Williams v. PBI BANK, Inc.
3:13-cv-01166
W.D. Ky.Nov 22, 2017Background
- Plaintiffs borrowed $5.25 million under a promissory note secured by mortgages; PBI Bank sued on the note and filed third-party claims against entities with claimed interests in the collateral.
- The district court granted judgment to PBI Bank on its counterclaim against Plaintiffs; remaining live issues concerned PBI Bank’s third-party claims against various entities.
- PBI Bank moved for summary judgment against all third-party defendants; no party responded to the motion and the matter was referred to Magistrate Judge Lindsay for a report and recommendation.
- Magistrate Judge Lindsay recommended granting summary judgment as to American Tax Funding and Jamos Fund I (they disclaimed interests), treating unresponsive third-party defendants under Rule 55, and denying without prejudice an order of sale request.
- The district court adopted most recommendations but, on review, found AES Realty, FTS Realty, and DES Realty had answered; FTS and DES denied any interest (summary judgment granted), AES admitted a possible interest but produced no proof (summary judgment granted against AES as well).
- PBI Bank’s separate motion to refer the entire case to the magistrate judge for final disposition was denied because the parties had not given implied consent to magistrate-judge jurisdiction for final adjudication.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether summary judgment should be entered against third-party defendants who disclaim or fail to prove an interest in the collateral | PBI: recorded mortgages secure the note; unproven or disclaimed claims are inferior or nonexistent, so summary judgment is proper | Third-party defs: some disclaimed any interest; AES asserted a possible interest but produced no recorded deed or proof | Court: Granted summary judgment against American Tax Funding, Jamos Fund I, FTS Realty, DES Realty, and AES Realty; denied as to Mitch and Sarah Taylor |
| Whether unresponsive third-party defendants must be pursued via Rule 55 default | PBI: sought summary judgment against all; impliedly treated nonrespondents the same | Nonrespondents (Mitch & Sarah Taylor): did not answer third-party complaint | Court: Rule 55 is the proper route for Mitch and Sarah Taylor; PBI may move for default judgment within 30 days |
| Whether PBI Bank’s request for an order of sale and appointment of auctioneer is properly supported | PBI: requested order of sale/auctioneer as remedy for foreclosure of collateral | Third-party defs: no responsive briefing challenging sufficiency | Court: Denied without prejudice for lack of legal support in the summary-judgment filings |
| Whether all matters may be referred to the magistrate judge for final disposition by implied consent | PBI: parties’ prior participation before Magistrate Lindsay implies consent to full magistrate jurisdiction | Third-party defs: no express consent; participation was limited to non-dispositive referrals and occasional R&Rs | Court: Denied; prior limited referrals do not constitute implied consent to final disposition by a magistrate judge |
Key Cases Cited
- Thomas v. Arn, 474 U.S. 140 (procedural default/standard for review of uncontested magistrate recommendations)
- Roell v. Withrow, 538 U.S. 580 (implied consent to magistrate jurisdiction requires awareness and full proceedings before magistrate)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (summary judgment standard and nonmoving party cannot rely on mere allegations)
- Hutchison v. C.I.T. Corp., 576 F. Supp. 1 (W.D. Ky. 1982) (recorded security interests prevail over unrecorded interests)