United States v. Myers

• Court: U.S. District Court — Eastern District of New York
• Writing for the Court: SPATT, District Judge
• Citation: United States v. Myers, 236 F.Supp.3d 702 (E.D. N.Y. 2017)
• Decision Date: 22 February 2017
• Docket Number: 15–cv–7046 (ADS)(SIL)
• Parties: UNITED STATES of America, Plaintiff, v. Daniel MYERS, Defendant.

236 F.Supp.3d 702

UNITED STATES of America, Plaintiff,

v.Daniel MYERS, Defendant.

15–cv–7046 (ADS)(SIL)

United States District Court, E.D. New York.

Signed February 22, 2017

U.S. Department of Justice, Tax Division, Attorneys for the Government, P.O. Box 55, Ben Franklin Station, Washington, DC 20044 By: Steven M. Dean, Esq.

Daniel Myers, The Defendant

Order

SPATT, District Judge:

On December 10, 2015, the Government commenced this tax liability action pursuant to 26 U.S.C. § 7401 et seq. to recover a monetary judgment of $2,757,788.64 against the Defendant Daniel Myers, allegedly representing unpaid federal income taxes for the income tax years 2002 through 2008 and 2010 through 2013.

On January 11, 2015, the Government filed an amended complaint, which broadened the relevant time period to include tax years 1999 through 2002, and increasing the total amount of allegedly unpaid taxes to $2,822,642.45.

On February 24, 2016, the Clerk of the Court noted the Defendant's default.

On April 22, 2016, the Government filed a motion for a default judgment, which was subsequently referred to United States Magistrate Judge Steven I. Locke for a report and recommendation.

On February 2, 2017, Judge Locke issued a Report and Recommendation ("R & R"), recommending that the motion for a default judgment be granted, and that damages be awarded in the amount of $2,841,219.80, plus interest from March 23, 2016 to the date judgment is entered.

On February 6, 2017, the Government filed proof of service of a copy of the R & R on the Defendant. More than fourteen days have elapsed, and the Defendant has failed to file an objection or request an extension of time to do so. Therefore, pursuant to 28 U.S.C. § 636(b) and Fed. R. Civ. P. 72, this Court has reviewed the R & R for clear error, and finding none, now concurs in both its reasoning and its result.

Accordingly, the February 2, 2017 Report and Recommendation is adopted in its entirety, and the Government's motion seeking the entry of default judgment against the Defendant Daniel Myers is granted.

The Clerk of the Court is respectfully directed to enter judgment in accordance with this Order, and to close this case.

It is SO ORDERED:

REPORT AND RECOMMENDATION

LOCKE, Magistrate Judge:

I. PRELIMINARY STATEMENT

Plaintiff, United States of America (the "Government"), commenced this action pursuant to 26 U.S.C. §§ 7401 and 7402 to recover unpaid tax liabilities from defendant Daniel Myers ("Defendant" or "Myers") for tax years 2002 through 2013. See Docket Entry ("DE") [1]. The Government subsequently filed an Amended Complaint with the same essential allegations, but encompassing a time period running from 1999 through 2013. See Amended Complaint ("Compl."), DE [7], at ¶¶ 3–5. The Defendant has not filed an Answer nor responded in any way to the Amended Complaint. The Government has moved for a default judgment against Defendant. Motion for Default Judgment ("Pl. Mot."), DE [11]. District Judge Arthur D. Spatt referred the Government's motion to this Court for a Report and Recommendation as to whether the motion should be granted, and, if so, to determine the appropriate amount of damages, costs, and/or fees, if any, to be awarded. Based upon the information submitted by the Government and for the reasons stated below, the Court respectfully recommends that a default judgment be entered in favor of the Government in the amount of $2,841,219.80, plus prejudgment interest.

II. BACKGROUND

The Government filed the Amended Complaint on January 11, 2016 with the authorization of a delegate of the Secretary of the Treasury and at the direction of the Attorney General of the United States, as required under 26 U.S.C. § 7401. See Compl. According to the Government, Defendant failed to pay his full federal tax liabilities for the reporting period running from 1999 through 2013. Id. at ¶ 3. Therefore, Defendant was assessed for the unpaid taxes, penalties, and interest, totaling $2,822,642.45 as of January 11, 2016. Compl. at ¶ 5. The Amended Complaint sets forth a chart of the assessments made for each year at issue. Id. at ¶ 3. On or about the date of each assessment, a delegate from the Secretary of the Treasury gave notice to the Defendant and made a demand for payment. See Compl. at ¶¶ 3–4. Despite these notices and demands, Myers has failed, neglected, or refused to pay the alleged federal income tax liabilities at issue. See id. at ¶ 5.

Defendant has never responded to the Amended Complaint in any way. On April 22, 2016, the Government moved for entry of a default judgment against Myers. See Pl.'s Mot., DE [11]. The Government now seeks damages in the sum of $2,841,219.80, which represents Myers outstanding tax obligation, including interest and other fees, running through March 23, 2016. See Pl.'s Mot. at ¶ 5. Despite having been served with the Government's motion, see Certificate of Service, DE [11] at 3, Defendant has not responded.

