United States District Court, D. Colorado
ORDER ADOPTING IN PART, ADOPTING AS MODIFIED IN PART,
AND REJECTING IN PART OCTOBER 31, 2018 RECOMMENDATION OF
MAGISTRATE JUDGE
William J. Martínez, United States District Judge
This
matter is before the Court on United States Magistrate Judge
N. Reid Neureiter's Recommendation dated October 31, 2018
(the “Recommendation”; ECF No. 237), which
recommended that this Court (1) enter default judgment in
favor of Plaintiff Richard Max Fleming
(“Plaintiff”) and against Defendant LDS Financial
Charter Services Co.; and (2) grant in part and deny in part
Plaintiff's motion for damages (“Motion for
Damages”; ECF No. 219). The Recommendation is
incorporated herein by reference. See 28 U.S.C.
§ 636(b)(1)(B); Fed.R.Civ.P. 72(b). Plaintiff filed a
timely Objection to the Recommendation
(“Objection”; ECF No. 240).
For the
reasons set forth below, the Recommendation is adopted in
part, adopted as modified in part, and rejected in part,
Plaintiff's Motion for Damages is denied, Plaintiff's
Objection is overruled, Defendant Larry Sims's improper
objection is vacated, and Plaintiff is ordered to show cause
why judgment should not be entered against him.
I.
LEGAL STANDARD
When a
magistrate judge issues a recommendation on a dispositive
matter, Federal Rule of Civil Procedure 72(b)(3) requires
that the district judge “determine de novo any
part of the magistrate judge's [recommendation] that has
been properly objected to.” An objection to a
recommendation is properly made if it is both timely and
specific. United States v. 2121 East 30th St., 73
F.3d 1057, 1059 (10th Cir. 1996). An objection is
sufficiently specific if it “enables the district judge
to focus attention on those issues-factual and legal-that are
at the heart of the parties' dispute.” Id.
In conducting its review, “[t]he district court judge
may accept, reject, or modify the recommendation; receive
further evidence; or return the matter to the magistrate
judge with instructions.” Fed.R.Civ.P. 72(b)(3).
In
considering the Recommendation, the Court is also mindful of
Plaintiff's pro se status, and accordingly,
reads his pleadings and filings liberally. Haines v.
Kerner, 404 U.S. 519, 520-21 (1972); Trackwell v.
United States, 472 F.3d 1242, 1243 (10th Cir. 2007). The
Court, however, cannot act as advocate for Plaintiff, who
must still comply with the fundamental requirements of the
Federal Rules of Civil Procedure. See Hall v.
Bellmon, 935 F.2d 1106, 1110 (10th Cir. 1991); see
also Ledbetter v. City of Topeka, 318 F.3d 1183, 1188
(10th Cir. 2003). As previously noted, Plaintiff holds
himself out as an “M.D., J.D., ” thus it appears
he has earned a law degree. (ECF No. 1 at 1.) If Plaintiff is
a lawyer, he may not be “automatically subject to the
very liberal standards afforded to a non-attorney pro
se plaintiff because an attorney is presumed to have a
knowledge of the legal system and need less protections from
the court.” Richards v. Duke Univ., 480
F.Supp.2d 222, 234 (D.D.C. 2007).
The
question addressed by the Recommendation is whether the Court
should grant default judgment. Default must enter against a
party who fails to appear or otherwise defend a lawsuit.
Fed.R.Civ.P. 55(a). Pursuant to Rule 55(b)(1), default
judgment must be entered by the Clerk of Court if the claim
is for “a sum certain”; in all other cases,
“the party must apply to the court for a default
judgment.” Fed.R.Civ.P. 55(b)(2). “[D]efault
judgment must normally be viewed as available only when the
adversary process has been halted because of an essentially
unresponsive party. In that instance, the diligent party must
be protected lest he be faced with interminable delay and
continued uncertainty as to his rights. The default judgment
remedy serves as such a protection.” In re
Rains, 946 F.2d 731, 732-33 (10th Cir. 1991) (internal
quotation marks and citation omitted).
“Even
after [entry of] default, however, it remains for the court
to consider whether the unchallenged facts constitute a
legitimate cause of action, since a party in default does not
admit mere conclusions of law.” Bricklayers &
Trowel Trades Int'l Pension Fund v. Denver Marble
Co., 2019 WL 399228, at *1 (D. Colo. Jan. 31, 2019).
Additionally, a court need not accept conclusory allegations.
Moffett v. Halliburton Energy Servs., Inc., 291 F.3d
1227, 1232 (10th Cir. 2002). Although “[s]pecific facts
are not necessary” in order to state a claim,
Erickson v. Pardus, 551 U.S. 89, 93 (2007) (quoting
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555
(2007)), the well-pleaded facts must “permit the court
to infer more than the mere possibility of misconduct.”
Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009)
(internal quotation marks omitted).
Moreover,
“entry of a default judgment is committed to the sound
discretion of the district court.” Tripodi v.
Welch, 810 F.3d 761, 764 (10th Cir. 2016); see also
Greenwich Ins. Co. v. Daniel Law Firm, 2008 WL 793606,
at *2 (D. Colo. Mar. 22, 2008) (“[A] party is not
entitled to a default judgment as of right; rather the entry
of a default judgment is entrusted to the ‘sound
judicial discretion' of the court.”). Therefore,
and in conjunction with Plaintiff's timely Objection to
the Recommendation, this Court will review the issues before
it de novo.
II.
BACKGROUND
This
dispute revolves around a $250, 000 grant and $3, 800 rental
payment Plaintiff alleges was promised to him by Defendants
LDS Financial Charter Service Co. (“LDS”),
Blactino Entertainment (“Blactino”), Larry D.
Sims (“Larry Sims”), and Jeffery Sims
(“Jeffery Sims”) (collectively,
“Defendants”). At the outset, the Court notes
that there is nothing that Plaintiff submits or that the
Court can consider in the case's current default judgment
posture that explains how the parties met, [1] what LDS and
Blactino are, how discussions about the $250, 000 grant and
$3, 800 rental payment came about, how Plaintiff came to
believe the Defendants had the resources to give Plaintiff
such funds, what is the nature of the parties'
relationship, among other things. From the Court's
perspective, the alleged contract regarding the $250, 000
grant and the $3, 800 rental payment appeared ex
nihilo on June 28, 2017.
The
record provides that on that date, LDS sent Plaintiff the
following document:
(Image
Omitted)
(The
“Grant”; ECF No. 146-1 at 4-5.)
Plaintiff
wrote on the Grant the last four digits of his social
security number, stated that he was a “heart,
cancer” doctor, and signed the document.[2] (Id.)
Plaintiff then faxed the document back to Defendants the same
day and provided them with his banking information. (ECF No.
146 at 2.) Plaintiff alleges that the Grant was for the
“licensing and promotion of breast cancer and [a] heart
disease patent.” (Id.) Plaintiff also claims
that in addition to the Grant, Defendants promised to pay for
a month of Plaintiff's apartment rent, which amounted to
$3, 800 (“Rent Payment”). (Id.) Over the
next few days, Plaintiff started sending Defendants a torrent
of e-mails and faxes inquiring about payment. (See,
e.g., ECF No. 146-1 at 7-16.)
By July
2, 2017, Defendants had not tendered any money to Plaintiff,
and instead “reported that there were power outages,
which set them behind several days.” (ECF No. 146 at
2.) Defendants “then posted on their website that
Jeffrey Sims, brother of CEO Larry D. Sims[, ] was
hospitalized.” (Id.) According to Plaintiff,
Jeffrey Sims was taken to the emergency room on July 7, 2017,
but was never hospitalized. (Id.) Plaintiff claims
to have “sent several faxes and emails to confirm the
guarantee of the [c]ontractually [a]greed to monies and on
each occasion plaintiff was assured that the error was on the
defendant's end and not the plaintiffs [sic] and
that the funds were GUARANTEED TO COME TO
PLAINTIFF.”[3] (Id. (emphasis in original).)
Plaintiff
also alleges that Larry Sims repeatedly promised to submit
the Rent Payment directly to the manager of Plaintiff's
apartment complex (the “Apartment Manager”).
(Id.) During a telephone call between Larry Sims,
Plaintiff, and the Apartment Manager, Larry Sims allegedly
promised that “he was overnighting a check for $3800
for rent payment including late fees and would send the rest
of the $250, 000 electronically the following week, but
wanted to make certain the rent would be taken care of
without delay to avoid eviction of plaintiff.”
(Id. at 3.)
On July
13, 2017, the Apartment Manager sent a fax to Larry Sims
inquiring about the funds. (Id.; see ECF
No. 146-1 at 22.) Blactino responded with a fax, stating that
Larry Sims was “unable to address this or any matter,
due to a serious car accident he was in, he or [sic]
CEO is now in a COMA, and I as is this office is trying to
retrace his action(s) so that we MAY complete
them.”[4] (Id. at 24 (emphasis in
original).) In addition, Blactino asked the property manager
for the amount of rent that it needed to pay. (Id.)
The property manager wrote on the fax her name, number, and
the amount due, and sent the document back to Blactino.
(Id.)
