United States District Court, D. New Mexico
PROPOSED FINDINGS AND RECOMMENDED DISPOSITION ON
MOTION FOR DEFAULT JUDGMENT
Fashing United States Magistrate Judge
MATTER comes before the Court on plaintiff Olivia
Skenandore's Motion for Default Judgment, filed on July
31, 2018. Doc. 7. Pursuant to 28 U.S.C. § 636 and Rule
72(b) of the Federal Rules of Civil Procedure, the Honorable
District Judge Martha Vázquez referred this matter to
me for a recommended disposition. Doc. 12. Having reviewed
the briefing and relevant case law, I find that Ms.
Skenandore's motion is well-taken and recommend that the
Court GRANT it, and that the Court enter a default judgment
in favor of Ms. Skenandore as outlined below.
Olivia Skenandore is a 70-year-old retired special education
teacher who lives in Albuquerque, New Mexico. In April 2017,
Ms. Skenandore searched for an internet loan to help her make
her car payment and buy groceries. She secured a loan in the
amount of $2100 from FIP, LLC (“FIP”), a Nevada
limited liability company. FIP did not provide her with any
documents when she entered into the loan. She thought the
loan would be paid off after six months of $350 payments. FIP
did not provide her with any documents pertaining to her loan
until she requested them in early 2018. It was only then that
she learned that the terms of the loan required her to repay
$21, 000 over the course of five years.
April 25, 2018, Ms. Skenandore filed her complaint in this
Court, seeking the following relief: (1) a declaratory
judgment that her loan with FIP is void and uncollectable;
(2) injunctive relief preventing FIP from attempting to
collect on the loan and from reporting negative information
about her to any credit reporting agency; (3) actual,
statutory, and/or punitive damages; and (4) reasonable
attorney's fees and costs. Doc. 1 at 8. Ms. Skenandore
served FIP on May 15, 2018. Doc. 3 at 2. FIP's answer was
therefore due by June 5, 2018. Fed.R.Civ.P. 12(a)(1)(A)(i)
(answer due 21 days after being served with the summons and
complaint). The time to plead or otherwise respond to the
complaint has not been extended by agreement of the parties
or by order of the Court. To date, FIP has failed to appear,
plead, or otherwise defend in this suit.
13, 2018, Ms. Skenandore filed a Praecipe Requesting Clerk to
Enter Default. Doc. 5. On June 14, this Court entered a
Clerk's Entry of Default as to FIP. Doc. 6. On July 31,
2018, Ms. Skenandore filed this Motion for Default Judgment.
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, the clerk must
enter the party's default.” Fed.R.Civ.P. 55(a).
After the clerk has entered default, and a plaintiff applies
to a court for default judgment, a district court may enter a
default judgment. See Fed. R. Civ. P. 55(b).
entry of a default judgment is sought against a party who has
failed to plead or otherwise defend, the district court has
an affirmative duty to look into its jurisdiction both over
the subject matter and the parties.” Williams v.
Life Sav. & Loan, 802 F.2d 1200, 1203 (10th Cir.
1986). This allows the Court “to determine that it has
the power to enter the default judgment.” Id.;
see also Venable v. Haislip, 721 F.2d 297, 300 (10th
Cir. 1983) (holding that a default judgment is not
appropriate if the court does not have jurisdiction over the
subject matter and the defendant).
determining it has jurisdiction over the subject matter and
the defendant, a court must decide “whether the
unchallenged facts create a legitimate basis for the entry of
a judgment.” Greenwich Ins. Co. v. Daniel Law
Firm, No. 07-CV-02445-LTB-MJW, 2008 WL 793606, *1 (D.
Colo. Mar. 22, 2008); see also Bixler v. Foster, 596
F.3d 751, 762 (10th Cir. 2010) (“Once default is
entered, it remains for the court to consider whether the
unchallenged facts constitute a legitimate cause of action,
since a party in default does not admit mere conclusions of
law.”) (internal quotation marks and citation omitted).
Upon a motion for default judgment, a district court accepts
as true all well-pled allegations in a complaint, except
those related to proving damages. See U.S. v.
Craighead, 176 Fed.Appx. 922, 925 (10th Cir. 2006)
(unpublished). The Court must determine whether the
allegations contained in plaintiff's complaint are
sufficient to state a claim for relief. To state a claim for
relief, the complaint must contain sufficient factual matter,
accepted as true, to show that the claim is plausible on its
face. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(citing Bell Atl. Corp. v. Twombly, 550 U.S. 544
(2007)). A claim is facially plausible when the plaintiff
pleads facts that allow the court to reasonably infer that
the defendant is liable for the alleged conduct. Id.
