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Wells Fargo Bank, N.A. v. Martin

United States District Court, M.D. Alabama, Eastern Division

August 27, 2019

WELLS FARGO BANK, N.A., Plaintiff,
v.
JOHN F. MARTIN, KEVIN PERRY, and THE UNITED STATES OF AMERICA, Defendants.

          MEMORANDUM OPINION AND ORDER

          W. KEITH WATKINS UNITED STATES DISTRICT JUDGE

         Wells Fargo Bank, N.A., sued the United States, John F. Martin, and Kevin Perry. Wells Fargo's claim against the United States seeks to quiet title to real estate. Its claim against John and Kevin seeks judicial foreclosure on that same property. The Clerk of the Court entered default against John and Kevin, and Wells Fargo now moves for default judgment against them. But for the reasons below, the motion for default judgment is due to be denied without prejudice.

         I. JURISDICTION AND VENUE

         The United States filed a notice of removal no more than thirty days after it received a copy of the complaint in this quiet title action. 28 U.S.C. §§ 1442(a)(1), 1444, 1446(b)(1). Venue is proper. Id. § 1391(b). So far, no party disputes personal jurisdiction.

         II. BACKGROUND

         This lawsuit is about real estate in Phenix City, Alabama. To be more specific, it is about a house on Tranquil Lane.[1] Both Wells Fargo and the United States[2] claim an interest in that property, and Wells Fargo wants to foreclose on it.

         Bobby Williams bought the property in 2007, and he recorded a warranty deed in the Russell County probate office. (Doc. # 1-1, at 17.) He financed his purchase with a $140, 000 loan from Wells Fargo. The loan was secured by a mortgage on the property, which Wells Fargo promptly recorded in the probate office in August 2007. (Doc. # 1-1, at 18-35.)

         Kevin Perry and Pamela Perry bought the property from Bobby Williams the next year. They received a quitclaim deed, which they recorded in the probate office in August 2008. (Doc. # 1-1, at 36.) Wells Fargo believes that Bobby Williams died soon after that sale. (Doc. # 6, at 2.) Neither the Perrys nor Bobby Williams addressed the Wells Fargo mortgage one way or the other in this transfer of title. It remained of record.

         In April 2015, a federal grand jury indicted Pamela for aggravated identity theft and conspiracy to defraud the government with respect to claims.[3] Before long, Pamela conveyed her one-half interest in the Tranquil Lane property to John Martin. John recorded a quitclaim deed to that effect in June 2015. (Doc. # 1-1, at 37.) Again, neither transferor nor transferee addressed the Wells Fargo mortgage in this transfer of title.

         Pamela pleaded guilty in November 2015, and she was sentenced in February 2016. Under 18 U.S.C. § 3663A, part of Pamela's sentence is that she must pay the Internal Revenue Service $340, 057 in restitution. So under 18 U.S.C. § 3613(c), the United States recorded a lien on the Tranquil Lane property in April 2016. (Doc. # 1-1, at 38.)

         Since June 2016, there have been no payments on the loan to Bobby Williams. (Doc. # 6, at 3.) So in July 2018, Wells Fargo sued John, Kevin, and the United States in state court. (Doc. # 1-3, at 1.) After the United States removed the case to this court (Doc. # 1), Wells Fargo filed an Amended Complaint (Doc. # 6). Count One of the complaint is a quiet title claim: Wells Fargo seeks a judgment that its 2007 mortgage is superior to the United States's 2016 lien, assuming that the government's lien attaches to the property at all. (Doc. # 6, at 3.) Count Two seeks judicial foreclosure on the property. (Doc. # 6, at 4.)

         John and Kevin were served by publication in March 2019. (Docs. # 18, 19.) Both have failed to appear. Thus, in May 2019, the Clerk of the Court entered default against them under Federal Rule of Civil Procedure 55(a). (Doc. # 25.) Wells Fargo now moves for default judgment against John and Kevin. (Doc. # 27.)

         III. STANDARD OF REVIEW

         Wells Fargo's motion for default judgment does not permit the Clerk of the Court to enter default judgment against John and Kevin. See Fed. R. Civ. P. 55(b)(1). Instead, whether to enter default judgment is left to the court's ...


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