 1. Dockets.Justia.com satisfied. 3 Defendant debis Financial Services, Inc. was served August 3, 20 16. 4 Plaintiff asked this Court for perm ission to serve defendants Ron Steinberg and Ganis Credit Corporation via publication, 5 and the Court granted plaintiff’s m otion. 6 On Decem ber 5, plaintiff filed an affidavit of publication, signed by Sandra Campos, the principal clerk of the Orange County Register, attesting that the Court’s order was published in the Register once a week for six weeks. 7 No defendant has filed any response to the sum m ons and com plaint, nor did any defendant request additional tim e to respond. 8 Plaintiff sought an entry of default as to debis Financial Services on September 29, 20 16, 9 and the clerk entered default against debis Financial Services on the following day. 10 On Decem ber 5, 20 16, plaintiff sought an entry of default against Steinberg and Ganis Credit Corporation, 11 and the 3 4 5 6 7 8 9 10 11 Id. at 1 ¶ 1. R. Doc. 7. R. Doc. 13. R. Doc. 15. R. Doc. 16. R. Doc. 12; R. Doc. 18. R. Doc. 12. R. Doc. 14. R. Doc. 17. 2 clerk entered default against them on December 9, 20 16. 12 Plaintiff now seeks a default judgm ent. II. LEGAL STAN D ARD Under Federal Rule of Civil Procedure 55(b), the Court m ay enter a default judgment against a party when it fails to plead or otherwise respond to the plaintiff’s com plaint within the required tim e period. Fed. R. Civ. P. 55(b). A plaintiff who seeks a default judgm ent against an unresponsive defendant m ust proceed through two steps. First, the plaintiff m ust petition the court for the entry of default, which is sim ply “a notation of the party’s default on the clerk’s record of the case.” Dow Chem . Pac. Ltd. v. Rascator Mar. S.A., 782 F.2d 329, 335 (2d Cir. 1986); see also United States v. Hansen, 795 F.2d 35, 37 (7th Cir. 1986) (describing the entry of default as “an interm ediate, m inisterial, nonjudicial, virtually m eaningless docket entry”). Before the clerk m ay enter the default, the plaintiff m ust show “by affidavit or otherwise” that the defendant “has failed to plead or otherwise defend.” Fed. R. Civ. P. 55(a). Beyond that requirem ent, however, the entry of default is largely m echanical. 12 R. Doc. 18. 3 After the defendant’s default has been entered, the plaintiff m ay request the entry of judgm ent on the default. In that context, the court deems the plaintiff’s well-pleaded factual allegations adm itted. See N ishim atsu Const. Co., Ltd. v. Houston N at. Bank, 515 F.2d 120 0 , 120 6 (5th Cir. 1975). At the sam e tim e, the court does not hold the defaulting defendant “to [have] adm it[ed] facts that are not well-pleaded or to [have] adm it[ed] conclusions of law.” Id. The default judgm ent should not be entered unless the judgm ent is “supported by well-pleaded allegations and . . . ha[s] a sufficient basis in the pleadings.” W ooten v. McDonald Transit Associates, Inc., 788 F.3d 490 , 498 (5 th Cir. 20 15) (internal quotation m arks om itted) (citing Houston N at. Bank, 515 F.2d at 120 6). If the plaintiff’s claim is for a sum certain and the defendant has not m ade an appearance in court, the clerk m ay enter a default judgm ent. Fed. R. Civ. P. 55(b)(1). In all other cases, “the party m ust apply to the court for a default judgm ent.” Fed. R. Civ. P. 55(b)(2). No party is entitled to a default judgm ent as a m atter of right. Lew is v. Ly nn, 236 F.3d 766, 767 (5th Cir. 20 0 1) (per curiam ) (quoting Ganther v. Ingle, 75 F.3d 20 7, 212 (5th Cir. 1996)). The disposition of a m otion for the entry of default judgm ent ultim ately rests within the sound discretion of the district court. Mason v. Lister, 562 F.2d 343, 345 (5th Cir. 1977). 4 III. D ISCU SSION A. Ju ris d ictio n Before entering judgm ent, a district court m ust “look into its jurisdiction both over the subject m atter and the parties.” Sy stem Pipe & Supply , Inc. v. M/ V Viktor Kurnatovskiy , 242 F.3d 322, 324 (5th Cir. 20 0 1) (quoting W illiam s v. Life Sav. & Loan, 80 2 F.2d 120 0 , 120 3 (10 th Cir.1986)) (quotation m arks rem oved). J udgment entered in the absence of jurisdiction is void, and the Court m ust therefore refrain from entering judgment if its jurisdiction is uncertain. In this case, subject m atter jurisdiction is founded upon diversity of citizenship. See 28 U.S.C. § 1332. RSDC is a Louisiana LLC and its sole m ember, Donald J oe Calloway, is a Louisiana citizen. Defendant Steinberg is a citizen of California; defendant debis Financial Services is a Delaware corporation; defendant Ganis Credit is a California corporation; 13 and the am ount in controversy exceeds $ 75,0 0 0 . 