United States District Court, C.D. Illinois, Springfield Division
MYERSCOUGH UNITED STATES DISTRICT JUDGE
cause is before the Court on the Corrected Motion for Relief
from Default Judgment (d/e 62) filed by Defendant KVB
Electric LLC and the Motion for Leave to File an Amended
Answer and Amended Affirmative Defenses (d/e 70) filed by
Defendants Kevin M. Von Behren and Brenda K. Von Behren.
Because KVB has shown good cause for its default, quick
action to correct the default, and a meritorious defense, the
Motion for Relief from Default Judgment is GRANTED. The Court
also, in an exercise of its discretion, GRANTS the Von
Behrens leave to file an amended answer and affirmative
December 3, 2014, Plaintiff United States filed suit against
Defendant Kevin M. Von Behren seeking a money judgment for
unpaid federal income taxes and for the trust fund portion of
federal income and Federal Insurance Contributions Act (FICA)
taxes withheld from the wages of employees of KVB Electric
LLC. Compl. (d/e 1). On April 23, 2015, Plaintiff filed an
Amended Complaint (d/e 6) containing three counts. In Count
I, Plaintiff sought a money judgment against Kevin and Brenda
K. Von Behren, jointly and severally, for unpaid federal
income taxes. In Count II, Plaintiff sought a money judgment
against Kevin Von Behren for the unpaid trust fund portion of
federal income and FICA taxes withheld from the wages of the
employees of BDK Industries, Inc. In Count III, Plaintiff
sought to enforce federal tax liens resulting from
liabilities owed by Kevin and/or Brenda against property
located at 2196 Cantrall Creek Road, Cantrall, County of
Sangamon, Illinois, 62625 (the Cantrall property). Plaintiff
also named as additional defendants entities that might have
a claim or interest in the Cantrall property, including KVB
Electric LLC, Williamsville State Bank & Trust, the
Illinois Department of Revenue, Daimler Chrysler Financial,
Capital One Bank, and County of Sangamon, Illinois.
Amended Complaint alleges that the Cantrall property was
transferred to Kevin and Brenda Von Behren as joint tenants
in April 1991. Am. Compl. ¶ 10. In June 2005, the
Cantrall property was conveyed to KVB by way of a
Sheriff’s Deed pursuant to the Judgment of Foreclosure
and Sale entered in Sangamon County Case No. 2003 CH 238.
Id. ¶ 13. Plaintiff alleges that KVB holds
record title to the property as the alter ego of Kevin Von
Behren, who is the true and equitable owner of the property.
Id. ¶ 26.
for Waiver of Service and Notice of Lawsuit were mailed to
Kevin, Brenda, and KVB on May 28, 2015. See d/e 7,
8, 9. On July 28, 2015, Kevin, Brenda, and KVB filed pro se
Motions for Extension of Time to File Answer. See
d/e 15, 16, 17. In its motion, KVB claimed that it was
discussing representation and a retainer with attorney David
Reid and believed the issues would be resolved soon.
See KVB Motion ¶ 8 (d/e 17).
States Magistrate Judge Tom Schanzle-Haskins granted
Kevin’s and Brenda’s motions, but denied
KVB’s motion because corporations may not appear pro se
in federal court. See July 31, 2015 Text Orders. On
August 6, 2015, Plaintiff filed a Second Amended Complaint
(d/e 19) to change the name of Defendant Daimler Chrysler
Financial to reflect the company’s current name, TD
Auto Finance, LLC.
Behrens hired Mr. Reid, who they believed was also
representing the interests of KVB. See Mem. of Law
in Support of Def. KVB Electric LLC’s Mot. for Relief
from Default J. at 3 (d/e 63). Mr. Reid represented the
interest of all three defendants in settlement negotiations
with Plaintiff. Id. On August 26, 2015, after those
attempts at settlement were unsuccessful, Mr. Reid filed an
Answer to the Second Amended Complaint on behalf of the Von
Behrens but not KVB. Id.; see Answer (d/e
Answer, Kevin and Brenda “allege[d] that the equitable
owners of the subject property are Kevin M. Von Behren and
Brenda K. Von Behren.” Answer ¶ 26. They also
“admit[ted] that the Plaintiff is entitled to enforce
its liens against the Defendants.” Id. at
October 21, 2015, Plaintiff and the Von Behrens filed a Joint
Report of Parties’ Planning Meeting (d/e 28). The
parties agreed that the Von Behrens were jointly liability
for unpaid federal income tax liabilities, that Kevin was
liable for the “Trust Fund Recovery Penalty, ”
and that the United States’ tax liens attach to all
property and rights to property belonging to the Von Behrens,
including their Cantrall, Illinois residence. Id.
The parties agreed to a sale of the Cantrall property with
the proceeds being used to pay the tax liabilities and any
other perfected liens against the property. Id. On
October 22, 2015, Judge Schanzle-Haskins granted the parties
until November 20, 2015 to file a proposed stipulated
judgment. See October 22, 2015 Minute Entry.
November 2015, the Von Behrens sought and received an
extension of time to submit a proposed stipulated judgment.
See d/e 36 (seeking an extension due to the Illinois
Department of Revenue’s notice of tax lien in excess of
$100, 000). Additional extensions of time were sought and
received in January (d/e 40) (requesting time to review 2003
bankruptcy records to determine whether the Department of
Revenue’s tax lien was enforceable in this action) and
February 2016 (d/e 41) (noting that the Department of Revenue
tax liens were not discharged in bankruptcy but seeking
additional time to review an Internal Revenue Service notice
regarding federal tax liabilities).
March 11, 2016, Mr. Reid filed a motion to withdraw as
counsel for the Von Behrens and KVB (d/e 43). Mr. Reid stated
there was substantial disagreement between Mr. Reid and the
defendants as to the proposed terms of the stipulation
regarding entry of judgment. Id. at 1.
March 14, 2016, Mr. Reid filed an amended motion to withdraw
(d/e 45), clarifying his original motion. In the amended
motion, Mr. Reid sought to withdraw as counsel for the Von
Behrens. Mr. Reid also sought to withdraw “from any
representation of the Defendant, KVB Electric LLC.” Mr.
Reid explained that while he did not formally enter his
appearance on behalf of KVB, he included KVB in certain
pleadings and the proposed Stipulation of Judgment documents.
Id. at 2. The Court also identified Mr. Reid as
KVB’s counsel on the civil docket sheet.
Schanzle-Haskins granted the motion to withdraw as counsel as
to all three defendants. See Order (d/e 46). Judge
Schanzle-Haskins advised KVB that it must retain counsel
because a ...