A pleading that offers mere legal conclusions, or a
recitation of the elements of a cause of action, is
insufficient. Id. A trial court is vested with broad
discretion in deciding whether to enter a default judgment.
See Grandbouche v. Clancy, 825 F.2d 1463, 1468 (10th
Court finds that it has the subject matter and personal
jurisdiction required to enter a default judgment against
FIP. Ms. Skenandore's complaint brings claims under the
federal Truth in Lending Act, 15 U.S.C. § 1601 et
seq. (“TILA”), the federal Electronic Funds
Transfer Act, 15 U.S.C. § 1693 et seq.
(“EFTA”), the New Mexico Unfair Practices Act,
N.M. Stat. Ann. § 57-12-1 et seq.
(“UPA”), and for fraud. Thus, the Court has
federal question subject matter jurisdiction under 28 U.S.C.
§ 1331. The Court has supplemental jurisdiction over the
state law claims under 28 U.S.C. § 1367.
district court does not have personal jurisdiction over a
defendant if the defendant was not served. See
Venable, 721 F.2d at 300. A plaintiff must serve a
defendant within 90 days after the complaint is filed.
See Fed. R. Civ. P. 4(m). Ms. Skenandore timely
served FIP: she filed her complaint on April 25, 2018 and
served defendant on May 15, 2018. Docs. 1, 3. In addition,
Ms. Skenandore properly served FIP under the federal rules,
which allow service of a corporation “by delivering a
copy of the summons and of the complaint to any agent
authorized by law to receive service of process.”
Fed.R.Civ.P. 4(h)(1)(B). Ms. Skenandore had a process server
deliver the summons and complaint to Amber Rose Aparicio, the
administrative assistant for FIP's registered agent ISI,
Inc. at 321 W. Winnie Lane Ste. 104, Carson City, NV, 89703.
Doc. 3 at 2. Thus, Ms. Skenandore properly served FIP
under Rule 4.
Court may only exercise personal jurisdiction over a
non-resident defendant “who is subject to the
jurisdiction of a court of general jurisdiction in the state
where the district court is located, ” Fed.R.Civ.P.
4(k)(1)(A), and if the exercise of personal jurisdiction
comports with the due process clause of the Fourteenth
Amendment. United States v. Botefuhr, 309 F.3d 1263,
1271 (10th Cir. 2002). New Mexico's long-arm
“statute extends the jurisdictional reach of New Mexico
courts as far as constitutionally permissible.”
Tercero v. Roman Catholic Diocese, 2002-NMSC-018,
¶ 6, 132 N.M. 312, 316, 48 P.3d 50, 54 (2002).
Consequently, the Court “need not conduct a statutory
analysis apart from the due process analysis.”
Marcus Food Co. v. DiPanfilo, 671 F.3d 1159, 1166
(10th Cir. 2011) (internal citation and quotation omitted).
Process Clause requires the Court to conduct a two-step
analysis of personal jurisdiction. First, the Court must
examine whether the non-resident defendant has “minimum
contacts” with the forum state. Int'l Shoe Co.
v. Washington, 326 U.S. 310, 316 (1945). Second, if the
defendant has sufficient contacts, the Court asks whether
exercising personal jurisdiction over the defendant is
consistent with “traditional notions of fair play and
substantial justice.” Id.
“minimum contacts” requirement of due process may
be met by showing the existence of either general or specific
jurisdiction. Trierweiler v. Croxton & Trench
Holding Corp., 90 F.3d 1523, 1532 (10th Cir.
1996); see also Helicopteros Nacionales de Columbia, S.A.
v. Hall, 466 U.S. 408, 414 (1984).
General jurisdiction is based on an out-of-state
defendant's “continuous and systematic”
contacts with the forum state, . . . and does not require
that the claim be related to those contacts. Specific
jurisdiction, on the other hand, is premised on something of
a quid pro quo: in exchange for
“benefitting” from some purposive conduct
directed at the forum state, a party is deemed to consent to
the exercise of jurisdiction for claims related to those
Dudnikov v. Chalk & Vermilion Fine Arts, Inc.,
514 F.3d 1063, 1078 (10th Cir. 2008) (internal citations
omitted). Thus, “[s]uch contacts may give rise to
personal jurisdiction over a nonresident defendant either
generally, for any lawsuit, or specifically, solely for
lawsuits arising out of particular forum-related
activities.” Shrader v. Biddinger, 633 F.3d
1235, 1239 (10th Cir. 2011).
may assert specific jurisdiction “if the defendant has
purposefully directed its activities at residents of the
forum, and the litigation results from alleged injuries that
arise out of or relate to those activities.” Burger
King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985)
(internal citations and quotations omitted). In contract
cases, the Tenth Circuit has framed this inquiry as
“whether the defendant ‘purposefully availed'
itself of the privilege of conducting activities or
consummating a transaction in the forum state.”
