Clemson Grande Lakefront Condominiums, LLC v. First Financial Equities Commercial, LLC (In re Clemson Grande Lakefront Condominiums, LLC), 472 B.R. 703

Plaintiff Clemson Grande Lakefront Condominiums, LLC filed an adversary proceeding on January 4, 2012 seeking avoidance of a fraudulent transfer under § 548(a)(1)(B).
Defendants First Financial Equities Commercial, LLC, Transamerica Equities, LLC, and James Ludlow did not answer the complaint by the February 6, 2012 deadline.
Court ordered Plaintiff to explain lack of progress or file an affidavit of default and proposed order for judgment within 14 days, which Plaintiff did on June 1, 2012 with an Affidavit of Default and Proposed Order.
Rule 55 provides a two-step process: entry of default by the Clerk, then an application for default judgment by the court; this procedure was not followed in this case.
The court construed the Affidavit of Default as a Motion for Default Judgment but denied it because default does not alone entitle the plaintiff to judgment and proper consideration requires a hearing if necessary.
The adversary complaint asserts avoidance of a transfer under § 548(a)(1)(B) relating to a December 3, 2007 transfer of $10,000 in exchange for a $1.2 million loan; the bankruptcy petition was filed November 11, 2011.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether default judgment should be entered without proper two-step procedure.	Clemson argues default suffices for judgment.	Procedure requires a Clerk's entry of default and a separate motion for judgment.	Denied; two-step process required.
Whether the § 548(a)(1)(B) claim can support a default judgment given the lookback period.	Transfer was within lookback and may be avoidable.	Transfer occurred more than two years before petition, so no avoidance relief.	Denied; lookback period bar defeats default judgment and claim.
Whether the court should treat the Affidavit of Default as a Motion for Default Judgment.	Affidavit should be treated as a motion for default judgment.	Motion for default judgment required separate filing and procedure.	Granted treatment but ultimately denied relief.

In re Rowell, 440 B.R. 117 (Bankr.D.S.C.2010) (default alone does not guarantee judgment; court may grant after hearing)
Thanh v. Truong, 271 B.R. 738 (Bankr.D.Conn.2002) (default judgment requires appropriate showing and court involvement)
In re Beltran, 182 B.R. 820 (9th Cir. BAP 1995) (broad discretion in determining propriety of default judgments)