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ALMA R. OLIVAS, Plaintiff, v. BENTWOOD PLACE APARTMENTS, LLC, and MARK JOHNSON, Defendants.

MEMORANDUM AND ORDER

JULIE ROBINSON, District Judge

This matter is before the Court on plaintiff's Application for Default Judgment (Doc. 22) and defendants' Motion to Set Aside Default Judgment (Doc. 27). The Court held a hearing on May 17, 2010. The parties presented arguments and evidence in support of their motions. After the hearing, the parties fully briefed the issues raised in defendants' motion to set aside default judgment. The Court has reviewed the evidence and the parties' submissions and is prepared to rule. For the reasons stated in detail below, the Court denies defendants' motion to set aside entry of default and grants plaintiff's motion for default judgment.

I. Procedural History

On April 6, 2009, plaintiff filed this action pro se, alleging that her employer, Bentwood Place Apartments, LLC ("Bentwood"), discriminated against her on the basis of race, sex, and national origin. Service of the Summons and Complaint were made by certified mail on defendants Bentwood and Marc Johnson ("Johnson") on April 15, 2009, at the Topeka address of Bentwood. Angela Davis ("Davis"), the office manager for Bentwood, signed for both pieces of certified mail as an agent for Bentwood and Johnson. No Answer was filed by the May 5, 2009 deadline. Plaintiff's motion for appointment of counsel was granted and counsel L.J. Leatherman was appointed on August 26, 2009.

In the parties' briefs, Johnson's name is spelled either "Mark" or "Marc." Consistent with Johnson's affidavit (Doc. 29), the Court refers to him as Marc Johnson.

More than four months after the Answer date, plaintiff filed an application for clerk's entry of default on September 24, 2009. On December 11, 2009, the Clerk entered a Clerks' Entry of Default against defendants. On March 2, 2010, ten months after the Answer date, plaintiff moved for default judgment. The hearing on plaintiff's motion for default judgment was scheduled for April 19, 2010, but continued to May 17, 2010, on plaintiff's motion. Finally, on May 11, 2010, more than a year after the Answer date, counsel for defendants Bentwood and Johnson entered an appearance; and on May 14, defendants moved to set aside the entry of default.

(Doc. 27.)

The hearing was held on May 17, and evidence and argument were heard on both motions. Plaintiff presented evidence of damages in the total amount of $198,745.45 comprised of: compensatory damages of $50,000, including pain and suffering caused by racially derogatory comments to and about plaintiff, and a racially motivated decision to terminate her; back pay of $63,066.35; and front pay of $85,679.10. While arguing that there was good cause for their failure to Answer or otherwise plead or defend, defendants did not present evidence on damages or otherwise challenge plaintiff's evidence.

After the hearing, the Court invited the parties to submit additional information by affidavit or pleading. Defendants availed themselves of this opportunity. Johnson filed an affidavit that addressed the issue of good cause for failing to answer or defend, but did not address or even mention damages. In addressing the issue of good cause, Johnson explained in his affidavit that although he is the owner of Bentwood in Topeka, Kansas, he lives in Florida and was not in Kansas to review the actual summons and complaint. Johnson relied upon his staff in the Kansas office, and specifically, office manager Davis, to handle problems and apprise him of problems. On May 8, 2009, Davis was fired from Bentwood for theft. Before her termination, she told defendants she had handled the Olivas matter. Defendants believed their decision to terminate plaintiff was justified and believed that, because the Equal Employment Opportunity Commission ("EEOC") had found plaintiff's complaint was unsubstantiated, the case was closed.

II. Motion to Set Aside Entry of Default

Defendants incorrectly ask for relief from "default judgment" under Rule 60(b), as default judgment has not yet been entered. Defendants ask that they not be punished for their ignorance of the legal process and their reliance upon an employee who proved to be unreliable.

In plaintiff's response brief, she asks the Court to deny defendants' motion for failure to comply with District of Kansas Rule 7.1(a), requiring a motion be "accompanied by a brief or memorandum." Because plaintiff subsequently filed an affidavit, at the direction of the Court, and filed a reply brief with supporting citations to law, the Court finds plaintiff's request moot.

Under Rule 55(c), the court may set aside an entry of default for good cause, and may set aside a default judgment under Rule 60(b). "The Court applies the same considerations when deciding whether to set aside either an entry of default or a default judgment, but they are applied more liberally when reviewing an entry of default." "This good cause standard under Rule 55(c) is a lesser standard than excusable neglect standard required to obtain relief from judgment under Rule 60(b)." Here, the Clerk entered default, but default judgment has not yet been entered. Thus, defendants need only show "good cause."

Clelland v. Glines, Case No. 02-2223-KHV, 2003 WL 21105084, at *3 (D. Kan. Apr. 11, 2003) (citing Berthelsen v. Kane, 907 F.2d 617, 620 (6th Cir. 1990)).

Bollacker v. Oxford Collection Agency, Inc., No. 07-cv-01730, 2007 WL 3274435, at *1 (D. Colo. Nov. 5, 2007).

The principal factors in determining whether defendant has shown good cause to set aside an entry of default include (1) whether the default resulted from culpable conduct by defendant, (2) whether plaintiff would be prejudiced if the Court sets aside the default and (3) whether defendant has presented a meritorious defense. These factors are not "talismanic" and the Court may consider other factors. The standard for setting aside an entry of default under Rule 55(c) is fairly liberal because "[t]he preferred disposition of any case is upon its merits and not by default judgment."

The court need not consider all the factors, but must "balance the interests of the defendants in the adjudication of the case on the merits, against the interests of the public and the court in the orderly and timely administration of justice." The Tenth Circuit has counseled that

McCook v. Flex Fin. Holding Co., Case No. 08-2039-CM-GLR, 2008 WL 1924129, at *2 (D. Kan. Apr. 29, 2008) (citing Hunt v. Kling Motor Co., 841 F. Supp. 1098, 1106 (D. Kan. 1993)).

default judgment must normally be viewed as available only when the adversary process has been halted because of an essentially unresponsive party. In that instance, the diligent party must be protected lest he be faced with interminable delay and continued uncertainty as to his rights. The default judgment remedy serves as such a protection.

A. Defendants' Culpability

Under the first factor, a defendant's conduct is considered culpable if he defaulted willfully or has no excuse for the default. A defendant's knowledge of a lawsuit and his post-service actions "play a role in measuring the willfulness of a defendant's default." When a party has actual or constructive notice of a lawsuit, yet completely fails to answer or otherwise communicate with the Court, defendant's failure is willful and "demonstrates complete disregard for the authority of the Court." This culpable conduct by a defendant under these circumstances caused the default. If the default was the result of defendant's culpable conduct, "the district court may refuse to set aside the default on that basis alone." Out of an abundance of caution, however, the Court considers the remaining two factors as well.

United States v. Timbers Preserve, Routt County, Colo., 999 F.2d 452, 454 (10th Cir. 1993).

Jenkens Gilchrist v. Groia Co., 542 F.3d 114, 123 (5th Cir. 2008).

Crutcher v. Coleman, 205 F.R.D. 581, 584 (D. Kan. 2001) (citing Hunt v. Ford Motor Co., 65 F.3d 178, 1995 WL 523646, at *3 (10th Cir. 1995); Ledbetter v. Kan. Dep't Soc. Rehab. Servs., Case No. 99-2261-KHV, 2000 WL 206208 (D. Kan. 2000)); Hunt v. Kling Motor Co., 841 F. Supp. 1098, 1106 (D. Kan. 1994) ("A defendant's conduct has been determined to be `culpable' if he has received actual or constructive notice of the filing of the action and failed to answer.").

