US v. Real Property In Sevier County, Tenn.

• Decision Date: 30 January 1989
• Docket Number: Civ. No. 3-88-562.
• Parties: UNITED STATES of America, Plaintiff v. REAL PROPERTY CONSTITUTING APPROXIMATELY FIFTY (50) ACRES, Including a House, Garage, Outbuildings, Cottage, and Appurtenances known as the Frank Mongiove Property LOCATED IN the Fifth Civil District of SEVIER COUNTY, TENNESSEE, Defendant.
• Court: U.S. District Court — Eastern District of Tennessee

703 F. Supp. 1306

UNITED STATES of America, Plaintiff v. REAL PROPERTY CONSTITUTING APPROXIMATELY FIFTY (50) ACRES, Including a House, Garage, Outbuildings, Cottage, and Appurtenances known as the Frank Mongiove Property LOCATED IN the Fifth Civil District of SEVIER COUNTY, TENNESSEE, Defendant.

Civ. No. 3-88-562.

United States District Court, E.D. Tennessee, N.D.

November 10, 1988.

On Motion for Summary Judgment January 30, 1989.

Marilyn L. Hudson, Asst. U.S. Atty., Knoxville, Tenn., for plaintiff.

W. Thomas Dillard, Knoxville, Tenn., Ben D. Brabson, Jr., Sevierville, Tenn., for defendant.

MEMORANDUM OPINION

JARVIS, District Judge.

Background Information

This action for forfeiture in rem was filed on July 18, 1988 for the forfeiture of certain real property titled in the names of Frank Mongiove, single, and Patricia Newcomb, then single and now the wife of Frank Mongiove (hereinafter sometimes collectively referred to as the "Mongioves"). See Doc. 5. The verified complaint alleges, inter alia, that said real property was used or intended to be used, to store and warehouse cocaine for purposes of resale, distribution and redistribution, to prepare and package cocaine for resale and distribution, and to house persons who engaged therein in the distribution of cocaine, possession of cocaine with intent to distribute, and preparation of cocaine for distribution. See id.. The Mongioves were personally served with process of this forfeiture action on July 18, 1988, which service included receiving copies of the complaint, together with summons, warrant of arrest and notice in rem, and notice of arrest and seizure. See Docs. 8-9.

The warrant of arrest and notice in rem served on the Mongioves stated in relevant part as follows:

... That they must file their claims with the Clerk of this Court within ten (10) days after the execution of this process or within such additional time as they may be allowed by the Court and must serve their answer within twenty (20) days after the filing of their claim; and that they serve a copy of any claim they make or any pleadings they may file, upon the United States Attorney for the Eastern District of Tennessee ...

See Doc. 4, p. 2. The notice of arrest and seizure served on the Mongioves likewise stated in pertinent part as follows:

... Any person having or claiming an interest in or to said property must file his claim with the Clerk of the United States District Court for the Eastern District of Tennessee, Northeastern Division (sic) within ten (10) days after process has been executed or within such time as may be allowed upon application to the District Court, shall serve his answer to the complaint within twenty (20) days after the filing of the claim, and shall serve a copy of any claim made or pleading filed, upon the United States District Attorney for the Eastern District of Tennessee as provided by Title 28, United States Code, Rule C(6) of the Supplemental Rules for Certain Admiralty and Maritime Claims.

See Doc. 6, p. 2.

On August 26, 1988, almost 40 days after this action was originally filed, the Government requested that the Clerk enter default of the defendant real property pursuant to Rule 55(a), Federal Rules of Civil Procedure, on the basis that there had been a failure to plead or otherwise defend. See Doc. 13. A copy of the Government's request for entry of default accompanied by an affidavit of default, as well as its motion for default judgment and other pleadings filed that same day, were all served on the Mongioves by mail on August 26, 1988. See Doc. 15, p. 2. Since no one timely objected to the request to enter default, see LR 10.1, 10.2, EDTN, the Clerk entered the requested default on September 9, 1988. See Doc. 14. On September 14, 1988, the Mongioves filed the pending motion to set aside the entry of default. See Doc. 16. Argument was subsequently heard and evidence was taken concerning the Mongioves' motion on November 4, 1988.

