United States District Court, S.D. Alabama, Southern Division
WILLIAM H. STEELE, UNITED STATES DISTRICT JUDGE
matter comes before the Court on plaintiff's Motion for
Default Judgment (doc. 23). The Motion, as to which no
opposition has been filed, is now ripe. The Court has
also considered the Supplemental Memorandum (doc. 25) filed
by plaintiff in support of its Motion.
Business Loan Center, LLC, filed its Verified Complaint (doc.
1) against the M/V CAPE FLORIDA, in rem (the
“Vessel”), on December 18, 2017. Well-pleaded
factual allegations in the Complaint reflect that the
Vessel's owners, nonparties Cape Towing, Inc. and Cape
Towing Caribbean, Inc. (collectively, “Cape
Towing”), became indebted to Business Loan Center in
November 2007 pursuant to a promissory note secured by a
Preferred Ship Mortgage on 100% of the Vessel in the amount
of $2 million. (Doc. 1, ¶¶ 5-6.) The Complaint
further alleges that Cape Towing defaulted on its
indebtedness to Business Loan Center by failing to make
installment payments on the note that were due and owing from
October 2016 through the present. (Id., ¶ 8.)
On the strength of these and other allegations, Business Loan
Center's Complaint requested that the Vessel be arrested;
that judgment be entered in plaintiff's favor in the
amount of $1, 214, 657.77 (which was alleged to be the unpaid
balance on the note as of December 8, 2017), plus reasonable
attorney's fees, interest, and costs; and that the Vessel
be condemned and sold to satisfy said judgment.
December 20, 2017, Magistrate Judge Bivins entered an Order
(doc. 5) directing issuance of a warrant for arrest of the
Vessel. The Clerk of Court promptly issued a Warrant for
Arrest in Rem (doc. 6), after which the U.S.
Marshals Service arrested the Vessel and placed it in the
possession of a substitute custodian. (See doc. 13.)
Plaintiff attempted to give actual notice of this action to
Cape Towing via certified mailing dated January 19, 2018;
however, Cape Towing refused delivery. (Willhoft Aff. (doc.
23-2), at 1 & Exhs. B & C.) Plaintiff also gave
public notice of this action and the Vessel's arrest via
publication in The Press Register on three occasions
in February 2018. (Id. at 2 & Exh. A.) Neither
Cape Towing nor any other claimant has ever submitted a
verified statement of claim pursuant to Supplemental Rule
C(6)(A), or has otherwise taken meaningful action to defend
against Business Loan Center's in rem claims
against the Vessel. All deadlines for doing so have long
March 21, 2018, the undersigned entered an Order (doc. 19)
granting plaintiff's request for default. A Clerk's
Entry of Default against the Vessel was entered on the same
date pursuant to Rule 55(a), Fed.R.Civ.P. (See doc.
20.) Copies of the March 21 Order and the Clerk's Entry
of Default were mailed to Cape Towing at two addresses of
record, but were returned as undeliverable. (See
docs. 21 & 22.) Despite a full and fair opportunity, and
(at a minimum) constructive notice of the Vessel's arrest
and these proceedings, Cape Towing has not come forward to
oppose or object to these default proceedings against the
Vessel. Accordingly, on April 5, 2018, Business Loan Center
filed its Motion for Default Judgment (doc. 23), seeking
entry of default judgment against the Vessel in the amount of
$1, 214, 657.77, along with reasonable attorney's fees,
interest and costs. Plaintiff served copies of its Motion on
Cape Towing at its addresses of record, but that entity has
neither appeared nor contested entry of default judgment
against the Vessel in the specified amount.
Propriety of Entry of Default Judgment.
