MEMORANDUM OPINION and ORDER
EMILY C. MARKS, Chief District Judge.
I. INTRODUCTION
On October 4, 2018, Plaintiff JP Morgan Chase Bank, National Association successor by merger to Chase Manhattan Corporation ("JP Morgan"), filed this Complaint in Interpleader in the Circuit Court of Russell County, Alabama. On February 8, 2001, Defendant Tawana Gibbs ("Gibbs") executed a mortgage on 47 Fallowfield Drive, Ft. Mitchell, Alabama in favor of Perimeter Mortgage Funding Corporation.1 She also executed a second mortgage on the property in favor of Defendant United States Department of Agriculture Rural Housing Service ("USDA RHS"). Plaintiff JP Morgan foreclosed on its mortgage on May 26, 2017. As the result of the foreclosure sale, the Defendants are potentially entitled to the surplus funds in the amount of Eleven Thousand Nine Hundred Eighty-Seven dollars and twenty-two cents ($11,987.22).2
On November 8, 2018, Defendant USDA RHS removed this interpleader case from the Circuit Court of Russell County, Alabama pursuant to 28 U.S.C. § 1442(a)(1) and § 1446. Now pending before the Court are the Plaintiff's motions to discharge Plaintiff and award attorney's fees (docs. 14 & 25), and the USDA RHUS' motion for entry of default judgment against Tawana Gibbs (doc. 24) filed on January 2, 2020.
II. JURISDICTION and VENUE
This Court possesses subject matter jurisdiction over this case pursuant to 28 U.S.C. § 1442(a) and 28 U.S.C. § 1346. Personal jurisdiction and venue are uncontested.
III. FACTS
On February 8, 2001, Defendant Gibbs executed a mortgage in the amount of $20,000 on a parcel of real property in Ft. Mitchell, Alabama, in favor of Perimeter Mortgage Funding Corporation. (Doc. 1, Ex. B). On the same day, Gibbs executed a second mortgage in the amount of $57,500 on the property in the favor Defendant USDA RHS. (Doc. 1, Ex. C). On June 7, 2001, Perimeter Mortgage Funding assigned Gibbs' first mortgage to Plaintiff Chase Manhattan Mortgage Corporation.
On May 26, 2017, Chase Manhattan foreclosed on the property, and sold the property for $38,000.00. After the foreclosure sale, there was an excess balance of Eleven Thousand Nine Hundred Eighty-Seven dollars and thirteen cents ($11,987.13) that was interpleaded into the registry of the Circuit Court of Russell County.
IV. DISCUSSION
A. Motion to Discharge. The Plaintiff deposited into the registry of the Court Eleven Thousand Nine Hundred Eighty-Seven dollars and twenty-two cents ($11,987.22) (doc.13) which constitute the surplus funds from the foreclosure sale. JP Morgan now moves for discharge and an award of attorney's fees. (Docs. 14 & 25).
Interpleader is the means by which an innocent stakeholder, who typically claims no interest in an asset and does not know the asset's rightful owner, avoids multiple liability by asking the court to determine the asset's rightful owner. A successful interpleader suit results in the entry of discharge judgment on behalf of the stakeholder; once the stakeholder turns the asset over to the registry of the court, all legal obligations to the asset's claimants are satisfied.
In re Mandalay Shores Co-op, Housing Ass'n, Inc., 21 F.3d 380, 383 (11th Cir. 1994). See also, Prudential Life Ins. Co. of Am. v. Hearndon, 2019 WL 5592470, *1 (M.D. Fla. 2019); Life Ins. Co. of N. Am. v. Williams, 2015 WL 10961833, *2 (N.D. Ga. 2015).
An interpleader action proceeds in two stages. First, the Court must determine "whether interpleader is proper and whether to discharge the stakeholder from further liability to the claimants. At the second stage, the court evaluates the respective rights of the claimants to the interpleaded funds." Unum Life Ins. Co. of Am. v. Smith, 2018 WL 1977257, *2 (M.D. Ala. 2018).
The Court concludes that interpleader is proper because there are two potential claimants to the surplus funds: defendant Gibbs and defendant USDA RHS. At this juncture, the Plaintiff has interpleaded the funds into the Court's registry and has satisfied its obligations with respect to the surplus funds. Moreover, the USDA RHS does not oppose the Plaintiff's discharge. (Doc. 17). Accordingly, the Court will grant the Plaintiff's motions to discharge.
