Brown et al v. Tennison et al

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Magistrate Judge S. Kato Crews
Civil Action No. 19-cv-00941-RM-SKC
DENNIS L. BROWN,
PAUL D. BROWN,
Plaintiffs,
v.
BRADLEY J. TENNISON,
FREDERICK ARIAS,
WAYNE EDWARD BELL,
TENNISON INVESTMENTS, INC.,
SHIELD DEFENSE SYSTEMS, INC.,
THE JOSEPH PROJECT, and,
JOHN DOES NUMBERS ONE THROUGH THREE,
Defendants.
ORDER DENYING MOTION FOR SANCTIONS [DKT. 109]
This order addresses Plaintiffs’ April 4, 2021 Motion for Sanctions for Failure
to Disclose Against Defendants Bradley J. Tennison and Tennison Investments, Inc.
[Dkt. 109]. The Motion was referred to the magistrate judge. [Dkt. 111.] No response
opposing the Motion was filed. The Court has reviewed the Motion, the docket, and
applicable law. No hearing is needed.
The Motion seeks sanctions against Mr. Tennison and Tennison Investments
under Fed. R. Civ. P. 37(c) for their failure to answer or otherwise respond to the
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Complaint, and their failure to serve Plaintiffs with disclosures under Fed. R. Civ. P.
26. The Motion is DENIED because the Clerk of Court entered default under Fed. R.
Civ. P. 55(a) against the Tennison Defendants on March 25, 2021 [Dkt. 105].
Plaintiffs filed a Motion for Entry of Default against the Tennison Defendants
on March 25, 2021. [Dkt. 103.] That motion requested the Clerk’s entry of default
against the Tennison Defendants due to their “failure to plead or otherwise defend
this action against them,” relying on much, if not all, of the same conduct by the
Tennison Defendants pleaded in support of the Motion for Sanctions. [Compare Dkt.
109 with Dkt. 103.]
In relevant part, the Motion for Sanctions complains the Tennison Defendants
have failed to file an answer to the Complaint or serve their initial disclosures. [Dkt.
109, ¶¶17-20.] It specifies that Plaintiffs seek an order sanctioning these Defendants
by:
1. 	ordering the Tennison Defendants to disclose to Plaintiffs, all
documents, 	communications, 	recordings 	and 	other 	tangible
things, along with any devices (or identical copies of such devices)
containing such materials, that relate to the subject matter of
Plaintiffs’ Complaint (ECF No. 1) and the claims and defenses in
this case, including but not limited to any and all materials
relating to the funds Plaintiffs invested, The Joseph Project, The
Destiny Trust and any individuals or entities, whether named or
unnamed, in the Complaint or affiliated with the foregoing . . .;
2. 	ordering that the foregoing shall be disclosed to Plaintiffs by the
Tennison Defendants within fourteen (14) days of the Court’s
order, and the disclosure shall consist of all such materials that
are in the Tennison Defendants’ possession, custody or control,
along with all such materials in the possession, custody or control
of any current or former counsel for the Tennison Defendants;
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3. 	directing that the matters contained in the Complaint are taken
as established, as to the Tennison Defendants, for purposes of this
action;
4. 	prohibiting the Tennison Defendants from opposing the claims in
the Complaint and from using any information or witnesses to
supply evidence relating to a 	motion, at a hearing, or in trial in
this case;
5. 	ordering the Tennison Defendants to pay Plaintiffs reasonable
expenses, including attorneys’ fees, in seeking to remedy the
failures by the Tennison Defendants herein; and
6. 	treating 	as 	contempt 	of 	Court 	any 	failure 	by 	the 	Tennison
Defendants to timely obey any subpart of this order.
[Dkt. 109, pp.7-8.]
