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Pnc Bank, National Association v. Cahaba Furniture, LLC

United States District Court, S.D. Alabama, Northern Division

August 15, 2014



CALLIE V. S. GRANADE, District Judge.

PNC Bank, National Association ("Plaintiff") moves this Court for entry of a default judgment against defendant Cahaba Furniture, LLC ("Defendant") (Doc. 12).[1] Plaintiff requested and the Clerk of Court entered default against Defendant on June 6, 2014 (Doc. 10). Because Defendant has not appeared in this case, it is not entitled to notice of the pending motion. FED. R. CIV. P. 55(b)(2). The complaint sets forth the existence of diversity jurisdiction with a sufficient amount in controversy. (Doc. 1, pp. 2-3).

Rule 55 establishes a two-step process for obtaining a default judgment. First, a party must successfully request the Clerk of Court to enter the other party's default. FED. R. CIV. P. 55(a). Second, after receiving the Clerk's entry of default, the party must submit a motion for default judgment to the court. FED. R. CIV. P. 55(b). If the plaintiff's claim is for a sum certain, the clerk will enter default judgment, but if damages are uncertain or other relief is sought, the plaintiff must apply to the court for default judgment. FED. R. CIV. P. 55(b)(2).

A plaintiff is not automatically entitled to a default judgment if a party fails to appear and the Clerk enters default against it. Default is not "an absolute confession by the defendant of his liability and of the plaintiff's right to recover, " rather it is merely "an admission of the facts cited in the Complaint, which by themselves may or may not be sufficient to establish a defendant's liability." Pitts ex rel. Pitts v. Seneca Sports, Inc. , 321 F.Supp.2d 1353, 1357 (S.D. Ga. 2004) (citations omitted); see also GMAC Commercial Mortg. Corp. v. Maitland Hotel Assocs., Ltd. , 218 F.Supp.2d 1355, 1359 (M.D. Fla. 2002). Thus "before entering a default judgment for damages, the district court must ensure that the well-pleaded allegations in the complaint... actually state a substantive cause of action and that there is a substantive, sufficient basis in the pleadings for the particular relief sought." Tyco Fire & Security, LLC v. Alcocer , 218 Fed.App'x 860, 863 (11th Cir. 2007). Stated differently, "a default judgment cannot stand on a complaint that fails to state a claim." Chudasama v. Mazda Motor Corp. , 123 F.3d 1353, 1370 n. 41 (11th Cir. 1997) (citations omitted).

A. Claim Asserted

Here, the complaint asserts specific and detailed facts against Defendant to state a cognizable claim based on breach of the promissory note, which is in essence a breach of contract claim. (Doc. 1). Pursuant to Alabama law, the elements for a breach of contract claim are: "(1) the existence of a valid contract binding the parties in the action, (2) [plaintiff's] own performance under that contract, (3) the defendant's nonperformance, and (4) damages." Southern Med. Health Sys., Inc. v. Vaughn , 669 So.2d 98, 99 (Ala. 1995) (citations omitted).

The complaint alleges and the supporting documents show that Plaintiff's successors loaned Defendant $350, 000, which is evidenced by a promissory note dated December 12, 2007. (Doc. 1, p. 3, Exh. 2). The parties modified their initial loan agreement through a forbearance agreement dated October 15, 2010 (Doc. 1, Exh. 3), an amendment to the forbearance agreement dated January 13, 2011 (Doc. 1, Exh. 4), and a second amendment to the forbearance agreement dated May 2, 2011. (Doc. 1, Exh. 5). The promissory note is secured by a mortgage dated December 12, 2007 (Doc. 1, Exh. 6), which the parties modified on October 15, 2010. (Doc. 1, Exh. 7). A commercial security agreement entered into by the parties on December 12, 2007 also secures the promissory note. (Doc. 1, Exh. 8).

The complaint further states Plaintiff performed its obligations under the note and corresponding agreements, and Defendant failed and refused to perform its corresponding obligations. (Doc. 1, pp. 5, 7). Defendant did not pay real property taxes or sums due when called for under the note. (Doc. 1, p. 5). As a result, Plaintiff accelerated the note and demanded its payment on October 8, 2013. (Doc. 1, Exh. 10). Following this demand, Defendant failed to make payments, which led Plaintiff to file this suit asserting breach of the promissory note. (Doc. 1, p. 7).

Defendant, by its default, admits Plaintiff's well-pleaded factual allegations in the Complaint. See Nishimatsu Const. Co., Ltd. v. Houston Nat'l. Bank , 515 F.2d 1200, 1206 (5th Cir. 1975) (citations omitted). Because the Court deems all well-pleaded allegations set forth in the Complaint admitted, Plaintiff has established (1) the existence of a valid contract binding Plaintiff's successors and Defendant, (2) Plaintiff's successors' performance under that contract, (3) Defendant's nonperformance under the contract, and (4) damages suffered by Plaintiff as a result of Defendant's nonperformance. The Court finds Plaintiff has thus sufficiently stated a claim entitling it to default judgment for Defendant's breach of the promissory note.

The Court may not enter default judgment against an infant or incompetent unless appropriately represented in the action. FED. R. CIV. P. 55(b)(2). Further, as to any civil action in which the defendant does not make an appearance, "the court, before entering judgment for the plaintiff, shall require the plaintiff to file with the court an affidavit" addressing the defendant's military status. 50 U.S.C. app. ยง 521(b). Because Defendant is a limited liability company, it cannot be a minor, incompetent, or serve in the military. Accordingly, there is no need for such averment and default judgment is appropriate on Plaintiff's claim.

B. Damages

"A default judgment must not differ in kind from, or exceed in amount, what is demanded in the pleadings." FED. R. CIV. P. 54(c). The Court finds that the default judgment sought is consistent with the allegations and relief sought in the complaint. (Doc. 1, p. 6; Doc. 12, pp. 2-3). Plaintiff's requested default judgment therefore does not violate Rule 54(c).

While well-pleaded facts in the complaint are deemed admitted, plaintiff's allegations relating to the amount of damages are not admitted by virtue of default; rather, the court must determine both the amount and character of damages. Anheuser-Busch, Inc. v. Philpot , 317 F.3d 1264, 1266 (11th Cir. 2003). Although the trial court must make determinations as to the amount and character of damages, it is not necessary to conduct an evidentiary hearing to fix damages if plaintiff is seeking amounts that are adequately supported by affidavits and other documentation. See, e.g., S.E.C. v. Smyth , 420 F.3d 1225, 1232 n. 13 (11th Cir. ...

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