United States District Court, N.D. Alabama, Southern Division
MEMORANDUM OPINION 
H. ENGLAND, III, UNITED STATES MAGISTRATE JUDGE.
Fred Beane (“Beane”) and Newco, Inc.
(“Newco”) initiated this action against MCoal
Corporation (“MCoal”) alleging a state law claim
for breach of contract based on MCoal's alleged failure
to pay the plaintiffs a “Gross Overriding
Royalty” payment and seeking injunctive relief to
prevent MCoal from transferring its permit to the subject
mine. (Doc. 1). On September 13, 2017, Lewis Page, counsel
for MCoal moved to withdraw. (Doc. 23). On October 16, 2017,
the undersigned held a hearing on the motion. In addition to
counsel who appeared in person, Stephen Moscicki, a
representative for MCoal, appeared by telephone. At the
hearing, the undersigned explained that MCoal is an
artificial entity that cannot proceed without counsel, and
that Mr. Page would not be forced to represent MCoal if he
was not being paid. When MCoal neither worked out its issues
with Mr. Page nor retained other counsel within the time
permitted, the undersigned granted Mr. Page's motion to
withdraw. (Doc. 27).
it is a corporation, MCoal must be represented by counsel to
take any action in federal court. See Palazzo v. Gulf Oil
Corp., 764 F.2d 1381, 1385 (11th Cir. 1985) (“The
rule is well established that a corporation is an artificial
entity that can act only through agents, cannot appear pro
se, and must be represented by counsel.”). MCoal is not
represented by counsel and in peril of a default judgment
being entered against it. See e.g., Sun South Capital,
Inc. v. Harding Enterp., LLC, No. 1:15-cv-823-WKW, 2017
WL 4079720, *2 (M.D. Ala. Sept. 14, 2017) (declining to rule
on a summary judgment motion as to an unrepresented entity
and instead directing the plaintiff to purse a default
judgment). Accordingly, on November 30, 2017, the Clerk
entered default as to MCoal. (Doc. 31). Plaintiffs now move
for entry of a default judgment pursuant to Federal Rule of
Civil Procedure 55(b). (Doc. 34). Based on the following, the
motion for default judgment (doc. 34) is due to be
Background and Analysis
contend MCoal is in breach of a “Gross Overriding
Royalty” agreement. (See doc. 1, doc. 28-2 at
2-13). According to the agreement, MCoal agreed to pay the
plaintiffs a “Gross Overriding Royalty” of 1% of
all coal mined at the Rosa Mine in Blount County in exchange
for 2, 000, 000 “Consideration Shares.” (Doc.
28-2 at 2). The “Gross Overriding Royalty”
payment is subject to a “minimum monthly payment”
of $ 10, 000.00, to be paid in the event the “Gross
Overriding Royalty” is less than $ 10, 000.00.
(Id.). The maximum aggregate amount is $ 2.4 million
were due to the plaintiffs beginning on the date that MCoal
commissioned a “coal washing facility” at the
Rosa Mine. (Doc. 28-2 at 2; doc. 28-2 at 15, ¶4). The
“coal washing facility” was commissioned at the
Rosa Mine in October 2011, and payments began as contemplated
under the agreement. (Doc. 28-2 at 15, ¶¶5-6).
made payments to the plaintiffs in the following amounts from
October 2011 through February 2012:
$ 10, 000.00
$ 10, 000.00
$ 17, 134.97
$ 11, 672.40
$ 10, 000.00
(Doc. 29-2 at 19). Per the terms of the contract, defendant
made three payments under the “minimum monthly
payment” condition and two payments under the 1%
“Gross Overriding Royalty” condition. (Doc. 28-2
at 15, ¶6).
has paid $ 58, 807.37 of the $2, 400, 000.00 total royalty
payment that is owed to the plaintiffs. (Doc. 29-2 at 19). As
of the filing of this Complaint, MCoal has defaulted on
sixty-seven months of minimum royalty payments. (Doc. 28-2 at
15, ¶7). Including the prejudgment interest owed under
the agreement, the balance owed to the plaintiffs by the
MCoal totals $ 751, 314.16. (See doc. 28-2 at
owes 164.87 remaining months of “minimum monthly
payments” under the contract, which, discounted to
present value with a discount rate of 6% statutory interest,
amounts to $1, 090, 990.44. (Doc. 28-2 at 24).
default on the payments owed to the plaintiffs, MCoal has
changed ownership at least three times, most recently in the
last quarter of 2016. (See doc. 28-2 at 26-35; doc.
28-2 at 16, ¶10).
the course of the last five years, Newco has attempted to
negotiate payment of the delinquent funds with no success.
(Doc. 28-2 at 16, ¶8). During these negotiations, MCoal
has never denied that it owes the ―minimum monthly
payment to Newco. (Id. at ¶9).
has attempted to sell and/or transfer ownership shares in the
company on numerous occasions since initially defaulting on
the money owed to Newco. (Id. at ¶10). Newco
has been personally notified in each of those negotiations as
the largest creditor of MCoal and the debt owed to Newco has
been included in sales information for MCoal. (Id.
at ¶¶ 11-12; doc. 28-2 at 37). On each attempt to
transfer of ownership or control, representatives from MCoal
have indicated ...