United States District Court, S.D. Alabama, Southern Division
V. S. GRANADE SENIOR UNITED STATES DISTRICT JUDGE
matter is before the Court on Plaintiff SE Property Holdings,
LLC's (“SEPH”) motion for entry of default
judgment (Doc. 20) against Defendant Michael Terry Adams
(“Adams”). Having considered the record as a
whole, the Court has concluded a hearing is unnecessary and
will consider the motion purely on the record before it. For
the reasons stated below, the Court deems it proper to
GRANT the motion in part.
October 8, 2003, Vision Bank-now SEPH-loaned Adams $157, 000.00 through
Loan Number 32387 (the “Loan”). (See
Doc. 20-1, ¶ 4). Originally, the Loan was scheduled to
mature on October 7, 2008, but Adams and SEPH agree to extend
the maturity date to October 7, 2013. See Id. at
¶¶ 4-5. Thereafter, Adams defaulted on certain
amounts due under the Loan. Id. at ¶ 6. In
February 2015, after seeking advice from its attorneys, SEPH
entered into a Forbearance Agreement, but Adams still
“failed to pay the Indebtedness under the Loan.”
Id. at ¶¶ 8-9.
August 3, 2015, SEPH demanded payment in full on the Loan,
but Adams failed to cure the default. Id. at
¶¶ 11-12. Thereafter, SEPH initiated a suit against
Adams in this Court and foreclosed on the property securing
the Loan on October 16, 2016. Id. at ¶¶
13-14. On that day, Adams filed a voluntary Chapter 13
bankruptcy petition in the Southern District of Alabama, and
the instant case was stayed. Id. at ¶ 15;
see also Doc. 13. On February 24, 2016, the
Bankruptcy Court granted SEPH's Motion for Nunc Pro
Tunc Annulment of the Automatic Stay in that court to
validate the foreclosure. (Doc. 20-1, ¶ 17). After the
Bankruptcy Court dismissed Adams's case for failure to
pay the proscribed Chapter 13 payment plan payments, SEPH
initiated a suit in the Circuit Court of Baldwin County to
eject Adams from the property. Id. at ¶¶
17-18. The court entered the ejectment order on May 27, 2016.
Id. at ¶ 19.
case returned to the Court's active docket on January 25,
2017. (Doc. 19). SEPH seeks entry of default judgment to
recover the deficiency on the Loan as well as attorneys'
fees and costs. As of February 2, 2017, the outstanding
balance on the Loan totals $55, 871.28, plus accruing per
diem interest. (See Doc. 20-1, ¶ 24; Doc.
20-2). This sum includes $43, 889.18 in principal, $10,
280.89 in interest, $105.48 in late fees, $895.73 in force
placed insurance, and $700.00 in appraisal fees. Id.
SEPH also seeks reimbursement for its attorneys' fees and
expenses in the amount of $44, 863.43 for work performed
and/or billed through January 31, 2017. (See Doc. 20-1,
¶ 30; Doc. 20-4).
Court generally requires some notice be given to defendants
between the time of the service of the summons and complaint
and the entry of a default judgment. See, e.g.,
JP Morgan Chase Bank, N.A. v. Surek, No.
11-263-KD-M, 2011 WL 5289254, at *2 (S.D. Ala. Nov. 4, 2011);
Penn. Nat'l Mut. Cas. Ins. Co. v. King, No.
11-577-WS-C, 2012 WL 1712670, at *2 n.4 (S.D. Ala. May 15,
2012). At the outset, the Court is satisfied Adams had notice
of the default proceedings. He was served with the summons
and the Complaint in August 2015. (Doc. 8). The summons
clearly stated, “If you fail to respond, judgment by
default will be entered against you for the relief demanded
in the complaint.” (Doc. 4). Moreover, the Clerk
entered default against Adams on October 8, 2015,
approximately seventeen months before this entry of default
judgment. (See Doc. 10). Considering the length of
time of the proceedings, including summons, entry of default,
and a separate bankruptcy proceeding, the Court finds Adams
had sufficient notice of the instant proceedings.
