United States of America v. Lyons et al, No. 2:2017cv00361 - Document 46 (E.D. Wash. 2020)
Court Description: ORDER GRANTING 44 MOTION FOR DEFAULT JUDGMENT. Signed by Judge Salvador Mendoza, Jr. (LR, Case Administrator) (Service of Notice on parties not registered as users of the Court CM/ECF system accomplished via USPS mail.)
Download PDF
<![CDATA[
United States of America v. Lyons et al Doc. 46 FI LED I N THE U.S. DI STRI CT COURT EASTERN DI STRI CT OF WASHI NGTON 1 Feb 07, 2020 SEAN F. MCAVOY, CLERK 2 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF WASHINGTON 3 4 UNITED STATES OF AMERICA, No. 2:17-cv-00361-SMJ 5 Plaintiff, 6 ORDER GRANTING MOTION FOR DEFAULT JUDGMENT v. 7 8 9 BONNIE LYONS, individually and as distributee of the Estate of Robert C. Lyons; ESTATE OF ROBERT C. LYONS; and CHELAN COUNTY, WA, 10 Defendants. 11 12 Before the Court, without oral argument, is the Government’s Motion for 13 Default Judgment Against the Estate of Robert C. Lyons, ECF No. 44. The 14 Government moves for entry of a default judgment against the Estate of Robert C. 15 Lyons (the “Estate”), against which the Government brought suit to secure a 16 judgment for outstanding federal trust fund recovery assessments and to foreclose 17 on tax liens against real property in Washington. See ECF Nos. 1, 44. The Estate 18 failed to file an answer to the Complaint, and on motion of the Government, the 19 Clerk’s Office entered an Order of Default. See ECF Nos. 29, 32. The Government 20 now moves for entry of default judgment. ORDER GRANTING MOTION FOR DEFAULT JUDGMENT - 1 Dockets.Justia.com 1 Entry of default judgment is discretionary. Aldabe v. Aldabe, 616 F.2d 1089, 2 1092 (9th Cir. 1980). Where possible, cases should be resolved on their merits, and 3 the entry of default judgment is an extreme measure reserved for unusual 4 circumstances. Westchester Fire Ins. Co. v. Mendez, 585 F.3d 1183, 1189 (9th 5 Cir. 2009) (citing Pena v. Seguros La Comercial, S.A., 770 F.2d 811, 814 (9th 6 Cir. 1985)). In evaluating the propriety of default judgment, the Court is guided by 7 seven non-exclusive factors: 8 9 10 (1) [T]he 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 underlying the Federal Rules of Civil Procedure favoring decisions on the merits. 11 Eitel v. McCool, 782 F.2d 1470, 1471–72 (9th Cir. 1986). The Court assumes the 12 facts alleged in the complaint are true. Geddes v. United Fin. Grp., 559 F.2d 557, 13 560 (9th Cir. 1977). Having reviewed the motion and the record in this matter in 14 light of the Eitel factors, the Court is fully informed and finds that entry of default 15 judgment is appropriate in this case. 16 First, the Court is persuaded that refusing to enter default judgment would 17 prejudice the Government. Eitel, 782 F.2d at 1471–72. Prejudice results from denial 18 of a default judgment where it would provide the only reasonable avenue for a 19 plaintiff to recover. Philip Morris USA, Inc. v. Castworld Prods., Inc., 219 F.R.D. 20 494, 499 (C.D. Cal. 2003). Such is the case where, as here, the plaintiff could be ORDER GRANTING MOTION FOR DEFAULT JUDGMENT - 2 1 denied recovery “until such time as Defendant participates . . . in the litigation— 2 which may never occur.” Getty Images (US), Inc. v. Virtual Clinics, No. C13- 3 0626JLR, 2014 WL 358412, at *3 (W.D. Wash. Jan. 31, 2014) (quoting United 4 States v. Ordonez, No. 1:10-cv-01921-LJO-SKO, 2011 WL 1807112, at *2 (E.D. 5 Cal. May 11, 2001)). 6 Here, the Government brought suit against both the Estate and Bonnie Lyons 7 and subsequently entered a stipulated judgment with Ms. Lyons for approximately 8 half the outstanding penalty assessments. See ECF Nos. 1, 42. Thus, as the 9 Government asserts, the only remaining possibility for recovering any of the 10 outstanding obligations is by way of the Estate “if it is later found to own property.” 11 ECF No. 44 at 5. Declining to enter default judgment would in practical terms 12 necessitate an appropriate motion for judgment on the pleadings or a motion for 13 summary judgment. Given that the Estate did not file an answer or otherwise 14 participate in its defense, the Court finds such alternatives would be wasteful. 15 Second, the Court is satisfied based on a review of the record that the 16 Government’s claims against the Estate are meritorious. See Eitel, 782 F.2d at 17 1471–72. The Complaint alleges Robert Lyons willfully failed to withhold required 18 taxes in his role as president of R&B Distribution, Inc., resulting in the assessment 19 of penalties totaling approximately $461,156, inclusive of interest as of October 16, 20 2017. See ECF No. 1 at 5–8. The Government submitted the sworn declaration of ORDER GRANTING MOTION FOR DEFAULT JUDGMENT - 3 1 Richard Ped, a Revenue Officer employed by the Internal Revenue Service, 2 attesting to the validity of the assessments and providing supporting documentation. 