Opinion
No. 1:02-CV-00899.
September 28, 2004
ORDER
On November 22, 2002, Plaintiff Keesh Construction, Inc. ("Keesh")filed this instant suit pursuant to 26 U.S.C. § 6330, seeking a redetermination of the Internal Revenue Service's assessment and subsequent attempts at collection of various employment tax liabilities incurred in tax years 1998 and 2000 (doc. 1). On October 31, 2003, Defendants United States of America and the Internal Revenue Service filed a motion to dismiss Keesh's Complaint, contending that the action had been rendered moot by Keesh's executed bankruptcy (doc. 6). Although the time for filing a response has expired, Keesh has failed to do so. Although the Court did not find it proper, based upon the facts before the Court, to grant the Defendants' motion to dismiss at that time, it did issue an Order compelling Keesh to show cause within thirty days why the instant action should not be dismissed with prejudice for failure to prosecute (doc. 8). See Carlisle v. U.S., 517 U.S. 416, 426, 438 n. 2 (1996); Link v. Wabash R.R., 370 U.S. 626, 630-31 (1962).
Although Keesh's filings were largely redundant, it stated that it "does not object to the dismissal of the case" because it "no longer possesses any . . . assets" capable of seizure and has "been out of business since December, 2002" (docs. 9, 10, 11). It, however, seeks an entry of default judgment in its favor rather than dismissal of the instant case, averring that the Defendants have failed to answer the Complaint and that, accordingly, entry of default is proper. In response, the Defendants contend that Keesh has not satisfied the requirements of Fed.R.Civ.P. 55(e), a prerequisite for establishing a default judgment against the United States.
Obtaining a default judgment is actually a two-step process. See Fed.R.Civ.P 55. First, the party seeking the judgment first files a motion for entry of default by demonstrating that the opposing party "has failed to plead or otherwise defend" as contemplated by the Federal Rules of Civil Procedure. Once the clerk has entered the party's default, the movant may then seek entry of judgment against the party. See Fed.R.Civ.P. 55(b). The Court will construe the motion as a motion for entry of default.
This rule provides, in relevant part:
e) Judgment Against the United States. No judgment by default shall be entered against the United States or an officer or agency thereof unless the claimant establishes a claim or right to relief by evidence satisfactory to the court.
Fed.R.Civ.P. 55(e) (emphasis in original).
Although Keesh is correct in noting that the Defendants have filed numerous motions seeking extensions in which to file their answer, it also seems quite clear that these requests were part of an overall effort to resolve the case with minimal disruption to the business of the Court and the parties involved. Furthermore, the Court cannot agree that the Defendants have failed to "otherwise defend" the action, in light of the filings advanced, the efforts to resolve the dispute, and Keesh's failure to respond to the Defendants' motion. Accordingly, the Court finds Keesh's motion unfounded.
In light of the shared concession that the case should be dismissed, all that remains is whether dismissal pursuant to should be with or without prejudice. Generally, an abuse of discretion is found only where the defendant would suffer "plain legal prejudice" as a result of a dismissal without prejudice, as opposed to facing the mere prospect of a second lawsuit. See generally Cone v. West Virginia Pulp Paper Co., 330 U.S. 212, 217 (1947). On these facts, the Court finds no reason why the Defendant would suffer such prejudice.
Accordingly, the Plaintiff's Motion for Default Judgment (doc. 11) is hereby DENIED. The Defendants' Motion to Dismiss for Mootness (doc. 6) is hereby GRANTED. This case is hereby DISMISSED WITHOUT PREJUDICE.
SO ORDERED.