14 Service of process on debis Financial Services appears to have been properly executed under the Federal Rules of Civil Procedure. The Court therefore finds that it has jurisdiction to enter this default judgm ent. 13 14 R. Doc. 1 at 2 ¶¶ 4-7. Id. at 1 ¶ 2. 5 B. Pro ce d u ral Re qu ire m e n ts fo r D e fau lt Ju d gm e n t The record shows that all defendants were served with process, but have failed to plead or otherwise defend against plaintiff’s claim s. Indeed, the defendants have m ade no appearance at all. Although judgm ents by default are generally disfavored, see Lindsey v. Prive Corp., 161 F.3d 886, 893 (5th Cir. 1998), the Court finds that the defendants’ failure to appear has m ade it impossible to achieve a “just, speedy, and inexpensive disposition” of this case on the m erits. Sun Bank of Ocala v. Pelican Hom estead and Sav. Ass’n, 874 F.2d 274, 276 (5th Cir. 1989). The record does not reveal any excuse for defendants’ failure to appear. Accordingly, the Court finds that the requirem ents for a default judgm ent have been met. C. D e clarato ry Re lie f Having established that the procedural requirements for default judgm ent have been satisfied, the Court m ust also evaluate whether declaratory relief is appropriate in this case. See, e.g., Clarendon Am erica Ins. Co. v. CM General Contractors, Inc., No. 0 7-20 37, 20 0 9 WL 1360 28, *2-3 (W.D. La. J an. 20 , 20 0 9) (evaluating whether to grant declaratory relief independently of the procedural requirem ents for default judgm ent); May flow er Transit, LLC v. Troutt, 332 F. Supp. 2d 971, 975-76 (W.D. Tex. 20 0 4) (same). “When considering a declaratory judgm ent action, a district 6 court m ust engage in a three-step inquiry.” Orix Credit Alliance, Inc. v. W olfe, 212 F.3d 891, 895 (5th Cir. 20 0 0 ). First, the court m ust determ ine whether the declaratory action is justiciable. Or, in other words, whether an “actual controversy” exists between the parties to the action. Id. Second, if the court has jurisdiction, it m ust determ ine whether it has the “authority” to grant declaratory relief. Id. Finally, the court m ust determ ine whether to exercise its discretion to decide or dism iss the declaratory action. Id. The Court address each of these three steps in turn. 1. Justiciability “A declaratory judgm ent action is ripe for adjudication only where an ‘actual controversy’ exists.” Id. at 896. Generally, “an actual controversy exists where ‘a substantial controversy of sufficient im m ediacy and reality exists between parties having adverse legal interests.’” Id. (quoting Middle South Energy , Inc. v. City of N ew Orleans, 80 0 F.2d 488, 490 (5th Cir. 1986)). Whether the facts are sufficiently im m ediate to establish an actual controversy is a case-by-case inquiry. Id. As a result of defendants default, defendants have adm itted that RSDC Holdings’ allegations in its com plaint are true. See N ishim atsu, 515 F.2d at 120 6 (“The defendant, by his default, adm its the plaintiff’s well-pleaded allegations of fact, is concluded on those facts by the judgment, and is barred 7 from contesting on appeal the facts thus established.”). The factual allegations establish that RSDC Holdings is currently in possession of the Tuna Taxi, and seeks to sell the vessel. 15 But in order for the vessel to be m erchantable, RSDC Holdings m ust determ ine the status of two m ortgages associated with the Tuna Taxi and establish that RSDC Holdings is the rightful owner of the vessel. Plaintiff’s allegations and the docum ents attached to plaintiff’s com plaint indicate the existence of these m ortgages and defendants’ association with the m ortgages. Therefore, the Court concludes that there is an actual controversy between the parties that is neither hypothetical nor conjectural. 