U.S. Bank Trust National Association, Trustee v. Kattar et al

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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
U.S. Bank Trust, N.A.,
as Trustee of the
Dwelling Series IV Trust
v. 	Case No. 22-cv-19-JL
Darcy Kattar, et al.
REPORT AND RECOMMENDATION
The plaintiff, U.S. Bank Trust, N.A. (U.S. Bank), initiated
this interpleader action in Rockingham County Superior Court to
determine the appropriate disposition of surplus funds resulting
from a foreclosure sale of defendant Darcy Kattar’s property in
Salem, New Hampshire. 	U.S. Bank named as defendants individuals
and entities believed to have an interest in the surplus funds
including former property owner, Kattar, the United States of
American through its agency the Internal Revenue Service (IRS),
Timberland Machines & Irrigation, Inc. (Timberland Machines),
and United Guaranty Residential Insurance Company (United
Guaranty). 	The IRS removed this action to this court. 	Doc.
no. 1. 	On April 13, 2022, the Clerk of Court entered default
against defendants United Guaranty and Timberland Machines.Doc.
no. 15. 	Before the court for Report and Recommendation is U.S.
Bank’s motion for default judgment against United Guaranty and
Timberland Machines. 	Doc. no. 18. 	Neither defendant has
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opposed or otherwise responded to the motion. 	For the reasons
that follow, the court recommends the motion for default
judgment be granted.
Standard of Review
After default is entered and when the amount at issue is
not a sum certain, “the party must apply to the court for a
default judgment.” 	Fed. R. Civ. P. 55(b)(2). 	Before entering a
default judgment, the court “may examine a plaintiff’s
complaint, taking all well-pleaded factual allegations as true,
to determine whether it alleges a cause of action.” 	Ramos-
Falcon v. Autoridad de Energia Electrica, 301 F.3d 1, 2 (1st
Cir. 2002) (citing Quirindongo Pacheco v. Rolon Morales, 953
F.2d 15, 16 (1st Cir. 1992)). 	The defaulting party is “taken to
have conceded the truth of the factual allegations in the
complaint . . . .” 	Ortiz-Gonzalez v. Fonovisa, 277 F.3d 59, 62
(1st Cir. 2002) (quoting Franco v. Selective Ins. Co., 184 F.3d
4, 9 n.3 (1st Cir. 1999)). 	However, “[t]he defaulting party
does not admit the legal sufficiency of [the] claims.” 	10 James
W. Moore, Moore’s Federal Practice § 55.32[1][b] (3d ed. 2013).
In short, “before entering default judgment, the court must
determine whether the admitted facts state actionable claims.”
United States v. Sullender, No. 16–cv–523–LM, 2018 WL 1368040,
at *1 (D.N.H. Mar. 16, 2018) (citation omitted).
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Background
By virtue of their default, United Guaranty and Timberland
Machines concede the following facts alleged in the complaint.
The surplus funds at issue resulted from the foreclosure
sale of property located in Salem, New Hampshire formerly owned
by Darcy Kattar. 	On April 15, 2005, Kattar obtained title to
the Property and the same day granted two mortgages to Sovereign
Bank. 	In February 2020, Santander Bank, N.A. (formerly
Sovereign Bank) assigned the first mortgage to U.S. Bank as
Trustee of the Lodge Series IV Trust. 	In October, the first
mortgage was then assigned to U.S. Bank as Trustee of the
Dwelling Series IV Trust. 	In July 2010, Santander Bank, N.A.
assigned the second mortgage to United Guaranty.
In addition to the mortgagees, other entities held an
interest in Kattar’s property. 	In 2007, Timberland Machines
recorded a Writ of Attachment on the property. 	In 2018, the
United States of America, through the IRS, recorded a federal
tax lien on the property. 	In 2020, the IRS recorded a second
tax lien.
In 2021, U.S. Bank foreclosed on the mortgage vis-a-vis a
statutory power of sale. 	U.S. Bank sold the Property to a third
party for $459,000.00. 	After crediting itself the charges and
expenses associated with the foreclosure sale, and payments of
the balance due from the mortgagor, U.S. Bank retained surplus
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funds in the amount of $97,279.19. It then initiated this
interpleader action to determine which of the parties in
interest are entitled to the surplus funds and in what amounts.
Discussion
U.S. Bank moves for entry of default judgment as to United
Guaranty and Timberland Machines to expedite this matter and
preclude the defendants from later making a claim for the
interpleaded funds. 	A copy of this motion was sent to United
Guaranty and Timberland Machines. 	Neither defendant has entered
an appearance or responded to the complaint or any pleading.
A defendant in an interpleader action who fails to respond
or otherwise assert a claim to the funds at issue, forfeits any
claim to those funds. 	See Deutsche Bank Nat'l Tr. Co. for
Ameriquest Mortg. Sec. Inc., Asset-Backed Pass-Through
Certificates, Series ARSI 2006-M3 v. Punko, No. 18-CV-10640-ADB,
2018 WL 2727901, at *2 (D. Mass. June 6, 2018); Sun Life Assur.
Co. of Canada, (U.S.) v. Conroy, 431 F. Supp. 2d 220, 227
(D.R.I. 2006). 	As defendants United Guaranty and Timberland
Machines neither appeared nor defended this action, there is no
basis to conclude that either has rights to the surplus funds.
Accordingly, and because Neither United Guaranty nor Timberland
Machines is either a minor or an incompetent person, entry of
default judgment is appropriate. 	The district judge should
grant U.S. Bank’s motion for default judgment and enter judgment
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that United Guaranty and Timberland Machines shall not be
entitled to any part of the $97,129.19 transferred to the
registry of the court.
Conclusion
For the foregoing reasons, the court recommends the
district judge grant U.S. Bank’s motion for default judgment
against defendants United Guaranty and Timberland Machines (doc,
no. 18).
Any objection to this Report and Recommendation must be
filed within fourteen days of receipt of this notice. 	See Fed.
R. Civ. P. 72(b)(2). 	The fourteen-day period may be extended
upon motion. 	Failure to file specific written objections to the
Report and Recommendation within the specified time waives the
right to appeal the district court’s order. 	See Santos-Santos
v. Torres-Centeno, 842 F.3d 163, 168 (1st Cir. 2016) (citations
omitted).
__________________________
Andrea K. Johnstone
United States Magistrate Judge
June 22, 2022
cc: 	Counsel of Record
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