Crutcher, 205 F.R.D. at 584.

Id.; Hunt, 841 F. Supp. at 1107; see also Guttman v. Silverberg, 167 F. App'x 1, 3 (10th Cir. 2005) ("even where there is a meritorious defense and no prejudice to the adversary, `[w]illful failure alone may constitute sufficient cause for the court to deny th[e] motion.'").

Here, defendants had actual knowledge of the lawsuit. Johnson admits that he spoke with Davis about the case before she was terminated on May 8, 2009. According to defendants, Davis's employment was terminated due to theft, yet they apparently continued to rely on her representation that the matter was closed, without taking any further steps to verify her allegations.

Furthermore, after Davis's termination, Bentwood and Johnson received service of other documents in this case over the course of ten months, evidencing that the case was not closed. Yet, neither defendant took any action to respond. Defendants took no action to respond when: (1) on September 2, 2009, plaintiff's counsel entered an appearance and both defendants were served with plaintiff's Entry of Appearance; (2) on September 24, 2009, plaintiff filed an Application for Entry of Default, which was served on defendants in Topeka, as well as Johnson's residential address in Florida; (3) on September 25, 2009, plaintiff responded to a show cause order, and mailed her response to Bentwood and Johnson in Kansas and Florida; (4) on December 11, 2009, the clerk entered default; and plaintiff's counsel mailed a copy of the entry to both defendants at all available addresses; and (5) on March 2, 2010, plaintiff moved for default judgment and mailed a copy to defendants, once again, at all available addresses. Defendants even received a copy of plaintiff's motion to continue the damages hearing, filed on March 9, 2010. But defendants did not enter an appearance until May 11, 2010, and did not file their Motion to Set Aside Default Judgment (sic) until five days before the May 17 hearing on damages. The defendants were obviously well-aware of the lawsuit since May 2009, when they spoke with Davis about it, and well-aware of the ongoing activity in the lawsuit before and after Davis's termination. Defendants took no initiative to inquire about the case or communicate with the Court until the case had proceeded for nearly a year without them. Such conduct was willful, and thus, defendants caused the default in this case.

B. Prejudice to Plaintiff

The second factor is whether plaintiff would be prejudiced if default were set aside. Prejudice to the plaintiff refers to "acts done by the moving party or events that have occurred which have in some way impaired or thwarted the non-moving party's ability to litigate or defend the case." This action proceeded for eight months from the date of filing until default was entered and another five months elapsed before defendants entered an appearance, just five days before the hearing on damages. The time and expense necessary to pursue an action that is more than a year old would prejudice plaintiff.

McCook v. Flex Fin. Holding Co., Case No. 08-2039-CM-GLR, 2008 WL 1924129, at *2 (D. Kan. Apr. 29, 2008).

See Vibe Tech., LLC v. Suddath, Case No. 06-cv-00812-LTB-MEH, 2007 WL 3171418, at *4 (D. Colo. Oct. 25, 2007).

 C. Meritorious Defense

Finally, although "[t]he burden to show a meritorious defense is light," defendants have not met their burden here. "The party moving to set aside default must make a sufficient elaboration of facts to permit the trial court to judge whether the defense, if movant's version were believed, would be meritorious." A movant's version of the facts and circumstances supporting his defense will be taken as true, but a conclusory allegation of a defense, unsupported by facts underlying that defense, will not sustain the burden of the defaulting party.

Super Film of Am., Inc. v. UCB Films, Inc., Case No. 02-4146-SAC, 2004 WL 2413497, at *2 (D. Kan. Sept. 23, 2004) (quoting In re Stone, 588 F.2d 1316, 1319 (10th Cir. 1978)) (internal quotation marks omitted).

Id.

In re Stone, 588 F.2d at 1319-20.

Gomes v. Williams, 420 F.2d 1364, 1366 (10th Cir. 1970) (applying this reasoning under Rule 60(b)).

But neither in their motion to set aside entry of default, nor at the hearing, nor in their post-hearing submission, did defendants articulate any defenses to plaintiff's claims, other than defendants' counsel's statement at the hearing that defendants may have thought plaintiff was stealing from the company.

D. No Good Cause

In short, defendants have failed to establish good cause to set aside the clerk's entry of default. Defendants rely on two excuses for failing to act in this case. First, at the time the original summons was served, Davis signed the return receipt and represented to them that the matter was closed. Johnson states in his affidavit that he "did not carefully review any information that may have been mailed to [his] office in Florida because [he] believed that the Federal case had been dismissed." But, this fact alone does not demonstrate "good cause" why defendants failed to respond to the lawsuit after receiving personal service of six documents relating to this case long after Davis's employment had been terminated. Second, defendants argue that they misunderstood the relationship between the administrative process and the federal judicial process, erroneously believing that the EEOC's decision resolved the matter and the federal case would be dismissed. But this is unsupported by the record, given defendants receipt of numerous notices and copies of pleadings over the thirteen month life of this case. The Court cannot find good cause in defendants' decision to remain willfully ignorant of an ongoing action against them when plaintiff made valiant efforts to notify them.

See McKinnon v. Kwong Wah Rest., 83 F.3d 489, 504 (1st Cir. 1996) (upholding district court decision to deny motion to set aside entry of default because defendant's reluctance to rectify the situation in a timely manner, and defendant's hope that "it `would all go away'" were not "good cause" under Rule 55(c)). "Litigants must act punctually and not casually or indifferently if a judicial system is to function effectively." Id.

Default judgment serves to protect a plaintiff when the "adversary process has been halted because of an essentially unresponsive party." Such is the case before the Court. Plaintiff should not be further subjected to "interminable delay and continued uncertainty as to [her] rights." The Court declines to set aside the entry of default.

Cessna Fin. Corp. v. Bielenberg Masonry Contracting, Inc., 715 F.2d 1442, 1444 (10th Cir. 1983) (quoting Jackson v. Beech, 636 F.2d 831, 836 (D.C. Cir. 1980)).

Id.

III. Standards for Default Judgment

Plaintiff has moved for default judgment, in recognition that after the clerk enters default, if plaintiff's claim is not for a sum certain, plaintiff must apply to the Court for default judgment. When entering default judgment and determining damages under Fed.R.Civ.P. 55(b), the Court is permitted to hold a hearing when necessary to: (a) conduct an accounting; (b) determine the amount of damages; (c) establish the truth of any allegation by evidence; or (d) investigate any other matter.

Fed.R.Civ.P. 55(b).

Fed.R.Civ.P. 55(b)(2).

"Once the default is established, defendant has no further standing to contest the factual allegations of plaintiff's claim for relief." "The well-pleaded factual allegations of the plaintiff's complaint are taken as true, except those allegations relating to the amount of damages." A trial court has broad discretion in deciding whether to enter a default judgment. "Even after default, it remains for the court to consider whether the unchallenged facts constitute a legitimate basis for the entry of a judgment since a party in default does not admit conclusions of law." Furthermore, a default judgment does not establish the amount of damages. Plaintiff must establish that the amount requested is reasonable under the circumstances. "Damages may be awarded only if the record adequately reflects the basis for [the] award via a hearing or a demonstration by detailed affidavits establishing the necessary facts."

DeMarsh v. Tornado Innovations, L.P., Case No. 08-2588-JWL, 2009 WL 3720180, at *2 (D. Kan. Nov. 4, 2009) (quoting 10A Charles Alan Wright, Arthur R. Miller Mary Kay Kane, Federal Practice Procedure § 2688 (3d ed. 1998); see also Olcott v. Del. Flood Co., 327 F.3d 1115, 1125 n. 11 (10th Cir. 2003) (after an entry of default, a defendant cannot defend a claim on the merits)).

