United States v. Toso ( 2019 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
UNITED STATES OF AMERICA,
Plaintiff,
v. No. 17-cv-1092 (DLF)
ROBERT TOSO, et al.,
Defendants.
MEMORANDUM OPINION
Before the Court is the plaintiff’s Motion for Default Judgment, Dkt. 27. For the reasons
that follow, the Court will grant the motion.
I. BACKGROUND
The plaintiff filed this action on June 7, 2017, Dkt. 1, to collect civil penalties and interest
assessed against the defendants under 31 U.S.C. §§ 5314, 31 U.S.C. 5321, and 31 U.S.C. 3717
for their willful failure to report interests in foreign bank accounts in 2008 and 2009. Id. The
plaintiff attempted to serve each defendant but was unable to do so because the defendants had
left the country. Pl.’s Mot. for Default J. at 2, Dkt. 27-1. The defendants then signed service
waivers on February 26, 2018 that provided for an answer deadline of March 1, 2018. Dkts. 16,
17. Because the Court received the waivers after that deadline had already passed, the Court
extended the answer deadline until April 20, 2018. Minute Order of Apr. 6, 2018. The Clerk of
Court filed an entry of default as to both defendants on April 25, 2018, Dkt. 21, because they still
had not filed an answer or other response to the complaint.
Thereafter, the parties worked to “negotiate an amicable settlement of this case.” Status
Report at 2, Dkt. 26. The parties were unable to settle, and the defendants continued not to
answer or otherwise respond to the complaint. On December 7, 2018 the plaintiff filed this
motion for default judgment, Dkt. 27.
Before ruling on the plaintiff’s motion, the Court gave the defendants yet another
opportunity to respond. On December 18, 2018—when the defendants had still not responded to
the complaint or to the plaintiff’s motion for default judgment—the Court ordered the defendants
to show cause on or before January 8, 2019 as to why the Court should not enter a default
judgment in favor of the plaintiff. Minute Order of Dec. 18, 2018. As of February 4, 2019, the
defendants still have not filed any response to the complaint, the clerk’s entry of default, the
plaintiff’s motion for default judgment, or the Court’s show cause order.
II. LEGAL STANDARD
Rule 55 of the Federal Rules of Civil Procedure empowers a federal district court to enter
a default judgment against a defendant who fails to defend its case. Fed. R. Civ. P. 55(b)(2);
Keegel v. Key West & Caribbean Trading Co., 627 F.2d 372, 375 n.5 (D.C. Cir. 1980). While
federal policy generally favors resolving disputes on their merits, default judgments are
appropriate “when the adversary process has been halted because of an essentially unresponsive
party.” Mwani v. bin Laden, 417 F.3d 1, 7 (D.C. Cir. 2005) (internal quotation marks omitted).
Ultimately, “[t]he determination of whether default judgment is appropriate is committed to the
discretion of the trial court.” Int’l Painters & Allied Trades Indus. Pension Fund v. Auxier
Drywall, LLC, 531 F. Supp. 2d 56, 57 (D.D.C. 2008).
Obtaining a default judgment is a two-step process. First, the plaintiff must request that
the Clerk of Court enter default against a party who has “failed to plead or otherwise defend.”
Fed. R. Civ. P. 55(a). The Clerk’s entry of default establishes the defendant’s liability for the
well-pleaded allegations in the complaint. Boland v. Providence Constr. Corp., 304 F.R.D. 31,
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35 (D.D.C. 2014). Second, if the plaintiff's claim is not for a “sum certain,” the plaintiff must
apply to the court for a default judgment. Fed. R. Civ. P. 55(b). At that point, the plaintiff “must
prove his entitlement to the relief requested using detailed affidavits or documentary evidence on
which the court may rely.” Ventura v. L.A. Howard Constr. Co., 134 F. Supp. 3d 99, 103
(D.D.C. 2015) (alterations adopted and internal quotation marks omitted).
When ruling on a motion for default judgment, a court “is required to make an
independent determination of the sum to be awarded.” Fanning v. Permanent Sol. Indus., Inc.,
257 F.R.D. 4, 7 (D.D.C. 2009) (internal quotation marks omitted). In performing that inquiry,
the court has “considerable latitude.” Ventura, 134 F. Supp. 3d at 103 (internal quotation marks
omitted). The court may conduct a hearing to determine damages, Fed. R. Civ. P. 55(b)(2), but it
is not required to do so “as long as it ensures that there is a basis for the damages specified in the
default judgment,” Ventura, 134 F. Supp. 3d at 103 (alterations adopted and internal quotation
marks omitted).
III. ANALYSIS
Default judgment is appropriate in this case because of the “absence of any request to set
aside the default or suggestion by the defendant[s] that [they] ha[ve] a meritorious defense.”
Fanning, 257 F.R.D. at 7 (citation and internal quotation marks omitted). And due to the Clerk’s
entry of default, the defendants are deemed liable for the well-pleaded allegations in the
complaint. Boland, 304 F.R.D at 35.
Although “[t]he clerk’s entry of default alone is enough to establish the defendant’s
liability,” id., the Court still must independently determine the amount of damages. Ventura, 134
F. Supp. 3d at 103. Here, § 5321(a)(5)(C) provides for the imposition of civil penalties against
taxpayers who willfully fail to comply with § 5314(a) in the amount of the greater of $100,000 or
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50% of the balance in the relevant bank accounts at the time of the violation. This penalty is
subject to interest and further penalties under 31 U.S.C. § 3717.
In support of its motion for default judgment, the plaintiff has submitted (1) the
declaration of Sean P. O’Donnell, counsel for the plaintiff, Dkt. 27-2; and (2) the declaration of
Nancy Beasley, the assigned Foreign Bank Account Reporting Act Penalty Coordinator for the
IRS in Detroit, Michigan, Dkt. 27-3. The declarations and their accompanying exhibits, see Dkt.
27, set forth the plaintiff’s calculations, detailing the principal, interest, and penalty fees owed by
each defendant. The declarations and the entire record establish that, as of August 13, 2018,
Robert Toso owed the following amounts totaling $472,954.02:
• $388,330.00 of principal;
• $12,362.72 in interest payments; and
• $72,261.30 for assessed penalty fees.
See Dkt. 27-3, ¶¶ 3–4; Dkt. 27-6.
The declarations and the entire record further establish that, as of August 13, 2018, Marcela
Salman Toso owed the following amounts totaling $474,273.28:
• $388,330.00 of principal;
• $12,277.61 in interest payments;
• $38,620.22 for assessed penalty fees; and
• $35,045.45 of pending penalty fees.
See Dkt. 27-3, ¶¶ 5–6; Dkt. 27-7.
Therefore, pursuant to §§ 5314, 5321, and 3717, the Court concludes that the plaintiff is
entitled to a monetary judgment of $472,954.02 against Robert Toso, and a monetary judgment
of $474,273.28 against Marcela Salman Toso.
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CONCLUSION
For the foregoing reasons, the Court grants plaintiff’s Motion for Default Judgment. A
separate order consistent with this decision accompanies this memorandum opinion.
________________________
DABNEY L. FRIEDRICH
United States District Judge
February 4, 2019
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