Opinion
A-23-CV-311-DII-ML
11-14-2023
WILMINGTON SAVINGS FUND SOCIETY, FSB, AS TRUSTEE OF STANWICH MORTGAGE LOAN TRUST F, Plaintiff, v. HELEN RIVAS, Defendant.
REPORT AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE
MARK LANE UNITED STATES MAGISTRATE JUDGE
TO THE HONORABLE UNITED STATES DISTRICT JUDGE:
Before the court is Motion for Final Default Judgment and Brief in Support Thereof (Dkt. 10) by Plaintiff Wilmington Savings Fund Society, FSB, as Trustee of Stanwich Mortgage Loan Trust F (“Wilmington”). Helen Rivas did not file a response. After reviewing the pleadings, the relevant case law, as well as the entire case file, the undersigned recommends the District Court GRANT the motion.
The motion was referred by then-presiding United States District Judge Lee Yeakel to the undersigned for a Report and Recommendation as to the merits pursuant to 28 U.S.C. § 636(b), Rule 72 of the Federal Rules of Civil Procedure, and Rule 1 of Appendix C of the Local Rules of the United States District Court for the Western District of Texas. Dkt. 6.
I. BACKGROUND
Rivas and her late husband entered a Loan Agreement secured by the Property commonly known as 8600 Dittmar Oaks Drive, Austin TX 78748 and more particularly described as:
LOT 12, BLOCK B, DITTMAR CROSSING, A SUBDIVISION IN TRAVIS COUNTY, TEXAS, ACCORDING TO THE MAP OR PLAT OF RECORD UNDER COUNTY CLERK'S DOCUMENT NO. 200400006, OFFICIAL PUBLIC RECORDS OF TRAVIS COUNTY, TEXAS.Wilmington is the current legal owner and holder of the endorsed in blank Note and the mortgagee of the Security Instrument as that term is defined in section 51.0001 (4) of the Texas Property Code. The loan has not been paid since April 1, 2021. Wilmington sent Rivas a Notice of Intent to Foreclose. When the default was not cured, Wilmington sent Rivas a Notice of Acceleration of Loan Maturity. Wilmington brings this suit for declaratory judgment and foreclosure so it may enforce its security interest in the Property. Wilmington asserts claims for declaratory judgment, non-judicial foreclosure, and judicial foreclosure.
Rivas was served with the Complaint but did not file an answer. Dkt. 7. On Wilmington's motion, the Clerk's Office entered default against Rivas. Dkt. 8, 9. Wilmington now moves for entry of default judgment against Rivas. Dkt. 10. Rivas did not respond to the motion. Wilmington seeks a declaratory judgment that it may proceed with the non-judicial foreclosure.
II. STANDARD FOR DEFAULT JUDGMENT
Federal Rule of Civil Procedure 55(b)(2) governs the entry of a default judgment by a court. See FED. R. CIV. P. 55(b)(2). In the Fifth Circuit, three steps are required when obtaining a default judgment: (1) default by the defendant, FED. R. CIV. P. 55(A); (2) ENTRY OF DEFAULT BY THE CLERK'S OFFICE, FED. R. CIV. P. 55(A); AND (3) ENTRY OF A DEFAULT JUDGMENT BY THE DISTRICT COURT, FED. R. CIV. P. 55(B); New York Life Ins. Co. v. Brown, 84 F.3d 137, 141 (5th Cir. 1996). Additionally, in order to obtain a default judgment, the movant must establish that the defendant is neither a minor nor an incompetent person, and that the defendant is not in military service. 50 U.S.C. § 3931; Bank of New York Mellon Tr. Co., N.A. v. Hancock, 5:19-CV-270-H-BQ, 2020 WL 2989023, at *2 (N.D. Tex. June 4, 2020). Where a defendant has defaulted, the factual allegations in the complaint are taken as true, except regarding damages. See Jackson v. FIE Corp., 302 F.3d 515, 525 n.29 (5th Cir. 2002).
“Default judgments are a drastic remedy” and thus are “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). Accordingly, “[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, “[t]here must be a sufficient basis in the pleadings for the judgment entered.” Nishimatsu Constr. Co. v. Houston Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975) (default is not treated as an absolute confession by defendant of liability and of plaintiff's right to recover). A court must accept pleaded facts as true, but must also determine whether those facts state a claim upon which relief may be granted. See Lewis v. Lynn, 236 F.3d 766, 767 (5th Cir. 2001) (affirming district court's denial of entry of default judgment because, even if true, plaintiff's allegations would not support imposing liability against defendants).