2. Authority Under the second prong of the Orix Credit Alliance test, a district court does not have authority to consider the merits of a declaratory judgm ent action when: “(1) a declaratory defendant has previously filed a cause of action in state court against the declaratory plaintiff, (2) the state case involves the same issues as those in the federal case, and (3) the district court is prohibited from enjoining the state proceedings under the Anti– Injunction Act.” Sherw in-W illiam s Com pany v. Holm es County , 343 F.3d 383, 388 n.1 (5th Cir. 20 0 3). The absence of any of these three factors 15 R. Doc. 1 ¶ 1. 8 defeats m andatory abstention. Sealed v. Sealed, 1994 WL 487245, at *2 (5th Cir. 1994) (citing Torch, Inc. v. LeBlanc, 947 F.2d 193, 194 (5th Cir. 1991)). There is nothing in the record indicating that there is any pending state court action between the parties. Accordingly, this case does not call for m andatory abstention, and the Court has the authority to enter a declaratory judgm ent. 3. Exercise of Discretion Finally, the Court m ust consider whether to exercise its discretion to grant a declaratory judgment as part of plaintiff’s m otion for default judgm ent. Federal courts have great discretion to entertain, stay, or dism iss a declaratory judgm ent action. W ilton v. Seven Falls Co., 515 U.S. 277, 28283 (1995). In exercising this discretion, the Court m ust balance on the record the purposes of the Declaratory J udgment Act and the factors relevant to the abstention doctrine. Travelers Insurance Com pany v. Louisiana Farm Bureau Federation, 996 F.2d 774, 778 (5th Cir. 1993). In St. Paul Insurance Com pany v. Trejo, 39 F.3d 585, 590 -91 (5th Cir. 1994), the Fifth Circuit set forth a list of six, non-exclusive factors relevant to this consideration: (1) whether there is a pending state action in which all the m atters in controversy m ay be fully litigated; (2) whether the plaintiff filed suit in anticipation of a lawsuit filed by the defendant; (3) whether the plaintiff engaged in forum shopping in bringing the suit; (4) whether possible inequities in allowing the declaratory plaintiff to gain precedence in tim e or to change 9 forum s exist; (5) whether the federal court is a convenient forum for the parties and witnesses; and (6) whether retaining the lawsuit would serve the purposes of judicial econom y. Id. at 590 -91. Here, there is no pending state action; there is nothing indicating that plaintiff filed suit in anticipation of a lawsuit filed by defendants; plaintiff did not engage in forum shopping in bringing this suit, as plaintiff is a Louisiana LLC and the Tuna Taxi is located in this district; the federal court m ay not be the m ost convenient location but defendants lack of response mitigates any inconvenience this location m ay pose; and finally, retaining this suit would serve the purposes of judicial econom y because plaintiff and the Court have already expended tim e and resources in this case. Therefore, there is no sound reason to stay or dism iss this action. See Clarendon Am erica, 20 0 9 WL 1360 28, at *4-5 (finding Trejo factors weighed in favor of resolving request for declaratory relief); Cf. Steadfast Ins. Co. v. Picke Const. Corp., No. 10 -3286, 20 11 WL 130 3144, at *4-5 (E.D. La. Mar. 30 , 20 11) (staying case in which plaintiff sought default judgm ent for declaratory relief because there was pending state court action, plaintiff was forum shopping, and judicial econom y favored a stay). D. En try o f D e fau lt Ju d gm e n t As described above, plaintiff’s well-plead factual allegations are deemed adm itted. See Houston Nat. Bank, 515 F.2d at 120 6. If these factual 10 allegations and the m aterials attached to the pleadings establish that RSDC is the rightful owner of the Tuna Taxi and that the ship m ortgages are satisfied, then the Court will enter a default judgm ent against the defendants and grant the declaratory relief sought. See W ooten, 788 F.3d at 498. 