United States of America v. Suta Douangpanya, et al.

• Court: District Court, E.D. California
• Decided: November 12, 2025
• Docket: 2:24-cv-02380
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 UNITED STATES OF AMERICA, Case No. 2:24-cv-02380-CSK 12 Plaintiff, 13 v. ORDER AND FINDINGS AND RECOMMENDATIONS GRANTING 14 SUTA DOUANGPANYA, et al., PLAINTIFF’S MOTION FOR DEFAULT JUDGMENT 15 Defendants. (ECF No. 11) 16

17 18 Pending before the Court is Plaintiff United States of America’s motion for default 19 judgment pursuant to Federal Rules of Civil Procedure 55(b)(2).1 (ECF No. 11). This 20 motion was reset for hearing for August 20, 2025 before the undersigned. (ECF No. 12.) 21 Defendants Suta Douangpanya and Annie Douangpanya did not file a response to the 22 motion, nor have they appeared in this case in any way. See Docket. On August 6, 23 2025, Plaintiff’s motion was taken under submission without argument pursuant to Local 24 Rule 230(g). 8/6/2025 Order (ECF No. 13). For the reasons stated below, the Court 25 recommends Plaintiff’s motion for default judgment be GRANTED, and that judgment be 26 entered in favor of Plaintiff. 27 1 This matter proceeds before the undersigned pursuant to 28 U.S.C. § 636(b)(1)(A) 28 and Local Rule 302(c)(19). 1 I. BACKGROUND 2 A. Factual Allegations 3 Plaintiff brings this action to establish Defendants’ personal liability for failure to 4 comply with a levy issued by the Internal Service Revenue (“IRS”) pursuant to 5 26 U.S.C. § 6332(d)(1). Compl. at 1 (ECF No. 1). From 2018 to 2019, the IRS assessed 6 tax liabilities against delinquent taxpayer, The Car Czar Inc., for employment taxes (IRS 7 Form 941) for tax periods ending September 30, 2018, December 31, 2018, June 30, 8 2019, and September 30, 2019. Id. ¶ 6-8. The IRS also assessed a civil penalty against 9 The Car Czar Inc. for tax period ending December 31, 2019 for “intentionally 10 disregarding its obligation” to file IRS Forms W3 and W2. Id. ¶ 8. Despite being given 11 proper notice and demand for payment on these tax assessments, The Car Czar Inc. 12 “neglected, refused, or failed to pay in full” the amounts owed. Id. ¶¶ 10-11. As of the 13 date of the tax assessments, statutory liens for these tax assessments arose in favor of 14 Plaintiff against all property or rights to property, whether real or personal, belonging to 15 The Car Czar Inc. pursuant to 26 U.S.C. §§ 6321 and 6322. Id. ¶ 12. 16 On September 12, 2019, a Notice of Federal Tax Lien (“NFTL”) on IRS Form 941 17 for the tax period ending September 30, 2018 was filed against The Car Czar Inc. 18 Compl. ¶ 13. On January 30, 2020, a NFTL on IRS Form 941 for the tax period ending 19 June 30, 2019 was filed against the Car Czar Inc. Id. On February 5, 2020, a NFTL on 20 IRS Form 941 for the tax period ending September 30, 2019 was filed against the Car 21 Czar Inc. Id. For each NFTL, the IRS issued an IRS Letter 3172 (“Notice of Federal Tax 22 Lien Filing and Your Rights to a Hearing”) to The Car Czar Inc. Id. ¶ 14. The Car Czar 23 Inc. did not request a Collection Due Process Hearing (“CDP Hearing”) on any of these 24 federal tax liens. Id. 25 On August 14, 2019, the IRS issued an IRS Letter 1058 (“Final Notice of Intent to 26 Levy and Notice of Your Right to a Hearing”) to The Car Czar Inc. for tax period ending 27 September 30, 2018. Compl. ¶ 15. On September 13, 2019, The Car Czar Inc. 28 requested a CDP Hearing and on November 11, 2020, the IRS issued a notice of 1 determination that sustained the proposed levy action, which The Car Czar Inc. did not 2 appeal. Id. ¶¶ 18-19. On February 17, 2020, February 24, 2020, June 29, 2022, and 3 October 3, 2022, the IRS issued multiple IRS Letter 1058s to The Car Czar Inc. for tax 4 periods ending December 31, 2018, June 30, 2019, September 30, 2019, and December 5 31, 2019. Id. ¶ 20. The Car Czar Inc. did not request a CDP Hearing. Id. ¶ 21. 