Courts use a three-part test to determine when to enter a default judgment. The court first considers whether the entry of default judgment is procedurally warranted. United States v. Rod Riordan Inc., No. MO:17-CV-071-DC, 2018 WL 2392559, at *2 (W.D. Tex. May 25, 2018); Nasufi v. King Cable Inc., No. 3:15-CV-3273-B, 2017 WL 6497762, at *1 (N.D. Tex. Dec. 19, 2017) (citing Lindsey v. Prive Corp., 161 F.3d 886, 893 (5th Cir. 1998)). The Fifth Circuit has set forth six factors for a court to consider in determining whether a default judgment is procedurally proper: “(1) whether material issues of fact are at issue; (2) whether there has been substantial prejudice; (3) whether grounds for default are clearly established; (4) whether default was caused by good faith mistake or excusable neglect; (5) harshness of default judgment; and (6) whether the court would feel obligated to set aside a default on the defendant's motion.” United States v. Padron, 7:17-CV-00009, 2017 WL 2060308, at *2 (S.D. Tex. May 12, 2017); see Lindsey v. Prive Corp., 161 F.3d 886, 893 (5th Cir. 1998).
Next, courts assess the substantive merits of the plaintiff's claims and determine whether there is a sufficient basis in the pleadings for the judgment. J & J Sports Prods., Inc. v. Morelia Mexican Rest., Inc., 126 F.Supp.3d 809, 814 (N.D. Tex. 2015) (citing Nishimatsu, 515 F.2d at 1206). In doing so, courts assume that, due to its default, the defendant admits all well-pleaded facts in the plaintiff's complaint. See Rod Riordan Inc., 2018 WL 2392559, at *3.
Finally, the court determines what form of relief, if any, the plaintiff should receive. Id. While damages are normally not to be awarded without a hearing or a demonstration by detailed affidavits establishing the necessary facts, if the amount of damages can be determined with mathematical calculation by reference to the pleadings and supporting documents, a hearing is unnecessary. Id. (citing United Artists Corp. v. Freeman, 605 F.2d 854, 857 (5th Cir. 1979); James v. Frame, 6 F.3d 307, 310 (5th Cir. 1993)).
III. ANALYSIS
Rivas is not a minor, incompetent person, or in military service. Dkt. 10-1. The Clerk of Court has entered default against Rivas. Dkt. 9.
Default judgment is procedurally warranted. First, Rivas's failure to respond or appear threatens to cause substantial prejudice because it threatens to bring the adversarial process to a halt, effectively prejudicing Wilmington's interests. Second, the grounds for default judgment are clearly established because Rivas has failed to answer or defend. Third, there is no indication that default was caused by a good faith mistake or excusable neglect. Rivas has simply chosen not to participate in this litigation. Fourth, default judgement would not be harsh in this situation because the judgment would be for nothing more than Rivas owes under the law. Fifth, given the circumstances, this court has no reason to set aside any default judgment it may enter. In sum, default judgment is procedurally proper.
Wilmington's claims are meritorious, and there is sufficient basis in the pleadings for the judgment. As described in the Complaint, Rivas has been given ample opportunity to cure the default and has not done so.
Finally, the declaratory relief Wilmington seeks is appropriate. Wilmington has established the default and its right to foreclose.
IV. RECOMMENDATION
For these reasons, the undersigned RECOMMENDS that Wilmington's Motion for Default Judgment (Dkt. 10) be GRANTED.
V. OBJECTIONS
The parties may file objections to this Report and Recommendation. A party filing objections must specifically identify those findings or recommendations to which objections are being made. The District Court need not consider frivolous, conclusive, or general objections. See Battles v. United States Parole Comm'n, 834 F.2d 419, 421 (5th Cir. 1987).
A party's failure to file written objections to the proposed findings and recommendations contained in this Report within fourteen (14) days after the party is served with a copy of the Report shall bar that party from de novo review by the District Court of the proposed findings and recommendations in the Report and, except upon grounds of plain error, shall bar the party from appellate review of unobjected-to proposed factual findings and legal conclusions accepted by the District Court. See 28 U.S.C. § 636(b)(1)(C); Thomas v. Arn, 474 U.S. 140, 150-53 (1985); Douglass v. United Services Auto. Ass'n, 79 F.3d 1415 (5th Cir. 1996) (en banc).