United States v. Nipper ( 2020 )

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 UNITED STATES OF AMERICA, Case No. 20-cv-00258-HSG 8 Plaintiff, ORDER GRANTING MOTION FOR DEFAULT JUDGMENT 9 v. Re: Dkt. No. 35 10 CELIA NIPPER, et al., 11 Defendants. 12 Pending before the Court is Plaintiff United States of America’s (“Plaintiff”) motion for 13 default judgment against Defendant Celia Nipper (“C. Nipper” or “Defendant”). Dkt. No. 35 14 (“Mot.”). The Court took the motion under submission on June 12, 2020. See Dkt. No. 42. After 15 careful consideration, the Court GRANTS the motion. 16 I. BACKGROUND 17 On July 19, 2009, C. Nipper acquired real property located at 1965 Keswick Lane, 18 Concord, California (“Property”), evidenced by a grant deed recorded by the Contra Costa County 19 Recorder’s Office. Dkt. No. 1 (“Compl.”) ¶¶ 14-19. On February 16, 2016, C. Nipper was 20 arrested on federal charges of wire fraud, bank fraud, and filing of false tax returns. Mot. at 2. On 21 May 8, 2018, the Court sentenced Defendant to a prison term of 51 months, and ordered restitution 22 of $2,362,469.00 to Marketlinx, Inc. and the Internal Revenue Service. See United States v. Celia 23 Nipper, Case No. 16-CR-0043, Dkt. No. 77 (N.D. Cal.). Plaintiff alleges that in the two years 24 between her arrest and her sentencing, C. Nipper transferred her interest in the Property to her 25 daughter, Kasey Nipper (“K. Nipper”), in two different transactions on March 8, 2017 and March 26 14, 2018 via K. Nipper’s alter ego, Peace House, Inc. Mot. at 2-3. 27 On January 13, 2020, pursuant to its authority to enforce restitution judgments under 18 1 seq., Plaintiff filed its complaint seeking the avoidance of fraudulent transfers of real property 2 pursuant to 28 U.S.C. Section 3304(b). Compl. at 4. 3 On February 12, 2020, copies of the summons (Dkt. No. 7) and complaint were personally 4 served on C. Nipper. Dkt. No. 15. Pursuant to the summons and Fed. R. Civ. P. 12(a)(1)(A)(i), 5 Defendant’s response was due on March 4, 2020. See Declaration of Manik Bowie, Dkt. No. 20-2 6 at 2. On March 12, 2020, the Clerk of the Court issued an entry of default against C. Nipper. Dkt. 7 No. 23. On May 13, 2020, Plaintiff filed this motion for default judgment.1 C. Nipper was served 8 with the motion by U.S. Mail addressed to her at FCI Dublin. Dkt. No. 36. On July 10, 2020, the 9 Court entered an order directing Plaintiff to file supplemental briefing “describing: 1) the steps 10 taken to effectuate service on [C. Nipper] while incarcerated, 2) authority reflecting the adequacy 11 of that service, and 3) the Court’s jurisdiction over [C. Nipper].” Dkt No. 43. On July 21, 2020, 12 Plaintiff filed its supplemental brief. Dkt. No. 44. On July 22, 2020, copies of the supplemental 13 brief were personally served on C. Nipper. Dkt. No. 45. 14 II. LEGAL STANDARD 15 After entry of a default by the clerk, a party may move for default judgment. See Fed. R. 16 Civ. P. 55. “The district court’s decision whether to enter a default judgment is a discretionary 17 one.” Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). As a preliminary matter, a district 18 court must confirm that it has subject matter jurisdiction over the action, personal jurisdiction over 19 the defendant, and that service of process was adequate. See In re Tuli, 172 F.3d 707, 712 (9th 20 Cir. 1999); Disney Enters., Inc. v. Vuong Tran, No. 12-5030 SC, 2013 WL 1832563, at *1 (N.D. 21 Cal. May 1, 2013). After finding these threshold matters met, a court next considers whether the 22 following factors (“the Eitel factors”) support an entry of default judgment: 23 (1) the possibility of prejudice to the plaintiff, (2) the merits of plaintiff’s substantive claim, (3) the sufficiency of the complaint, (4) 24 the sum of money at stake in the action; (5) the possibility of a dispute concerning material facts; (6) whether the default was due to 25 excusable neglect, and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits. 26 27 1 Plaintiff’s earlier motion for default judgment as to the other two Defendants, Kasey Nipper and 1 Eitel v. McCool, 782 F.2d 1470, 1471–72 (9th Cir. 1986). 