Prior to turning to the second stage to determine which defendant is entitled to the surplus funds, the Court will resolve the Plaintiff's request for attorney's fees. The Plaintiff seeks an award of attorney's fees in the amount of $3,623.29. "A district court has the discretionary authority to award attorney's fees and costs to a plaintiff in an interpleader action." Americo Fin. Life & Annuity Ins. Co. v. Bonner, 2006 WL 8434116, *3 (N.D. Ga. 2006). In this Circuit, an award of attorney's fees is not warranted "when a stakeholder's interpleader action arises out of the normal course of business." In re Mandalay Shores Co-op, 21 F.3d at 383. See also Unum Life Ins. Co., 2018 WL 1977257 at *4 ("the Court has discretion in whether to award attorney's fees particularly with respect to cases where the stakeholder is a bank or insurance company.") (emphasis in original). For banks and insurance companies, interpleader actions "arise with some modicum of regularity." In re Mandalay Shores Co-op, 21 F.3d at 383. Because this interpleader action arises out of a defaulted mortgage, JP Morgan reasonably could have expected that costs might be incurred in the servicing of the mortgage. The Court concludes that because servicing mortgages, and in particular defaulting mortgages, are part of the ordinary and normal course of business for a bank, the award of attorney's fees in this case is not appropriate.
B. Default Judgment. The Court now turns to the second stage of the analysis to "evaluate[] the respective rights of the claimants to the interpleaded funds." Unum Life Ins. Co., 2018 WL 1977257 at *2. See also Prudential Ins. Co. of Am., 2019 WL 5592470 at *1. The USDA RHS asserts that it is entitled to a default judgment against defendant Gibbs and claims entitlement to the entire amount of the interpleaded funds in this case.
Federal Rule of Civil Procedure 55 governs the procedure for obtaining a default judgment. When a defendant "has failed to plead or otherwise defend," and the failure is demonstrated, the clerk must enter the defendant's default. FED. R. CIV. P. 55(a). The Clerk of Court must enter default when "a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise . . . ." (Id.). After entry of default, a "party must apply to the court for a default judgment." FED. R. CIV. P. 55(b)(2).
Once a default has been entered, "[t]he defendant, by h[er] default, admits the plaintiff's well-pleaded allegations of fact, is concluded on those facts by the judgment, and is barred from contesting on appeal the facts thus established." Nishimatsu v. Const. Co., Ltd. v. Houston Nat. Bank, 515 F.2d 1200, 1206 (5th Cir. 1975). A district court need not hold a hearing to determine damages when "all essential evidence is already of record." S.E.C. v. Smyth, 420 F.3d 1225, 1231-32 & n.13 (11th Cir. 2005). "Given its permissive language, Rule 55(b)(2) does not require a damages hearing in every case." Giovanno v. Fabec, 804 F.3d 1361, 1366 (11th Cir. 2015).
Moreover, an interpleader defendant may seek a default judgment against an interpleader co-defendant who has failed to respond to a complaint in interpleader. See Gulf Coast Galvanizing, Inc. v. Steel Sales, Co., Inc., 826 F.Supp. 197, 201 (S.D. Miss. 1993); Sun Life Assur. Co. of Canada, (U.S.) v. Conroy, 431 F.Supp.2d 220, 226 (D. R.I. 2006). And, "[a] named interpleader defendant who fails to answer the interpleader complaint and assert a claim to the res forfeits any claim of entitlement that might have been asserted." Sun Life Assur. Co. of Canada, 431 F.Supp.2d at 226.
JP Morgan interpleaded the sum of Eleven Thousand Nine Hundred Eighty-Seven dollars and twenty-two cents ($11,987.22) into the registry of this Court. (Doc. 13). The Plaintiff served Defendant Gibbs on October 12, 2018. (Doc. 20). To date, Defendant Gibbs has failed to appear, answer, or otherwise defend this action. On December 11, 2019, the Clerk filed the Entry of Default against Defendant Gibbs as required by Rule 55(a) of the Federal Rules of Civil Procedure. (Doc. 23). The USDA RHS seeks a default judgment against Defendant Gibbs (doc. 24) and seeks an award of the surplus funds interpleaded in this case.