Dudnikov, 514 F.3d at 1071. Regardless of how the
question is framed, the defendant must have purposely
established minimum contacts with the forum state such that
it “should reasonably anticipate being haled into
court” there. Burger King, 471 U.S. at 474.
Minimum Contacts/Specific Jurisdiction
FIP “purposefully availed” itself of the
privilege of conducting activities and consummating a
transaction in New Mexico, such that it is subject to
specific jurisdiction in New Mexico. Ms. Skenandore is a resident
of New Mexico who searched the internet for
“loans” and found FIP's website. Doc. 1
¶¶ 6, 18, 19. She completed an online application for
a $1000 loan. Id. ¶ 20. FIP asked Ms.
Skenandore for information about her pension with the New
Mexico Educational Retirement Board and for the account and
routing numbers for her New Mexico bank account. Id.
¶¶ 16, 21, 22, 24. As a condition for the loan, FIP
required Ms. Skenandore to preauthorize electronic funds
transfer payments from her New Mexico bank account.
Id. ¶¶ 23, 24. FIP's website
instructed Ms. Skenandore to call FIP, which she did.
Id. ¶¶ 25, 26. She also faxed FIP a copy
of her driver's license and provided an electronic
signature. Id. ¶ 30. FIP did not provide Ms.
Skenandore with any documents when the transaction was
consummated. Id. ¶ 31. FIP deposited the loan
into Ms. Skenandore's New Mexico bank account, and
withdrew payments from the same. Id. ¶¶
32, 33. Through these activities, FIP purposefully directed
its activities toward a resident of New Mexico, and it
reasonably could have anticipated being haled into court
Jurisdiction in these circumstances may not be avoided merely
because the defendant did not physically enter the forum
State. Although territorial presence frequently will enhance
a potential defendant's affiliation with a State and
reinforce the reasonable foreseeability of suit there, it is
an inescapable fact of modern commercial life that a
substantial amount of business is transacted solely by mail
and wire communications across state lines, thus obviating
the need for physical presence within a State in which
business is conducted. So long as a commercial actor's
efforts are “purposefully directed” toward
residents of another State, we have consistently rejected the
notion that an absence of physical contacts can defeat
personal jurisdiction there.
Burger King, 471 U.S. at 476.
Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F.Supp.
1119, 1124 (W.D. Pa. 1997), the court explained its approach
[T]he likelihood that personal jurisdiction can be
constitutionally exercised is directly proportionate to the
nature and quality of commercial activity that an entity
conducts over the Internet. This sliding scale is consistent
with well developed personal jurisdiction principles. At one
end of the spectrum are situations where a defendant clearly
does business over the Internet. If the defendant enters into
contracts with residents of a foreign jurisdiction that
involve the knowing and repeated transmission of computer
files over the Internet, personal jurisdiction is proper.
Tenth Circuit has not taken a definitive position on the
Zippo sliding-scale approach.Shrader,
633 F.3d at 1242 n.5. It has, however, cited it with
approval. See Quik Payday, Inc. v. Stork, 549 F.3d
1302, 1312 (10th Cir. 2008) (discussing one-to-one commercial
exchanges via the Internet and citing with approval
Zippo, 952 F.Supp. at 1124) (“Traditionally,
when an entity intentionally reaches beyond its boundaries to
conduct business with foreign residents, the exercise of
specific jurisdiction [by the foreign jurisdiction over that
entity] is proper. Different results should not be reached
simply because business is conducted over the
Internet.”); Soma Med. Int'l v. Standard
Chartered Bank, 196 F.3d 1292, 1296 (10th Cir. 1999)
(citing Zippo for the “the likelihood that
personal jurisdiction can be constitutionally exercised is
directly proportionate to the nature and quality of
commercial activity that an entity conducts over the
Internet”); see also Villanueva v. Account
Discovery Systems, LLC, 77 F.Supp.3d 1058, 1069 (D.
Colo. 2015) (finding that an out-of-state third-party debt
collector's withdrawal of debt payments from a Colorado
bank account over a period of nine months established
general-not just specific-jurisdiction in Colorado).
