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`UNITED STATES DISTRICT COURT
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`FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA
`HUNTINGTON DIVISION
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`WALLACE L. SCRUGGS, JR,
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`and
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`RENEE SCRUGGS,
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`PLAINTIFFS,
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`WAYNE ANDERSON, individually, and
`As successor in interest to American Energy
`Holdings, LLC, Wilon Resources, Inc. and E2
`Investments, LLC;
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`US NATURAL GAS CORP WV,
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`US NATURAL GAS CORP,
`And SYLIOS CORP.
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`'
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`DEFENDANTS.
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`Civil Action No: 3 : 13-CV-30435
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`PLAINTIFFS’ MOTION FOR DEFAULT AGAINST
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`WAYNE ANDERSON, PURSUANT TO RULE 55(a),
`WITH INCORPORATED MEMORANDUM OF LAW
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`NOW COME the Plaintiffs, Wallace L. Scruggs, Jr. and Renee Scruggs, by counsel, to
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`respectfully move for entry of default against Defendant, Wayne Anderson, pursuant to Rule
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`55(a) of the Federal Rules of Civil Procedure. In support, Plaintiffs state as follows:
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`FACTS
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`This case pertains to claims of fraud, negligence, breach of contract, and breach of
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`fiduciary duty against Wayne Anderson of St. Petersburg Florida and various corporate entities
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`that he chooses to operate under fiom time to time. See Complaint, ECF No. 1. Essentially,
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`Wallace and Renee Scruggs invested three hundred and fifty thousand dollars ($350,000.00) to
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`buy a “Working interest” in what turned out to be a sham gas well enterprise, through a
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`Subscription Agreement with American Energy Holding, LLC in 2006. See E. Anderson has
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`since changed the name of the corporate entities several times.
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`The Plaintiffs’ allegations of fraud and breach of contract arise from the fact that the
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`alleged gas Well — to the extent it exists at all m is located on property which has not been leased
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`by any of Mr. Anderson’s companies or predecessors. Accordingly, the Defendants cannot
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`extract mineral from this location. Yet, for years, Anderson has claimed to the Scruggs that the
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`Well existed and that it would soon be ready for production, while at the same time asking for
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`further investment in the well in order to perform maintenance. Details concerning the specific
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`allegations are set forth in the Amended Complaint.
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`Based upon the arbitration clause that was contained in the Subscription Agreement
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`between the parties, the Court stayed this litigation in favor of arbitration, and the Plaintiffs did
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`not oppose this action. See Memorandum Opinion and Order, entered 7/ 1/2014, ECF No. 10.
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`Because arbitration had not occurred, the Court entered an order directing the Plaintiffs to show
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`cause for why the matter should not be dismissed. See Order, entered 6/11/2015, ECF No. 15.
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`The Plaintiffs then explained that, although they are equally comfortable pursuing the case in
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`arbitration or federal court, they had encountered much difflculty in securing the Defendants’
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`participation in the arbitration. See Plaintiffs’ Response to Court Order of June 11, 2015 and
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`Report of Case Status, filed 6/19/2015, ECF No. 16. The Plaintiffs sought to keep the federal
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`court case open against the corporate defendants, who were unrepresented in the arbitration
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`proceedings, but agreed to allow the case to proceed against Wayne Anderson separately in
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`arbitration. See E.
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`In October of 2015, the Plaintiffs then filed a Report of the Arbitration
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`Status with Court, wherein they informed the Court that there had been numerous problems with
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`Mr. Anderson’s failure to participate in the arbitration and that the Defendants had failed to pay
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`their share of the fees for the arbitration proceedings. See Plaintiffs’ Report of Arbitration
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`Status, filed 10/ 15/2015, ECF No. 25.
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`In March of 2016, the Plaintiffs again informed the Court that Mr. Anderson had not been
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`participating in the arbitration proceedings, and further informed the Court that Mr. Anderson
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`had not paid the required arbitration fees; therefore, the Plaintiffs moved the Court to remand the
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`case back to the active docket in federal court. See Plaintiffs’ Response to Order of February
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`. 24, 2016 [DE—26l and Report of Case Status, and Plaintiffs’ Motion to Remand Case to Active
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`Docket in Federal Court, filed 3/2/2016, ECF No. 27.
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`The Court agreed, and entered an Order reinstating the case on the active docket. See
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`Order Reinstating Case, filed 3/30/2016, ECF No. 36. The Plaintiffs then moved for default
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`judgment against all defendants, showing that Wayne Anderson had demonstrated a pattern of
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`acting in bad faith and stalling the arbitration and litigation processes. See E. at ECF pages 159-
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`160. The Plaintiffs also illustrated how the corporations were prohibited from pro se
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`representation, and that they required representation by an attorney. See E. at ECF pages 160-
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`162.