In support of its motion for default judgment, in addition to the allegations in the complaint and contained in the state court record, the USDA RHS submits an affidavit of Stephen D. Wadsworth, an Assistant United States Attorney for the Middle District of Alabama. In this affidavit, Wadsworth attests that Defendant Gibbs has failed to appear, answer, or otherwise defend this action; that Gibbs is not a minor or incompetent; and that the USDA RHS is entitled to the full amount interpleaded in this matter. JP Morgan's allegations in the complaint and the attached documentations provide a sufficient basis for the Court to enter default judgment against Gibbs. By failing to assert a claim, Gibbs has forfeited any claim to the interpleaded funds, and the USDA RHS is entitled to default judgment in its favor. The motion for default judgment, is therefore, due to be granted.
The USDA RHS, as the sole remaining non-defaulting defendant, is entitled to an award of the surplus funds. See Nationwide Mut. Fire Ins. Co. v. Eason, 736 F.2d 130, 133 n.4 (4th Cir. 1984) ("Clearly, if all but one named interpleader defendant defaulted, the remaining defendant would be entitled to the fund.")
V. CONCLUSION
Accordingly, for the reasons as stated, it is
ORDERED as follows that:
1. JP Morgan's motions to discharge Plaintiff (docs. 14 & 25) are GRANTED. JP Morgan is DISCHARGED from this case and dismissed with prejudice.
2. JP Morgan's motions for an award of attorney's fees (docs. 14 & 25) are DENIED.
3. the USDA RHS's motion for entry of default judgment against Tawana Gibbs (doc. 24) is GRANTED and the Clerk of the Court is DIRECTED to enter default judgment against defendant Gibbs on JP Morgan's interpleader complaint.
4. the Clerk of the Court, without further notice, is DIRECTED and AUTHORIZED to draw a check on the funds on deposit in the Commercial Registry Account and DISBURSE just compensation, in the principal sum of Eleven Thousand Nine Hundred Eighty-Seven dollars and twenty-two cents ($11,987.22), plus 90% of accrued interest, in a check payable to the United States Treasury. Said check should be mailed to Stephen D. Wadsworth, Assistant United States Attorney, at P.O. Box 197, Montgomery, Alabama 36101. The balance of 10% of accrued interest shall be paid to the U.S. Treasury as a handling fee pursuant to 28 U.S.C. § 1914(b) and FRDOC91-26415 reported at 56 Fed. Reg. 56356 and directions received from the Administrative Office of the U.S. Courts on February 7, 1992. It is further
ORDERED that upon disbursement of the interpleader funds, final judgment will be entered.
A copy of this checklist is available at the website for the USCA, 11th Circuit at www.ca11.uscourts.gov Effective on December 1, 2013, the fee to file an appeal is $505.00
CIVIL APPEALS JURISDICTION CHECKLIST
1. Appealable Orders: Courts of Appeals have jurisdiction conferred and strictly limited by statute:
(a) Appeals from final orders pursuant to 28 U.S.C. § 1291: Final orders and judgments of district courts, or final orders of bankruptcy courts which have been appealed to and fully resolved by a district court under 28 U.S.C. § 158, generally are appealable. A final decision is one that "ends the litigation on the merits and leaves nothing for the court to do but execute the judgment." Pitney Bowes, Inc. v. Mestre, 701 F.2d 1365, 1368 (11th Cir. 1983) (citing Catlin v. United States, 324 U.S. 229, 233, 65 S.Ct. 631, 633, 89 S.Ct. 911 (1945)). A magistrate judge's report and recommendation is not final and appealable until judgment thereon is entered by a district court judge. 28 U.S.C. § 636(b); Perez-Priego v. Alachua County Clerk of Court, 148 F.3d 1272 (11th Cir. 1998). However, under 28 U.S.C. § 636(c)(3), the Courts of Appeals have jurisdiction over an appeal from a final judgment entered by a magistrate judge, but only if the parties consented to the magistrate's jurisdiction. McNab v. J & J Marine, Inc., 240 F.3d 1326, 1327-28 (11th Cir. 2001).
(b) In cases involving multiple parties or multiple claims, a judgment as to fewer than all parties or all claims is not a final, appealable decision unless the district court has certified the judgment for immediate review under Fed.R.Civ.P. 54(b). Williams v. Bishop, 732 F.2d 885, 885-86 (11th Cir. 1984). A judgment which resolves all issues except matters, such as attorneys' fees and costs, that are collateral to the merits, is immediately appealable. Budinich v. Becton Dickinson & Co., 486 U.S. 196, 201, 108 S.Ct. 1717, 1721-22, 100 L.Ed.2d 178 (1988); LaChance v. Duffy's Draft House, Inc., 146 F.3d 832, 837 (11th Cir. 1998).