1. Ow nership of the Tuna Taxi Plaintiff alleges that in 20 13, Steinberg gave Mr. Calloway, RSDC’s sole m ember, the Tuna Taxi in paym ent of a debt that Steinberg owed to First NBC bank. 16 Plaintiff alleges that at the tim e, it was acting at the agent of First NBC Bank, and that First NBC Bank held a prom issory note secured by a ship mortgage on the Tuna Taxi. 17 The prom issory note, which is attached to plaintiff’s com plaint, is dated Decem ber 31, 1997, is in the am ount of $ 425,0 0 0 , and is m ade payable by Steinberg to debis Financial Services. 18 The prom issory note was executed with the First Ship Mortgage on the Tuna Taxi, also attached to plaintiff’s com plaint. 19 The m ortgage was granted by Steinberg in favor of debis Financial Services to secure the indebtedness of $ 425,0 0 0 . 20 16 17 18 19 20 Id. at 2 ¶ 8. Id. ¶ 9. Id. ¶ 10 ; R. Doc. 1-5. R. Doc. 1-5. Id. at 1. 11 Plaintiff further alleges that while a recent title abstract from the National Vessel Docum entation Center of the United States Coast Guard lists debis Financial Services as the current holder of the m ortgage, debis Financial Services assigned the note and m ortgage to Central Progressive Bank of Lacombe, Louisiana in 20 0 2. 21 In support of this contention, plaintiff attaches a copy of this assignm ent, dated Decem ber 20 , 20 0 2. 22 Plaintiff further alleges that that the note and m ortgage were next assigned to First NBC Bank and then to RSDC Holdings. 23 Though plaintiff acknowledges that there is no documentation of the assignm ent from Central Progressive to First NBC Bank, plaintiff attaches to his com plaint the assignment and allonge transferring all interests in the note, m ortgage, and Tuna Taxi from First NBC Bank to RSDC Holdings. 24 Under Louisiana law, a “giving in paym ent is a contract whereby an obligor gives a thing to the obligee, who accepts it in payment of a debt.” La. Civ. Code art. 2655. A “giving in paym ent transfers ownership and has the same effect as an ordinary sale.” Id. cm t. note (g) (citing Quality Finance Co. of Donaldsonville, Inc. v. Bourque, 315 So. 2d 656 (La. 1975). Taking 21 22 23 24 R. Doc. 1 at 3 ¶ 12. R. Doc. 1-5 at 7. R. Doc. 1 at 3 ¶ 13. R. Doc. 1-7; R. Doc. 1-8. 12 plaintiff’s well-pleaded allegations as true, Steinberg transferred ownership of the Tuna Taxi to First NBC Bank when Steinberg gave the vessel to First NBC’s agent. First NBC Bank then assigned its ownership interest in the Tuna Taxi to RSDC Holdings. 25 Therefore, RSDC Holdings is the rightful owner of the Tuna Taxi. 2. The Ship Mortgages Plaintiff’s com plaint also seeks a declaration that the m ortgages on the Tuna Taxi are satisfied. As described above, plaintiff is the rightful owner of the Tuna Taxi, and has also been assigned the December 31, 1997 m ortgage. Under Louisiana law, as RSDC has acquired ownership of the m ortgaged vessel and the rights under the m ortgage, the m ortgage is extinguished. See La. Civ. Code art. 3319; Bourque, 315 So.2d at 659. In addition to the December 31, 1997 m ortgage, plaintiff alleges that before Steinberg owned the Tuna Taxi, its previous owners, Kenneth Sawczyn and William J . Pettigrew, III, granted a m ortgage on the vessel in the am ount of $ 175,0 0 0 to Ganis Credit Corporation. 26 A copy of the title from the Coast Guard indicating the existence of this m ortgage is attached to plaintiff’s complaint. 27 Plaintiff alleges this previous m ortgage was satisfied 25 26 27 R. Doc. 1-7 at 1-2. R. Doc. 1 at 3 ¶ 14. R. Doc. 1-6 at 2. 13 before Steinberg acquired the Tuna Taxi. 28 Taking plaintiff’s allegation as true, the paym ent of the obligations under the Ganis m ortgage extinguishes the m ortgage. See Mente & Co. v. Levy , 10 7 So. 318, 320 -21 (La. 1926). Therefore, the ship m ortgages on the Tuna Taxi in favor of debis Financial Services and Ganis Credit Corporation are satisfied and extinguished. IV. CON CLU SION For the foregoing reasons, the plaintiff’s m otion for default judgm ent is GRANTED. J udgm ent is entered against defendants. The Court will separately enter a declaratory judgment consistent with this opinion. 12th New Orleans, Louisiana, this _ _ _ _ _ day of J anuary, 20 17. _____________________ SARAH S. VANCE UNITED STATES DISTRICT J UDGE 28 R. Doc. 1 at 4 ¶ 15. 14
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