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United States v. Rod Riordan, Inc.

United States District Court, W.D. Texas, Midland/Odessa Division

May 25, 2018




         BEFORE THE COURT is Plaintiff United States of America's Motion for Default Judgment and Supporting Brief. (Doc. 41). Plaintiff seeks entry of a default judgment against Defendants Rod Riordan, Inc. d/b/a E-Power (Rod Riordan, Inc.); Rodney Riordan, Sr.; Rodney Riordan, Jr.; Kali Riordan; and Yvonne Riordan due to their failure to answer or otherwise respond to Plaintiff's Complaint. Id. After due consideration, the Court GRANTS Plaintiff's Motion for Default Judgment. (Doc. 54).

         I. BACKGROUND

         On November 8, 2011, Rod Riordan, Inc. purchased the real property located at 4701 E. County Road 45, Midland, Texas 79705 (Subject Property) from Shenandoah Bar M Ranch LLC, more fully described as:

BEING a 20.00 acre tract out of Section 16, Block 38, T-1-S, T. & P. RR. Co. Survey, Midland County, Texas, described by metes and bounds as follows:
BEGINNING at a line created from a ½” iron rod found for the SE corner of Section 9 and a 1” iron pipe found for the NE corner of Section 21 from which the SE corner of Section 9 bears N. 15° 29' 16” W. a distance of 1906.46 feet;
THENCE S. 15° 35' 00” E. 776.48 feet along said line to a ½” iron rod with cap set for the SE corner of this tract;
THENCE S. 73° 56' 08” W. 1124.49 feet along the centerline of a 15 foot dirt road to a ½” iron rod with cap set for the SW corner of this tract;
THENCE N. 15° 07' 37” W. 776.54 feet along the centerline of a 12 foot dirt road to a ½” iron rod with cap set for the N.W. corner of this tract;
THENCE N. 73° 56' 08” E. 1119.60 feet to the PLACE OF BEGINNING.

(Doc. 41 at 4-5).

         Beginning on April 23, 2012, a delegate of the Secretary of the Treasury assessed against, and gave notice and demand to, Rod Riordan, Inc. for various unpaid federal employment taxes, unemployment taxes, and a Civil Penalty resulting from various tax periods. (Docs. 42-1-42-9). As a result of these tax liabilities, the Internal Revenue Service (IRS) recorded Notices of Federal Tax Lien against Rod Riordan, Inc. in the real property records of Midland County, Texas on April 29, 2013, June 11, 2013, April 7, 2014, July 28, 2014, and March 16, 2015. (Docs. 42-10-42-15). Despite notice of and demand for payment, Rod Riordan, Inc. failed to pay the federal tax liabilities which, by May 30, 2018, will total $1, 154, 970.44. (Doc. 41 at 4).

         On April 11, 2017, Plaintiff filed this action against Rod Riordan, Inc. as well as several parties Plaintiff believed might claim an interest in the Subject Property: Rodney Riordan, Sr., Rodney Riordan, Jr., Kali Riordan, Yvonne Riordan, Shenandoah Bar M Ranch, R.O. Pomroy Equipment Rental, Inc., d/b/a Roper Inc. (R.O. Pomroy), and the Midland County Tax Assessor-Collector. (Doc. 1). In its Complaint, Plaintiff seeks to: (1) reduce to judgment the outstanding federal tax assessments against Rod Riordan, Inc.; (2) foreclose the federal tax liens against the Subject Property; and (3) sell the Subject Property and distribute the proceeds from such sale in accordance with the Court's findings as to the validity and priority of the liens and claims of all parties. Id.

         The Midland Central Appraisal District (MCAD) filed its Answer on April 25, 2017.[1](Doc. 12). In its Answer, MCAD asserts-and Plaintiff agrees-any ad valorem tax liens on the Subject Property in favor of MCAD or its constituent taxing units are superior to any lien of the United States, pursuant to 26 U.S.C. § 6323(b)(6). (Doc. 41 at 5).

         On May 26, 2017, R.O. Pomroy filed its Answer, explaining it obtained a judgment against Rod Riordan, Jr., individually and d/b/a E-Power, on May 19, 2014, and filed an abstract of said judgment on May 30, 2014. (Doc. 28). However, R.O. Pomroy admitted that, in regard to the Subject Property, “its lien would be inferior to the liens claimed by the Plaintiff, which were recorded prior to the filing of Defendant's abstract of judgment.” Id. at 2.

         After the IRS recorded its Notices of Federal Tax Lien on the Subject Property and without conducting a title search, Shenandoah Bar M Ranch purchased the Subject Property for $300, 000. Id. at 5. On August 21, 2017, Plaintiff and Shenandoah Bar M Ranch filed a Joint Stipulation with the Court. (Doc. 35). In the Joint Stipulation, Shenandoah Bar M Ranch agrees to settle its claim to the property in exchange for a payment of $33, 654.81 from the proceeds of the sale of the Subject Property as reimbursement for paid delinquent property taxes. Id.

         Summonses issued to each of the remaining Defendants were returned executed on May 1, 2017. (Docs. 16-20). None of the Defendants answered or otherwise appeared and Plaintiff filed its Motion for Entry of Default Against Defendants Rod Riordan, Inc., d/b/a E-Power; Rodney Riordan Sr.; Rodney Riordan Jr.; Kali Riordan; and Yvonne Riordan on May 25, 2017. (Doc. 25). The Clerk entered default against the Defendants the same day. (Doc. 27). On April 26, 2018, Plaintiff filed the instant Motion for Default Judgment against Defendants along with an Affidavit in Support, which contains the Declaration of Revenue Officer B. Wesley Glass and various documents supporting Plaintiff's claims. (Docs. 41, 42). Plaintiff's Default Judgment against Defendants is the final pending issue in this matter. (Doc. 41 at 2).


         Rule 55 of the Federal Rules of Civil Procedure authorizes the Court to enter a default judgment against a defendant who fails to plead or otherwise defend upon motion of the plaintiff. Fed.R.Civ.P. 55(b). “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 & Savs. Ass'n, 874 F.2d 274, 276 (5th Cir. 1989). In addition, “[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, the district court “has the discretion to decline to enter a default judgment.” Lindsey v. Prive Corp., 161 F.3d 886, 893 (5th Cir. 1998).

         Courts developed a three-part test to determine when to enter a default judgment. First, the court considers whether the entry of default judgment is procedurally warranted. Nasufi v. King Cable Inc., 2017 WL 6497762, * 1 (N. D. Tex. 2017) (citing Lindsey v. Prive Corp., 161 ...

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