United States District Court, D. Colorado
A. Brimmer Chief Judge
matter is before the Court on the United States’ Motion
for Default Judgment Against Kyle L. Bauer [Docket No. 27].
of the Clerk of Court’s entry of default, Docket No.
18, the allegations in plaintiff’s complaint, Docket
No. 1, are deemed admitted. Olcott v. Del. Flood
Co., 327 F.3d 1115, 1125 (10th Cir. 2003). The United
States brings this lawsuit to reduce to judgment federal tax
liabilities assessed against defendant Kyle Bauer
(“Bauer”) and to foreclose federal tax liens on
Bauer’s property, located at 749 and 751 E. 8th Street,
Akron, Colorado 80720. Docket No. 1 at 1, ¶ 1.
the time periods relevant to this case, Bauer conducted
business under the name of Bauer Construction, a sole
proprietorship. Id. at 3, ¶ 11. Based on
Bauer’s failure to file (a) a Form 1040 Individual
Income Tax Return for the tax year ending on December 31,
2002, (b) a Form 941 Employer’s Quarterly Federal Tax
Return on behalf of Bauer Construction for the quarterly tax
periods ending on December 31, 2006 and March 31, 2007, and
(c) a Form 940 Employer’s Annual Federal Unemployment
(FUTA) Tax Return on behalf of Bauer Construction for the tax
year ending on December 31, 2006, a duly authorized delegate
of the Secretary of the Treasury made assessments against
Bauer for the unpaid tax liabilities. Id. at 3-4,
¶¶ 13-20; see also Docket No. 28 at 2-3,
¶¶ 4, 6-8. According to the assessments, Bauer owes
$65, 255.64 in unpaid taxes, penalties, and interest. Docket
No. 1 at 4-5, ¶ 21.
filed this lawsuit on January 5, 2018. Docket No. 1. Count
One of the complaint seeks to reduce to judgment the unpaid
federal income tax assessments made against Bauer.
Id. at 5-6, ¶¶ 22-23. Count Two requests a
judgment against Bauer based on the unpaid federal employment
tax assessments. Id. at 6, ¶¶ 24-25. Count
Three seeks to foreclose federal tax liens on Bauer’s
property and requests a decree of sale pursuant to 26 U.S.C.
§ 7403(c). Id. at 6-7, ¶¶ 26-32.
March 30, 2018, plaintiff filed a Motion to Extend Time for
Service and to Serve By Publication [Docket No. 9], wherein
plaintiff stated that it had been unable to locate and serve
Bauer despite diligent efforts and requested leave to serve
Bauer by publication pursuant to Fed.R.Civ.P. 4(e)(1) and
Colo. R. Civ. P. 4(g). Docket No. 9 at 4-5. On April 2, 2018,
the magistrate judge granted the motion. Docket No. 11. In
addition to requiring service by publication, the magistrate
judge ordered plaintiff to mail a copy of the complaint and
summons to Bauer at 751 E. 8th Street, Akron CO 80720. Docket
No. 11 at 2. On May 24, 2018, plaintiff filed proof of
publication and a declaration verifying that plaintiff had
mailed a copy of the complaint and summons to Bauer’s
properties at 749 and 751 E. 8th Street. See Docket
Nos. 14, 15. After Bauer failed to appear in this action,
plaintiff moved for entry of default under Fed.R.Civ.P.
55(a). Docket No. 16. The Clerk of Court entered default on
June 15, 2018, Docket No. 18, and on October 22, 2018,
plaintiff filed a motion for default judgment under
Fed.R.Civ.P. 55(b). Docket No. 27.
order to obtain a judgment by default, a party must follow
the two-step process described in Fed.R.Civ.P. 55. First, the
party must seek an entry of default from the Clerk of the
Court under Rule 55(a). Second, after default has been
entered by the Clerk, the party must seek judgment under the
strictures of Rule 55(b). See Williams v. Smithson,
57 F.3d 1081, 1995 WL 365988, at *1 (10th Cir. June 20, 1995)
(unpublished table decision) (citing Meehan v. Snow,
652 F.2d 274, 276 (2d Cir. 1981)).
decision to enter default judgment is “committed to the
district court’s sound discretion.”