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`The Defendants responded with absurd allegations that the Plaintiffs had also failed to
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`pay their arbitration fees. See Defendant's Response to Plaintiffs’ Motion for Default Judgment
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`Against Defendants Wayne Anderson, US Natural Gas Corp. WV, US Natural Gas Corp and
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`Sylios Com, filed 5/2/2016, ECF No. 38.
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`The Plaintiffs then filed a Reply, in which they made clear that judgment should be
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`granted against the corporate entities, as that argument was unopposed, and Wayne Anderson
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`specifically stated that he was not responding on behalf of the corporate entities. See Plaintiffs’ A
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`Reply Memorandum of Law in Support of Motion for Judgment Against Defendants Wame
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`Anderson, US Natural Gas Corp. WV, US Natural Gas Copp, and Sylios Copp, filed 5/9/2016,
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`ECF No. 39.
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`Ultimately, the Court granted the Plaintiffs’ motion and entered default judgment against
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`the corporate defendants, but denied the motion with respect to Wayne Anderson, individually,
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`stating
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`...[D]efault judgment against Mr. Anderson is not warranted at this time. Mr.
`Anderson responded to Plaintiffs motion for default judgment with allegations
`that, if true, make default judgment against him unwarranted.
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`Order, filed 5/ 1 1/2015, ECF No. 40.
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`The Court then held a Scheduling Conference in this matter, and entered a Scheduling
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`Order in this case.
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`See Order, filed 6/3/2016, ECF No. 41 (rescheduling the Scheduling
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`Conference); see also Scheduling Order, filed 6/ 16/2016, ECF No. 43. Despite the fact that the
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`Court expressly directed the parties to appear,
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`in person, for the Scheduling Conference,
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`Defendant Anderson did not appear. Pursuant to the Scheduling Order, the case proceeded
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`against defendant Anderson; however, Anderson refused to participate. Specifically, Anderson
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`would not respond to numerous requests for deposition scheduling, nor would he respond to any
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`inquiry from the Plaintiff Counsel at any time subsequent to his non-appearance at the Court-
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`ordered scheduling conference.
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`On August 22, 2016, the Court held a Pretrial Conference in this matter. Defendant,
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`Wayne Anderson, was unrepresented and did not appear for the Pretrial Conference. The Court
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`suspended the current Scheduling Order and further ordered that the Plaintiffs would have one
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`week from that hearing to file a Motion for Default to be entered by the Clerk, in accordance
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`with the Federal Rules of Civil Procedure.
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`In compliance with the Court’s ruling at the Pretrial
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`Conference, the Plaintiffs submit this Motion for Default to be entered by the Clerk, pursuant to
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`Rule 55(a) of the Federal Rules of Civil Procedure.
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`LAW & ARGUMENT
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`Entry of Default against a party by the Clerk is authorized by Rule 55(a) of the Federal
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`Rules of Civil Procedure, which states, in pertinent part:
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`(a) Entering a Default. When a party against whom a judgment for affirmative
`relief is sought has failed to plead or otherwise defend, and that failure is
`shown by affidavit or otherwise, the clerk must enter the party's default.
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`Fed. R. Civ. Pro. 55(a) (2016).
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`Procedurally, once default has been entered by the clerk, the plaintiff may move the court
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`to enter a default judgment against the defendant pursuant to Rule 55(b)(2). See Finney V. MIG
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`Capital Mgmt., Inc., Civil Action No. 2113-02778 (S.D. W. Va. March 27, 2014) (Memorandum
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`Opinion and Order); see also United States V. Moradi, 673 F.2d 725, 727 (4th Cir. 1982); see
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`also Fed. R. Civ. P. 55('b) ('20'l.6').
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`In compliance with Rule 55, Plaintiffs’ counsel has also
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`included an Affidavit, which explains his efforts to obtain cooperation from Mr. Anderson in this
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`case and further demonstrates Mr. Anderson’s failures to defend this action. See Affidavit of
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`Plaintiffs’ Counsel Robert R. Waters, attached hereto as Exhibit A.
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`Although the Court previously indicated that default was not yet warranted against
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`Defendant, Anderson, the Plaintiffs now respectfully move for entry of default against him
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`because of his continued brazen violations of Orders of this Court, which stem back over two
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`years, and his repeated failures to defend this action.
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`In response, Defendant Anderson has
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`provided no explanation for such Violations or his failures to defend, and further provides no
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`assurances that he will change his behavior in the future to co-operate in the orderly disposition
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`of this case.