Traditional Notions of Fair Play and Substantial
Court also finds that exercising jurisdiction over FIP does
not offend “traditional notions of fair play and
substantial justice.” Int'l Shoe, 326 U.S.
at 316. In considering these notions, courts evaluate the
(1) the burden on the defendant, (2) the forum state's
interests in resolving the dispute, (3) the plaintiff's
interest in receiving convenient and effectual relief, (4)
the interstate judicial system's interest in obtaining
the most efficient resolution of controversies, and (5) the
shared interest of the several states [or foreign nations] in
furthering fundamental social policies.
Dudnikov, 514 F.3d at 1080 (internal citation and
quotation omitted). The Court addresses each of these factors
in turn. First, the Court's exercise of jurisdiction over
FIP would not create an undue burden on FIP. “[I]t is
only in highly unusual cases that inconvenience will rise to
a level of constitutional concern. . . . [I]n this age of
instant communication, . . . and modern transportation, the
burdens of litigating in a distant forum have
lessened.” Peay v. BellSouth Med. Assistance
Plan, 205 F.3d 1206, 1212-13 (10th Cir. 2000) (internal
citations and quotations omitted). Requiring FIP to travel
from Nevada to defend this action in New Mexico would not
create an undue burden.
“[s]tates have an important interest in providing a
forum in which their residents can seek redress for injuries
caused by out-of-state actors.” OMI Holdings, Inc.
v. Royal Ins. Co. of Canada, 149 F.3d 1086, 1096 (10th
Cir. 1998). Here, Ms. Skenandore lives in New Mexico, she
entered into the contract in New Mexico, her bank account is
in New Mexico, and FIP electronically withdrew funds from her
bank account located in New Mexico. Accordingly, New Mexico
has an interest in providing a forum for Ms. Skenandore to
seek redress for her alleged injuries.
third factor “hinges on whether the [p]laintiff may
receive convenient and effective relief in another forum,
” Benton v. Cameco Corp., 375 F.3d 1070, 1079
(10th Cir. 2004), and the fourth factor asks “whether
the forum state is the most efficient place to litigate the
dispute, ” id. at 1080 (internal quotations
and citation omitted). In this case, Ms. Skenandore could
receive effective, albeit less convenient, relief in Nevada.
However, New Mexico is the most efficient forum to litigate
this dispute because Ms. Skenandore resides in New Mexico,
she entered into the contract in New Mexico, and FIP is out
of state and has not responded to Ms. Skenandore's
complaint or to her motion for default judgment. Therefore,
the third and fourth factors weigh in favor of exercising
personal jurisdiction over FIP in New Mexico.
fifth factor “focuses on whether the exercise of
personal jurisdiction by [the forum] affects the substantive
social policy interests of other states.” Id.
As discussed further below, the TILA, the EFTA, and the UPA
are all designed to protect individual consumers. Exercising
personal jurisdiction over FIP where the individual consumer
was injured furthers the policy interests of all states.
Thus, after considering all the relevant factors, the Court
finds that exercising jurisdiction over FIP does not offend
“traditional notions of fair play and substantial
justice, ” and the Court may exercise personal
jurisdiction over FIP as a non-resident defendant. The Court
has both subject matter and personal jurisdiction to enter
default judgment against FIP.
Allegations in the Complaint
concluded that it has the power to enter a default judgment,
the Court next must determine whether the well-pled
allegations of the Complaint, if true, state a claim for
relief. See 10A Alan C. Wright & Arthur R.
Miller, Federal Practice and Procedure Civil, Rule 55 §
2688.1 (4th ed. 2018); Dallas Buyers Club, LLC v.
Cordova, 81 F.Supp.3d 1025, 1032 (D. Colo. 2015). The
Court accepts as true all well-pled allegations in the
complaint. See Craighead, 176 Fed.Appx. at 924
(“The defendant by his 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.”). The
Court also accepts as undisputed any facts set forth by the
moving party in affidavits and exhibits. Dallas Buyers
Club, 81 F.Supp.3d at 1032.
Violations of the TILA
the purposes of the TILA is to “assure a meaningful
disclosure of credit terms . . . to protect the consumer
against inaccurate and unfair credit billing and credit card
practices.” 15 U.S.C. § 1601(a). Congress enacted
the TILA “to aid unsophisticated consumers and to
prevent creditors from misleading consumers as to the actual
costs of financing.” In re Ramirez, 329 B.R.
727, 731 (D. Kan. 2005). The TILA sets forth rules for
disclosure of uniform terms in credit transactions between
“creditors” and “consumers.” The TILA
defines a “creditor” as
a person who both (1) regularly extends, whether in
connection with loans, sales of property or services, or
otherwise, consumer credit which is payable by agreement in
more than four installments or for which the payment of a
finance charge is or may be required, and (2) is the person
to whom the debt arising from the consumer credit transaction
is initially payable on the face of ...