DeMarsh, 2009 WL 3720180, at *2.

Galloway v. Hadl, Case No. 07-3016-KHV, 2008 WL 5109758, at *1 (D. Kan. Dec. 2, 2008) (citing Grandbouche v. Clancy, 825 F.2d 1463, 1468 (10th Cir. 1987)).

Evidence in the record shows that consulting psychologist Rebecca K. Brayman, Ph.D., performed a psychiatric review of Pettit at the request of the Social Security Administration on November 21, 2000. Tr. 170-186. In a summary of that report, Dr. Brayman writes: "The claimant takes care of her preschool child, household, and is taking four college classes per term to become a dietician. The claimant receives `A's' in her college classes. The claimant has mild problems in social functioning in that she won't answer the ringing telephone." Tr. 186. Brayman also assessed Pettit on April 23, 2002. Tr. 236-256. On January 25, 2005, Dr. Brayman affirmed as true the results of a psychiatric review done on October 18, 2004, by another examiner whose name is illegible in the record. Tr. 421-435. In all three reports, the consulting psychologists opine that Pettit has impairments, but that none of those meet the Listings for those impairments. Tr. 170-186, 236-256, 421-435.

The Social Security Administration also contracted with Drs. Glen D. Knosp, J.A. Reed, and Donald Larson to assess Pettit's RFC regarding her back impairment. Tr. 187-194, 257-285, 343-357. All three doctors opined that Pettit retained sufficient RFC to perform work subject to some limitations. Id.

Pettit's hearing testimony generally coincides with her treating physicians' opinions but goes into much more detail regarding specific injuries to her back (Tr. 749-750) and physical limitations (Tr. 741-743), and depressive, manic, and anxiety episodes, their causes and their results (Tr. 744-750). Specifically, Pettit testified that her back condition causes her to have her husband do any kind of lifting for her and that he must sometimes assist her in getting dressed. Tr. 742-743. She also testified that her husband has had to miss "a lot" of work to stay home and help her when she is having a bad day dealing with both her back and bipolar symptoms. Tr. 743-744.

Pettit described three particular manic episodes. Tr. 749-750, 760-761. She testified that in the first episode she suddenly decided she needed to remove bushes and plants from her backyard and worked for eight hours tearing out as many plants and bushes as possible. Tr. 749. Pettit further testified about the episode which caused her to be hospitalized in July of 2004. Tr. 749-750. In that episode, she woke up one morning with the racing thought that she needed to reupholster all her furniture, even though she did not know how to do so. Id. She bought all the supplies and proceeded to work for two days without sleep to complete the reupholstering. Id. The third episode involved her son. Tr. 760-761. In that episode, she thought she must drive herself and her sleeping son to Tennessee from her home in Bellevue, Nebraska. Id. Packing only snacks for her son and a basket of photos, she began driving. Id. When she arrived in St. Louis, her son woke up and demanded to go home. Id. Pettit then called a friend, who persuaded her to return and remained on the phone with her for four or five hours while she drove home. Id.

Pettit also testified regarding her structured environment. Tr. 755-757, 759-760, 761-765. She, her husband and son moved next door to her in-laws so that they could help her take care of her and her son while her husband was working. Tr. 761. She described an incident when she held an internship with a master chef. Tr. 764-765. The internship was near the end of her schooling and was supposed to last four weeks. Id. She became so agitated during the internship that she told her advisor that she could not finish it. Id. Pettit stated that because of her special needs, her advisor allowed her to drop the internship and write a paper in order to finish the class and graduate. Id.

Pettit's husband, Mark Pettit, also testified at the hearing. Tr. 766-769. He testified that his work records revealed he had missed 29 full and 24 partial days to assist Pettit and their son in 2003, and that in 2004, he took off 38 full and 19 partial days to do the same. Id. He stated that after 2004, his father was able to take on this caretaker role, and his absences have been far less frequent. Id. Mark Pettit testified that his father comes over in the mornings and gets Pettit's son ready for school and also cares for the son after school when Mark Pettit is unable to do so. Id. Mark Pettit's testimony also confirms Pettit's testimony regarding the episode in which she removed much of the plant life in their backyard. Id.

As part of her treatment at the VA, Pettit participated in art therapy. Tr. 449, 744-746. In coordination with that program, she attended Metropolitan Community College for the sculpting/ceramics class. Tr. 744-746. Pettit testified that she had been taking the class as art therapy for a "couple years" as of her hearing date. Tr. 745. She related that she was not taking it for a grade, that she does the work at home, and that she has someone take her completed projects to her teacher for her, which the teacher allows because the teacher is aware of her "special needs." Tr. 745-746.

STANDARD OF REVIEW

When reviewing the decision not to award disability benefits, the district court does not act as a fact-finder or substitute its judgment for the judgment of the ALJ or the Commissioner. Bates v. Chater, 54 F.3d 529, 532 (8th Cir. 1995). See also Wiese v. Astrue, 552 F.3d 728, 730 (8th Cir. 2009) (stating that the district court could come to a different conclusion is not sufficient basis for reversal). Rather, the district court will affirm the Commissioner's decision to deny benefits if it is supported by substantial evidence in the record as a whole. Bowman v. Barnhart, 310 F.3d 1080, 1083 (8th Cir. 2002), quoting Cox v. Apfel, 160 F.3d 1203, 1206 (8th Cir. 1998). Under this standard, substantial evidence means something "less than a preponderance, but is enough that a reasonable mind would find it adequate to support the Commissioner's conclusion." Prosch v. Apfel, 201 F.3d 1010, 1012 (8th Cir. 2000).

In determining whether the evidence in the record as a whole is substantial, the district court must consider "evidence that detracts from the Commissioner's decision as well as evidence that supports it." Holley v. Massanari, 253 F.3d 1088, 1091 (8th Cir. 2001). If the district court finds that the record contains substantial evidence supporting the Commissioner's decision, the court may not reverse the decision because the record also contains substantial evidence that supports a different outcome or because the court would have decided the case differently. Id.

LAW

A disability is the "inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve months. . . ."42 U.S.C. § 423(d)(1)(A); 20 C.F.R. § 404.1505. The Social Security Administration has promulgated a sequential process to determine whether a claimant qualifies for disability benefits. See 20 C.F.R. § 404.1520(a); Singh v. Apfel, 222 F.3d 448, 451 (8th Cir. 2000). The Commissioner determines: "(1) whether the claimant is engaged in any substantial gainful activity; (2) whether the claimant has severe impairment; (3) whether the impairment meets or equals an impairment listed in 20 C.F.R. Pt. 404, Subpt. P, App. 1; (4) whether the claimant can return to her past relevant work; and (5) whether the claimant can adjust to other work in the national economy." Tilley v. Astrue, 580 F.3d 675, 679 (8th Cir. 2009).

Substantial gainful activity is defined as work that is both substantial and gainful. 20 C.F.R. § 404.1572. Substantial activity is work that involves doing substantial physical or mental activities. 20 C.F.R. § 404.1572(a). Gainful activity is work for which a person is paid or receives a profit. 20 C.F.R. § 404.1572(b). In addition to involving substantial mental or physical activities for pay, substantial gainful activity is only considered a successful work attempt if it lasts for six months or longer without a claimant's impairment forcing an end to the work or a fall below the "substantial" or "gainful" standards. 20 C.F.R. § 404.1574(c)(1)-(2).