Circuit, “there is a strong policy of determining cases
on their merits[, ] and we therefore view defaults with
disfavor.” In re Worldwide Web Sys., Inc., 328
F.3d 1291, 1295 (11th Cir. 2003); see also Varnes v.
Local 91, Glass Bottle Blowers Ass'n of U.S. and
Canada, 674 F.2d 1365, 1369 (11th Cir. 1982).
Nonetheless, it is well established that a “district
court has the authority to enter default judgment for failure
. . . to comply with its order or rules of procedure.”
Wahl v. McIver, 773 F.2d 1169, 1174 (11th Cir.
Federal Rules of Civil Procedure establish a two-part process
for obtaining a default judgment. Fed.R.Civ.P. 55. If
“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.” FED. R. CIV. P. 55(a).
After default has been entered, if the “claim is for a
sum certain or a sum that can be made certain by computation,
” the clerk must enter default judgment. Id.
at 55(b)(1). In all other circumstances, such as here,
“the party must apply to the court for a default
judgment.” Id. at 55(b)(2). Importantly, a
“default judgment must not differ in kind from, or
exceed amount in, what is demanded in the pleadings.”
Id. at 54(c).
55(b)(2) also provides the Court may conduct a hearing to
enter a judgment if the Court needs to “conduct an
accounting, ” “determine the amount of damages,
” “establish the truth of any allegation by
evidence, ” or “investigate any other
matter.” Fed.R.Civ.P. 55(b)(2). Upon review of the
docket, the motion for default judgment, and supporting
evidence, the Court finds a hearing is unnecessary.
Securities and Exchange Comm'n v. Smyth, 420
F.3d 1225, 1231-2 & n. 13 (11th Cir. 2005) (where
“all essential evidence is already of record, ” a
hearing is generally not required).
Eleventh Circuit has held, although “a default is not
treated as an absolute confession by the defendant of his
liability and of the plaintiff's right to recover, a
defaulted defendant is deemed to admit the plaintiff's
well-pleaded allegation of fact. The defendant, however, is
not held to admit facts that are not well-pleaded or to admit
conclusions of law.” Tyco Fire & Sec., LLC v.
Alcocer, 218 F. A'ppx 860, 863 (11th Cir. 2007) (per
curiam) (citations and internal quotations admitted).
Moreover, “before entering a default judgment for
damages, the district court must ensure that the well-pleaded
allegations of the complaint . . . actually state a cause of
action and that there is a substantive, sufficient basis in
the pleadings for the particular relief sought.”
Id. (emphasis omitted). When assessing damages in
connection with a default judgment, the Court has “an
obligation to assure that there is a legitimate basis for any
damage award it enters.” Anheuser Busch, Inc. v.
Philpot, 317 F.3d 1264, 1266 (11th Cir. 2007).
Additionally, SEPH must establish a “prima facie
liability case” against Adams. Pitts ex rel. Pitts
v. Seneca Sports, Inc., 321 F.Supp.2d 1353, 1357 (S.D.
Ga. 2004) (citations omitted).
asserted one claim against Adams for breach of contract.
(Doc. 1). Under Alabama law, loan documents are governed
under contract law. See Penick v. Most Worshipful Prince
Hall Grande Lodge F & A M of Alabama, Inc., 46 So.3d
416, 428 (Ala. 2010) (construing terms of a mortgage, notes,
and modification agreement). In order to prevail on its
claim, SEPH must establish the following breach of contract
elements: “(1) a valid contract binding the parties;
(2) the plaintiff's performance under the contract; (3)
the defendant's nonperformance; and (4) resulting
damages.” Shaffer v. Regions Fin. Corp., 29
So.3d 872, 880 (Ala. 2009); Vision Bank v. Algernon Land
Co., L.L.C., 2011 WL 1380062, at *7 (S.D. Ala. Apr. 12,
light of the foregoing principles, the Court has reviewed the
Complaint and is satisfied SEPH has established a viable
claim for breach of contract. SEPH and Adams entered into a
valid, binding contract in the initial mortgage agreement and
the subsequent modifications thereof. SEPH clearly performed
by loaning the funds to Adams, and Adams failed to perform
when he defaulted on the loan repayment. Additionally, SEPH
incurred damages, as explained below.