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Istar Fm Loans LLC v. Clark D. East

November 18, 2011

ISTAR FM LOANS LLC, PLAINTIFF,
v.
CLARK D. EAST, DEFENDANT.



ORDER

This cause is before the Court pursuant to Clark D. East's Motion to Vacate Judgment (Doc. # 19), which was filed on May 31, 2011, and iStar's Response (Doc. # 22), which was filed on June 14, 2011.*fn1 On September 15, 2011, the Court ordered further briefing from the parties. (Doc. # 26). iStar filed its brief on October 14, 2011, and East filed his brief on October 17, 2011. For the reasons that follow, the Court grants East's Motion to Vacate Judgment. This Court vacates its default judgment against East and dismisses this action based upon the doctrine of res judicata.

I. Background

A. The Obligation

On May 31, 2006, iStar entered into a loan and security agreement with East, as trustee of the Captain Van Dyke Trust; Gold Doubloons, LLC; Black Beard, LLC; and Treasure Chest, LLC, in which iStar loaned the borrowers $28,628,000.00. (Doc. # 1 at ¶ 1, 9; Doc. # 1-3). In addition to signing the loan and security agreement as "Trustee," East executed a guaranty in which he unconditionally and irrevocably guaranteed iStar full and prompt payment of the debt. (Doc. # 1-2 at 2-17).

The borrowers breached their obligations under the loan and security agreement when they failed to make scheduled payments, among other things.

B. State Court Action

On March 26, 2009, after notice and demand, iStar filed suit against the borrowers and East in the Circuit Court for the Thirteenth Judicial Circuit in and for Hillsborough County, Florida, in the case captioned iStar FM Loans LLC v. Clark D. East, individually and as trustee of the Captain Van Dyke Trust under Agreement dated December 8, 2003, Et Al., Case No. 09-CA-7912. (Doc. # 1 at ¶ 16).

iStar's amended complaint sought a foreclosure judgment on certain real property and to enforce a guaranty against East, among other claims. On May 25, 2010, the state court entered a final judgment on iStar's foreclosure count, but did not address the guaranty count. Id. at ¶ 18. A public sale of the property was set for June 24, 2010, at which time the Clerk of the Florida Circuit Court was going to sell the property to the highest bidder. Id. at ¶ 19. However, on June 23, 2010, Captain Van Dyke and Treasure Chest filed for protection under Chapter 11 of the United States Bankruptcy Code. Id. at ¶ 20.

The foreclosure judgment has been appealed in the state court. (Doc. # 32 at 3).

C. Federal Action

On September 13, 2010, iStar filed a one-count complaint in this Court alleging breach of guaranty on a commercial loan against East. (Doc. # 1). On September 29, 2010, iStar filed return of service documents showing that East was served with the summons and complaint. (Doc. # 5). East failed to plead or otherwise defend, and iStar filed a motion for entry of Clerk's default on October 19, 2010. (Doc. # 8). The Clerk entered a default against East on October 20, 2010. (Doc. # 9). iStar promptly moved for entry of default judgment against East in the amount of $32,102,692.90, plus interest and attorneys' fees and costs, which this Court granted on October 28, 2010. (Doc. ## 10, 11). The Clerk issued a Default Judgment against East on October 29, 2010, and closed the case. (Doc. # 12).

Thereafter, iStar initiated discovery in aid of execution. On December 15, 2010, iStar propounded interrogatories and requests for production on East. (Doc. # 13). On March 3, 2011, iStar filed a motion to compel East's presence at a deposition in aid of execution. (Doc. # 14). On April 8, 2011, in the midst of this discovery battle, Lyndi Gordon, Esq. entered a Notice of Appearance on behalf of East. (Doc. # 16).

On May 20, 2011, due to apparent noncompliance with various discovery requests, iStar filed a motion for the issuance of an Order to Show Cause seeking the sanction of contempt. (Doc. # 17). East filed a response in opposition to the motion for issuance of an Order to Show Cause and, therein, moved for an order vacating the Default ...


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