6 On September 26, 2019, The Car Czar Inc. sold its business assets, including its 7 name, to Defendants for $265,000, with a down payment of $20,000 and $245,000 to be 8 paid in monthly installments of $3,462.81 for a seven-year period. Compl. ¶ 22. After the 9 sale, The Car Czar Inc. no longer operated as an active business and Defendants 10 formed Complete Auto Solutions LLC to operate the auto repair shop business originally 11 under The Car Czar Inc. Id. ¶ 23. From 2020 to 2023, the IRS issued multiple IRS Form 12 668-A (“Notice of Levy”) and IRS Form 668-W (“Notice of Levy on Wages”) to 13 Defendants for monthly levy payments due for The Car Czar Inc. Id. ¶¶ 24-28. 14 Between 2020 to 2022, Defendants made 16 monthly levy payments in the 15 amount of $3,462.81 to the IRS, including several payments in November 2022 to catch 16 up on previously missed months. Id. ¶¶ 27, 34; 7/14/2025 Yang Zong Declaration ¶¶ 9, 17 10 (ECF No. 11-2). Beginning January 2023, Defendants failed to make monthly levy 18 payments and on March 16, 2023, the IRS issued a Final Demand for Payment to 19 Defendants for failure to fully satisfy one of the levies. Compl. ¶ 35; Zong Decl. ¶ 10. As 20 of July 14, 2025, the total amount owed by Defendants for the unpaid levy payments is 21 $52,882.22, which includes costs and interest, calculated at the underpayment rate set 22 forth in 26 U.S.C. § 6621, accruing from the date of the levy. Pl. Mot. at 2-3 (ECF No. 1- 23 1); Zong Decl. ¶¶ 12-14. 24 B. Procedural Background 25 On September 3, 2024, Plaintiff initiated this action asserting a single cause of 26 action against Defendants for failure to honor an IRS levy pursuant to 26 U.S.C. 27 § 6332(d)(1). Compl. ¶¶ 37-45. On October 4, 2024, Plaintiff filed proofs of service of 28 summons and complaint on Defendants. (ECF Nos. 4, 5.) On December 15, 2024, 1 Plaintiff filed a request for entry of default against Defendants after Defendants failed to 2 appear. (ECF No. 6.) The Clerk of the Court entered default as to Defendants on 3 December 17, 2025. (ECF No. 7.) On July 14, 2025, Plaintiff moved for default judgment 4 against Defendants. Pl. Mot. Defendants were served with Plaintiff’s motion on July 15, 5 2025. Id. at 9. On July 15, 2025, on the Court’s own motion, Plaintiff’s motion was reset 6 for an August 20, 2025 hearing before the undersigned. 7/15/2025 Order (ECF No. 12). 7 After Defendants failed to respond to the motion for default judgment, on August 6, 8 2025, the Court issued an order taking Plaintiff’s motion under submission; vacating the 9 hearing; ordering a written response from Defendants by August 20, 2025; and directing 10 Plaintiff to serve Defendants with a copy of the order. 8/6/2025 Order. On August 12, 11 2025, Plaintiff filed a proof of service indicating that Defendants were served on August 12 8, 2025 with a copy of the August 6, 2025 Order. (ECF No. 14.) Defendants did not 13 respond. See Docket. 14 II. LEGAL STANDARDS 15 Under Federal Rule of Civil Procedure 55, default may be entered against a party 16 against whom a judgment for affirmative relief is sought who fails to plead or otherwise 17 defend against the action. See Fed. R. Civ. P. 55(a). However, this default does not 18 automatically entitle the plaintiff to a judgment. PepsiCo, Inc. v. Cal. Sec. Cans, 238 F. 19 Supp. 2d 1172, 1174 (C.D. Cal. 2002) (citations omitted). The decision to grant or deny 20 the entry of default judgment is within the district court’s discretion. NewGen, LLC v. 21 Safe Cig, LLC, 840 F.3d 606, 616 (9th Cir. 2016). 22 In determining whether to enter default judgment, courts consider the following 23 factors: 24 1. the possibility of prejudice to the plaintiff; 25 2. the merits of the substantive claim(s); 26 3. the sufficiency of the complaint; 27 4. the amount of money at stake in the lawsuit; 28 5. whether there are any disputes of material fact; 1 6. whether the defendant’s default was due to excusable neglect; and 2 7. the strong policy favoring decisions on the merits. 3 Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). The Ninth Circuit has long 4 disfavored default judgments, counseling that cases be decided on the merits “whenever 5 reasonably possible.” Id. at 1472. 