IN THE UNITED STATES DISTRICT COURT

 FOR THE NORTHERN DISTRICT OF INDIANA

HAMMOND DIVISION

UNITED STATES OF AMERICA, )

)

Plaintiff, )

)

v. ) Cause No. 2:16-cv-91

)

DIAMOND RESIDENTIAL )

MORTGAGE CORPORATION, )

)

Defendant. )

OPINION & ORDER

The United States seeks to enforce federal tax liens against Edwin Stillman’s

home in Valparaiso. (DE 1.) Diamond Residential Mortgage Corporation was named a

codefendant because it “may claim . . . an interest in the real property on which the

United States seeks to enforce its tax liens.” (DE 3 at 2.) The United States now seeks a

default judgment against Diamond because the company hasn’t responded to the

complaint or otherwise defended this lawsuit. (DE 19.) For the reasons below, the

United States’ motion is granted.

Background

According to the complaint, Edward Stillman withheld more than $175,000 in

Federal Insurance Contributions Act (“FICA”) taxes from the wages of Provar Industrial

Corporation employees between 2003 and 2005 but never paid it to the IRS. (DE 3 at 3.)

Stillman also allegedly failed to pay federal income taxes totaling more than $15,000 for

2012, 2013, and 2014. (Id. at 3-4.) The government recorded the FICA tax liability and
demanded payment from Stillman on March 15, 2016, and it assessed the unpaid

income taxes and demanded payment from Stillman for 2012 and 2013 on October 19,

2015 and for 2014 on November 9, 2015. (Id. at 4.) Together with accrued penalties and

interest and taking account of all payments, credits, and the like, Stillman allegedly

owes $288,181.79. (Id. at 4.)

Stillman and his wife, Monica, purchased real property at 230 East Bridgewater

Lane in Valparaiso, Indiana on June 25, 2010. (Id. at 2.) The United States filed notices of

federal tax liens on that property with the Porter County Recorder’s office in Stillman’s

name for tax periods in 2003, 2004, and 2005 starting in August 2015, and it filed notices

of those same liens in Diamond’s name on December 9, 2015. (Id. at 5-6.)

The government filed this case three months later. (DE 1.) Although Diamond

received service of the summons and amended complaint through its registered agent

on May 2, 2016, the company failed to plead or otherwise defend this action by the May

23, 2016 deadline. (DE 12.) As a result, the Clerk of the Court entered a default on

August 16, 2016 (DE 16), and the government has now moved for default judgment (DE

19). Diamond still has not appeared or responded.

Discussion

“[I]n civil cases, where a party fails to respond, after notice the court is ordinarily

justified in entering a judgment against the defaulting party, and the court has

considerable latitude in deciding whether to require plaintiff to produce evidence in

support of the claims before entering such a judgment. Bermudez v. Reid, 733 F.2d 18, 21

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(2d Cir. 1984) (citing Fed. R. Civ. P. 55(b)(2); 10 C. Wright, A. Miller, M. Kane, Federal

Practice & Procedure §§ 2685, 2688 (1983)). However, even though Diamond has failed

to challenge the facts alleged in the complaint, I still must determine whether those facts

constitute a legitimate cause of action. 

Count II of the complaint, the only count relevant to this defendant, alleges that

the United States has federal tax liens against the Valparaiso property, arising from the

FICA tax liabilities assessed against Stillman on March 15, 2006, and income tax

liabilities assessed against him on October 19, 2015, and November 9, 2015. The count

further alleges Diamond has no right, title, lien, or other interest in the Valparaiso

property. Therefore, the complaint alleges a legitimate cause of action to determine the

priority of the federal tax liens relative to any interest Diamond may have in the

Valparaiso property.

Conclusion

Accordingly, the United States’ Motion for Default Judgment (DE 19) is

GRANTED, and it is hereby ADJUDGED that the federal tax liens that arose against

Edwin L. Stillman’s property on March 15, 2006, October 19, 2015, and November 9,

2015 are superior in priority to any right, title, claim, lien, or interest held by Diamond

Residential Mortgage Company in the real property located at 239 East Bridgewater

Lane, Valparaiso, Indiana. The Clerk of Court is DIRECTED to enter default judgment

in favor of the plaintiff and against defendant Diamond Residential Mortgage

Corporation and ORDERED to send a copy of this order to Diamond Residential

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Mortgage Corporation, c/o Incorp Services, Registered Agent, 120 E. Market St., Ste.

808, Indianapolis, IN 46204.

SO ORDERED.

ENTERED: December 29, 2016.

 s/ Philip P. Simon 

CHIEF JUDGE

UNITED STATES DISTRICT COURT

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