III. LEGAL STANDARD

"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." Fed. R. Civ. P. 55(a). Once the clerk's certificate of default is issued, the moving party may then make an application for entry of a default judgment, pursuant to Fed. R. Civ. P. 55(b), as the Government has done here. See Enron Oil Corp. v. Diakuhara, 10 F.3d 90, 95–96 (2d Cir. 1993) ; Millennium TGA, Inc. v. Leon, No. 12-CV-01360, 2013 WL 5719079, at *3 (E.D.N.Y. Oct. 18, 2013) ; Kor s unsky v. North Star Found., Inc., No. 10-CV-3241, 2013 WL 5656197, at *3 (E.D.N.Y. Oct. 15, 2013) ; Fashion tv .com v. Hew, No. 06-CV-3200, 2007 WL 2363694, at *2 (S.D.N.Y. Aug. 17, 2007). A default constitutes an admission of all well-pleaded factual allegations in the complaint and the allegations as they pertain to liability are deemed true. Gurung v. Malhotra, 279 F.R.D. 215, 221 (S.D.N.Y. 2011) ; Joe Hand Promotions, Inc. v. El Norteno Rest. Corp., No. 06-CV-1878, 2007 WL 2891016, at *2 (E.D.N.Y. Sept. 28, 2007) (citing Greyhound Exhibitgroup, Inc. v. E.L. U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992), cert. denied, 506 U.S. 1080, 113 S.Ct. 1049, 122 L.Ed.2d 357 (1993) ). A default judgment entered on the well-pleaded allegations in the complaint establishes a defendant's liability. See Garden City Boxing Club, Inc. v. Morales, No. 05-CV-0064, 2005 WL 2476264, at *3 (E.D.N.Y. Oct. 7, 2005) (citing Bambu Sales, Inc. v. Ozak Trading, Inc., 58 F.3d 849, 854 (2d Cir. 1995) ).

The determination of a motion for default judgment is left to the sound discretion of the district court. Shah v. N.Y. State Dep't of Civil Serv., 168 F.3d 610, 615 (2d Cir. 1999) ; Merrill Lynch Bus. Fin. Servs., Inc. v. Brook – Island, No. 06 CV 5912, 2010 WL 2787553, at *3 (E.D.N.Y. July 14, 2010). As the Second Circuit notes, when determining whether to grant a default judgment, the Court is guided by the same factors that apply to a motion to set aside entry of a default. See Pecarsky v. Galaxiworld.com Ltd., 249 F.3d 167, 170–171 (2d Cir. 2001) ; Enron Oil Corp. v. Diakuhara, 10 F.3d 90, 96 (2d Cir. 1993). These factors are: (1) "whether the defendant's default was willful; (2) whether defendant has a meritorious defense to plaintiff's claims; and (3) the level of prejudice the non-defaulting party would suffer as a result of the denial of the motion for default judgment."

Mason Tenders Dist. Council v. Duce Constr. Corp., No. 02 Civ. 9044, 2003 WL 1960584, at *2 (S.D.N.Y. Apr. 25, 2003) (citation omitted).

IV. DISCUSSION

A. Default Judgment

The Court considers the three factors necessary for the entry of a default judgment as applied to the circumstances of this case.

1. Willfulness

As to the first factor, Defendant's failure to appear, failure to respond to the Amended Complaint, and failure to respond to the instant motion sufficiently demonstrate willfulness. See S.E.C. v. McNulty, 137 F.3d 732, 738–39 (2d Cir. 1998) (unexplained failure to respond to complaint indicates willfulness); Indymac Bank v. Nat'l Settlement Agency, Inc., No. 07 Civ. 6865, 2007 WL 4468652, at *1 (S.D.N.Y. Dec. 20, 2007) (finding defendants' failure to appear, failure to respond to the complaint and failure to respond to a motion for default judgment indicates willful conduct); U.S. v. DiPaolo, 466 F.Supp.2d 476, 482 (S.D.N.Y. 2006) (grounds for default judgment were established by defendant's failure to answer the complaint, particularly in light of the fact that the defendant had expressed no intention to do so at a later time).

The Government has filed an affidavit of service with the Clerk of the Court demonstrating that the Summons and Amended Complaint were properly served upon the Defendant. See DE [8]. Myers never answered nor responded in any way to the Amended Complaint, nor did Defendant request an extension of time to respond. The Government has also submitted an affidavit of service for the motion for default judgment. See Pl. Mot. at 3. The instant motion was mailed to 340 Ocean Ave., Lawrence, New York, 11559, the same address where Myers was served with the Summons and Amended Complaint. Compare id. with DE [8]. Defendant has not responded to the Government's motion for default judgment nor appeared in any way in this action. Defendant's failure to answer the Amended Complaint and to respond to the instant motion demonstrates willfulness under existing case law. See McNulty, 137 F.3d at 738 ; see also Indymac Bank, 2007 WL 4468652, at *1 ; U.S. v. DiPaolo, 466 F.Supp.2d at 482.

2. Meritorious Defenses

Next, the Court must consider whether Defendant has a meritorious defense. "A defense is meritorious if it is good at law so as to give the factfinder some determination to make." Am. Alliance Ins. Co. v. Eagle Ins. Co., 92 F.3d 57, 61 (2d Cir. 1996) (quoting Anilina Fabrique de C o lorants v. Aakash Chems. & Dyest u ffs, Inc., 856 F.2d 873, 879 (7th Cir. 1988) ) (internal...