A disability determination by the Veteran's Administration ("VA") is not binding on the ALJ's decision; however, it is "entitled to some weight and must be considered in the ALJ's decision." Hamel v. Astrue, 620 F.Supp.2d 1002, 1025 (D.Neb. 2009), quoting Morrison v. Apfel, 146 F.3d 625, 628 (8th Cir. 1998). If the ALJ rejects the finding of the VA, "reasons should be given to enable a reasoned review by the courts." Morrison v. Apfel, 146 F.3d at 628 . The ALJ errors when a disability determination by the VA is not given explicit attention. Id.

Error exists when an ALJ fails to consider or discuss a treating physician's opinion that a claimant is disabled when the record contains no contradictory medical opinion. Hogan v. Apfel, 239 F.3d 958, 961 (8th Cir. 2001). "[A] treating physician's opinion regarding an applicant's impairment will be granted `controlling weight,' provided the opinion is `well-supported by medically acceptable clinical and laboratory diagnostic techniques and is not inconsistent with other substantial evidence in the record.'" Prosch v. Apfel, 201 F.3d 1010, 1012-1013 (8th Cir. 2000), quoting 20 C.F.R. § 404.1527(d)(2). The ALJ may discount or disregard such an opinion if other medical assessments are supported by superior medical evidence, or if the treating physician has offered inconsistent opinions. Hogan v. Apfel, 239 F.3d at 961 . A complaint's subjective complaints must also be given controlling weight, unless contrary to evidence on the record. "An ALJ may discount a claimant's subjective complaints only if there are inconsistencies in the record as a whole." Jackson v. Apfel, 162 F.3d 533, 538 (8th Cir. 1998), quoting Porch v. Chater, 115 F.3d 567, 572 (8th Cir. 1997). In contrast, "[t]he opinion of a consulting physician who examines a claimant once or not at all does not generally constitute substantial evidence." Kelley v. Callahan, 133 F.3d 583, 589 (8th Cir. 1998); Nevland v. Apfel, 204 F.3d 853, 858 (8th Cir. 2000) (holding that is was improper for an ALJ to rely on the opinions of reviewing physicians alone.).

The Listings specify the criteria for each impairment that is considered presumptively disabling. 20 C.F.R. Pt. 404, Subpt. P App. 1. The Listings for mental impairments generally consist of a set of medical findings that medically substantiate the mental disorder ("Paragraph A criteria"), a set of impairment-related limitations that show effects of the impairment on functions deemed essential to work ("Paragraph B criteria"), and certain functional limitations ("Paragraph C criteria"). 20 C.F.R. Pt. 404, Subpt. P, App. 1 §§ 12.00(A); see generally Pratt v. Sullivan, 956 F.2d 830, 834 nn. 7 9 (8th Cir. 1992). With respect to mental impairments, a certain review technique must be conducted and documented at each level of the review process, including the ALJ level. 20 C.F.R. § 416.920a(a)-(e); Nicola v. Astrue, 480 F. 3d 885, 887 (8th Cir. 2007) (noting that documentation is generally provided in a standard form.)

To be presumptively disabled by reason of bipolar disorder, a claimant must satisfy criteria set forth in the Listing for affective disorders in 20 C.F.R. Pt. 404, Subpt. P, App. 1, § 12.04. A claimant who meets the clinical findings criteria and exhibits two of the four functional restriction criteria is presumed to be disabled by bipolar syndrome. Id. A claimant may be presumptively disabled by reason of an anxiety-related disorder if she presents medically documented findings of generalized persistent anxiety accompanied by at least three of the four listed signs or symptoms or recurrent obsessions or compulsions which are a source of marked distress along with at least two of the four functional restriction criteria.

Under the Social Security regulations, the clinical findings criteria are: "Bipolar syndrome with a history of episodic periods manifested by the full symptomatic picture of both manic and depressive syndromes (and currently characterized by either or both syndromes.)" 20 C.F.R. Pt. 404, Subpt. P, App. 1, § 12.04(3).

Those four criteria are: (1) marked restriction of activities of daily living; (2) marked difficulties in maintaining social functioning; (3) marked difficulties in maintaining concentration, persistence, or pace; and (4) repeated episodes of decompensation, each of extended duration. 20 C.F.R. Pt. 404, Subpt. P, App. 1, § 12.04 (functional restriction criteria for bipolar disorder).

Those four signs or symptoms are: (1) motor tension; (2) autonomic hyperactivity; (3) apprehensive expectation; and (4) vigilance and scanning. 20 C.F.R. Pt. 404, Subpt. P, App. 1, § 12.06(A)(1)(a)-(d).

Those four criteria are: (1) marked restriction of activities of daily living; (2) marked difficulties in maintaining social functioning; (3) marked difficulties in maintaining concentration, persistence, or pace; and (4) repeated episodes of decompensation, each of extended duration. 20 C.F.R. Pt. 404, Subpt. P, App. 1, § 1206(B)(1)-(4) (functional restriction criteria for anxiety-related disorder).

The Listings for disorders of the musculoskeletal system, including disorders of the spine, generally consist of a set of medical findings that medically substantiate the disorder. An impairment meets the listing for musculoskeletal disorder if it causes loss of function, which is shown by inability to ambulate effectively, inability to perform fine or gross motor movements effectively, and/or is accompanied by pain. 20 C.F.R. Part 404, Subpt. P, App. 1, § 1.00. A claimant is presumptively disabled by reason of disorders of the spine if she shows "evidence of nerve root compression characterized by neuro-anatomic distribution of pain, limitation of motion of the spine, motor loss . . . accompanied by sensory or reflex loss and, if there is involvement of the lower back, positive straight-leg raising test." 20 C.F.R. Pt 404, Subpt. P, App. 1, § 1.04(A).

If a claimant has a severe mental or physical impairment that does not meet the Listings, the Commissioner will then assess RFC. 20 C.F.R. § 404.1520a(d)(3). Although RFC is a medical question, Nevland v. Apfel, 204 F.3d 853, 858 (8th Cir. 2000), RFC is not based solely on "medical" evidence. See McKinney v. Apfel, 228 F.3d 860, 863 (8th Cir. 2000) (holding that the Commissioner must determine a claimant's RFC based on all of the relevant evidence, including medical records, observations of treating physicians and others, and an individual's own description of their limitations); see also 20 C.F.R. §§ 404.1545, 404.1546.

A claimant may have symptom-free intervals and still be considered disabled. Andler v. Chater, 100 F.3d 1389, 1393 (8th Cir. 1996). "We are mindful that `[i]t is inherent in psychotic illnesses that periods of remission will occur,' and that such remission does not mean that the disability has ceased." Id., quoting Miller v. Heckler, 756 F.2d 679, 681 n. 2 (8th Cir. 1985). "Symptom-free intervals and brief remissions are generally of uncertain duration and marked by the impending possibility of relapse. Andler v. Chater, 100 F.3d at 1393 . A claimant may experience a lessening or remission of signs and symptoms of mental illness due to creation of a structured environment. 20 C.F.R. Part 404, Subpt. P, App. 1, § 12.00(E).

It is the ALJ's duty to investigate the facts and develop arguments both for and against granting benefits. Sims v. Apfel, 530 U.S. 103, 111 (2003) (noting that "social security proceedings are inquisitorial rather than adversarial"). It is well-settled that the ALJ's duty to fully and fairly develop the record includes the responsibility of ensuring that the record includes evidence addressing the alleged impairments at issue from either a treating or examining physician. Snead v. Barnhardt, 360 F.3d 834, 838 (8th Cir. 2004) ("The ALJ possesses no interest in denying benefits and must act neutrally in developing the record").

