United States v. Bayley
| Decision Date | 26 April 2023 |
| Docket Number | 3:20-cv-05867-DGE |
| Parties | UNITED STATES OF AMERICA, Plaintiff, v. JOAN V. BAYLEY, et al., Defendants. |
| Court | U.S. District Court — Western District of Washington |
ORDER GRANTING PLAINTIFF'S MOTION FOR DEFAULT JUDGMENT (DKT. NO. 186)
This matter comes before the Court on Plaintiff United States of America's motion for default judgment. (Dkt. No. 186.) Defendants Joan Bayley, Big D's Beach Cabin LLC (“Big D's”), and Philip Bayley, in his capacity as trustee of Frihet Trust, did not respond. Mr Bayley, in his individual capacity, responded late and seeks relief from this deadline. (Dkt. Nos. 194, 195, 196, 198.) Having reviewed the motion, Mr. Bayley's response, all supporting materials, and the record, the Court GRANTS the motion and ENTERS DEFAULT JUDGMENT against Defendants Joan Bayley, Big D's, and Philip Bayley in his individual and trustee capacities.
On August 27, 2020, Plaintiff sued Defendants for allegedly violating the Clean Water Act (“CWA”) by unlawfully discharging dredge or fill material “into waters of the United States including Hood Canal on property then owned by Big D's Beach Cabin, LLC, . . . (the ‘Site')[.]”[1](Dkt. No. 1 at 1.) Plaintiff also claimed Defendants fraudulently transferred title and wrongfully distributed Big D's assets to avoid CWA penalties. (Id. at 7-8.)
In its complaint, Plaintiff alleges the following facts. On May 11 2017, Mr. Bayley contracted with an engineering firm to design a bulkhead to be located on the Site, intending to build a house ten feet landward of the bulkhead. (Id. at 5.) Around a week later, Mr. Bayley and his mother, Ms. Bayley, formed Big D's and registered it with the Washington Secretary of State. (Id.) On June 5 2017, the engineering firm provided Mr. Bayley plans for the bulkhead. (Id.) Big D's purchased the Site for $90,000 and recorded its deed with the Mason County Auditor. (Id. at 6.) On July 29, 2017, Mr. Bayley signed a contract with South Sound Concrete Construction to construct a replacement bulkhead on the Site, which was paid for by Big D's as well as Mr. and Ms. Bayley from their personal accounts. (Id.) Bulkhead construction began August 1, 2017. (Id.)
Soon after, beginning August 11, 2017, the U.S. Army Corps of Engineers notified Defendants that construction of the bulkhead violated the CWA if continued without first obtaining a Section 404 permit. (Id.) The construction involved an excavator and trucks that discharged dredged or fill material at the Site, including dirt, spoil, rock, sand, and concrete along the shoreline and below the high tide line of Hood Canal. (Id. at 5.) On July 26, 2018, the EPA sent a Notice of Violation informing Defendants that construction of the bulkhead violated the CWA. (Id. at 6.) At some point, EPA directed Defendants to remedy their violations or face enforcement action. (Id. at 8.)
On December 13, 2019, Mr. and Ms. Bayley “disbursed the assets of [Big D's] without making provisions for the payment of creditors of [Big D's] or for its liabilities for violating the [CWA].” (Id. at 6.) Specifically, they signed a quitclaim deed conveying Big D's interest in the Site to Ms. Bayley, which was recorded in the Mason County Assessor's office on January 22, 2020. (Id. at 7.) Big D's received neither cash nor property in exchange although the transferred real property was worth at least $105,205 at the time. (Id.) As a result, Big D's became insolvent. (Id. at 8.) Mr. and Ms. Bayley allegedly knew the United States had claims for violations of the CWA when they distributed Big D's assets. (Id. at 9.)
On December 13, 2019, Ms. Bayley signed a quitclaim deed conveying her interest in the Site to the trustee of Frihet Trust, which was recorded in the Mason County Assessor's office on January 22, 2020. (Id. at 7.) Frihet Trust did not pay Ms. Bayley cash or property in exchange for the transfer. (Id.)
On August 11 and August 17, 2020, Mr. Baylee as trustee of Frihet Trust (or individuals acting on his behalf) used equipment to discharge concrete and other fill material in Hood Canal below the high tide line without a Section 404 permit to construct a stairway adjacent to the bulkhead and to fill the shoreline behind the bulkhead. (Id. at 9.)
Plaintiff alleges four claims against Defendants, two of which are CWA claims. Plaintiff alleges Defendants violated 33 U.S.C. § 1311(a) by discharging dredge or fill material into the Hood Canal during bulkhead construction in 2017 and in 2020. (See id. at 4, 9.) Plaintiff also alleges Defendants engaged in fraudulent transfers in violation of 28 U.S.C. § 3304. (Id. at 7.)