2 In considering these factors, a court takes all factual allegations in a plaintiff’s complaint 3 as true, except for those relating to damages. See TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 4 917–18 (9th Cir. 1987). And relief granted under a default judgment is always limited by Federal 5 Rule of Civil Procedure 54(c), in that the judgment “shall not be different in kind or exceed in 6 amount that prayed for in the [complaint].” 7 III. DISCUSSION 8 A. Jurisdiction 9 Before entering default judgment, the Court must have subject matter jurisdiction over the 10 action, and personal jurisdiction over the defendant. See In re Tuli, 172 F.3d 707, 712 (9th Cir. 11 1999). The Court will address each issue in turn. 12 i. Subject Matter Jurisdiction 13 Congress broadly authorizes the federal courts to exercise subject matter jurisdiction over 14 all civil actions arising under the Constitution, laws, or treaties of the United States. 28 U.S.C. 15 § 1331. District courts “shall have original jurisdiction of all civil actions, suits, or proceedings 16 commenced by the United States, or by any agency or officer thereof expressly authorized to sue 17 by Act of Congress,” unless otherwise provided by Congress. 28 U.S.C. § 1345. 18 Specifically, Plaintiff filed this action against C. Nipper under 28 U.S.C. § 3304 to recover 19 property she fraudulently transferred to her daughter to avoid paying restitution. Compl. at 1. 20 Plaintiff is authorized under federal law to employ civil process to collect restitution in favor of 21 private parties, such as C. Nipper’s victims. 18 U.S.C.§ 3612(c), 28 U.S.C. § 3664(m). 22 Therefore, the Court has subject matter jurisdiction over this action. 23 ii. Personal Jurisdiction 24 Courts have recognized two types of personal jurisdiction: general jurisdiction and specific 25 jurisdiction. Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011). “For 26 an individual, the paradigm forum for the exercise of general jurisdiction is the individual’s 27 domicile.” Bristol-Myers Squibb Co. v. Superior Court of California, 137 S. Ct. 1773, 1780 1 In determining an individual’s domicile, a number of factors are considered, including 2 current residence, location of property, and location of spouse and family. Lew v. Moss, 797 F.2d 3 747, 749-50 (9th Cir. 1986). “[T]he domicile of [a] prisoner before he was imprisoned is 4 presumed to remain his domicile while he is in prison.” Denlinger v. Brennan, 87 F.3d 214, 216 5 (7th Cir. 1996) (quoting Sullivan v. Freeman, 944 F.2d 334, 337 (7th Cir. 1991)); see also United 6 States v. Arango, 670 F.3d 988, 998 (9th Cir. 2012) (adopting a rebuttable presumption that, for 7 the purposes of the Immigration and Nationality Act, “an incarcerated individual retains residence 8 in the judicial district where he lived prior to incarceration”). 9 Here, C. Nipper resided in California before she was incarcerated. Defendant was served 10 where she presently resides—at FCI Dublin, located in Alameda County, California. See Dkt. No. 11 14-3 at 11, 19. Post-incarceration, C. Nipper stated that she intends to remain in California. See 12 Case No. 16-cr-0043, Dkt. No. 82 at 15. Second, the subject of this action is C. Nipper’s 13 fraudulent transfer of real property located in California. Third, the Court recommended at 14 sentencing that she “be designated to FCI Dublin to facilitate family visits.” Case No. 16-cr-0043, 15 Dkt. No. 77. Taken together, these factors indicate that this Court has general jurisdiction over the 16 Defendant. 