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Lyons v. BAIC Inc.

United States District Court, D. South Carolina, Greenville Division

October 28, 2019

Jason Lyons, Chad Wright, Adrian Russo, Plaintiffs,
v.
BAIC Inc., VFG Inc. formerly known as Voyager Financial Group, SoBell Ridge Corp., Bradling Financial Group, Veterans Benefit Leverage, Andrew Gamber, Mark Corbett, Candy Kern-Fuller, and Upstate Law Group, Defendants. Charlotte McFerren, Billy Lee Green, Augustus Bostick, Jr., Mark Adragna, Courtney Koepf, Plaintiffs,
v.
BAIC Inc., VFG Inc. formerly known as Voyager Financial Group, SoBell Ridge Corp., Financial Products Distributors LLC, Performance Arbitrage Company, Life Funding Options Inc., Andrew Gamber, Mark Corbett, Katharine Snyder, Michelle Plant, David Woodard, Candy Kern-Fuller, and Upstate Law Group, Defendants. Life Funding Options Inc., Counter-Claimant
v.
Mark Adragna, Augustus Bostick, Jr., Billy Lee Green, Courtney Koepf, and Charlotte McFerren, Counter-Defendants.

          ORDER GRANTING PLAINTIFFS' MOTION FOR DEFAULT JUDGMENT AS TO DEFENDANTS BAIC, ANDREW GAMBER, SOBELL RIDGE CORP., VOYAGER FINANCIAL GROUP, FINANCIAL PRODUCTS DISTRIBUTORS LLC, AND DAVID WOODARD

          Donald C. Coggins, Jr. United States District Judge.

         The above-captioned matters (hereinafter, the Lyons and McFerren matters) are before the Court on Plaintiffs' Motion for Default Judgment as to Defendants BAIC, Andrew Gamber, SoBell Ridge Corp., Voyager Financial Group, Financial Products Distributors LLC, and David Woodard (collectively, the “Defaulting Defendants”), which Plaintiffs submitted as part of their combined Motion for Final Judgments. For the reasons set forth below in the Court's Findings of Fact and Conclusions of Law arising out of the above-captioned matters, Plaintiffs' motion is GRANTED.

         “[T]he Fourth Circuit has declared that, upon a plaintiff's application for default judgment, district courts have an obligation to review the complaint to determine whether the plaintiff has alleged well-pleaded facts and, assuming those well-pleaded facts are true, whether the complaint states a ‘sufficient basis' on which judgment may be entered.” Silvers v. Iredell Cty. Dep't of Soc. Servs., No. 515CV00083RLVDCK, 2016 WL 427953, at *4 (W.D. N.C. Feb. 3, 2016), aff'd, 669 Fed.Appx. 182 (4th Cir. 2016) (citation omitted). For the reasons articulated below, the Court finds that, based upon the well-pled facts that are deemed admitted, the complaints in the Lyons and McFerren matters state a basis upon which judgment should be entered in favor of the plaintiffs and against the Defaulting Defendants as a matter of law.

         For the avoidance of doubt, the Court notes that Performance Arbitrage Company, Life Funding Options Inc., Mark Corbett, Katharine Snyder, Michelle Plant, Candy Kern-Fuller, and Upstate Law Group (“Settling Defendants”) have resolved this matter without admitting liability. Nothing herein should be deemed an admission of liability by, or a finding of liability against, any of the Settling Defendants.

         Accordingly, THIS COURT HEREBY ORDERS that a default judgment shall be entered as to the Defaulting Defendants as set forth below.

         I. INTRODUCTION

         These actions were commenced by Jason Lyons, Chad Wright, Adrian Russo, Charlotte McFerren, Billy Lee Green, Augustus Bostick, Jr., Mark Adragna, and Courtney Koepf, (collectively, “Plaintiffs”). Each Defaulting Defendant was properly served via a combination of actual service of Process and by publication reasonably calculated under all circumstances to apprise Defaulting Defendants of the pendency of the action.[1] Defendants BAIC, Andrew Gamber, SoBell Ridge Corp., Voyager Financial Group failed to appear, answer, or otherwise plead. The Clerk of the Court entered default against them on March 1, 2018 (Lyons) and August 10, 2018 (McFerren). ECF 75 (Lyons); ECF 47 (McFerren).

