United States District Court, M.D. Alabama, Eastern Division
SOUTHERN STATES BANK, successor in interest by merger with Columbus Community Bank, Plaintiff,
TERESA WATSON HOLLEY, et al., Defendants.
REPORT AND RECOMMENDATION
A. BAKER UNITED STATES MAGISTRATE JUDGE
Southern States Bank, as successor in interest by merger with
Columbus Community Bank, sues Defendants, Teresa Watson
Holley, as Executrix of the Estate of Steven F. Watson; the
United States; Capital One, N.A.; and Wells Fargo Bank N.A.,
in a two-count amended complaint for reformation of mortgage
and to set aside a mortgage foreclosure deed. (Doc. 1-4).
Before the court is the Plaintiff's Motion for Default
Judgment Against Teresa Watson Holley, as Executrix of the
Estate of Steven F. Watson, Capital One, N.A., and Wells
Fargo, N.A. (Doc. 20). For the reasons that follow, the
Magistrate Judge recommends Plaintiff's
Motion for Default Judgment (Doc. 20) be
case was removed to this court by Defendant, the United
States, pursuant to 28 U.S.C. §§ 1442 and 1444.
(Doc. 1). No. party has contested jurisdiction or venue, and
the court finds sufficient information of record to support
both. See 28 U.S.C. § 1391. On March 5, 2018,
this matter was referred to the undersigned for review by
Chief United States District Judge W. Keith Watkins. (Doc.
12); see also 28 U.S.C. § 636(b); Rule 72, Fed.
R. Civ. P.; United States v. Raddatz, 447 U.S. 667
(1980); Jeffrey S. v. State Bd. of Educ. of State of
Ga., 896 F.2d 507 (11th Cir. 1990).
of the Federal Rules of Civil Procedure outlines the
procedure for obtaining default judgment against a party.
Rule 55 requires an entry of default to precede the entry of
a default judgment. See Fed. R. Civ. P. 55(a), (b).
The effect of the entry of a default is that all of the
factual allegations in the Complaint are taken as true, save
for the amount of unspecified damages. Thus, if liability is
well pled in the complaint, it is established by the entry of
a default. Buchanan v. Bowman, 820 F.2d 359, 361
(11th Cir. 1987). After the entry of a clerk's default,
where the damages are not for a “sum certain, ”
the plaintiff is required to “apply to the court”
for an entry of default judgment, pursuant to Rule 55(b)(2).
mere entry of a default by the Clerk does not, in itself,
warrant the court entering a default judgment. See Tyco
Fire & Sec. LLC v. Alcocer, 218 Fed.Appx. 860, 863
(11th Cir. 2007) (citing Nishimatsu Constr. Co. v. Hous.
Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975)).
Rather, a defaulted defendant is only deemed to admit the
plaintiff's well pled allegations of fact. Tyco
Fire, 218 Fed.Appx. at 863. Furthermore, a default
judgment bars the defendant from contesting those facts on
appeal. Id. Therefore, before entering a default
judgment for damages, a court must ensure that the well pled
allegations in the complaint, which are taken as true due to
the default, actually state a substantive cause of action and
that there is a “substantive, sufficient basis in the
pleadings for the particular relief sought.”
liability is established, the court turns to the issue of
relief.” Enpat, Inc. v. Budnic, 773 F.Supp.2d
1311, 1313 (M.D. Fla. 2011). “Pursuant to Federal Rule
of Civil Procedure 54(c), ‘[a] default judgment must
not differ in kind from, or exceed in amount, what is
demanded in the pleadings,' and a court may conduct
hearings when it needs to determine the amount of damages,
establish the truth of any allegation by evidence, or
investigate any other matter.” Enpat, 773
F.Supp.2d at 1313 (citing Fed.R.Civ.P. 55(b)(2)). The court
may enter final judgment as to one or more but fewer than all
claims or parties “only if the court expressly
determines that there is no just reason for delay.”
Rule 54(b), Fed.R.Civ.P. In order to enter a default
judgment, the Court must find that an adequate showing has
been made as to liability and the kind or amount of damages
or other relief.
PROCEDURAL AND FACTUAL BACKGROUND
filed its Complaint to Set Aside Foreclosure Deed and Reform
Mortgage in October 2017 in Circuit Court for Lee County,
Alabama. (Doc. 1-1). Plaintiff amended the complaint to
substitute the United States as a party Defendant for the
Internal Revenue Service. (Doc. 1-3 at 54-58). On January 3,
2018, Defendant United States removed the case to this court,
pursuant to 28 U.S.C. §§ 1442(a)(1) and 1444. (Doc.
April 6, 2018, Plaintiff filed an application for entry of
default against Defendants, Teresa Watson Holley, as
Executrix of the Estate of Steven F. Watson, Capital One,
N.A., and Wells Fargo, N.A., as these Defendants did not
answer or respond to Plaintiff's complaint. (Doc. 15). On
April 23, 2018, the Clerk entered a default against
Defendants, Teresa Watson Holley, as Executrix of the Estate
of Steven F. Watson, Capital One, N.A., and Wells Fargo, N.A.
(Doc. 18). Plaintiff now moves for default judgment against
these Defendants. (Doc. 20).
Amended Complaint, Plaintiff alleges it entered into a
Promissory Note with Steven F. Watson, now deceased, on or
about September 16, 2013. (Doc. 1-4, ¶ 6). The Note was
secured by a mortgage on property located at 34 Lee Road 843,
Salem, Alabama. Id. ¶ 7. Plaintiff claims that
due to a mutual mistake the mortgage fails to list all of the
lots that encompass the subject property. Id. ¶
8. The mortgage included only Lot 2, Block “B”,
Unit No. 2, Lake Shores, but the property known as 34 Lee
Road 843, Salem, Alabama also includes Lots 3, 4 and 25,
Block “B”. Id. ¶¶ 8, 9. After
Defendant Watson defaulted on the Note, Plaintiff conducted a
foreclosure sale. Id. ¶ 10. Plaintiff alleges
due to a mutual mistake of fact, only Lot 2 was foreclosed on
rather than the entire property being foreclosed on.
of the mutual mistake of fact, Plaintiff's Amended
Complaint seeks to equitably reform the mortgage, pursuant to
Ala. Code § 35-4-150, in order to accurately reflect the
proper legal description of the subject property as intended
and currently used by the parties, and to set aside the
foreclosure on the single lot so that a foreclosure can be
conducted on the entire property. Id. ¶ 11.
Count I of the Amended Complaint seeks reformation of the
mortgage. Id. ¶¶ 12-14. Count II seeks to
set aside the foreclosure deed so that the whole property can
be foreclosed on. Id. ¶¶ 15-18. Plaintiff
alleges that the grantee of the foreclosure deed- Defendant
United States-consents to such setting aside. Id.
¶ 18. Plaintiff and Defendant United States stipulate
that the mortgage should be reformed to reflect the proper
legal description of the subject property and further
stipulate that the foreclosure deed should be set aside.
motion for default judgment, Plaintiff states it has already
obtained a default against Defendants, Teresa Watson Holley,
as Executrix of the Estate of Steven F. Watson, Capital One,
N.A., and Wells Fargo, N.A., and to date these Defendants
have not appeared, nor have they responded to Plaintiff's
Amended Complaint. (Doc. 20, ¶¶ 5-7). Plaintiff