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United States v. Gentry

United States District Court, N.D. Mississippi, Aberdeen Division

September 2, 2014

UNITED STATES OF AMERICA, Plaintiff,
v.
BILLY MIKE GENTRY, Defendant.

ORDER GRANTING MOTION TO SET ASIDE DEFAULT JUDGMENT

SHARION AYCOCK, District Judge.

Presently before the Court is Defendant's Motion to Set Aside Default Judgment [17]. Upon due consideration, the Court finds that the motion is well taken and should be granted.

A. Factual and Procedural Background

Defendant Billy Mike Gentry is a livestock dealer and market agency located in Houston, Mississippi. Gentry has been engaged in the practice of purchasing livestock on behalf of himself and others for a number of years.

Under the Packers and Stockyards Act of 1921 ("the Act"), Gentry is required to register with the United States Department of Agriculture ("USDA") and post a reasonable bond to secure his performance. In 1990, Gentry purchased livestock but failed to pay the full purchase price when due, in violation of the Act. The Packers and Stockyards Administration then initiated an administrative action against him. Gentry was assessed a civil monetary penalty of $4, 000 and ordered to cease and desist from engaging in any business governed by the Act without maintaining a reasonable bond or equivalent.

In 2001, the USDA initiated another administrative action against Gentry. The ALJ subsequently found, by reason of Gentry's default, that Gentry had been informed that his $10, 000 bond was inadequate, that a $75, 000 bond was required, and that Gentry disregarded such notice and continued to operate as a dealer and market agency without increasing his bond coverage. As a result, the ALJ imposed a $5, 000 monetary penalty and ordered Gentry to cease and desist all such activities until he maintained and filed an adequate bond.

Gentry did not, however, increase his coverage, continuing instead to operate with only a $10, 000 bond. Additionally, Gentry underreported the cost of livestock he purchased. In response, the USDA filed a third administrative complaint against him, alleging that Gentry violated the Act by failing to file an accurate annual report. Gentry was served the complaint, but he failed to respond, and ultimately, default was entered against him. An administrative order, again suspending Gentry from purchasing livestock without filing and maintaining adequate bond coverage, was issued. Gentry sought to appeal the decision, but the attempt was subsequently dismissed for procedural deficiencies. The 2008 administrative order therefore became effective on March 18, 2009.

On October 11, 2012, the Government filed a complaint against Defendant based on his failure to comply with the administrative order. The complaint alleged that Gentry purchased livestock at least thirty times between March and April 2009 and at least sixty-nine times between January and March 2011. At the time of the complaint, Gentry still had not increased his bond coverage to $75, 000, as required by the 2008 administrative order.

Defendant was personally served with process on October 26, 2012, to which he did not respond. Accordingly, the Clerk granted Plaintiff's Motion for Entry of Default [6] due to Defendant's failure to "plead or otherwise defend...." FED. R. CIV. P. 55(a).

On July 1, 2013, the Government moved for default judgment. Gentry again failed to respond, and the Court set a motion hearing, which was held on December 17, 2013. Although Gentry was provided notice of the hearing, he failed to appear. Following the hearing, the Court granted default judgment for Government, awarding $945, 250 plus interest. The Court also enjoined Gentry from operating as a dealer or market agency until he increased his bond coverage to the full amount required under the regulations and until he re-registered with USDA as required by the 2008 administrative order.

On February 14, 2014, Defendant filed a Motion to Set Aside Default Judgment. Gentry argues the "good cause" analysis under Rule 60(b)(1) weighs in favor of setting aside the default judgment; that the judgment grants relief not requested in the complaint in violation of Rule 8(a)(3) and Rule 54(c); and that the judgment constitutes an excessive fine under the Eighth Amendment. The Government filed a response in opposition to Defendant's Motion, to which Defendant replied.

B. Standard and Analysis

Federal courts have the authority under Rule 55 to enter a default judgment. But this is "a drastic remedy not favored by the Federal Rules and resorted to by courts only in extreme situations." Sun Bank of Ocala v. Pelican Homestead & Sav. Ass'n , 874 F.2d 274, 276 (5th Cir. 1989). Indeed, federal courts universally prefer a trial on its merits. In re Dierschke , 975 F.2d 181, 183 (5th Cir. 1992).

The decision of whether to set aside a default lies within the sound discretion of the district court. Id . It may relieve a party from a final judgment, order, or proceeding for "mistake, inadvertence, surprise, or excusable neglect." FED. R. CIV. P. 60(b)(1). Where a party seeks to set aside a default judgment, the Court examines three main factors: (1) whether the default was willful, (2) whether setting aside the judgment would prejudice the adversary, and (3) whether the defendant has presented a meritorious defense. In re OCA, Inc. , 551 F.3d 359, 369 (5th Cir. 2008). These factors are not talismanic, however, and "[c]ourts have been careful to avoid treating them as though they were exclusive, relying on such other factors including: (1) whether the public ...


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