17 B. Adequacy of Service 18 The Court next considers whether procedural prerequisites, including adequate service of 19 process, have been met. See, e.g., Ebates Inc. v. Cashbag.co.za, No. 18-CV-02884-EDL, 2018 20 WL 6816113, at *5 (N.D. Cal. Oct. 30, 2018), report and recommendation adopted, No. C 18- 21 2884 SBA, 2019 WL 1095820 (N.D. Cal. Jan. 14, 2019) (citing PepsiCo, Inc. v. Cal. Sec. Cans, 22 238 F. Supp. 2d 1172, 1175 (C.D. Cal. 2002)). Plaintiff’s effort must “be ‘reasonably calculated’ 23 to apprise a party of the pendency” of an action. Dusenbery v. United States, 534 U.S. 161, 170 24 (2002). Plaintiff is not required to make special efforts to “assure that a particular piece of mail 25 reaches a particular individual who is in one way or another in the custody of the Government.” 26 Id. 27 As discussed below, the Court finds that Plaintiff’s efforts to provide notice to C. Nipper in 1 procedure, satisfies due process. See id. at 168-69 (finding that Government’s notice was 2 adequate when it followed the BOP mail procedure described in the record for mail distribution). 3 i. Plaintiff Personally Served C. Nipper with the Complaint in Accordance with Federal Rule of Civil Procedure 4(3)(2) 4 An individual who is not a minor, incompetent person, or person whose waiver has been 5 filed, may be served a complaint by: 6 (A) delivering a copy of the summons and of the complaint to the 7 individual personally; (B) leaving a copy of each at the individual’s dwelling or usual place 8 of abode with someone of 
suitable age and discretion who resides there; or 9 (C) delivering a copy of each to an agent authorized by appointment or by law to receive service of process. 10 Fed. R. Civ. P. 4(e)(2). 11 Here, Plaintiff provided the U.S. Marshals Service a copy of the summons, complaint and 12 other documents to deliver to C. Nipper personally. Dkt. No. 44 at 3. The U.S. Marshals Service 13 delivered the documents to FCI Dublin on February 12, 2020, as indicated by the Process Receipt 14 and Return. Dkt. No. 15. The Process Receipt and Return indicates the documents were received 15 by “J. Golden (LT.).” Id. Joseph Golden is a Lieutenant employed with BOP and assigned to FCI 16 Dublin. See Declaration of Lt. Golden, Dkt. No. 44-1 ¶¶ 2-3 (“Golden Decl.”). Lt. Golden stated 17 in his declaration that he received the documents from the Deputy U.S. Marshal, and personally 18 delivered them to C. Nipper on the same day. Id. ¶¶ 4-6. Therefore, the Court is satisfied that C. 19 Nipper received proper notice of the complaint because the Government personally served 20 Defendant with the summons and complaint. 21 ii. Plaintiff Served C. Nipper with the Motion via U.S. Mail in Accordance with 22 Federal Rule of Civil Procedure 5(b)(2)(C) 23 A motion filed after the complaint may be served by mailing it to the person’s last known 24 address. Fed. R. Civ. P. 5(b)(2)(C). When done in this manner, service is complete upon mailing. 25 Id. Persons sending mail to individuals incarcerated at FCI Dublin are instructed to include the 26 inmate’s name and register number, and to address mail to FCI Dublin’s address of 5701 8th 27 Street—Camp Parks, Dublin, CA 94568. Dkt. No. 44 at 3. 1 Here, Plaintiff mailed the motion to Plaintiff’s last known address, which is her place of 2 incarceration at FCI Dublin. As indicated on the proof of service, the delivery address included C. 3 Nipper’s name and register number. Dkt. No. 36. At FCI Dublin, general incoming mail is 4 received, screened for security purposes, and distributed to inmates, typically on a daily basis. See 5 Golden Decl. ¶¶ 7-8. By following BOP’s procedures, Plaintiff has complied with the Federal 6 Rules of Civil Procedure in a manner that is reasonably calculated to apprise C. Nipper of the 7 pending action, satisfying due process requirements. 8 *** 9 Plaintiff personally served C. Nipper with the summons and complaint, and mailed her the 10 motion, in accordance with the Federal Rules of Civil Procedure and BOP mail procedure. 11 Therefore the Court finds that service of process was adequate. 12 C. Eitel Factors 13 Once the Court finds that it has jurisdiction and notice was sufficient, the Court must then 14 evaluate the merits of the default judgment request based on the seven Eitel factors. See Eitel, 782 15 F.2d at 1471–72. 