DISCUSSION

In the instant case, the ALJ determined that Pettit's impairments did not meet or equal the Listings. Tr. 17. This determination was based on the ALJ's reading of Pettit's treating physicians' opinions, Social Security Administration-chosen consulting physicians' opinions, and hearing testimony of Pettit and her husband. Tr. 17-27. Pettit appeals this decision based on ALJ error in that the ALJ did not base her decision upon substantial evidence and that the decision she reached was contrary to law and the facts presented in this case. Filing No. 1.

The ALJ was correct in determining that Pettit's back impairments did not render her disabled according to Social Security Administration guidelines. Pettit does have medically-diagnosed degenerative disk disease and meets the first requirement of the Listing for that impairment in 20 C.F.R. Part 404, Subpt. P, App. 1, § 1.04. That disease frequently causes Pettit a great deal of pain and has even resulted hospitalization. However, the medical record does not support the meeting of § 1.04(A) of the Listing. The requirements of that section are conjunctive. A claimant must experience limited range of motion, motor loss, accompanied by sensory or reflex loss, and positive straight-leg raising test when the lower back is involved. While VA and Nebraska Spine Center medical records do show limitations in Pettit's range of motion, Tr. 327, 495, 516, they are also consistent in showing no motor, sensory or reflex losses and negative straight-leg raising test results. On February 14, 2002, John W. Sype and Dr. Nicoline W. Lee from the VA noted negative straight-leg lifts. Dr. Eric Phillips from the Nebraska Spine Center noted the same on August 9, 2004. Although Pettit has been diagnosed with degenerative disk disease that causes pain and some limited range of motion, Pettit's back impairment does not fully meet the Listing for disorders of the spine. She, therefore, is not disabled by reason of her degenerative disk disease.

The inquiry into Pettit's disability determination does not end with her back impairments. Her mental impairments must also be considered. The ALJ did consider Pettit's mental impairments but erred in her decision. Pettit's mental impairments are disabling, and the record supports that determination.

In determining that Pettit was not disabled by mental impairments, the ALJ failed to give Pettit's treating physicians' opinions controlling weight in her decision. Dr. Mead treated Pettit for almost two years, and Dr. Fernandes treated her for just over three years. Drs. Mead and Fernandes and their predecessors at the VA determined that Pettit was disabled. The ALJ is not held to a disability determination by the VA, but she must give it consideration and if she rejects it, must give reasons that enable a reasonable review. The ALJ's decision shows that she did consider the VA determination but dismissed it rather summarily by noting that the Social Security Administration and its Commissioner use different standards for determining disability. To support her opinion the ALJ analyzes the Axis V diagnosis GAF scores V periodically ascribed by Petit's treating psychiatrists. The scores range from GAF 40 to 75 (which range not unexpectedly is consistent with a Axis I diagnosis of bipolar disorder). Based on this analysis and the findings of the consulting psychiatrist, the ALF concludes that Dr. Fernandes's determination of disability and inability to work are "widely inconsistent with and unsupported by" the assessments and medical reports in the record. The ALJ also notes that the fact that Pettit was able to successfully complete an Associate's of Arts degree with high marks during her insured status negates a finding of disability. This court disagrees. The VA doctors' opinions are supported by the record as a whole.

The record shows Dr. Mead as Pettit's first long-term treating mental health physician. Although Dr. Mead's notes frequently show Pettit as "pleasant" and "doing well," a closer look at the notes reveals that Pettit's impairments drastically affected her life. Dr. Mead notes that Pettit's obssessive-compulsive personality causes her so much concern in her college courses that she is unable to sleep the night before an exam and that if Pettit fears she will not earn an "A" in her class, she must drop that class. Dr. Mead also noted that Pettit was "not happy at all" and was in "obvious distress" due to her bipolar disorder, even when receiving the great news that her article would be published. Pettit's life was also affected by her generalized anxiety disorder, as shown in Dr. Mead's treatment notes. Dr. Mead's diagnosis of anxiety disorder came after a visit in which Pettit described her difficulties in her encounters with co-workers, which eventually led Pettit to the decision not to return to work. Dr. Mead's diagnoses and opinions are supported by Pettit's VA Compensation and Pension Examination performed by Dr. E. Haffke during this time. Dr. Haffke's notes agree with Dr. Mead's; Pettit is miserable, sad, and her depressive symptoms persist.

When Dr. Mead left the VA, Dr. Fernandes continued Pettit's treatment for another three years. In those three years, Dr. Fernandes also found Pettit to be depressed and experiencing feelings of hopelessness. In May of 2002, Dr. Fernandes reported that Pettit was sleeping up to twenty hours a day. Throughout Dr. Fernandes's treatment of Pettit, he notes at different times that her bipolar disorder appears to be in remission, but this does not negate a finding of disability. A determination of disability, even when there are periods of remission, is fully consistent with case law and Social Security regulations.

Drs. Mead and Fernandes are treating physicians who saw Pettit as a patient at the VA. Dr. Mead opined that Pettit's mental impairments significantly affected her work adjustment; Dr. Fernandes opined that Pettit would be unable to maintain employment. These opinions of disability are from the VA, so they are not binding upon the ALJ; however, these were Pettit's treating physicians, and their opinions must be given controlling weight, unless there is substantial contrary evidence or those opinions are inconsistent.

The ALJ points to the evaluations of Dr. Rebecca Brayman to show substantial contrary evidence. The record shows that Dr. Brayman examined Pettit twice over a period of two years and merely acknowledged as true the examination of another consulting psychologist at a later date. Dr. Brayman stated that because Pettit was able to care for her child and complete college classes, she was not suffering from a disabling mental condition. What Dr. Brayman failed to mention was that, as VA records indicate, Pettit was only able to cope independently with help from her husband, in-laws, and VA treatment. Pettit was raising her child only with significant help from her husband and in-laws, and she was able successfully complete college classes only by making special accommodations with her teachers, such as taking tests and completing labs in solitary areas and substituting a paper for completion of an internship when the stress of an internship caused Pettit to quit the internship.

The ALJ points to "inconsistent" opinions of Drs. Mead and Fernandes in discrediting their disability determinations. As noted above, it is true that the record does contain notes stating the Pettit is "doing well" or is in remission, but read as a whole, those notes are not inconsistent with a determination of disability. It is possible to appear well and experience periods of remission while still suffering the effects of obsessive-compulsive personality, bipolar disorder, and generalized anxiety. Both doctors' notes and opinions reflect that reality. Since Pettit's treating physicians' opinions are supported by the record as whole and are consistent, they must be given controlling weight.

In addition to the opinions of Pettit's treating physicians, Pettit's own subjective complaints must be given controlling weight because they are also consistent with the record as a whole. She testified that her manic episodes caused her to tear out most of the landscaping in her yard, stay up for two days in order to reupholster furniture, and embark on a suddenly-urgent trip to Tennessee with her son without packing. She needed a friend to remain with her on the phone for four or five hours in order to return home. Pettit also testified that her husband does most of the household chores for her and that he and his father must assist her in taking care of herself and their son. She also testified that she was able to complete her Associate's degree, but only with special accommodations. These statements are not inconsistent with the record. The manic episodes she described are fully consistent with effects of bipolar disorder and her physicians' notes. While neither Dr. Mead nor Dr. Fernandes specifically notes those incidents, they do note periods of extreme high energy followed by depressive periods, which support Pettit's recollection of those incidents. Pettit's accounts of the necessity of a structured environment is specifically reflected in Dr. Fernandes's notes. In a period during which Pettit was experiencing marked distress, Dr. Fernandes recommended returning to activity scheduling, and approved of her return to ceramics class for part of her therapy.

