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Cobalt Multifamily Investors l, LLC v. Arden

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK


June 8, 2009

COBALT MULTIFAMILY INVESTORS I, LLC ET AL., PLAINTIFFS,
v.
LISA ARDEN, ET AL., DEFENDANTS.

The opinion of the court was delivered by: Kimba M. Wood, U.S.D.J.

OPINION AND ORDER

On January 22, 2009, the Receiver for plaintiffs Cobalt MultiFamily Investor I, LLC, Cobalt MultiFamily Co. I, Cobalt Capital Funding, LLC, and Vail Mountain Trust ("Plaintiffs") filed a motion seeking a default judgment against eight defendants. Six of these defendants - Mr. H. Stephen Kirschner, Ms. Susan DeSiena, Mr. Fareah Khan, Mr. Jason Miller, Mr. Brett Stitsky, and Mr. Jared Stitsky (hereinafter "the non-responding Defendants") - have failed to respond to Plaintiffs' discovery demands.*fn1

On March 11, 2009, Magistrate Judge Dolinger addressed

Plaintiffs' motion in a Report and Recommendation (the "Report"), familiarity with which is assumed. The Report recommends that a default, but not a default judgment, should be entered against the non-responding Defendants. For the foregoing reasons, the Court adopts the Report's recommendation.

I. Magistrate Judge Dolinger's Report

The Report states that since July 2008, when Plaintiffs served their first discovery request, the non-responding Defendants have failed to comply with Plaintiffs' discovery demands and the Court's orders. The Report concludes that the non-responding Defendants have "chosen not to participate in this case" despite warnings that "persistence in their course of inaction may lead to dispositive sanctions being imposed on them." (Report at 6-7.) The Report explains that the Court is justified in taking dispositive action in order to avoid the continuation of this "stalemate" that is prejudicing Plaintiffs. (Report at 7.)

The Report concludes that "a default is the only means of bringing this aspect of the current lawsuit to an equitable and efficient close," and therefore recommends that the Court issue a default against the six non-responding Defendants. (Report at 7.) The Report also recommends that the Court decline to issue a default judgment against the six non-responding Defendants, because Plaintiffs have failed to show the amount of damages each of the six non-responding Defendants owes Plaintiffs.

The Report informed the parties that, pursuant to 28 U.S.C. § 636(b)(1) and Federal Rule of Civil Procedure 72(b), they had ten days from service of the Report to file any objections.*fn2 No objections have been filed to the Report, and the time to object has expired.

II. Analysis

The Court has reviewed the Report and finds it to be well-reasoned and free of any clear error on the face of the record.*fn3

The Court agrees with the Report that "a default is the only means of bringing this aspect of the current lawsuit to an equitable and efficient close" because "no alternative and lesser sanctions are likely to resolve the impasse." (Report at 7.) The Court, therefore, adopts the Report's recommendation.


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