3 See ECF Nos. 45, 45-1 & 45-2. Considering this evidence and taking the well- 4 pleaded facts in the Complaint as true, the Court concludes the Government’s 5 claims are substantively meritorious. Relatedly, the Court finds the Complaint is 6 sufficient; it invokes the Government’s right to relief under a federal statute, 26 7 U.S.C. § 6672, and sets forth the essential facts necessary to substantiate that claim. 8 See generally ECF No. 1; see also Eitel, 782 F.2d at 1471–72. 9 Next, the Court considers the sum of money at stake in the action. See Eitel, 10 782 F.2d at 1471–72. Excepting the stipulated judgment entered against Bonnie 11 Lyons, the Government seeks entry of judgment against the Estate for $263,651.60, 12 exclusive of statutory interest accrued after October 8, 2019. ECF No. 44 at 8–9. 13 This is a significant sum of money, which weighs in favor of resolving this matter 14 on the merits. Nevertheless, in view of the remaining factors and the circumstances 15 of this case, the Court finds this fact does not prevent entry of default judgment. 16 Next, the Court must consider whether there is a possibility of a dispute over 17 the material facts in this matter. See Eitel, 782 F.2d at 1471–72. Considering the 18 facts set out in the Complaint, the declaration of Richard Ped, and the supporting 19 documentation submitted with that declaration, the Court finds a genuine dispute as 20 to the validity or amount of the assessments against the Estate is unlikely. See ECF ORDER GRANTING MOTION FOR DEFAULT JUDGMENT - 4 1 Nos. 1, 45, 45-1 & 45-2. 2 The Court also considers the possibility that the Estate’s default was due to 3 excusable neglect. See Eitel, 782 F.2d at 1471–72. There is no excusable neglect 4 where a defendant is “properly served with the complaint, the notice of entry of 5 default, [and] the papers in support of the [default judgment] motion.” Shanghai 6 Automation Instrument Co. v. Kuei, 194 F. Supp. 2d 995, 1005 (N.D. Cal Nov. 2, 7 2001). Here, the taxpayer whose actions precipitated the penalty assessments at 8 issue is deceased and, as the Government observes, the individual most likely to 9 intervene in the Estate’s defense is Bonnie Lyons, who has been aware of this action 10 since early 2018, when she waived formal service. ECF No. 44 at 8; ECF No. 10. 11 No one has appeared or litigated on behalf of the Estate, and the Court considers it 12 unlikely that this is the result of excusable neglect. 13 Finally, the Court considers the strong preference, expressed in the Federal 14 Rules of Civil Procedure, for resolution of claims on the merits. See Eitel, 782 F.2d 15 at 1471–72; Pena v. Seguros La Comercial, S.A., 770 F.2d 811, 814 (9th Cir. 1985). 16 Although this factor “almost always disfavors the entry of default judgment,” it is 17 not dispositive. Vawter v. Quality Loan Serv. Corp. of Wash., No. C009-1585JL R, 18 2011 WL 1584434, at *6 (W.D. Wash. Apr. 27, 2011). That strong preference 19 notwithstanding, the Court finds this is an appropriate case for entry of default 20 judgment. This matter has been pending since late 2017 and seeks to recover tax ORDER GRANTING MOTION FOR DEFAULT JUDGMENT - 5 1 obligations which appear well documented and not reasonably disputed. Because 2 the Estate has, to this time, taken no steps toward mounting a defense against the 3 suit, the Court finds entry of default judgment is the most appropriate, just, and 4 efficient resolution to this matter. As the Government observes, entry of judgment 5 against the Estate resolves all outstanding claims in this matter, and the case is now 6 closed. 7 Accordingly, IT IS HEREBY ORDERED: 8 1. The Government’s Motion for Default Judgment Against the Estate of Robert C. Lyons, ECF No. 44, is GRANTED. 9 2. 10 The Clerk’s office shall ENTER JUDGMENT in favor of the United 11 States of America against the Estate of Robert C. Lyons, in the amount 12 of $263,651.60 as of October 8, 2019, with statutory interest and 13 additions continuing to accrue pursuant to 26 U.S.C. §§ 6601, 6621, 14 6622, and 28 U.S.C. § 1961(c) after October 8, 2019, for Trust Fund 15 Recovery Penalty assessments for the tax periods ending 03/31/2005; 16 06/30/2005; 09/30/2005; 12/31/2005; 06/30/2006; and 09/30/2006. 17 // 18 // 19 // 20 // ORDER GRANTING MOTION FOR DEFAULT JUDGMENT - 6 1 3. All pending motions are DENIED AS MOOT. 2 4. All hearings and other deadlines are STRICKEN. 3 5. The Clerk’s Office is directed to CLOSE this file. 4 IT IS SO ORDERED. The Clerk’s Office is directed to enter this Order and 5 provide copies to all counsel and pro se Defendants. 6 7th day of February 2020. DATED this ___ 7 8 _________________________ SALVADOR MENDOZA, JR. United States District Judge 9 10 11 12 13 14 15 16 17 18 19 20 Q:\SMJ\Civil\2017\United States of America v. Lyons et al-0361\Order Granting Motion for Default Judgment.docx ORDER GRANTING MOTION FOR DEFAULT JUDGMENT - 7
]]>
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You
should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.