The record lacks substantial evidence to support a finding that Pettit is disabled by reason of her anxiety-related disorder; however, when Pettit's treating physicians' opinions and her own subjective complaints are given controlling weight, Pettit's impairments do meet the Listings for bipolar disorder. The record is replete with evidence showing a history of "episodic periods" of both manic and depressive syndromes. Physicians' notes and Pettit's testimony show how those episodic periods caused at least two of the four listed functional restrictions. Pettit's impairments caused marked restriction of activities of daily living. That restriction is shown in her decision not to have more children, her inability to take care of herself and son, periods in which she would sleep twenty hours a day, and the inability to perform basic household tasks. Pettit also has marked difficulties in maintaining social functioning. The record reflects that Pettit was unable to complete her course labs and examinations without the special accommodation of solitary areas. She was also not able to participate in therapeutic pottery class in a traditional manner. Her husband or friend had to transfer her work back and forth from her teacher in order that Pettit would not have to endure the overwhelming stress of that social encounter.

The record shows Pettit's medically-documented bipolar disorder and its effects meet two of the four functional restriction criteria. Therefore, Pettit is disabled by reason of bipolar disorder. The ALJ erroneously discredited the opinions of Pettit's treating physicians and Pettit's own subjective complaints and instead relied upon the opinions of a consulting physician who only examined Pettit two times. If the ALJ would have correctly relied upon the opinions of Drs. Mead and Fernandes and Pettit's subjective complaints, she would have found Pettit disabled by reason of bipolar disorder at the third step of the five-step process and need not have considered her RFC. 20 C.F.R. § 404.1520(a). If the claimant meets the criteria of steps 1, 2, or 3, no further analysis is necessary; the claimant is considered disabled and is granted benefits.

The court finds that the analysis of Pettit's case should end at step three with a finding that substantial medical and subjective evidence in the record shows her mental impairment meets or equals the Listing for bipolar disorder. Because she is determined disabled at that step, it is not necessary to analyze whether she has the requisite RFC to be able to perform some previous or other work activity.

CONCLUSION

The court concludes that the clear weight of the evidence leads to a determination that Pettit was disabled within the meaning of 20 C.F.R. Pt 404, Subpt. P, App. 1, § 1204(A)(3), from February 5, 2001, through March 31, 2005. Where further hearings would merely delay receipt of benefits, an order granting benefits is appropriate. See Hutsell v. Massanari, 259 F.3d 707, 714 (8th Cir. 2001), quoting Parsons v. Heckler, 739 F.2d 1334, 1341 (8th Cir. 1984). Accordingly,

IT IS ORDERED that the decision of the Commissioner is reversed and this action is remanded for an award of benefits. A separate judgment is filed in connection with this Memorandum and Order.

[*] This opinion may contain hyperlinks to other documents or Web sites. The U.S. District Court for the District of Nebraska does not endorse, recommend, approve, or guarantee any third parties or the services or products they provide on their Web sites. Likewise, the court has no agreements with any of these third parties or their Web sites. The court accepts no responsibility for the availability or functionality of any hyperlink. Thus, the fact that a hyperlink ceases to work or directs the user to some other site does not affect the opinion of the court.

ss Seme v. E H Prof'l Sec. Co., Inc., Case No. 08-cv-01569-RPM-KMT, 2010 WL 1553786, at *2 (D. Colo. Mar. 19. 2010) (internal quotations omitted).

DeMarsh, 2009 WL 3720180, at *2.

Id.

Id. (quoting Adolph Coors Co. v. Movement Against Racism The Klan, 777 F.2d 1538, 1544 (11th Cir. 1985)) (internal quotation marks omitted).

 IV. Findings of Fact

At the hearing to establish damages, plaintiff testified as to her loss of income, her effort to mitigate damages by seeking subsequent employment, and the pain and suffering she experienced as a result of the humiliation of losing her job. Defendants did not personally appear and no witnesses were called on their behalf. Defense counsel did not cross-examine plaintiff on her alleged damages. The Court took the matter under advisement. Having reviewed the evidence and the applicable law, the Court makes the following findings.

A. Plaintiff is Entitled to Damages

The Court finds that plaintiff is entitled to damages, based on these facts, taken from plaintiff's Complaint and attached exhibits, as well as testimony and evidence presented at the hearing.

Plaintiff filed this lawsuit against Bentwood and Johnson, on behalf of Bentwood, alleging that they violated Title VII of the Civil Rights Act of 1964, the Kansas Act Against Discrimination, and Topeka City Ordinance No. 18735 sec. 86.1, when defendants discriminated against her on the basis of her race, sex, and national origin.

Plaintiff is a Hispanic female, born in Mexico. Plaintiff was employed at Bentwood from 2005 until 2008, as the onsite property manager. During her tenure, about two months before her termination, Bentwood was sold to a new owner, defendant Johnson. Under this new management, plaintiff was offered, and she accepted, the same rate of pay and benefits. Additionally, Bentwood provided plaintiff with a free apartment with all rent and utilities paid; the apartment was provided with the understanding that plaintiff would have thirty days to vacate if she were terminated.

During the two months that plaintiff worked at Bentwood under Johnson's direction, Bentwood management directed plaintiff to ask illegal questions, to hire undocumented Hispanic employees, and told to have undocumented immigrants perform plumbing and electrical work without the proper permits. During this same time, plaintiff and other employees received insufficient funds checks for their pay and vendors received insufficient funds checks as well. When plaintiff questioned a member of management staff about this, the director told her to find another job, and on May 12, 2008, plaintiff was terminated and given no valid business reason for her termination.

In her letter to the Kansas Department of Labor, she states that, following her complaint, she learned that defendants "fired or transferred all the illegal immigrants." (Doc. 1, Ex. 3 at 3.)

Plaintiff testified that she was subjected to disparate treatment regarding the terms, conditions and privileges of her employment because of her sex and national origin. She testified that Bentwood's management would not have treated a similarly-situated Caucasian male employee in the same manner as she was treated by Bentwood's management. Plaintiff was verbally mistreated when she was called an "illegal Mexican," an "illegal Hispanic," or an "illegal woman" because of her race, national origin and gender. Management also called her an "illegal alien." Plaintiff testified that she was terminated because of her race and national origin, and because she argued about directions to engage in illegal hiring and employment practices based on race and national origin. Even after her termination, and while she still resided at the apartment complex, Bentwood management continued to call plaintiff an "illegal alien." Consequently, plaintiff suffered loss of respect and reputation.

B. Type and Amount of Damages

Plaintiff testified that she had received income, benefits and regular bonuses from Bentwood. She calculated that she received gross weekly wages of $550 ($13.75 per hour for 40 hours a week). She was also paid $50 for each renewal and each new rental, bonuses that averaged $250 per week in the last few weeks of plaintiff's employment there. Plaintiff also received a rent- and utility-paid apartment, a benefit that included: the apartment valued at $580 per month; storage space valued at $415 per month; and utilities of approximately $312.45 per month. From this, plaintiff calculated $57,119.40 in total annual salary and benefits, comprised of: $27,500 in salary; $12,500 in bonuses; $15,689.40 in benefits; and an estimated thirteen days of vacation worth $1,430.