(c) Appeals pursuant to 28 U.S.C. § 1292(a): Under this section, appeals are permitted from the following types of orders:
i. Orders granting, continuing, modifying, refusing or dissolving injunctions, or refusing to dissolve or modify injunctions; However, interlocutory appeals from orders denying temporary restraining orders are not permitted. McDougald v. Jenson, 786 F.2d 1465, 1472-73 (11th Cir. 1986);
ii. Orders appointing receivers or refusing to wind up receiverships; and
iii. Orders determining the rights and liabilities of parties in admiralty cases.
(d) Appeals pursuant to 28 U.S.C. § 1292(b) and Fed.R.App.P. 5: The certification specified in 28 U.S.C. § 1292(b) must be obtained before a petition for permission to appeal is filed in the Court of Appeals. The district court's denial of a motion for certification is not itself appealable.
(e) Appeals pursuant to judicially created exceptions to the finality rule: Limited exceptions are discussed in cases including, but not limited to: Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 546, 69 S.Ct. 1221, 1225-26, 93 S.Ct. 1528 (1949); Atlantic Fed. Sav. & Loan Ass'n v. Blythe Eastman Paine Webber, Inc., 890 F.2d 371, 376 (11th Cir. 1989); Gillespie v. United States Steel Corp., 379 U.S. 148, 157, 85 S.Ct. 308, 312, 13 L.Ed.2d 199 (1964).
2. Time for Filing: The timely filing of a notice of appeal is mandatory and jurisdictional. Rinaldo v. Corbett, 256 F.3d 1276, 1278 (11th Cir. 2001). In civil cases, Fed.R.App.P. 4(a) and (c) set the following time limits:
(a) Fed.R.App.P. 4(a)(1): A notice of appeal in compliance with the requirements set forth in Fed.R.App.P. 3 must be filed in the district court within 30 days after the order or judgment appealed from is entered. However, if the United States or an officer or agency thereof is a party, the notice of appeal must be filed in the district court within 60 days after such entry. THE NOTICE MUST BE RECEIVED AND FILED IN THE DISTRICT COURT NO LATER THAN THE LAST DAY OF THE APPEAL PERIOD — no additional days are provided for mailing. Special filing provisions for inmates are discussed below.
(b) Fed.R.App.P. 4(a)(3): "If one party timely files a notice of appeal, any other party may file a notice of appeal within 14 days after the date when the first notice was filed, or within the time otherwise prescribed by this Rule 4(a), whichever period ends later."
(c) Fed.R.App.P. 4(a)(4): If any party makes a timely motion in the district court under the Federal Rules of Civil Procedure of a type specified in this rule, the time for appeal for all parties runs from the date of entry of the order disposing of the last such timely filed motion.
(d) Fed.R.App.P. 4(a)(5) and 4(a)(6): Under certain limited circumstances, the district court may extend or reopen the time to file a notice of appeal. Under Rule 4(a)(5), the time may be extended if a motion for an extension is filed within 30 days after expiration of the time otherwise provided to file a notice of appeal, upon a showing of excusable neglect or good cause. Under Rule 4(a)(6), the time to file an appeal may be reopened if the district court finds, upon motion, that the following conditions are satisfied: the moving party did not receive notice of the entry of the judgment or order within 21 days after entry; the motion is filed within 180 days after the judgment or order is entered or within 14 days after the moving party receives notice, whichever is earlier; and no party would be prejudiced by the reopening.
(e) Fed.R.App.P. 4(c): If an inmate confined to an institution files a notice of appeal in either a civil case or a criminal case, the notice of appeal is timely if it is deposited in the institution's internal mail system on or before the last day for filing. Timely filing may be shown by a declaration in compliance with 28 U.S.C. § 1746 or a notarized statement, either of which must set forth the date of deposit and state that first-class postage has been prepaid.
3. Format of the notice of appeal: Form 1, Appendix of Forms to the Federal Rules of Appellate Procedure, is a suitable format. See also Fed.R.App.P. 3(c). A pro se notice of appeal must be signed by the appellant.
4. Effect of a notice of appeal: A district court lacks jurisdiction, i.e., authority, to act after the filing of a timely notice of appeal, except for actions in aid of appellate jurisdiction or to rule on a timely motion of the type specified in Fed.R.App.P. 4(a)(4).