[Mr. Bayley, Ms. Bayley, and Big D's] engaged in the transfers on December 13, 2019, with intent to hinder, delay, or defraud creditors, including the United States, to protect and preserve the real property for Defendants' own use and benefit, and to prevent and hinder the United States from seeking restoration of the Site and recovering other relief prescribed by the Clean Water Act for unpermitted discharges of dredged and fill material [in violation of 28 U.S.C. § 3304 and Revised Code of Washington § 19.40.081].
(Id. at 8.) Finally, Plaintiff alleges Mr. and Ms. Bayley “distributed the assets of [Big D's] without paying or providing for their CWA violations in violation of 31 U.S.C. § 3713. (Id.)
On September 19, 2022, the Court granted Plaintiff's motion and sanctioned Defendants for their flagrant discovery abuses by entering default, striking Defendants' amended answer, and dismissing Defendants' counterclaims without prejudice. (Dkt. No. 182 at 24.) Because the Court chronicled Defendants' discovery misconduct in its sanctions order, it does not recount it here. (See id. at 2-8.) The Court also ordered Defendants' ability to pay an appropriate CWA penalty be taken as established. (Id. at 24.)
On November 14, 2022, Mr. Bayley moved for “relief from a deadline.” (Dkt. No. 194.) Mr. Bayley appears to ask the Court to consider his declaration (Dkt. No. 195) and his motion for relief under Federal Rule of Civil Procedure 60(b) (Dkt. No. 189, re-filed Dkt. No. 195-2) as a late-filed response to Plaintiff's motion for default judgment. Mr. Bayley states:
Defendant presents its Responses to [Dkt. No. 186] through Exhibit 1 of Bayley's declaration attached herein and [Dkt. Nos.] 189 and 191 so he could promptly bring to the Court's attention Plaintiff's perjury and fraud on the Court confirmed and admitted to by Plaintiff in its [motion for default judgment] and relevant material new evidence that impacts nearly every filed brief in this case[.]
(Dkt. No. 194 at 5.) Mr. Bayley filed the same 127-page document twice. (See Dkt. Nos. 189, 195-2.) The Court denied Plaintiff's motion for relief under Federal Rule of Civil Procedure 60(b) (Dkt. No. 189) as premature. (See Dkt. No. 204.) Thus, the Court considers Mr. Bayley's filing at Dkt. No. 195-2 as his purported response to Plaintiff's motion for default judgment.
Plaintiff moved for default judgment on October 14, 2022. (See Dkt. No. 186.) Responses were due by November 4, 2022. See LCR 7(d)(3). Mr. Bayley moved for relief from this deadline on November 14, 2022. Mr. Bayley argues there is good cause for the Court to excuse this delay because he “was not aware [he] could file a response” and he did not receive Plaintiff's motion for default judgment (Dkt. No. 186) and accompanying declaration (Dkt. No. 187) until October 20, 2022, which caused him disadvantage. (Dkt. No. 194 at 3, 5.) Mr. Bayley also argues “[t]he interests of justice will be served by allowing [him] to submit [his response].” (Id. at 5.)
Plaintiff argues there was no prejudice because Plaintiff emailed Mr. Bayley a copy of its motion the day Plaintiff filed it with the Court.[2](See Dkt. No. 200-1 at 2.) Additionally, Mr. Bayley received notice via the CM/ECF system. (See Dkt. Nos. 200-2 at 2; 200-3 at 2.) (See also Dkt. No. 185) (Mr. Bayley registered to “receive service of documents and notice of electronic filings to [his] email via the Court's electronic filing system (CM/ECF).”)
Under Local Civil Rule 55(b)(4), if the defaulting party has appeared, a motion for default judgment and all papers filed in support of the motion must be served at the defaulting party's address of record and shall also be served by electronic means if available. Because the particulars of when Mr. Bayley received a paper copy are unclear, the Court will accept Mr. Bayley's late filed response to cure any potential prejudice.
That said, the Court does not find Mr. Bayley has been prejudiced as a pro se litigant nor that the Court has shown bias against Defendants. The examples of purported bias Mr. Bayley raises in his motion are meritless. First, Mr. Bayley asserts “three outside witnesses” claim the Court showed favoritism to Plaintiff but does not explain how this purported favoritism manifested. (See Dkt. No. 195 at 1.) Second, Mr. Bayley complains, even though the Court considered his late filed response to Plaintiff's motion for sanctions, Plaintiff did not reply. (Id. at 2.) A reply is not required for the Court to consider a motion. See LCR 7(b)(3) () Mr. Bayley fails to show any prejudice.
Although Mr. Bayley appears pro se, he is not immune from the rules of civil procedure. “Pro se litigants must follow the same rules of procedure that govern other litigants” including the Federal Rules of Civil Procedure and...
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