16 i. First Factor: Possibility of Prejudice to the Plaintiff 17 First, the Court must consider the possibility of prejudice to Plaintiff. Id. at 1471. A 18 plaintiff may be prejudiced when, in the absence of a default judgment, plaintiff would be left with 19 no “other recourse for recovery.” PepsiCo, 238 F. Supp. 2d at 1177. Courts have found prejudice 20 when a defendant has failed to appear or defend against a suit, and plaintiff could not otherwise 21 seek relief. See, e.g., id.; Fulton v. Bank of Am., N.A., No. 2:16-cv-04870, 2016 WL 7156440, at 22 *3 (C.D. Cal. Dec. 6, 2016). 23 Plaintiff here will be prejudiced absent entry of default judgment because Plaintiff will 24 have no recourse to recover the Property and apply its proceeds to the outstanding judgment. See, 25 e.g., Willamette Green Innovation Ctr., LLC v. Quartis Capital Partners, No. 13-cv-848-JCS, 26 2014 WL 5281039, at *6 (N.D. Cal. 2014) (“Denying a plaintiff a means of recourse is by itself 27 sufficient to meet the burden posed by this factor.”). The Court finds that the first Eitel factor ii. Second and Third Factors: Merits of Plaintiff’s Substantive Claim, and 1 Sufficiency of the Complaint 2 The second and third Eitel factors consider the merits and sufficiency of Plaintiff’s claims. 3 These two factors are often analyzed together, and require courts to consider whether a plaintiff 4 has “state[d] a claim on which [it] may recover.” PepsiCo, 238 F. Supp. 2d at 1175. With the 5 exception of facts relating to damages, courts must take as true all other factual allegations pled in 6 the complaint. TeleVideo Sys., 826 F.2d at 917–18. Of all the Eitel factors, courts often consider 7 the second and third factors to be “the most important.” Sanrio, Inc. v. Jay Yoon, No. 5:10-CV- 8 05930 EJD, 2012 WL 610451, at *4 (N.D. Cal. Feb. 24, 2012). 9 Plaintiff has pled sufficient facts to support its claims that C. Nipper transferred the 10 Property to Peace House and/or K. Nipper “with actual intent to hinder, delay, or defraud a 11 creditor” or “without receiving a reasonably equivalent value in exchange for the transfer.” See 28 12 U.S.C. § 3304(b). In its first cause of action, Plaintiff alleged that “one year after her arrest,” C. 13 Nipper “transferred property” by granting a deed of trust in favor of “her insider . . . K. Nipper’s 14 alter ego Peace House.” Compl. ¶ 23(a), (c); 28 U.S.C. § 3304(b)(2)(A). Plaintiff alleged that C. 15 Nipper “concealed the transfer by using the name of K. Nipper’s corporation and alter ego Peace 16 House.” Compl. ¶ 23(b); 28 U.S.C. § 3304(b)(2)(C). Plaintiff also alleged that C. Nipper received 17 no consideration for the “gratuitous[] . . . $500,000” transfer. Compl. ¶ 23(d); 28 U.S.C. 18 § 3304(b)(2)(H). Lastly, Plaintiff alleged that C. Nipper attempted to “defraud” Plaintiff by 19 keeping assets from Plaintiff’s reach, “bec[o]m[ing] insolvent as a result of the transfer, as she had 20 no significant assets approximately six months later.” Compl. ¶ 23, 23(e); 28 U.S.C. 21 § 3304(a)(1)(B). 22 Likewise, in the second cause of action, Plaintiff alleged that six months after her guilty 23 plea—and two weeks prior to her sentencing—C. Nipper “transferred” title to the Property to “her 24 insider . . . K. Nipper’s alter ego Peace House.” Compl. ¶ 26(a), (c); 28 U.S.C. § 3304(b)(2)(A). 25 Plaintiff alleged that C. Nipper “concealed the transfer by using the name of K. Nipper’s 26 corporation and alter ego Peace House.” Compl. ¶ 26(b); 28 U.S.C. § 3304(b)(2)(C). Plaintiff 27 also alleged that C. Nipper received consideration of $433,000, “approximately $500,000 below 1 C. Nipper attempted to “defraud” Plaintiff by keeping assets from Plaintiff’s reach, “bec[o]m[ing] 2 insolvent as a result of the transfer, as she had no significant assets at approximately the time of 3 the transfer.” Compl. ¶ 26, 26(e); 28 U.S.C. § 3304(a)(1)(B). 4 Reviewing these allegations, the Court finds that Plaintiff has alleged sufficient facts to 5 state a claim under 28 U.S.C. § 3304(b). Accordingly, the Court finds that the second and third 6 Eitel factors favor entry of default judgment. 