6 Once a default is entered, all well-pled allegations in the complaint regarding 7 liability are deemed true. Fair Hous. of Marin v. Combs, 285 F.3d 899, 906 (9th Cir. 8 2002). “On the other hand, a defendant is not held to admit facts that are not well- 9 pleaded or to admit conclusions of law.” United States v. Cathcart, 2010 WL 1048829, at 10 *4 (N.D. Cal. Feb. 12, 2010) (citation omitted). “[I]t follows from this that facts which are 11 not established by the pleadings of the prevailing party, or claims which are not well- 12 pleaded, are not binding and cannot support the judgment.” Danning v. Lavine, 572 F.2d 13 1386, 1388 (9th Cir. 1978). Necessary facts not contained in the pleadings and claims 14 which are legally insufficient are not established by default. DIRECTV, Inc. v. Hoa 15 Huynh, 503 F.3d 847, 854 (9th Cir. 2007). Further, a plaintiff’s allegations regarding 16 damages are not deemed true at default, and the plaintiff bears the burden to prove 17 damages with evidence. See Fed. R. Civ. P. 55(b)(2)(C); Geddes v. United Fin. Grp., 18 559 F.2d 557, 560 (9th Cir. 1977). 19 III. DISCUSSION 20 Plaintiff moves for default judgment against Defendants as to its only cause of 21 action for failure to honor an IRS levy pursuant to 26 U.S.C. § 6332(d)(1). Pl. Mot. at 2. 22 Plaintiff requests the Court enter judgment in favor of it in the amount of $52,882.22, 23 plus statutory interest and other additions as provided by law, and that the amount be 24 jointly and severally assessed against both Defendants. Id. at 6, 8. 25 A. Jurisdiction and Service 26 As a preliminary matter, a court considering whether to enter default judgment 27 must first determine whether it has jurisdiction over both the subject matter and the 28 parties to the case. In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999). 1 The Court has subject matter jurisdiction over this action pursuant to federal 2 question jurisdiction. 28 U.S.C. § 1331. The Court has jurisdiction over matters in which 3 the federal government is seeking to enforce federal tax laws. See 28 U.S.C § 1340; Pl. 4 Mot. at 4. In addition, the Court has personal jurisdiction over Defendants, who appear to 5 be California residents. See ECF Nos. 4, 5. 6 The Court also finds service was proper under Federal Rule of Civil Procedure 4. 7 Here, a third-party process server attempted to serve Defendants at their residence on 8 September 13, 2024, September 17, 2024, September 21, 2024, September 26, 2024, 9 September 29, 2024, and October 2, 2024, but there was either no answer at the 10 address or a co-resident indicated Defendants were not available. ECF Nos. 4 at 4; 5 at 11 4. On October 3, 2024, the third-party process server left a copy of the summons and 12 Complaint with a John Doe at Defendants’ residence. ECF Nos. 4 at 1; 5 at 1. The 13 process server also mailed the same documents to Defendants’ residence the same 14 day. ECF Nos. 4 at 2; 5 at 2. Accordingly, Defendants were properly served through 15 substitute service. See Cal. Civ. P. § 415.20. 16 B. Eitel Factors 17 For the following reasons, the Court finds that the Eitel factors weigh in favor of 18 granting default judgment against Defendants. 19 1. Factor One: The Possibility of Prejudice to the Plaintiff 20 The first Eitel factor considers whether the plaintiff would suffer prejudice if default 21 judgment were not entered, and such potential prejudice to the plaintiff weighs in favor of 22 granting a default judgment. See PepsiCo, 238 F. Supp. 2d at 1177. Here, the Clerk of 23 the Court entered default against Defendants on December 17, 2024 (ECF No. 7), and 24 Defendants have not participated in the litigation despite being served with the 25 Complaint, default judgment motion, and the Court’s August 7, 2025 Order. See Docket. 26 Plaintiff would suffer prejudice if the Court did not enter a default judgment. Accordingly, 27 the first Eitel factor favors the entry of default judgment. 28 / / / 1 2. Factors Two and Three: The Merits of the Claim and the Sufficiency 2 of the Complaint 3 The merits of Plaintiff’s substantive claim and the sufficiency of the Complaint are 4 considered together due to the relatedness of the two inquiries. The Court must consider 5 whether the allegations in the Complaint are sufficient to state a claim that supports the 6 relief sought. See Danning, 572 F.2d at 1388; PepsiCo, Inc., 238 F. Supp. 2d at 1175. 7 Here, the merits of the claim and the sufficiency of the Complaint favor entry of default 8 judgment. 