Exhibit 1 states that plaintiff's annual benefits while at Bentwood totaled $15,684.40, but the Court has reviewed the calculations and determined that her annual benefits totaled $15,689.40. Nevertheless, plaintiff's total annual income is correctly calculated as $57,119.40.

After she was terminated, plaintiff was unemployed from May 13, 2008 to June 24, 2008. During this time, she received unemployment from the Kansas Department of Labor. She then went to work for a property management company, and its successor company, from June 25, 2008 to August 21, 2009, when she changed employment and began working as an onsite manager for an employment agency. While plaintiff was still working for that company at the time of the May 17, 2010 hearing, she testified that she expected to lose the position when the company closed its Topeka office at the end of May 2010. Plaintiff had not secured new employment.

Unemployment compensation is a collateral source of income and should not be used to off set a back pay award. Leidel v. Ameripride Servs., Inc., 276 F. Supp. 2d 1138, 1144 (D. Kan. 2003).

 V. Conclusions of Law

A. Subject Matter Jurisdiction

Before it may enter default judgment, the Court has an affirmative duty to determine whether it has subject matter jurisdiction. Title VII is a federal cause of action for employment discrimination. As a jurisdictional prerequisite, plaintiff must exhaust all administrative remedies before bringing a claim in federal court. Here, plaintiff alleges she filed a complaint with the EEOC on July 2, 2008, and with the Kansas Human Rights Commission ("KHRC") on August 6, 2008. On or about January 7, 2009, the EEOC issued to plaintiff a Notice of Suit Rights. On April 6, 2009, plaintiff filed a Complaint with the federal district court, attaching a copy of the Notice of Suit Rights. Based on the facts alleged in her Complaint, her administrative claim was filed within 300 days of her termination, and this lawsuit was filed within 90 days of the EEOC Notice of Suit Rights. The Court finds it has subject matter jurisdiction over plaintiff's Title VII claims. On the other hand, the Court does not have jurisdiction over plaintiff's claims brought under the Kansas Act Against Discrimination, as by plaintiff's own admission, that administrative action was still pending at the time she brought this lawsuit.

See Ins. Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702 (1982).

Although the Tenth Circuit treats the question of whether a defendant is an "employer" under Title VII as an issue of subject matter jurisdiction that is intertwined with the merits of the claim, there is no dispute here that Bentwood is such an employer. See Burgett v. Utah Valley Veterinary Hosp., 97 F. App'x 874, 875 (10th Cir. 2004); Wheeler v. Hurdman, 825 F.2d 257, 259-60 (10th Cir. 1987); Owens v. Rush, 636 F.2d 283 (10th Cir. 1980); see also Nesbit v. Gears Unlimited, Inc., 347 F.3d 72, 78 (3rd Cir. 2003) (noting the Tenth Circuit's stance on this issue makes the matter jurisdictional and a matter to be resolved on the merits).

The Tenth Circuit has distinguished between a plaintiff's failure to exhaust administrative remedies, which creates a jurisdictional bar to suit, and plaintiff's failure to timely exhaust administrative remedies, which is an affirmative defense subject to equitable tolling. See Jones v. Runyon, 91 F.3d 1398, 1399 n. 1 (10th Cir. 1996) (noting that the Tenth Circuit's precedent was somewhat inconsistent, but concluding that, although timeliness is not jurisdictional, exhaustion is jurisdictional under Tenth Circuit law); see also Low v. Chu, Case No. 09-CV-0398-CVE-PJC, 2010 WL 503109, at *3 (N.D. Okla. Feb. 8, 2010) (noting that exhaustion is jurisdictional, but timely exhaustion is not jurisdictional and may be waived or tolled).

Pursuant to K.S.A. § 44-1005(i), if the Kansas Human Right Commission has not issued a finding of probable cause or no probable cause within 300 days of the filing of the complaint, the complainant may make a written request to have the complaint dismissed. Id. "Any such dismissal of a complaint in accordance with this section shall constitute final action by the commission which shall be deemed to exhaust all administrative remedies under the Kansas act against discrimination for the purpose of allowing subsequent filing of the matter in court by the complainant." Id. If plaintiff did not request that her complaint be dismissed, the Court finds she has not exhausted her administrative remedies on her state law claims. See Sandlin v. Roche Labs., Inc., 991 P.2d 883 (Kan. 1999) (noting that § 44-1005(i) allows a complainant to request dismissal, but only if 300 days have passed and no finding has yet been made); Van Scoyk v. St. Mary's Assumption Parochial School, 580 P.2d 1315, 1316-18 (Kan. 1978); Parsells v. Manhattan Radiology Group, L.L.P., 255 F. Supp. 2d 1217, 1228 n. 4 (D. Kan. 2003) (explaining § 44-1005(i)); Butler v. Capitol Fed. Sav., 904 F. Supp. 1230, 1234 (D. Kan. 1995) (dismissing claims for failure to exhaust even though KAAD claim had been pending two years); Freeman v. Kan. State Network, Inc., 719 F. Supp. 995, 997-98 (D. Kan. 1989) (finding that state law claims were appropriately added to federal complaint only after Kansas Commission on Civil Rights dismissed the administrative claims).

 B. Personal Jurisdiction

Before a court has power to enter default judgment, it must determine whether it has jurisdiction over the parties. In evaluating personal jurisdiction over a nonresident defendant, the Court considers "(1) whether the applicable statute potentially confers jurisdiction by authorizing service of process on the defendant and (2) whether the exercise of jurisdiction comports with due process." The Court finds that is has personal jurisdiction over defendant Bentwood. The Court further finds that it has personal jurisdiction over defendant Johnson, who was sued not individually, but in his capacity as the owner and agent of defendant Bentwood.

Williams v. Life Sav. Loan, 802 F.2d 1200, 1202 (10th Cir. 1986).

Trujillo v. Williams, 465 F.3d 1210, 1217 (10th Cir. 2006) (quoting Peay v. BellSouth Med. Assistance Plan, 205 F.3d 1206, 1209 (10th Cir. 2000)).

Here, the summons and complaint were delivered to the main office at Bentwood, in Topeka, Kansas, via certified mail. Davis, a managing employee working for the company at its main office, accepted service of process on behalf of the company. She signed the return receipt as an agent for the company. She also received service for Johnson. Although Johnson is listed as an individual defendant in this case, it does not appear he was served in his individual capacity. Rather, he was served "on behalf of Bentwood Place Apartments LLC." Johnson is the owner of Bentwood Place Apartments and Davis was the office manager at the time service was effected. As an agent for the LLC, Johnson was properly served at the address of his business. In both cases, plaintiff filed a copy of the return receipt electronically. This comports with the requirements under Fed.R.Civ.P. 4(h), which provides that service on a domestic corporation, partnership or other unincorporated association may be served in a judicial district of the United States in any manner permitted under state law for serving a summons in an action in state court, or by delivering a copy of the summons and complaint "to an officer, a managing or general agent, or any other agent authorized by appointment or by law to receive service of process."

See K.S.A. § 60-303(c)(4).

See Fed.R.Civ.P. 4(h)(1)(A) and 4(e)(1).

Fed.R.Civ.P. 4(h)(1)(B).

 C. Damages Available Under Title VII

Under Title VII, the following damages are recoverable: compensatory damages, front pay, and back pay. "In ruling on a motion for default judgment, the court may rely on detailed affidavits or documentary evidence to determine the appropriate sum for default judgment." Although punitive damages are permitted upon a proper showing, at the hearing, plaintiff did not request punitive damages, and is thus not entitled to punitive damages.