7 iii. Fourth Factor: Sum of Money at Stake 8 Under the fourth Eitel factor, “the court must consider the amount of money at stake in 9 relation to the seriousness of Defendant[s’] conduct.” PepsiCo, 238 F. Supp. 2d at 1176. Here, 10 Plaintiff does not seek a monetary judgment in this matter, and Plaintiff’s request for a declaratory 11 judgment is tailored to redress C. Nipper’s misconduct. See Mot. at 6-7; see also PepsiCo, 238 F. 12 Supp. 2d at 1177; United States v. Malinowski, No. 11-cv-1187 JAM JFM, 2011 WL 6141075, *4 13 (E.D. Cal. 2011). C. Nipper’s conduct is “serious,” as she engaged in deceitful conduct to evade 14 her creditors. See PepsiCo, 238 F. Supp. 2d at 1176. Therefore, the fourth Eitel factor favors 15 entry of default judgment. 16 iv. Fifth Factor: Possibility of a Dispute Concerning Material Facts 17 The fifth Eitel factor examines the “possibility of dispute as to any material facts in the 18 case.” Id. at 1177. “The general rule of law is that upon default the factual allegations of the 19 complaint, except those relating to the amount of damages, will be taken as true.” Geddes v. 20 United Fin. Group, 559 F.2d 557, 560 (9th Cir. 1997). As discussed above, Plaintiff has 21 sufficiently pled sufficient facts to state a claim under 28 U.S.C. § 3304(b), and C. Nipper has 22 failed to raise any dispute of material fact. Therefore, the fifth Eitel factor favors entry of default 23 judgment. 24 v. Sixth Factor: Whether the Default Was Due to Excusable Neglect 25 The sixth Eitel factor considers the possibility that Defendant’s default resulted from 26 excusable neglect. PepsiCo, 238 F. Supp. 2d at 1177. Courts have found that where defendant 27 was “properly served with the complaint, the notice of entry of default, as well as the paper in 1 support of the [default judgment] motion,” there is no evidence of excusable neglect. Shanghai 2 Automation Instrument Co. v. Kuei, 194 F. Supp. 2d 995, 1005 (N.D. Cal. 2001). 3 There is no evidence that C. Nipper’s failure to respond was the result of excusable 4 neglect. Defendant was properly and timely served, and apparently chose not to respond. 5 Therefore, the sixth Eitel factor favors entry of default judgment. 6 vi. Seventh Factor: Policy Underlying the Federal Rules of Civil Procedure Favoring Decisions on the Merits 7 The seventh Eitel factor emphasizes that “[c]ases should be decided upon their merits 8 whenever reasonably possible.” Eitel, 782 F. 2d at 1472. While this preference does not preclude 9 a court from granting default judgment, see PepsiCo, 238 F. Supp. 2d at 1177, the general rule is 10 that “default judgments are ordinarily disfavored.” Eitel, 782 F. 2d at 1472. Deciding the case on 11 the merits is nearly impossible where a party refuses to participate. This factor thus weighs 12 against, but does not preclude, entry of default judgment. 13 * * * 14 In sum, the majority of the Eitel factors favor default judgment against Defendant. 15 IV. CONCLUSION 16 For the foregoing reasons, the Court GRANTS Plaintiff’s motion for default judgment 17 against Defendant Celia Nipper. The Court enters judgment as follows: 18 1. The deed of trust on real property located at 1965 Keswick Lane, Concord, California 19 (APN: 147-194-037-7 Lot 39), executed by Celia Nipper and for the benefit of Peace 20 House, Inc., recording March 8, 2017, is fraudulent and void; 21 2. The transfer of title of real property located at 1965 Keswick Lane, Concord, California 22 (APN: 147-194-037-7 Lot 39), from Celia Nipper to Peace House, Inc., recorded 23 March 14, 2018, is fraudulent and void; and 24 // 25 // 26 // 27 // 1 3. Title to real property located at 1965 Keswick Lane, Concord, California (APN: 147- 2 194-037-7 Lot 39) is hereby vested in the sole name of Celia Nipper. 3 The Clerk is directed to close the case. 4 IT IS SO ORDERED. 5 Dated: 8/12/2020 ® HAYWOOD S. GILLIAM, JR. 7 United States District Judge 8 9 10 11 12 © 15 16 = 17 Z 18 19 20 21 22 23 24 25 26 27 28