9 Plaintiff moves for default judgment on its single claim for failure to honor an IRS 10 levy pursuant to 26 U.S.C. § 6332(d)(1). See Pl. Mot. Pursuant to 26 U.S.C. § 6321, 11 when a taxpayer fails or neglects to pay any tax after demand, a federal tax lien arises 12 “in favor of the United States upon all property and rights to property, whether real or 13 personal, belonging to [the taxpayer].” See also Babb v. Schmidt, 496 F.2d 957, 958 (9th 14 Cir. 1974). The federal tax lien arises on the date of assessment of the unpaid tax. 15 26 U.S.C. § 6321. “If any person liable for any tax neglects or refuses to pay the [tax] 16 within 10 days after notice and demand, [the IRS may proceed] to collect such tax [ ] by 17 levy upon all property and rights to property” of the delinquent taxpayer. 26 U.S.C. 18 § 6331(a). Any person in possession of property belonging to a delinquent taxpayer 19 upon which a levy has been made must also, upon demand, surrender such property to 20 the IRS. 26 U.S.C. § 6332(a). A person who fails to surrender property subject to a levy, 21 upon demand, incurs personal liability to the government for his refusal. 26 U.S.C. 22 § 6332(d)(1); see also Farr v. United States, 990 F.2d 451, 456 (9th Cir. 1993) (“As the 23 Supreme Court has indicated, the party in possession has limited defenses to a levy on 24 a taxpayer's property interests and will proceed at his own peril if he refuses to honor the 25 levy.”). 26 Here, Plaintiff has sufficiently alleged the IRS made tax assessments against The 27 Car Czar Inc. for the 2018 to 2019 tax years. Compl. ¶¶ 6-8. Plaintiff also alleges The 28 Car Czar Inc. was provided proper notice and demand for payment on the tax 1 assessments and that The Car Czar Inc. “neglected, refused, or failed to pay in full” the 2 amounts owed. Id. ¶¶ 10-11. Plaintiff further alleges that after The Car Czar Inc. was 3 sold to Defendants for $265,000, with a down payment of $20,000 and $245,000 to be 4 paid in monthly installments of $3,462.81 for a seven-year period, the IRS issued 5 multiple Notices of Levy and Notices of Levy on Wages to Defendants for monthly levy 6 payments due for The Car Czar Inc. Id. ¶¶ 22-28. Therefore, Plaintiff alleges Defendants 7 were in possession of property (i.e., monthly installments of $3,462.81 owed to The Car 8 Czar Inc.) subject to an IRS levy. Pl. Mot. at 5. Plaintiff further alleges despite 9 Defendants making monthly levy payments between 2020 to 2022, and Defendants 10 receiving a Final Demand for Payment, Defendants “failed or refused to surrender 11 property” belonging to The Car Czar Inc. by failing to make monthly levy payments to the 12 IRS beginning January 2023. Compl. ¶ 44; see also Id. ¶¶ 27, 34-35, 41-44. As a result, 13 Plaintiff alleges Defendants have refused to honor the IRS levy and are therefore 14 personally liable to Plaintiff for their refusal. Id.¶ 45. Taken as true, the Court finds the 15 allegations of the Complaint are sufficient and state a meritorious claim. Accordingly, the 16 Court finds that these two factors weigh in favor of granting default judgment. 17 3. Factor Four: The Sum of Money at Stake in the Action 18 Under the fourth Eitel factor, the Court considers the amount of money at stake in 19 relation to the seriousness of Defendants’ conduct. PepsiCo, 238 F. Supp. 2d at 1176. 20 The sum of money at stake here is significant, though not unreasonable as it is directly 21 connected to tax liabilities. Accordingly, the fourth Eitel factor favors the entry of default 22 judgment. 23 4. Factor Five: The Possibility of Dispute Concerning Material Facts 24 The facts of this case are relatively straightforward, and Plaintiff has provided the 25 Court with well-pleaded allegations and documentation supporting its claim. See 26 generally Compl. Here, the Court may assume the truth of well-pleaded facts in the 27 complaint (except as to damages) following the clerk's entry of default, and thus, there is 28 no likelihood that any genuine issue of material fact exists. See, e.g., Elektra Entm't 1 Group Inc. v. Crawford, 226 F.R.D. 388, 393 (C.D. Cal. 2005) (“Because all allegations 2 in a well-pleaded complaint are taken as true after the court clerk enters default 3 judgment, there is no likelihood that any genuine issue of material fact exists.”); accord 4 Philip Morris USA, Inc. v. Castworld Prods., Inc., 219 F.R.D. 494, 500 (C.D. Cal. 2003); 5 PepsiCo, 238 F. Supp. 2d at 1177. Accordingly, the fifth Eitel factor favors the entry of 6 default judgment. 