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Lloyd v. Gallagher

United States District Court, N.D. Texas, Amarillo Division

May 22, 2018

FORREST LLOYD, TRUSTEE, Plaintiff,
v.
MICHAEL EUGENE GALLAGHER, RHONDA LYNN GALLAGHER, INTERNAL REVENUE SERVICE, TEXAS WORKFORCE COMMISSION, and FDB POOLS, INC. d/b/a AMARILLO CUSTOM POOLS, Defendants.

          FINDINGS, CONCLUSIONS AND RECOMMENDATION TO GRANT MOTIONS FOR SUMMARY JUDGMENT AND FOR DEFAULT JUDGMENT AGAINST THE TEXAS WORKFORCE COMMISSION

          LEE ANN RENO UNITED STATES MAGISTRATE JUDGE.

         Before the Court are the following motions filed by defendant INTERNAL REVENUE SERVICE [defendant USA][1] on April 16, 2018:

1. United States' Motion for Summary Judgment Against Forrest Lloyd as Trustee, Michael Eugene Gallagher, Rhonda Lynn Gallagher, and FDB Pools, Inc. d/b/a Amarillo Custom Pools [ECF 20]; and
2. United States' Motion for Default Judgment Against the Texas Workforce Commission [ECF 20].

         For the following reasons, defendant USA's motions should be GRANTED.

         I.

         STATEMENT OF THE CASE

         On December 6, 2016, plaintiff FORREST LLOYD sold, pursuant to a Trustee's Sale, certain property owned by defendants MICHAEL EUGENE GALLAGHER and RHONDA LYNN GALLAGHER [defendants GALLAGHERS] to satisfy a Deed of Trust held by Wellington State Bank. After applying the proceeds of the sale in accordance with the Deed of Trust, a surplus of $120, 802.81 remained. Plaintiff identified three (3) creditors with potential claims to the surplus proceeds: defendant USA, defendant TEXAS WORKFORCE COMMISSION [defendant TWC], and defendant FDB POOLS, INC. d/b/a Amarillo Custom Pools [defendant POOLS]. On January 12, 2017, plaintiff initiated an interpleader action in the 31st Judicial District Court in Wheeler County, Texas, seeking a determination as to which of the above creditors is entitled to the excess sale proceeds and asserting entitlement to recovery of attorney fees and costs. On February 13, 2017, the state case was removed to this Court.

         On March 9, 2017, defendant USA filed an answer in this case requesting the Court find the United States is entitled to the surplus funds, and that the Court deny plaintiff's claim for attorney's fees, the only answer filed by any of the defendants. On March 26, 2018, plaintiff signed a stipulation withdrawing his request for attorney's fees. [ECF 21-1 at 35-38]. On March 28, 2017, defendant USA notified the Court that defendants GALLAGHERS had filed a Chapter 7 bankruptcy proceeding on March 20, 2017. Consequently, this case was stayed and subsequently administratively closed. On March 28, 2018, defendant USA notified this Court that the bankruptcy court had lifted the stay and requested this Court reopen the instant case to determine which creditor is entitled to the surplus funds from the sale. On April 2, 2018, this case was reopened and, on April 13, 2008, plaintiff deposited the surplus funds into the registry of the Court.

         On April 16, 2018, defendant USA filed the instant motion for summary judgment against plaintiff and the other defendants, and the instant motion for default judgment against defendant TWC. No. timely responses opposing the motions have been filed by any of the parties. On April 17, 2018, this case was referred to the undersigned for pretrial management.

         II.

         STANDARDS AND AUTHORITY

         Federal Rule of Civil Procedure 55 provides that default may be entered if a defendant has “failed to plead or otherwise defend” the suit. Fed.R.Civ.P. 55(a). Default judgments “are a drastic remedy, not favored by the Federal Rules and resorted to by courts only in extreme situations.” Sun Bank of Ocala v. Pelican Homestead & Sav. Ass'n, 874 F.2d 274, 276 (5th Cir. 1989). In accord with that policy, “[a] party is not entitled to a default judgment as a matter of right, even where the defendant is technically in default.” Ganther v. Ingle, 75 F.3d 207, 212 (5th Cir. 1996). Rather, a default judgment is generally committed to the discretion of the district court. Mason v. Lister, 562 F.2d 343, 345 (5th Cir. 1977). As further noted by defendant USA in its motion:

“A default judgment is a judgment on the merits that conclusively establishes the defendant's liability. But it does not establish the amount of the damages.” Regions Bank v. Am. Int'l, 2012 U.S. Dist. LEXIS 146433, *7 (N.D. Texas Oct. 11, 2012) (citations omitted). “If the amount of judgment can be reliably computed from the record, and a party is otherwise entitled to default judgment, a default judgment can be entered without a hearing.” Id. (citations omitted).

         In its motion, defendant USA has set forth the following standard for granting summary judgment:

“Summary judgment is appropriate when “the pleadings, depositions, answers to interrogatories, and admissions on file, together with any affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Alcan Alum. Corp. v. BASF ...

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