         Defendants Financial Products Distributors LLC, and David Woodard (collectively, the “FPD Defendants”), who are both Defendants in the McFerren matter, were also subject to default due to their initial failure to appear; however, the entry of default against these Defendants was set aside by the Court upon consent of the parties when counsel for the FPD Defendants made an appearance. (ECF 61, 62 (McFerren). On May 1, 2019, counsel for the FPD Defendants filed a motion seeking to withdraw as counsel because those Defendants had failed to respond to any of his repeated communications with them since December 4, 2018 and had failed to provide information to respond to Plaintiff's discovery requests. ECF 133 (McFerren). On or about August 29, 2019, counsel for the FPD Defendants represented to counsel for Plaintiffs that the FPD Defendants still had not communicated with him. Plaintiffs sought entry of default against the FPD Defendants based on their failure to defend against the Plaintiffs' claims or otherwise engage in any proceedings since December 2018. ECF 156 (McFerren). On September 30, 2019, the Court directed the Clerk of Court to enter default judgment against the FPD Defendants based on the failure to defend or participate in the proceedings. ECF 160 (McFerren).

         Rule 55(a) of the Federal Rules of Civil Procedure provides that the clerk must enter default “[w]hen a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend.” After the clerk enters default, the party may seek a default judgment under Rule 55(b), which “authorizes the entry of a default judgment when a defendant fails ‘to plead or otherwise defend' in accordance with the Rules.” United States v. Moradi, 673 F.2d 725, 727 (4th Cir. 1982).

         Defendants Andrew Gamber and SoBell Ridge Corp., failed to appear, plead, or otherwise defend against these actions. Therefore, default judgment is procedurally appropriate as to these Defendants.

         Default judgment is also appropriate as to the FPD Defendants, who initially filed appearances through counsel and then failed to defend against the Plaintiffs' claims or otherwise engage in any proceedings for over ten months. See, e.g., Hawkins v. i-TV Digitalis Tavkozlesi, 935 F.3d 211, 217-222 (4th Cir. 2019) (affirming default judgment where the defendant had “appeared through counsel in the [ ] proceedings, only to disappear-leading to the default judgment.”).

         II. FINDINGS OF FACT AND CONCLUSIONS OF LAW

         Federal law declares that any agreements purchasing military pensions or benefits are “prohibited . . . and void from inception.” See 38 U.S.C. § 5301(a) (veteran benefits); 37 U.S.C. § 701 (noting the prohibition on assignment of military retirement pay) [hereinafter, the “Federal Anti-Assignment Acts”]; see also In re Moorhous, 108 F.3d 51, 55 (4th Cir. 1997) (“No serviceman may assign his pay in advance of the date it becomes due and payable.”) (citing United States v. Smith, 393 F.2d 318, 321 (5th Cir. 1968)). In fact, 38 U.S.C. § 5301 unequivocally states that agreements involving military compensation or pensions whereby another person “acquires for consideration the right to receive such benefit by payment of such compensation [or] pension” are “deemed to be an assignment and [are] prohibited.” 38 U.S.C. § 5301(a)(3)(A). Likewise, 37 U.S.C. § 701(c) states that the assignment of an enlisted military member's pay is prohibited. This restriction applies equally to military pension payments. See, e.g., Noak and Equity Trust Company v. Byrd, No. 6:13-AP-01078-SY, ECF No. 66, at 3, 9-10 (Bankr. C.D. Cal. Oct. 28, 2015).

         The core purpose of the Federal Anti-Assignment Acts is to ensure that retired and disabled military personnel “actually receive the benefits provide to them from being lost through either the predation of others or their own poor judgement.” Henry v. Structured Investments Co., LLC, No. 05CC00167 (Cal. Supr. Ct. Orange Cty. Sept. 7, 2011). Because of the purpose of these statutes, the Supreme Court and lower courts have recognized that Section 701 and Section 5301 must be liberally construed. See Porter v. Aetna, 370 U.S. 159, 162 (1962) (discussing predecessor to 38 U.S.C. 5301, and holding that “legislation of this type should be liberally construed . . . to protect funds granted by the Congress for the maintenance and support of the beneficiaries thereof”). Seealso In re Mary Ann Hyder-Ward, Case No. 10-20047 (Bankr. D. Me. June 23, 2010) (finding that veteran's pension payments deposited into an account are ...


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