Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_11-cv-00995/USCOURTS-azd-2_11-cv-00995-1/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Breach of Contract

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

First Horizon Home Loans, a Division of

First Tennessee Bank, N.A., 

Plaintiff, 

vs.

Centerpiece Mortgage, LLC, an Arizona

Corporation; Kirk Jungbluth, an

individual; Real Estate Research

Corporation, an Arizona corporation;

James Moore, an individual; Reliant

Appraisal Service, an Arizona

Corporation; Does I through X, and Roe

Corporations I through X, inclusive, 

Defendants. 

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No. CV-11-0995-PHX-JAT

ORDER

Pending before the Court is Plaintiff’s Motion for Default Judgment as to Centerpiece

Mortgage, LLC (Doc. 30). The Court now rules on the Motion. 

 I. BACKGROUND

On May 19, 2011, Plaintiff filed a Complaint against Defendants, alleging as follows:

Plaintiff entered into a Mortgage Broker Agreement (the “Broker Agreement”) with

Defendant Centerpiece Mortgage, LLC (“Centerpiece”) in 2005 (Doc. 1, Exhibit 1).

Pursuant to the Broker Agreement, Centerpiece brokered loans for Plaintiff. (Id. at ¶ 14).

Plaintiff alleges that thirty-two of the loans that Centerpiece brokered for it were based on

incorrect income and/or employment information. (Id.). Plaintiff further alleges that

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Defendants Jungbluth, Real Estate Research Corporation, Moore, and Reliant Appraisal

Service (the “Appraisal Defendants”) conducted appraisals on the properties brokered by

Centerpiece and consistently overvalued those appraisals. (Id. at 15). Plaintiff alleges that

the borrowers on the subject loans subsequently defaulted and the properties were foreclosed

and sold. (Id. at 16). Plaintiff alleges that it was required to purchase the subject loans

because the loans were based on incorrect income, employment information, and/or

overvaluations. (Id. at 17). Plaintiff alleges that Centerpiece is required to indemnify it for

the damages that Plaintiff has incurred as a result of the foreclosures. (Id. at 18). 

Plaintiff filed an Affidavit of Service by Private Service with the Court. (Doc. 22).

The sworn affidavit avers that Centerpiece Mortgage, LLC was served through its statutory

agent on July 30, 2011. (Id.). When Defendant Centerpiece Mortgage, LLC failed to appear

or otherwise defend the case, Plaintiff filed an Application for Entry of Default. (Doc. 23).

Thereafter, the Clerk of the Court entered default as to Defendant Centerpiece Mortgage,

LLC. (Doc. 25). Plaintiff now seeks a default judgment in the amount of $4,075,731.11, in

addition to attorneys’ fees, costs, and post-judgment interest. 

II. LEGAL STANDARD

Entry of default judgment is governed by Federal Rule of Civil Procedure 55 and is

left to the Court’s sound discretion. Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980);

Fed. R. Civ. P. 55. Because granting or denying relief is entirely within the Court’s

discretion, a defendant’s default does not automatically entitle a plaintiff to a court ordered

judgment. See id. The Court has considerable leeway as to what it may require as a

prerequisite to the entry of a default judgment, pursuant to Rule 55. The Court may consider

the following factors in exercising its discretion to award a default judgment:

(1) the possibility of prejudice to the plaintiff, (2) the merits of

plaintiff’s substantive claim, (3) the sufficiency of the

complaint, (4) the sum of money at stake in the action; (5) the

possibility of a dispute concerning material facts; (6) whether

the default was due to excusable neglect, and (7) the strong

policy underlying the Federal Rules of Civil Procedure favoring

decisions on the merits.

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Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986).

According to Federal Rule of Civil Procedure 54(b), “when multiple parties are

involved, the court may direct entry of a final judgment as to one or more, but fewer than all,

claims or parties only if the court expressly determines that there is no just reason for delay.”

Fed.R.Civ.P. 54(b) (emphasis added). “[W]here a complaint alleges that defendants are

jointly liable and one of them defaults, judgment should not be entered against the defaulting

defendant until the matter has been adjudicated with regard to all defendants.” Nielson v.

Chang, 253 F.3d 520, 532 (9th Cir. 2001) (citing Frow v. De La Vega, 82 U.S. 552, 554-55

(1872)).

Even if Defendants are not alleged to be jointly and severally liable, where defendants

have closely related defenses or are otherwise similarly situated, the Court should not enter

default judgment until the matter has been adjudicated as to all defendants. Id. at 532.

Further, judgment should not be entered against one defendant until the matter has been

adjudicated with regard to all defendants, if judgment would produce logically inconsistent

judgments in the same action. Shanghai Automation Instrument Co. v. Kuei, 194 F.Supp.2d

995, 1007-1008 (N.D. Cal. 2001) (citing Chang, 253 F.3d at 532). 

III. ANALYSIS

In this case, the Court cannot determine that there is no just reason for delay, and thus,

cannot enter default judgment against Defendant Centerpiece Mortgage, Inc. While Counts

One and Two of Plaintiff’s Complaint are alleged solely against Defendant Centerpiece

Mortgage, Inc., Counts Three and Four are alleged against all Defendants. Plaintiff alleges

that it was required to purchase the subject loans because the loans were based on incorrect

income and employment information provided by Centerpiece and/or overvaluations

provided by the other Defendants. Accordingly, the claims against Centerpiece and the

remaining Defendants are closely related and its is possible that a judgment in favor of

Centerpiece Mortgage, Inc. at this stage in the litigation could produce inconsistent results

with a judgment when the matter has been entirely adjudicated. Further, determinations that

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the Court must necessarily make in accordance with Federal Rule of Civil Procedure

55(b)(2)(A)-(D) could more easily be made once all claims are adjudicated. 

IV. CONCLUSION

Based on the foregoing, the Court cannot find that there is no just reason for delay.

Accordingly,

IT IS ORDERED that Plaintiff’s Motion for Default Judgment as to Centerpiece

Mortgage, LLC (Doc. 30) is denied without prejudice to Plaintiff filing at the conclusion of

the lawsuit and in accordance with any other judgment entered in the case. 

DATED this 22nd day of June, 2012.

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