Facts

The Mongioves contend that the default entered against them should be set aside because of a genuine misunderstanding between them and Attorney John P. Valliant, Jr. In particular, the Mongioves maintain that Mr. Valliant had agreed to represent them in this matter. Construing the proof in the light most favorable to the Mongioves, as the court is required to do, see INVST Financial Group v. Chem-Nuclear Systems, 815 F.2d 391, 398 (6th Cir. 1987), cert. denied, ___ U.S. ___, 108 S.Ct. 291, 98 L.Ed.2d 251 (1987), the proof at the hearing indicates the following. After the Mongioves' farm was "raided" by the Government on July 13, 1988, Mrs. Mongiove's sister, Barbara Headrick, advised Mrs. Mongiove that she knew an attorney in Knoxville who would be able to provide her the necessary representation in this matter. Subsequently, Ms. Headrick contacted Mr. Valliant's office and, either as a result of that telephone call or a subsequent telephone call by Mrs. Mongiove, an appointment was scheduled with Mr. Valliant on July 22, 1988. It also appears to be undisputed that Ms. Headrick and Mrs. Mongiove kept that appointment with Mr. Valliant. Ms. Headrick also testified that her sister provided "some papers" to Mr. Valliant at that meeting. Ms. Headrick also testified that Mr. valliant indicated to them that he would "file something" on or before July 28, 1988. Ms. Headrick further testified that Mr. Valliant refused any money or a check for a retainer at that time. Finally, Ms. Headrick testified that her sister made an appointment with Mr. Valliant for the following week.

Likewise, Mrs. Mongiove testified that she understood that Mr. Valliant was representing her and that he would "file papers" on her behalf before her next scheduled appointment with him. She also admitted, however, that she did not show up for that scheduled appointment with Mr. Valliant on July 29, 1988. Mrs. Mongiove testified that she was unable to keep that appointment because she and her husband left for a three or four week vacation on July 28, the day before her next appointment with Mr. Valliant. She testified that this vacation was in part to celebrate her birthday which was on August 1st and in part to escape the pressures resulting from the Government's seizure of their property.

In response, Mr. Valliant testified that he recalled first meeting with Mrs. Mongiove and her sister about this matter and then later meeting only with the Mongioves. At that second meeting, Mr. Valliant specifically remembered advising the Mongioves about the necessity for posting bond as a result of not only the seizure involved in this action but also the seizure of the Mongioves' automobile and other personal property. Mr. Valliant testified that it was his policy not to post bonds of any type, except for cost bonds in civil actions, on behalf of any of his clients. Since he had not received any money from the Mongioves to post these bonds, he certainly did not do so. Furthermore, Mr. Valliant testified that he did not receive or even quote an attorney fee because he had not yet agreed to represent them during these preliminary meetings. He also specifically remembered asking the Mongioves to prepare a "statement" of exactly what had previously occurred in order that he might evaluate their case and determine if he wished to represent them. Finally, Mr. Valliant testified that the Mongioves did not keep their next scheduled appointment on July 29, 1988, and that they never attempted to contact him while they were on vacation. He was surprised by their behavior since the Mongioves knew they had to post bonds and they knew they had to meet with him; yet they did neither. His final contact with the Mongioves before this hearing was on September 8, 1988, when Mrs. Mongiove came to his office to retrieve the documents left with him on July 26.

Law and Analysis

The court would first note that a default only has been entered against the Mongioves—not a default judgment. Therefore, the mechanism by which an entry of default may be set aside is found in Rule 55(c), Federal Rules of Civil Procedure, as follows:

(c) Setting Aside Default. For good cause shown, the court may set aside an entry of default and, if judgment by default has been entered, may likewise set it aside in accordance with Rule 60(b).

Thus, in the instant case, the Mongioves must demonstrate "good cause" to the court. It is also important to emphasize that Rule 60(b), Federal Rules of Civil Procedure, provides, inter alia, that a default judgment may be set aside for "mistake, inadvertence, surprise, or excusable neglect ..." In Shepard Claims Service v. William Darrah & Associates, 796 F.2d 190 (6th Cir.1986), the Sixth Circuit described the standard for setting aside an entry of default as "somewhat more lenient" as opposed to the "stricter rule ... standards for Rule 60(b)", which would govern setting aside default judgments. Id. at 193-94. Obviously, if the Mongioves are able to satisfy the stricter standard of Rule 60(b), they will have also satisfied the "good cause" requirement of Rule 55(c). In applying the stricter standard of Rule 60(b), the Sixth Circuit has held that the following three factors determine the outcome of a motion to set aside a default judgment:

1. Whether the plaintiff will be prejudiced;

2. Whether the defendant has a meritorious defense; and

3. Whether culpable conduct of the defendant led to the default.

Shepard Claims Service, 796 F.2d at 192. Addressing these factors seriatim, the court first notes that delay alone is not a sufficient basis for establishing prejudice. INVST Financial Group, Inc., 815 F.2d at 398. Rather, the prejudice must be shown by delay which will result in the loss of evidence, create increased difficulties of discovery, or provide greater opportunity for fraud and collusion. Id. In the instant case, the court finds that the Government has not demonstrated that prejudice from any delay would occur because the Government has...