Most of the sanctions Plaintiffs seek are duplicative of what it accomplished by
obtaining the entry of default against these defendants; the effect of an entry of
default against a party is that the factual allegations in the complaint regarding
liability are deemed admitted. OTO Software, Inc. v. Highwall Techs., LLC, No. 08-
CV-01897-PAB-CBS, 2011 WL 3236049, at *4 (D. Colo. July 5, 2011) (a party’s default
is deemed a concession of all well-pleaded allegations of liability), adopted, 2011 WL
3235707 (D. Colo. July 27, 2011); Cree, Inc. v. BHP Energy Mexico S. De R.L. De C.V.,
335 F. Supp. 3d 1105, 1111 (E.D. Wis. 2018) (same); Harris v. M/V FATHOMS
O'FUN, No. 10-62038-CV, 2011 WL 13319377, at *2 (S.D. Fla. July 18, 2011) (same),
adopted, 2011 WL 13319373 (S.D. Fla. Aug. 18, 2011); In re Sandoval, No. 06-11316-
R, 2007 WL 2737939, at *1 (Bankr. N.D. Okla. Sept. 12, 2007) (same) aff'd, 541 F.3d
997 (10th Cir. 2008); Twist & Shout Music v. Longneck Xpress, N.P., 441 F. Supp. 2d
782, 783 (E.D. Tex. 2006) (“The effect of the entry of default is that it cuts off the
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defendants' right to appear in the case with respect to liability issues.”). And since
Fed. R. Civ. P. 26(a)(1) only requires disclosure of materials a defendant “may use to
support its . . . defenses[,]” the entry of default has rendered the Tennison Defendants’
disclosures (and defenses) moot because their liability is now established.
Indeed, other courts have held the entry of default effectively ends the case
against the party in default. See Morales-Garcia v. Higuera Farms, Inc., No.
CV185118SVWJPRX, 2020 WL 6260016, at *1 (C.D. Cal. June 4, 2020) (“Because
default has been entered against Big F, it is no longer a party to this lawsuit.”); United
States ex rel. Dotson v. Texoma Mobility, Inc., No. MO-09-CV-013, 2010 WL 11610444,
at *1 (W.D. Tex. Nov. 12, 2010) (“Entry of Default was entered by the Clerk of the
Court on October 8, 2010, effectively ending the case against Defendant Texoma
Mobility, Inc.”); Blazek v. Cap. Recovery Assocs., Inc., 222 F.R.D. 360, 361 (E.D. Wis.
2004) (defaulted defendant should be treated as a nonparty for discovery purposes).
But see Minx, Inc. v. West, No. 2:11-CV-00895-BSJ, 2011 WL 5844486, at *2 (D. Utah
Nov. 21, 2011) (declining to treat defaulted party as a nonparty).
Whether or not the Tennison Defendants are considered parties in light of the
entry of default, because the allegations in the Complaint regarding liability are now
deemed admitted, the matter of their Rule 26(a)(1) disclosures is moot and irrelevant.
Further, the relief sought by the Motion for Sanctions related to “directing that the
matters contained in the Complaint are taken as established[,]” or “prohibiting the
Tennison Defendants from opposing the claims in the Complaint[,]” are already
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accomplished by the entry of default. And finally, because the acts or omissions of the
Tennison Defendants supporting the Motion for Sanctions is the same conduct
Plaintiffs advanced to support their Motion for Entry of Default, this conduct was
already sanctioned with the entry of default, further rendering the Motion for
Sanctions moot.
The Motion for Sanctions [Dkt. 109] is DENIED.1
DATED: January 12, 2022
BY THE COURT:
______________________________
S. Kato Crews
United States Magistrate Judge
1 Within 14 days after service of a copy of this Order, any party may serve and file
written objections. 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(a). Failure to file written
objections may result in a waiver of the right to appeal the non-dispositive order. See
Sinclair Wyo. Ref. Co. v. A & B Builders, Ltd., 989 F.3d 747, 782 (10th Cir. 2021) (firm
waiver rule applies to non-dispositive orders); but see Morales-Fernandez v. INS, 418
F.3d 1116, 1119, 1122 (10th Cir. 2005) (firm waiver rule does not apply when the
interests of justice require review, such as when a “pro se litigant has not been
informed of the time period for objecting and the consequences of failing to object”).
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