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Fun Charters, Inc. v. Vessel Shady Lady

United States District Court, S.D. Alabama, Southern Division

December 19, 2014

FUN CHARTERS, INC., Plaintiff,
v.
The Vessel SHADY LADY, Official No. 681969, her engines, etc., in rem, Defendant.

ORDER

WILLIAM H. STEELE, Chief District Judge.

This matter comes before the Court on plaintiff's Motion for Default and Default Judgment (doc. 30) against the in rem defendant, The Vessel SHADY LADY, Official No. 681969 (the "Vessel"). Plaintiff requests that this Court enter an order that both declares the Vessel to be in default and imposes a default judgment against such Vessel in the amount of $188, 954.48. No certificate of service accompanied the Motion, and it appears that no notice of this Motion or the proposed default and default judgment remedies has been given to anyone.

On June 10, 2014, this Court entered an Order (doc. 5) directing issuance of a warrant for arrest of the Vessel. The Clerk of Court promptly issued a Warrant for Arrest in Rem (doc. 7), after which the U.S. Marshals Service arrested the Vessel and placed it in the possession of a substitute custodian. ( See doc. 11.) Actual notice of this action was given to the Vessel's owner and all lien claimants who have filed notices of lien with the U.S. Coast Guard, and public notice of this action was published in The Press-Register. ( See doc. 16, ΒΆΒΆ 3-4.) Court-ordered deadlines for all such persons and entities to file verified statements of claim pursuant to Supplemental Rule C(6)(a) have long since expired, yet none came forward and no statements of claim were filed.

On September 16, 2014, the undersigned entered a Decree Ordering Sale of Vessel (doc. 24), which directed that the Vessel be sold by the U.S. Marshals Service via public auction on the front steps of the courthouse at noon on October 22, 2014. The Decree made appropriate arrangements for publication of notice of sale, and provided that all claims in intervention against the Vessel or the proceeds of the sale must be filed on or before November 21, 2014. On October 29, 2014, the U.S. Marshals Service caused to be filed a Bill of Sale reflecting that the Vessel was sold to sole bidder Fun Charters, Inc. for the amount of $70, 000 (which was submitted via credit bid). ( See doc. 28.) No claimant has come forward in intervention within the designated time, and the court-ordered period for doing so has now expired.

The foregoing circumstances, as documented above and in the court file, plainly satisfy the criteria for a Clerk's Entry of Default against the Vessel pursuant to Rule 55(a), Fed.R.Civ.P.

That said, there is a significant technical infirmity in plaintiff's filing. In particular, plaintiff improperly conflates and combines the distinct procedures of a clerk's entry of default and a court's entry of default judgment. The law is clear that these are separate steps that should not be combined into one. See, e.g., Ramada Franchise Systems, Inc. v. Baroda Enterprises, LLC, 220 F.R.D. 303, 304 (N.D. Ohio 2004) ("An entry of default and a default judgment are distinct events that require separate treatment."). "First, the party seeking a default judgment must file [an application] for entry of default with the clerk of a district court by demonstrating that the opposing party has failed to answer or otherwise respond to the complaint, and, second, once the clerk has entered a default, the moving party may then seek entry of a default judgment against the defaulting party." UMG Recordings, Inc. v. Stewart, 461 F.Supp.2d 837, 840 (S.D. Ill. 2006); see also Gottschalk v. City and County of San Francisco, 964 F.Supp.2d 1147, 1165 (N.D. Cal. 2013) ("entry of default judgment is a two-step process; default judgment may be entered only upon the entry of default by the Clerk of the Court") (citation omitted); Twist and Shout Music v. Longneck Xpress, N.P., 441 F.Supp.2d 782 (E.D. Tex. 2006) ("Securing a default judgment is a three-step procedure involving the defendants' default, entry of default, and a default judgment."). The point is that a clerk's entry of default must precede an application to the district judge for entry of default judgment.[1] Plaintiff has attempted to merge these two distinct steps into one by requesting both forms of relief contemporaneously.

Under the circumstances, it is ordered that the Motion for Default and Default Judgment (doc. 30) is granted in part, and denied in part. Plaintiff's request for entry of default is granted, and the Clerk of Court is directed to enter a default against the Vessel pursuant to Rule 55(a), Fed.R.Civ.P. However, plaintiff's request for entry of default judgment is denied as premature. The Clerk of Court is directed to mail a copy of this Order to Adrenaline Charters, LLC, c/o Edward Sims, 5405 Ornacor Avenue, Orange Beach, AL 36561, to provide it with notice of the pending default proceedings. If no motion to set aside the default is filed on or before January 2, 2015, plaintiff may renew its Motion for Default Judgment, supported by exhibits and authorities, as appropriate.

DONE and ORDERED.


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