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`In addition to the aforementioned Affidavit of Mr. Waters, the record in this case is
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`replete with instances of Defendant, Wayne Anderson’s failures to defend this action. As the
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`Plaintiffs illustrated more than a year ago, Defendant Anderson frustrated efforts to arbitrate this
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`case after the Court ordered that the matter be submitted to arbitration. See Plaintiffs’ Response
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`to Court Order of June 11, 2015 (DE-15) and Report of Case Status, filed 6/19/2015, ECF No.
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`16. Much of this frustration was due to Defendant Anderson’s insistence upon representing
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`himself and the corporate entities in that proceeding, pro se, despite the fact that West Virginia
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`law prohibits corporations from being represented on a pro se basis. See E. at ECF pages 91-92.
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`On October 15, 2015, approximately four months later, the Plaintiffs again informed the
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`Court of Mr. Anderson’s failures to defend and efforts to frustrate the arbitration proceedings.
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`See Plaintiffs’ Report of Arbitration Status, filed 10/15/2015, ECF No. 25. Plaintiffs explained
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`that termination of the arbitration proceedings was likely, due to Anderson’s failure to pay his
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`portion of the arbitration fees. See id. Despite Anderson’s allegations that the Plaintiffs had also
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`neglected to pay their portion of the arbitration fees in this matter, the Plaintiffs informed the
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`Court that this was untrue because they had paid approximately $7,500.00 to the American
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`Arbitration Association (A) at the time, yet Defendant Anderson had yet to pay any of his
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`portion of the fees. See Plaintiffs Response to Order of February 24, 2016 (DE-26) and Report
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`of Case Status and Plaintiffs Motion to Remand Case to Active Docket of Federal Court, filed
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`3/2/2016, ECF No. 27, Page ID 127.
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`Plaintiffs further illustrated the absurdity of Mr.
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`Anderson’s allegations, and attached proof of their payments to the A to their motion. See
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`Plaintiffs’ Reply Memorandum of Law in Support of Motion for
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`Judgment Against
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`Defendants. . ., filed S/9/2016, ECF No. 39.
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`Mr. Anderson’s non-cooperation and failure to defend this action has continued to date,
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`and Mr. Anderson has shown no propensity to act any differently. As the Court specifically
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`ordered, all parties were to be present, in person, for the Scheduling Hearing that was held on
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`June 13, 2016. See Orjcler, filed 6/3/2016, ECF No. 41 (rescheduling the Scheduling Conference
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`and directing that all parties appear in person). Furthermore, Mr. Anderson did not personally
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`appear for the Pretrial Conference that was held on August 22, 2016. Despite the Court’s
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`express directive, Mr. Anderson did not appear for the Pretrial Conference and filed no motions
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`to continue that proceeding, and provided yet another example of his failure to defend this
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`action.
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`CONCLUSION
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`For the incessant failures of Defendant Anderson to defend this action, which have
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`continued to date, the Plaintiffs respectfully move for entry of default against him, pursuant to
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`Rule 55 (a) of the Federal Rules of Civil Procedure. As set forth above, in the attached affidavit,
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`and in numerous prior pleadings, the record of this case abounds with evidence of Defendant
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`Anderson’s failures to defend this action, making entry of default appropriate under Rule 55(a).
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`WHEREFORE, for the reasons set forth above, the Plaintiffs respectfully request that the
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`Clerk enter default against Defendant, Wayne Anderson, pursuant to Rule 5 5(a) of the Federal
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`Rules of Civil Procedure.
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`Date: August 25, 2016
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`Respectfully submitted,
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`s/gage»? E. Waww
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`Robert R. Waters, Esq.
`WV State Bar ID 7627
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`Steven M. Wright, Esq.
`WV State Bar ID 12118
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`WATERS LAW GROUP, PLLC
`633 Seventh Street
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`Huntington, WV 25701
`Tele: 304-522-6658
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`Fax: 304-522-7722
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`CERTIFICATE OF SERVICE
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`The undersigned hereby certifies that a true and correct copy of the forgoing “Plaintif‘3*’
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`Motion For Default Against Wayne Anderson, Pursuant to Rule 55(a), With Incorporated
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`Memorandum OfLaw,” has been served this 25th day of August, 2016, by means of the Court’s
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`ECF document filing system to all those registered therewith, and further that the document be
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`sent by US Mail, First Class, as well as electronic mail to the following:
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`Wayne Anderson
`735 Arlington Ave. N, Suite 308
`St. Petersburg, FL 33701
`727-821-6200
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`/ Robert R. Wareas‘ /
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`Robert R. Waters, Esq.
`Steven M. Wright, Esq.
`Waters Law Group, PLLC
`633 Seventh Street
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`Huntington, WV 25701
`rrwatersg QwaterslawggI'Ol.1 [2 .COII1
`smwright@,waterslawgroup.com
`Telephone: (304) 522-6658
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`

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`Facsimile:
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`(304) 522-7722