United States District Court, N.D. Texas, Amarillo Division
FINDINGS, CONCLUSIONS AND RECOMMENDATION TO GRANT
MOTIONS FOR SUMMARY JUDGMENT AND FOR DEFAULT JUDGMENT AGAINST
THE TEXAS WORKFORCE COMMISSION
ANN RENO UNITED STATES MAGISTRATE JUDGE.
the Court are the following motions filed by defendant
INTERNAL REVENUE SERVICE [defendant USA] on April 16,
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].
following reasons, defendant USA's motions should be
OF THE CASE
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.
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.
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.
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).
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 ...