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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 12-12551
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D. C. Docket No. 8:10-cv-02464-SDM-AEP
BRANCH BANKING AND TRUST COMPANY,
a North Carolina banking corporation,
as successor in interest to Colonial Bank
by asset acquisition from the FDIC as Receiver
for Colonial Bank,
Plaintiff-Appellee,
versus
LAWRENCE T. MAXWELL,
individually,
Defendant-Appellant.
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Appeal from the United States District Court
for the Middle District of Florida
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(March 19, 2013)
Before CARNES, HULL, and ANDERSON, Circuit Judges.
PER CURIAM:
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This appeal involves Maxwell’s challenge to the district court’s refusal to set
aside the default judgment against Maxwell. Maxwell makes two arguments on
appeal: first, that the district court erred in refusing to set aside the default
judgment; and second, that the district judge erred with respect to the amount of
damages (i.e., the amount of the deficiency judgment) by limiting discovery and
limiting the evidence to the fair market value of the collateral purchased by BB&T
in the foreclosure sale.
The relevant background facts can be stated concisely. BB&T sued Maxwell
as guarantor of the note secured by certain real estate. Despite proper service,
Maxwell failed to answer the complaint, which resulted in the entry of a default
judgment on January 6, 2011. On July 27, 2011, Maxwell filed a motion to set
aside the default judgment. The district court denied the motion to set aside the
default judgment as to liability, but permitted Maxwell to challenge the fair market
value of the collateral purchased by BB&T at the foreclosure sale, and held a
hearing at which evidence of the fair market value of the collateral was considered,
and the amount of the deficiency judgment determined by the district court. We
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address Maxwell’s two arguments in turn.1
DISCUSSION
A. Did the district court err in refusing to set aside the default judgment?
The appropriate standard for challenging a district court’s refusal to set aside
a default judgment was set forth in our opinion, In Re Worldwide Web Systems,
Inc., 328 F.3d 1291 (11th Cir. 2003). There, we noted that our standard of review
of a district court’s denial of a motion to set aside a default judgment was for abuse
of discretion. Id. at 1295. We set forth the appropriate standard as follows:
To establish mistake, inadvertence or excusable neglect made under
Rule 60(b)(1), a defaulting party must show that: (1) it had a
meritorious defense that might have affected the outcome; (2) granting
the motion would not result in prejudice to the non-defaulting party;
and (3) a good reason existed for failing to reply to the complaint.
Id. (quotations and citations omitted). The district court held that Maxwell had
failed to satisfy either the first prong (a meritorious defense that might have
affected the outcome), or the third prong (good reason for failing to reply to the
complaint). Maxwell challenges both rulings, and we address each in turn.
Maxwell’s position that he did assert a meritorious defense relies primarily
1
We reject BB&T’s jurisdictional argument. We believe that Maxwell’s notice of
appeal reflected an overriding intent to appeal not only the amount of the deficiency judgment,
but also the district court’s denial of his motion to set aside the default judgment with respect to
liability.
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upon his argument that the district court erred when it held that BB&T’s
allegations of ownership of the note should be deemed admitted by Maxwell’s
failure to answer or respond to the complaint. We reject Maxwell’s argument in
this regard. Paragraph 8 of the complaint alleges that BB&T was the owner of the
note by virtue of BB&T’s acquisition of the assets of Colonial Bank. We readily
conclude that the allegations of the complaint raise a reasonable inference that
BB&T is the owner of the note, and that this is all that is required under notice
pleading.2 Thus, BB&T’s ownership was deemed admitted, and Maxwell has
failed to satisfy the requirement of showing that it had a meritorious defense that
might have affected the outcome.
Although the foregoing failure of Maxwell to show a meritorious defense
would be sufficient to warrant affirming the district court’s decision denying
Maxwell’s motion, we also agree with the district court that Maxwell failed to
satisfy the third prong of the standard – i.e., Maxwell failed to demonstrate that a
good reason existed for his failure to respond to the complaint. We cannot
conclude that the district court abused its discretion in holding that Maxwell’s
2
We reject without need for discussion Maxwell’s argument that the concept of
ownership is a legal concept, and not a fact which is deemed admitted by Maxwell’s default. We
also reject without need for further discussion Maxwell’s argument that BB&T’s allegations
conflict with the exhibits attached to the complaint.
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default was not excused by the mere fact that he was at the time engaged in other
litigation. We also note that Maxwell ignored multiple notices: he ignored proper
service of process of the complaint, notice of the motion for default, and notice of
the default judgment itself.
For these reasons, we cannot conclude that the district court abused its
discretion in refusing to set aside the default judgment as to liability. We turn next
to Maxwell’s challenge to the amount of the deficiency judgment.
B. Did the district court err with respect to the amount of the deficiency
judgment by limiting discovery and evidence to the value of the
collateral?
The parties agree that our standard of review with respect to this issue is
abuse of discretion. As noted above, the district court denied Maxwell’s motion to
set aside the default judgment, but did permit Maxwell to challenge the amount of
the deficiency judgment, by challenging the price paid for the collateral by BB&T
at the foreclosure sale. The district court limited discovery and limited the
evidentiary hearing to a determination of the fair market value of the collateral at
the time of the foreclosure sale. Maxwell argues on appeal that the district court
abused its discretion in thus limiting discovery and the evidence. He argues that
the amount of the indebtedness owed (and thus the amount of the deficiency
judgment) should be reduced by any partial satisfaction of the indebtedness from
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any source. The only possible other source suggested by Maxwell is the FDIC.
Maxwell argues that, pursuant to the Shared-Loss component of the Purchase and
Assumption Agreement between BB&T and FDIC, losses incurred by BB&T with
respect to the assets acquired from Colonial Bank would be shared by FDIC. In
other words, Maxwell argues that he should have been permitted to engage in
discovery with respect to the possibility that FDIC might have made payments to
BB&T in partial satisfaction of this and other loans acquired by BB&T from
Colonial Bank.
After the district court permitted limited discovery by Maxwell focused on
the fair market value of the collateral, Maxwell did seek the expanded discovery
described above. The district court denied such expanded discover, relying in part
upon the fact that Maxwell’s motion to set aside default judgment “argued only that
the judgment was too large by [sic] the value of the property.” Docket 24, at 1.
We have carefully reviewed Maxwell’s motion to set aside the default judgment,
and we cannot conclude that the district court abused its discretion in reading that
document as arguing only that the deficiency judgment should be reduced because
BB&T paid less than fair market value for the collateral and the foreclosure sale.
We cannot conclude that the district court abused its discretion in holding that
Maxwell failed to timely raise the new argument about other sources of partial
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satisfaction of the indebtedness, and thus waived further pursuit thereof.
Moreover, the district court sensed the futility of such expanded litigation, and we
agree. If indeed the Purchase and Assumption Agreement did in fact result in
FDIC payments to BB&T allocable to losses incurred by BB&T with respect to the
subject loan, that same agreement would require BB&T to reimburse FDIC upon
BB&T’s recovery from Maxwell. Moreover, pursuant to a recent decision of this
Court, it is clear that Maxwell is not an intended third party beneficiary of the
Purchase and Assumption Agreement and therefore “lacks standing to enforce its
interpretation of that Agreement.” Interface Kanner, LLC v. JPMorgan Chase
Bank, 704 F.3d 927, 934 (11th Cir. 2013).
For the foregoing reasons,3 the judgment of the district court is
AFFIRMED.
3
The motion to take judicial notice of the Purchase and Assumption Agreement is
GRANTED. All other pending motions are DENIED.
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