Olcott, 327 F.3d at 1124 (citation omitted). In
exercising that discretion, the Court considers that
“[s]trong policies favor resolution of disputes on
their merits.” Ruplinger v. Rains, 946 F.2d
731, 732 (10th Cir. 1991) (quotation and citations omitted).
“The default judgment must normally be viewed as
available only when the adversary process has been halted
because of an essentially unresponsive party.”
Id. It serves to protect plaintiffs against
“interminable delay and continued uncertainty as to his
rights.” Id. at 733. When “ruling on a
motion for default judgment, the court may rely on detailed
affidavits or documentary evidence to determine the
appropriate sum for the default judgment.” Seme v.
E&H Prof’l Sec. Co., Inc., No.
08-cv-01569-RPM- KMT, 2010 WL 1553786, at *11 (D. Colo. Mar.
may not simply sit out the litigation without consequence.
See Cessna Fin. Corp. v. Bielenberg Masonry Contracting,
Inc., 715 F.2d 1442, 1444-45 (10th Cir. 1983)
(“[A] workable system of justice requires that
litigants not be free to appear at their pleasure. We
therefore must hold parties and their attorneys to a
reasonably high standard of diligence in observing the
courts’ rules of procedure. The threat of judgment by
default serves as an incentive to meet this standard”).
One such consequence is that, upon the entry of default
against a defendant, the well-pleaded allegations in the
complaint are deemed admitted. See Charles Wright,
Arthur Miller & Mary Kane, Fed. Prac. & Proc. §
2688 (3d ed. 2010). “Even after 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.”
Id. at 63. 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) (per curiam) (quoting Bell Atl. 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 and
alteration marks omitted). Thus, even though modern rules of
pleading are somewhat forgiving, “a complaint still
must contain either direct or inferential allegations
respecting all the material elements necessary to sustain a
recovery under some viable legal theory.” Bryson v.
Gonzales, 534 F.3d 1282, 1286 (10th Cir. 2008)
(quotation and citation omitted).
addressing the merits of plaintiff’s motion for default
judgment, the Court must determine whether it has
jurisdiction over this case. See Dennis Garberg &
Assocs., Inc. v. Pack-Tech Int’l Corp., 115 F.3d
767, 772 (10th Cir. 1997) (holding that “a district
court must determine whether it has jurisdiction over the
defendant before entering judgment by default against a party
who has not appeared in the case”). The Court has
subject matter jurisdiction because this is an action by the
United States to reduce to judgment federal tax liabilities
and foreclose on federal tax liens. See 26 U.S.C.
§§ 7402(a), 7403; 28 U.S.C. §§ 1340,
1345. Regarding the issue of personal jurisdiction, plaintiff
alleges that Bauer resides in the District of Colorado.
See Docket No. 1 at 2, ¶ 4; see also United
States v. Olsen, No. 14-cv-03302-WJM-KLM, 2016 WL
322554, at *2 (D. Colo. Jan. 27, 2016). However, whether the
Court has personal jurisdiction over Bauer also depends on
whether service of process was adequate. Holcim (US) Inc.
v. Limerock Materials, LLC, No. 11-cv-00686-REB-CBS,
2012 WL 4442757, at *4 (D. Colo. Sept. 26, 2012).
on Fed.R.Civ.P. 4(e)(1) and Colo. R. Civ. P. 4(g), plaintiff
served Bauer by publication from April 18, 2018 through May
16, 2018, Docket No. 14; Docket No. 27 at 2, ¶ 4, and
mailed a copy of the complaint and summons to Bauer’s
property at 749 and 751 E. 8th Street, Akron, CO 80720.
Docket No. 15 at 1, ¶ 2; Docket No. 27 at 2, ¶ 5.
While these measures may have been adequate to perfect
service under Colo. R. Civ. P. ...