United States District Court, D. Oregon
OPINION AND ORDER
Michael H. Simon United States District Judge.
United States of America (the “Government”), has
filed a complaint against Defendants, RiverCliff Farm, Inc.
(“RFI”), Ronald B. Talmage, Annette C. Talmage,
New Century Properties Limited (“NCPL”), and
Multnomah County (collectively, “Defendants”).
Before the Court is the Government's motion for default
judgment against all Defendants except Multnomah County. ECF
52. Regarding Multnomah County, Plaintiff and Multnomah
County have entered into a stipulation that appears to
resolve all issues between these two parties. ECF 8. For the
reasons that follow, the Government's motion is granted.
Federal Rule of Civil Procedure 55(a), the Clerk of the Court
is required to enter an order of default if a party against
whom affirmative relief is sought fails timely to answer or
otherwise defend an action. Fed.R.Civ.P. 55(a) (“When a
party against whom a judgment for affirmative relief is
sought has failed to plead or otherwise defend, and that
failure is shown by affidavit or otherwise, the clerk must
enter the party's default.”). Upon the entry of
default, the Court accepts “the well-pleaded factual
allegations” of the complaint “as true.”
DIRECTV, Inc. v. Hoa Huynh, 503 F.3d 847, 854 (9th
Cir. 2007) (quoting Cripps v. Life Ins. Co. of N.
Am., 980 F.2d 1261, 1267 (9th Cir. 1992)); see also
Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir.
1977). The court, however, does not accept as admitted facts
that are not well-pleaded, conclusions of law, or facts
relating to the amount of damages. DIRECTV, 503 F.3d
at 854; Geddes, 559 F.2d at 560; see also Derek
Andrew, Inc. v. Poof Apparel Corp., 528 F.3d 696, 702
(9th Cir. 2008) (“‘The general rule of law is
that upon default the factual allegations of the complaint,
except those relating to the amount of damages, will be taken
as true.'” (quoting TeleVideo Sys., Inc. v.
Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987))).
default has been entered against a defendant, a court may
enter a default judgment against that defendant. See
Fed. R. Civ. P. 55(b). “The district court's
decision whether to enter a default judgment is a
discretionary one.” Aldabe v. Aldabe, 616 F.2d
1089, 1092 (9th Cir. 1980); see also Dreith v. Nu Image,
Inc., 648 F.3d 779, 786 (9th Cir. 2011) (noting that a
district's court decision whether to enter a default
judgment is reviewed for abuse of discretion). In Eitel
v. McCool, 782 F.2d 1470 (9th Cir. 1986), the Ninth
Circuit set out factors to guide a district court's
consideration of whether to enter a default judgment. See
DIRECTV , 503 F.3d at 852 (noting that Eitel
“set out factors to guide district court's
determination regarding the appropriateness of granting a
default judgment”). These factors 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 underlying the Federal
Rules of Civil Procedure favoring decisions on the merits.
Eitel, 782 F.2d at 1471-72 (punctuation in
original). The “starting point” of the
court's analysis, however, “is the general rule
that default judgments are ordinarily disfavored.”
Id. at 1472.
Mrs. Talmage (collectively, the “Talmages”) are
husband and wife. ECF 1 ¶ 33. Together, the Talmages owe
the Government more than $30 million in unpaid taxes,
penalties, and interest. ECF 1 ¶ 61. The Government
seeks to foreclose its tax liens on real property located at
35701 N.E. Chamberlain Road in Corbett, Oregon (the
“River Cliff Property” or the
“Property”). The Government alleges that Mr.
Talmage is the true owner of the River Cliff Property,
despite RFI's purported ownership, because RFI is Mr.
Talmage's alter ego, nominee, or fraudulent transferee.
The Government further alleges that NCPL has no claim or
interest in the Property, despite its purported encumbrance
of the Property, because the Talmages used NCPL as a shell to
interfere with tax collection.
Government has served process on RFI, NCLP, and the Talmages.
The Government served RFI on June 27, 2016, ECF 4; NCLP on
August 5, 2016, ECF 26; and the Talmages on August 16 and 23,
2016, ECF 34; ECF 35; ECF 36; ECF 37. Neither RFI, NCLP, nor
the Talmages have entered appearances or responded to the
Complaint. The Court entered orders of default against
Defendants RFI, NCLP, and the Talmages on July 28, 2016,
September 8, 2016, and September 26, 2016, respectively. ECF
19; ECF 33; ECF 41; ECF 42.
not the only case in which this Court has been asked to
determine the ownership of the River Cliff Property. On
October 28, 2016, John Wadsworth, as trustee for the RBT
Victim Recovery Trust, who is not a party in this case, filed
a separate lawsuit, seeking to quiet title to the River Cliff
Property. See Wadsworth v. Talmage, Case No.
3:16-cv-2082-SI (D. Or.), Complaint (ECF 1) (the “Quiet
Title Lawsuit”). After the Government moved for default
judgment in the case at bar on December 13, 2016, ECF 52, the
Court entered an Order noting: “The Government also
does not address how Mr. Wadsworth could still litigate this
alleged interest [in the River Cliff Property] after the
Government forecloses its liens on the River Cliff
Property.” ECF 53 at 3. The Court added that the
“Government does not address how a default judgment is
appropriate at this juncture when the Court must
‘finally determine the merits of all claims to and
liens upon the property.'” ECF 53 at 3 (emphasis
omitted) (quoting 26 U.S.C. § 7403(b)-(c)). On August 1,
2017, the Court granted the Government's motion to
dismiss Mr. Wadsworth's claim to the River Cliff Property
in the Quiet Title Lawsuit, finding that the Government's
tax liens defeat any interest that Mr. Wadsworth or the RBT
Victim Recovery Trust have (or could obtain) in that
property. See Quiet Title Lawsuit, Opinion and Order
factual allegations in the Complaint at bar establish the
elements of Plaintiff's claims. Although a court may not
accept as true any allegations relating to damages, the
United States does not seek damages in this case. The Court
also finds that the Eitel factors weigh in favor of
entering a default judgment. Federal tax law requires the
Court to “finally determine the merits of all claims to
and liens upon” the River Cliff Property. 26 U.S.C.
§ 7403(c). Because the Court has determined that Mr.
Wadsworth's claims are meritless, there are no remaining
claims to the River Cliff Property asserted outside this
lawsuit. Finally, as noted, the Government and Multnomah
County have entered into a stipulation that resolves their
dispute in this matter.
Motion for Default Judgment (ECF 52) is GRANTED. Within two
weeks from the date of this Opinion and Order, Plaintiff
shall file a proposed judgment resolving all ...