United States District Court, D. New Jersey
United States filed this action to collect unpaid gift taxes,
interest, and penalties for tax year 2004 from defendant the
Estate of Sidney Elson (the "Estate"), as well as
others. This matter comes before the Court on the unopposed
motion of the United States for entry of default judgment
against the Estate only. (DE 30) For the reasons stated
herein, the motion will be granted and a default judgment
will be entered pursuant to Fed.R.Civ.P. 55(b).
entry of a default judgment is left primarily to the
discretion of the district court." Hritz u. Woma
Corp., 732 F.2d 1178, 1180 (3d Cir. 1984) (citing
Tozer v. Charles A. Krause Milling Co., 189 F.2d
242, 244 (3d Cir. 1951)). Because the entry of a default
judgment prevents the resolution of claims on the merits,
"this court does not favor entry of defaults and default
judgments." United States v. $55, 518.05 in U.S.
Currency, 728 F.2d 192, 194 (3d Cir. 1984). Thus, before
entering default judgment, the Court must determine whether
the "unchallenged facts constitute a legitimate cause of
action" so that default judgment would be permissible.
DirecTV, Inc. v. Asher, 2006 WL 680533, at *1
(D.N.J. Mar. 14, 2006) (citing Wright, Miller, Kane, 10A Fed.
Prac. & P. Civil 3d § 2688, at 58-59, 63).
are deemed to have admitted the factual allegations of die
Complaint by virtue of their default, except those factual
allegations related to the amount of damages." Doe
v. Simone, 2013 WL 3772532, at *2 (D.N.J. July 17,
2013). While "courts must accept the plaintiffs
well-pleaded factual allegations as true," they
"need not accept the plaintiffs factual allegations
regarding damages as true." Id. (citing
Chanel, Inc. v. Gordashevsky, 558 F.Supp.2d 532, 536
Prerequisites for Entry of Default Judgment
a court may enter default judgment against a defendant, the
plaintiff must have properly served the summons and
complaint, and the defendant must have failed to file an
answer or otherwise respond to the complaint within 21-day
time period provided by die Federal Rules. See Gold Kist,
Inc. v. Laurinburg Oil Co., Inc., 756 F.2d 14, 18-19 (3d
Complaint, filed on July 3, 2018, seeks to collect gift
taxes, interest, and penalties assessed against die Estate.
(DE 1} The United States has filed proof that on July 9,
2018, the Summons and Complaint were personally served on die
Executrix for the Estate. (DE 4) See Fed. R. Civ. P.
4(e). The Estate had 21 days to file an answer or otherwise
respond. Fed.R.Civ.P. 12(a). No answer or other responsive
pleading appears on die court's docket.
clerk entered default on August 15, 2018. (DE 28 and
following entry) The United States filed its motion for a
default judgment on August 22, 2018. (DE 30) There has been
no response to die motion.
I am satisfied that the prerequisites to filing a default
judgment are met. See Gold Kist, 756 F.2d at 18-19.
Three Factor Analysis
die prerequisites have been satisfied, a court must evaluate
the following three factors: "(1) whether the party
subject to default has a meritorious defense, (2) the
prejudice suffered by the party seeking default, and (3) the
culpability of the party subject to default." Doug
Brady, Inc. v. N.J. Bldg. Laborers Statewide Funds, 250
F.R.D. 171, 177 (D.N.J. 2008) (citing Emcasco Ins. Co. v.
Sambrick, 834 F.2d 71, 74 (3d Cir. 1987)). Those
factors, considered in light of the record of this case,
weigh in favor of entry of a default judgment.
evaluation of the first factor is always complicated by the
defendant's failure to answer or to oppose the motion. My
independent review of the case File, however, does not
suggest that the claims are legally flawed or that the Estate
could mount a meritorious defense. See Doe, 2013 WL
3772532, at *5. Accepting the allegations in the Complaint as
true, Comdyne I, Inc. v. Corbin, 908 F.2d 1142, 1149
(3d Cir. 1990), I find that the complaint states a viable
claim for relief as against the defendant.
Elson made various gifts in 2004. (Cplt. ¶ 11) He did
not file a gift tax return; after his death, the Executrix of
the Estate did so, and the return was audited by the IRS.
(Cplt. ¶¶ 12, 13, 14) On May 2, 2011, a delegate of
the Secretary of the Treasury assessed gift taxes against the
Estate for tax year 2004. (Cplt. ¶ 15; Declaration of
Michele Hornby ("Hornby Dec") Ex. A, DE 30-3)
Notice and demand were duly served on the Estate. (Cplt.
¶ 17; Hornby Dec. ¶ 5) Payments ...