Court Opinion

ID: 2656510
Source: CourtListenerOpinion
Date Created: 2014-03-13 05:08:03.056802+00
Date Added: 2024-06-11T12:38:15.172751
License: Public Domain

Case: 13-30907      Document: 00512558480         Page: 1    Date Filed: 03/12/2014

           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT
                                                                           United States Court of Appeals
                                                                                    Fifth Circuit

                                    No. 13-30907                                  FILED
                                  Summary Calendar                          March 12, 2014
                                                                             Lyle W. Cayce
                                                                                  Clerk
ROSE MEYER

                                                 Plaintiff-Appellant
v.

FRED M. BAYLES; JOANNE CALDWELL, FORMERLY MARRIED TO
FRED M. BAYLES; SUSAN SWINEA; ARBOR TERRACE OF LOUISIANA,
INCORPORATED,

                                                 Defendants-Appellees

                   Appeal from the United States District Court
                      for the Western District of Louisiana
                              USDC No. 3:12-CV-43

Before REAVLEY, JONES, and PRADO, Circuit Judges.
PER CURIAM:*
       This is an appeal from the district court’s order denying a motion for
default judgment and dismissing all claims. Finding no error, we AFFIRM.
       Rose Meyer sued The Arbor and Terrace Senior Center of Ruston, LLC
(“the LLC”) for discriminatory termination. When the LLC failed to appear,
Meyer obtained a default judgment in the amount of $82,333.00. Because she

       * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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                                  No. 13-30907
has been unable to collect her judgment against the LLC, Meyer brought the
present action against its principals and its successor corporation. Meyer
alleges that the successor corporation, Arbor Terrace, is a shell corporation and
that the LLC’s principals transferred the assets into the new corporation to
avoid the debt. She asserts that the defendants should be liable for the default
judgment against the LLC. The claims against two defendants, Swinea and
Caldwell, were dismissed with prejudice. The claim against Bayles was stayed
during the pendency of a bankruptcy action. Arbor Terrace never appeared.
After the court filed an intent to dismiss Arbor Terrace for failure to take
default 60 days after service, Meyer filed a motion for default judgment. The
district court denied the motion for default judgment and gave notice of its
intent sua sponte to dismiss the case in its entirety. After considering Meyer’s
supplemental brief, the district court dismissed the case with prejudice.
                          STANDARD OF REVIEW
      This court reviews a district court’s grant of a motion to dismiss de novo.
Bustos v. Martini Club Inc., 599 F.3d 458, 461 (5th Cir. 2010). A denial of a
motion to enter default judgment is reviewed for abuse of discretion.
Cambridge Toxicology Group, Inc. v. Exnicios, 495 F.3d 169, 179 (5th Cir.
2007). After 14 days have elapsed since the Clerk’s entry of default, a plaintiff
may move for default judgment under Federal Rule of Civil Procedure 55(b).
“There must be sufficient basis in the pleadings” for the entering of a default
judgment, and the court must accept the well-pleaded factual allegations in
the plaintiff’s complaint.   Nishimatsu Constr. Co. v. Houston Nat’l Bank,
515 F.2d 1200, 1206 (5th Cir. 1975).
                                 DISCUSSION
      The district court held that a default was properly entered because Arbor
Terrace failed to defend the suit by filing a sufficient answer, but it refused to
enter a default judgment. The district court determined that Meyer’s action,
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                                  No. 13-30907
while not well articulated in the complaint, most closely resembles a revocatory
action in which an obligee annuls an act of the obligor that causes the obligor’s
insolvency. See Traina v. Whitney Nat’l Bank, 109 F.3d 244, 247-48 (5th Cir.
1997). Under Louisiana law, a revocatory action requires the obligee to prove
that the transaction was “made or effected after the right of the obligee arose
and caused or increased by the obligor’s insolvency.” Id. at 247. The obligee
must also prove prejudice, injury, or damage as a result of the act. Parish Nat’l
Bank v. Wilks, 2004-1439 (La. App. 1 Cir. 8/3/05), 923 So. 2d 8, 15.
      The district court concluded that Meyer failed to carry her burden of
proving prejudice because documents offered by Meyer to prove the asset
transfer show that Kilpatrick Life Insurance Company has a preferred claim
against the property of the LLC in the amount of $5,500,000. Because there is
no evidence that Arbor Terrace’s property is worth an amount in excess of
Kilpatrick’s preferred claim, the district court concluded that Meyer has not
shown any possibility of collecting her judgment, even if the transfer had not
occurred. Accordingly, it denied the motion to enter a default judgment.
      Meyer contends that the district court abused its discretion because the
cash deed transferring the LLC’s assets to Arbor Terrace does not reference
the actual value of the assets and there was no showing that the LLC was
insolvent before the transfer. Neither of these arguments is sufficient to carry
Meyer’s affirmative burden of demonstrating that she was injured by the
transfer. The cash deed recited the assumption of the preferred Kilpatrick
claim, and the district court did not abuse its discretion in finding that Meyer
had failed to carry her burden.
      Meyer’s additional arguments are not persuasive.         She asserts that
under the same statute her complaint could be construed as an “oblique”
action, in which a creditor exercises a right belonging to the debtor in the
debtor’s name. She does not explain how construing the suit in this manner
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                                  No. 13-30907
overcomes her failure to carry her burden of proving prejudice. Additionally,
she asserts that the district court should not have dismissed the claims against
Bayles because he, unlike Arbor Terrace, had answered the complaint. Again,
this difference does not overcome Meyer’s failure to satisfy the threshold
elements of the revocatory action. Meyer’s failure to show that she was injured
by the transfer is fatal to all of her claims. The district court did not abuse its
discretion in denying the motion for default judgment, nor was it error to
dismiss the case with prejudice. The judgment is AFFIRMED.

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