42 U.S.C. § 1981a(b)(3).

42 U.S.C. § 2000e-5(g)(1) ("If the court finds that the respondent has intentionally engaged in or is intentionally engaging in an unlawful employment practice charged in the complaint, the court may . . . order . . . any other equitable relief as the court deems appropriate").

Id.

Seme v. E H Prof'l Sec. Co., Inc., Case No. 08-cv-01569-RPM-KMT, 2010 WL 1553786, at *11 (D. Colo. Mar. 19, 2010) (citing Fanning v. Permanent Solution Indus., Inc., 257 F.R.D. 4, 7 (D. D.C. 2009)).

Title VII allows compensatory damages for future pecuniary losses, emotional pain, suffering, inconvenience, mental anguish, loss of enjoyment of life and other nonpecuniary losses. The amount of compensatory damages recoverable is limited; if the defendant has more than 14 but less then 101 employees, plaintiff's compensatory damages cannot exceed $50,000. The Court finds the limitation applicable here, as plaintiff presented no evidence that defendant employs more than 101 employees.

42 U.S.C. § 1981a(b)(3).

Id.

At the hearing, plaintiff testified to the social ostracization and humiliation she personally felt, and that she heard her children express, arising out of ongoing and baseless accusations by Bentwood staff that she was residing in the United States illegally, as well as the fact that she was terminated. Plaintiff testified that she had worked at Bentwood as its onsite manager for three years before she was terminated. Having established her reputation there, she testified that there were rumors among Bentwood employees, even at her children's school, as to why plaintiff was terminated. Plaintiff testified that even at the time of the hearing, she and her children were suffering humiliation, as they continued to live in the same community and her children continued to attend the same school as Bentwood residents. Plaintiff testified that she was uncertain how to quantify her pain and suffering and asked for $50,000 in compensatory damages. The Court finds this award appropriate.

In addition to compensatory damages, Title VII allows equitable relief, such as back pay and front pay. Back pay is the amount of money plaintiff would have earned from the date she was unlawfully terminated to the date the first judgment is entered. In that time, plaintiff is responsible for mitigating her damages. "Interim earnings or amounts earnable with reasonable diligence by the person or persons discriminated against shall operate to reduce the back pay otherwise allowable." Plaintiff provided sworn testimony and a spreadsheet of her estimated damages. She itemized her income and benefits while working at Bentwood, and separately itemized her income and benefits while working for subsequent employers. By subtracting the difference between her earnings at Bentwood and her earnings with each subsequent employer, she estimated her back pay and seeks $63,066.35. The Court finds this amount appropriate.

42 U.S.C. § 1981a(b)(2); 42 U.S.C. § 2000e-5(g); Medlock v. Ortho Biotech, Inc., 164 F.3d 545, 556 (10th Cir. 1999).

Daniel v. Loveridge, 32 F.3d 1472, 1477 (10th Cir. 1994).

42 U.S.C. § 2000e-5(g)(1).

It is within the court's discretion to award prejudgment interest on a plaintiff's back pay award. The Court opts not to award prejudgment interest, particularly since plaintiff's judgment comes approximately one year after she filed this lawsuit.

Loeffler v. Frank, 486 U.S. 549, 557 (1988) ("Prejudgment interest, of course, is `an element of complete compensation'") (quoting West Virginia v. United States, 479 U.S. 305, 310 (1987)); Daniel, 32 F.3d at 1478; Leidel v. Ameripride Servs., Inc., 276 F. Supp. 2d 1138, 1147 n. 36 (D. Kan. 2003) (applying the interest rate set by the Internal Revenue Service on overpayments and underpayments, 26 U.S.C. § 6621, and holding that such interest should be compounded annually); Rahn v. Junction City Foundry, Inc., 161 F. Supp. 2d 1219, 1241 (D. Kan. 2001) (awarding prejudgment interest at the Kansas statutory rate of ten percent, K.S.A. § 16-201).

Plaintiff also produced evidence at the hearing in support of her request for front pay. Front pay is "money awarded for lost compensation during the period between judgment and reinstatement or in lieu of reinstatement." Plaintiff calculated her average loss each year to be $57,119.40. She requests half that amount, $28,559.70, as annual future lost wages. Based on an estimated annualized loss of $28,559.70 per year, plaintiff requests front pay for a three year period, totaling $85,679.10 in future damages. The Court finds this award of damages appropriate, and further finds appropriate an award of postjudgment interest pursuant to 28 U.S.C. § 1961(a), by which "the court achieves the statutory goal of compensating the plaintiff while removing defendant's incentive to delay payment of the judgment."

Pollard v. E.I. du Pont de Nemours Co., 532 U.S. 843, 848 (2001).

Leidel v. Ameripride Servs., Inc., 276 F. Supp. 2d 1138, 1148 (D. Kan. 2003); see DeMarsh v. Tornado Innovations, L.P., Case No. 08-2588-JWL, 2009 WL 3720180, at *7 (D. Kan. Nov. 4, 2009) (awarding postjudgment interest on a default judgment); Albert v. Wesley Health Servs., Case No. 00-2067-KHV, 2001 WL 503241, at *3 (D. Kan. May 10, 2001) (same).

Defendants have raised no argument that plaintiff's award of damages is limited to the amount of her prayer in her Complaint. The Court recognizes that Fed.R.Civ.P. 54(c) requires that "[a] default judgment must not differ in kind from, or exceed in amount, what is demanded in the pleadings." This rule protects a defendant's due process rights with respect to the amount of damages he must pay. "If plaintiff had demanded greater relief, defendant might have chosen to defend the action on the merits; thus it would be unjust to award by default relief greater than that which plaintiff demanded in the pleadings."

Albert, 2001 WL 503241, at *1 (citing 10 Moore's Federal Practice § 54.71 and 54-127 (Matthew Bender 3d ed.)).

Id.

In this action, initiated by plaintiff filing both a form pro se Civil Complaint, and a form pro se Employment Discrimination Complaint, plaintiff checked boxes praying for actual damages, punitive damages, costs and fees in litigating this case, and "such other relief as may be appropriate, including attorneys fees, if applicable; and plaintiff inartfully articulated her damages to include "monetary restitution," "$18,000 = as restitution for been unlawfully victimized," and also claimed damages arising from being terminated, and for "loss of respect reputation." Defendants did not challenge plaintiff's evidence of damages and have raised no argument that her award of damages is limited to any particular amount. Notably, this case is not in the typical posture of a default judgment; here, defendants had an opportunity to challenge plaintiff's entitlement to damages, the amount of damages, and whether her award should be limited. Defendants did not, and this Court concludes that under these circumstances, defendants due process rights have not been denied.

Thus the Court finds sufficient evidence and an appropriate basis to award plaintiff the total damages she requested at the hearing, $198,745.45, which is comprised of: $50,000 in compensatory damages; $63,066.35 in back pay; and $85,679.10 in front pay. The Court further awards statutory postjudgment interest. Neither plaintiff nor her attorney requested an award of costs or attorneys fees at the hearing.

IT IS THEREFORE ORDERED BY THE COURT that defendants' Motion to Set Aside Default Judgment (Doc. 27) is denied, and plaintiff's Application for Default Judgment (Doc. 22) is granted. The Court enters default judgment against defendant Bentwood Place Apartments, LLC in the amount of $198,745.45, and postjudgment interest at the rate provided in 28 U.S.C. § 1961(a).

IT IS SO ORDERED.

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Comments

OLIVAS v. BENTWOOD PLACE APARTMENTS, LLC (Kan. 7-26-2010)
(Jul 26, 2010)