In
response, Jeffery Sims sent a fax to the Apartment Manager
that stated, in pertinent part, as follows:
[Blactino's Letterhead]
I have received you [sic] FAX and it was very RUDE,
you were told the FACTS of our CEO, and all you can think
about is your money...fine since you feel that you have an
AGREEMENT with Mr. [Larry] Sims/CEO, upon his issue at hand I
am in control and I have now CANCELLED the loan(s)/grant(s),
et. al, and any matter concerning that of you or [Plaintiff]
had with company...PLEASE understand DO NOT CONTACT THIS
COMPANY, BLACTINO[, ] or any of its holdings again we are
DONE. . . .
Mr. Jeffery R. Sims (Brother), Acting CEO for that of Larry
D. Sims, until he is well to proceed.
(Id. at 25 (emphasis in original).) Plaintiff claims
that this fax “breach[ed] the contract agreement of the
Grant and Rent [P]ayment monies.” (ECF No. 146 at 3.)
Moreover, Plaintiff asserts that “[p]ursuant to the
[m]edical [r]ecords departments and the E.R.s of Parkview and
St. Mary Cowin Hospitals[, ] Mr. Larry D. Sims was not and
had not been hospitalized for a coma or anything else.”
(Id. at 4.)
On July
14, 2017, Plaintiff resumed his barrage of e-mails and faxes
to Defendants, demanding funds for the Grant and Rent
Payment. (See, e.g., ECF No. 146-1 at 26-30.) Two
days later, Jeffery Sims responded saying that he had
“cancelled any and all matters [Plaintiff] had with
[Larry Sims] before his accident and any and all matters
concerning the grant/loan.” (Id. at 29
(emphasis omitted).) Plaintiff alleges that he was
“evicted for failure to pay rent after detrimentally,
reasonably, and foreseeably relying upon the guaranteed
rental payment and grant.” (ECF No. 146 at 4 (emphasis
omitted).) Plaintiff notified the Colorado Attorney
General's office, the Pueblo County District
Attorney's office, the FBI, and the website, Ripoff
Report. (Id. at 5.) According to Plaintiff,
“[D]efendants sent a fax to the rental office
threatening [P]laintiff for posting the complaint” on
Ripoff Report. (Id.)
III.
PROCEDURAL HISTORY
The
procedural history of this case is not easily summarized, but
a brief recitation of events will be helpful.[5] On July 27, 2017,
Plaintiff, proceeding pro se, filed suit against
several defendants (not entirely congruent with the current
group of Defendants) for breach of contract, promissory
estoppel, fraud, and assault. (ECF No. 1.) After being
ordered to cure certain pleading deficiencies (ECF No. 5),
Plaintiff filed an amended complaint (ECF No. 26) that
alleged that those defendants guaranteed him a grant of $250,
000 for the licensing and promotion of a patent associated
with breast cancer and heart disease research, and agreed to
make a $3, 800 rent payment for him, but failed to make
either payment. (Id. at 3-5.)
An
avalanche of filings ensued, including at least 15 motions by
Plaintiff for entry of default, default judgment, and related
relief. (See ECF Nos. 66-67, 70, 72, 78-80, 82, 84,
89, 92, 94, 99, 115.) Plaintiff was eventually given leave to
file a second amended complaint (“Second Amended
Complaint”; ECF No. 146), which he did on January 25,
2018.
The
Magistrate Judge held a Scheduling Conference on May 3, 2018,
at which Defendants were given until June 4, 2018, to answer
or otherwise respond to Plaintiff's Second Amended
Complaint.[6] (ECF No. 191 at 4.) The Magistrate Judge
also gave LDS and Blactino until June 4, 2018, to retain
counsel. (Id.) An Order to Show Cause was entered,
and a Show Cause Hearing and Status Conference was set for
June 11, 2018. (ECF No. 193.) Defendants were ordered to show
cause why default judgment should not enter against them
pursuant to Rule 55 for their failure to answer or otherwise
respond to Plaintiff's Second Amended Complaint, and for
LDS and Blactino's failure to retain counsel.
(Id.)
Defendants
did not appear on June 11, 2018 for the Show Cause Hearing,
nor did they answer or otherwise respond to Plaintiff's
Second Amended Complaint. (ECF No. 202.) Accordingly, that
day, the Magistrate Judge recommended that judgment be
entered against Defendants as a sanction for their failure to
comply with the court's orders and the federal and local
rules of civil procedure. (ECF No. 203.)
On
August 21, 2018, this Court adopted the recommendation in its
entirety, and referred the matter back to the Magistrate
Judge for a recommendation as to the scope and content of the
default judgment to be entered against the Defendants. (ECF
No. 217.) The Clerk of Court then entered a Rule 55(a)
default ...