United States District Court, D. Minnesota
N. ERICKSEN United States District Judge
United States of America (the “Government”)
brought this action against Defendant Eddy J. Nichols
(“Nichols”) to reduce to judgment certain unpaid
federal tax, interest, and penalty assessments. (See
Compl. ¶ 1, Docket No. 1.) The Government applied for
the entry of default against Nichols, and the Clerk of Court
entered default on June 22, 2016. (See Dkt. No. 9.)
The Government now moves for entry of default judgment
against Nichols under Fed R. Civ. P. 55(b)(2). (See
Dkt. No. 10.)
Government filed the Complaint in this action on April 7,
2016 against Nichols and his former wife, Sylvia D. Nichols
(“the Nichols”). (See Compl.
¶¶ 6-7.) Nichols was personally served with summons
and the Complaint on April 11, 2016. (See Dkt. No.
5.) There is no indication Sylvia D. Nichols was served, and
the Government subsequently dismissed her from the action.
(See Dkt. No. 6.) To date, Nichols has not responded
in any way to this action, and the deadlines to answer or
otherwise respond have passed.
Complaint alleges that the Nichols filed federal income tax
returns as married filing jointly in 2002, 2003, 2004, 2005,
and 2007 (the “Tax Years”) in Minnesota. (Compl.
¶¶ 6-8.) These returns were filed late, with the
exception of the return for 2005. (Id. ¶ 8.)
After the Nichols failed to pay the income tax they owed, a
delegate of the Secretary of the Treasurymade assessments
against them for taxes, accrued interest, and penalties for
each of the Tax Years. (Id. ¶¶ 8-9.) The
Nichols then received notices of assessments and demands for
payment. (See Id. ¶ 11.) Nichols admitted these
facts upon default. See Fed. R. Civ. P. 8(b)(6).
time the Complaint was filed, the Nichols owed the Government
a total tax liability of $162, 738.69, plus statutory
interest and additions (penalties) accruing from April 5,
2016, for all Tax Years. (See Compl. ¶¶
14, 16.) Since filing this action, the Government (through
the IRS) administratively collected money from property
belonging to the Nichols. (Declaration of Kyle Kofoid
(“Kofoid Decl.”) ¶ 8, Dkt. No. 13.) These
collections satisfied the outstanding assessments for all Tax
Years except 2007. (Id.) The remaining total 2007
tax liability was $22, 534.49 as of October 28, 2016.
(Id., Ex. 6.) Statutory interest and additions
continue to accrue on this amount. (Id.)
Government served Nichols with its motion for default
judgment by mail at Nichols's last known address.
(See Dkt. No. 15.) This service was effective under
Fed.R.Civ.P. 5(b)(2)(C). Nichols has not responded to the
Government's motion for default judgment within the
deadline to do so. See D. Minn. LR 7.1(c)(2). As
such, the Government's motion is unopposed. The record
reflects that Nichols is not an infant, an incompetent
person, or currently serving in the military. (See
Declaration of LaQuita Taylor-Phillips ¶¶ 8-9, Dkt
No. 8.) Therefore, there are no preliminary hurdles to
granting default judgment in this case. See 50
U.S.C. § 3931(b); Fed.R.Civ.P. 55(b)(2).
default has been entered against a defendant, a plaintiff may
apply to the Court for the entry of default judgment.
See Fed. R. Civ. P. 55(b)(2). In evaluating such a
request, the Court may conduct hearings or make referrals
when it considers them necessary, such as when an accounting
is required or the amount of damages is uncertain. See
id.; see also Stephenson v. El-Batrawi, 524
F.3d 907, 916 (8th Cir. 2008) (“The need for a hearing
is within the sound discretion of the district court under
Fed.R.Civ.P. 55(b)(2)(B).”). A hearing or referral is
unnecessary in this case; the Government's motion can be
resolved on the papers submitted, which show the amount of
damages at stake. See Taylor v. City of Ballwin, 859
F.2d 1330, 1333 (8th Cir. 1988); United States v.
Aldrich, No. 16-CV-387 (JNE/SER), 2016 WL 5660456, at *1
(D. Minn. Sept. 28, 2016) (finding a hearing unnecessary
under similar circumstances).
considering a Rule 55 motion, the Court accepts the
allegations in the Complaint as true (except those relating
to the amount of damages) and determines “whether the
unchallenged facts constitute a legitimate cause of
action.” Murray v. Lene, 595 F.3d 868, 871
(8th Cir. 2010) (internal quotation marks omitted). The
allegations in the Complaint (as reported in Part I,
supra) establish Nichols's liability for all
unpaid tax, interest, and penalty assessments for the Tax
Years. The total amount of this liability must be
proven by evidence in the record, however. See
Stephenson, 524 F.3d at 915-16.
Government seeks default judgment in the amount of $22,
534.49, plus statutory interest and additions from October
28, 2016. (See Dkt. No. 12 at 5-6.) This figure
represents the total unpaid 2007 tax liability balance,
evidenced by an IRS record created on October 28, 2016.
(See Kofoid Decl., Ex. 6.) The balance is further
supported by a Certificate of Assessments, Payments, and
Other Specified Matters regarding the 2007 tax liability,
(see id., Ex. 5.), which is entitled to a legal
presumption of validity, see United States v.
Gerads, 999 F.2d 1255, 1256 (8th Cir. 1993). Statutory
additions continue to accrue on the balance up to certain
limits, and statutory interest accrues until full payment.
See 26 U.S.C. §§ 6601(a), 6651(a).
Therefore, the Government has proven entitlement to damages
in the amount of $22, 534.49, plus statutory interest and
additions accruing from October 28, 2016.
on the files, records, and proceedings herein, and for the
reasons stated above, IT IS ORDERED THAT:
Plaintiff United States of America's Unopposed Motion for
Default Judgment Against Defendant Eddy J. Nichols [Dkt. No.
10] is GRANTED.
Judgment is entered in favor of Plaintiff United States of
America and against Defendant Eddy J. Nichols on Count I of
the Complaint in the amount of $22, 534.49, plus statutory
interest and additions ...