7 5. Factor Six: Whether Default was Due to Excusable Neglect 8 Upon review of the record before the Court, there is no indication that the default 9 was the result of excusable neglect. See PepsiCo, 238 F. Supp. 2d at 1177. Plaintiff 10 served Defendants with the summons and the Complaint. (ECF Nos. 4, 5.) Plaintiff also 11 served Defendants with its motion for default judgment and with the Court’s August 6, 12 2025 Order. Pl. Mot. at 9; ECF No. 14. Despite ample notice of this lawsuit and Plaintiff’s 13 intention to seek a default judgment, Defendants have failed to participate in this action 14 or to defend themselves. Accordingly, the sixth Eitel factor favors the entry of default 15 judgment. 16 6. Factor Seven: The Strong Policy Favoring Decisions on the Merits 17 “Cases should be decided upon their merits whenever reasonably possible.” Eitel, 18 782 F.2d at 1472. Although the Court is cognizant of the policy favoring decisions on the 19 merits, that policy does not, by itself, preclude the entry of default judgment where a 20 defendant fails to appear or defend itself in an action. See PepsiCo, 238 F. Supp. 2d at 21 1177; see also Craigslist, Inc. v. Naturemarket, Inc., 694 F. Supp. 2d 1039, 1061 (N.D. 22 Cal. 2010). 23 7. Conclusion 24 Upon consideration of the Eitel factors, the Court concludes that Plaintiff is 25 entitled to the entry of default judgment against Defendants as to its claim for failure to 26 honor an IRS levy. The Court next determines the amount of damages to which Plaintiff 27 is entitled. 28 / / / 1 C. Terms of Judgment 2 Plaintiff seeks a judgment in favor of it in the amount of $52,882.22 plus statutory 3 interest and additions running from July 14, 2025, until fully satisfied and that the amount 4 be jointly and severally assessed against both Defendants. Pl. Mot. at 6, 8. In support of 5 its request, Plaintiff has submitted evidence demonstrating that as of July 14, 2025, 6 Defendants’ unpaid tax liabilities totaled to $52,882.22. Zong Decl. ¶¶ 12-13. Plaintiff has 7 also included a copy of the IRS accrual computation as of July 14, 2025 showing the 8 calculated amounts using IRS internal records that track interest and additions. Zong 9 Decl., Exh A. The Court finds Plaintiff has met its burden of demonstrating that it should 10 be awarded $52,882.22 pursuant to 26 U.S.C. § 6332(d)(1) plus interest and additions, 11 and therefore recommends granting this request. 12 IV. CONCLUSION 13 For the reasons set forth above, it is HEREBY ORDERED that the Clerk of the 14 Court randomly assign a district judge to this action. 15 It is further HEREBY RECOMMENDED that: 16 1. Plaintiff’s motion for default judgment (ECF No. 11) be GRANTED; 17 2. Plaintiff be awarded $52,882.22 pursuant to 26 U.S.C. § 6332(d)(1), plus 18 statutory interest and additions running from July 14, 2025, until paid in full, 19 and this amount be jointly and severally assessed against both 20 Defendants; and 21 3. This case be closed. 22 These findings and recommendations are submitted to the United States District 23 Judge assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(1). Within 24 14 days after being served with these findings and recommendations, any party may file 25 written objections with the Court and serve a copy on all parties. This document should 26 be captioned “Objections to Magistrate Judge’s Findings and Recommendations.” Any 27 reply to the objections shall be served on all parties and filed with the Court within 14 28 days after service of the objections. Failure to file objections within the specified time 1 || may waive the right to appeal the District Court’s order. Turner v. Duncan, 158 F.3d 449, 2 || 455 (9th Cir. 1998); Martinez v. Yist, 951 F.2d 1153, 1156-57 (9th Cir. 1991). 3 4 5 Dated: November 10, 2025 C □□ $ \U 6 GHI 500 KIM UNITED STATES MAGISTRATE JUDGE 7 4, usa2380.24 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 11