Circuit, “there is a strong policy of determining cases
on their merits and we therefore view defaults with
disfavor.” In re Worldwide Web Systems, 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) (“Since this case involves a default judgment
there must be strict compliance with the legal prerequisites
establishing the court's power to render the
judgment.”). Nonetheless, it is well established that a
“district court has the authority to enter default
judgment for failure … to comply with its orders or
rules of procedure.” Wahl v. McIver, 773 F.2d
1169, 1174 (11th Cir. 1985).
as here, defendant and putative claimants have failed to
appear or otherwise respond to a pending lawsuit for four
months, entry of default judgment is appropriate. Indeed,
Rule 55 itself provides for entry of default and default
judgment where a defendant “has failed to plead or
otherwise defend.” Rule 55(a), Fed.R.Civ.P. In a
variety of contexts, courts have entered default judgments
against defendants who have failed to appear and defend in a
timely manner following proper service of
process. In short, “[w]hile modern courts do
not favor default judgments, they are certainly appropriate
when the adversary process has been halted because of an
essentially unresponsive party.” Flynn v. Angelucci
Bros. & Sons, Inc., 448 F.Supp.2d 193, 195 (D.D.C.
2006) (citation omitted). That is precisely what has happened
here. Despite service of process on the Vessel (and notice to
all known claimants, including Cape Towing) in December 2017,
no claims were made and no entity or person stepped forward
to defend against this action.
said, a defendant's failure to appear and a Clerk's
Entry of Default do not automatically entitle a plaintiff to
a default judgment in the requested (or any) amount. After
all, a default is not “an absolute confession by the
defendant of his liability and of the plaintiff's right
to recover, ” but is instead 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); see
also Nishimatsu Const. Co. v. Houston Nat'l Bank,
515 F.2d 1200, 1204 (5th Cir. 1975) (similar);
Cotton States Mut. Ins. Co. v. Sellars, 2008 WL
4601015, *5 (M.D. Ala. Oct. 15, 2008) (“the failure to
defend does not automatically entitle a plaintiff to
recover”); Descent v. Kolitsidas, 396
F.Supp.2d 1315, 1316 (M.D. Fla. 2005) (“the
defendants' default notwithstanding, the plaintiff is
entitled to a default judgment only if the complaint states a
claim for relief”). 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); see also Eagle Hosp. Physicians, LLC v. SRG
Consulting, Inc., 561 F.3d 1298, 1307 (11th
Cir. 2009) (“A default defendant may, on appeal,
challenge the sufficiency of the complaint, even if he may
not challenge the sufficiency of the proof.”).
threshold question, then, is whether the Complaint states a
viable claim for relief. The Court readily concludes that it
does. After all, the well-pleaded factual allegations of the
Complaint (which are deemed admitted pursuant to Rule 55)
identify in sufficient detail the subject promissory note,
Cape Towing's default of same, plaintiff's security
interest in the Vessel pursuant to the Preferred Ship
Mortgage, Cape Towing's breach of its obligations under
said Preferred Ship Mortgage, and plaintiff's contractual
right to recover against the Vessel, in rem,
pursuant to the express terms of the note and the Preferred
the Complaint is sufficient to state a claim against the
Vessel, the Court finds that entry of default judgment is
appropriate pursuant to Rule 55, given the failure to appear
after service of process and the sufficiency of the
well-pleaded factual allegations of the Complaint (which are
now deemed admitted) to establish liability of the defendant
Vessel to plaintiff.
Amount of Damages.
the propriety of default judgment, it remains incumbent on
Business Loan Center to prove damages. “While
well-pleaded facts in the complaint are deemed admitted,
plaintiffs' 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.”
Virgin Records America, Inc. v. Lacey, 510 F.Supp.2d
588, 593 n.5 (S.D. Ala. 2007); see also Eastern Elec.
Corp. of New Jersey v. Shoemaker Const. Co., 652
F.Supp.2d 599, 605 (E.D. Pa. 2009) (“A party's
default does not suggest that the party has admitted the
amount of damages that the moving party seeks.”). Even
in the default judgment context, “[a] 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.
2003); see also Adolph Coors Co. v. Movement Against
Racism and the Klan, 777 F.2d 1538, 1544
(11th Cir. 1985) (explaining that damages may be
awarded on default judgment only if the record adequately
reflects the basis for award); Everyday Learning Corp. v.
Larson, 242 F.3d 815, 818 (8th Cir. 2001)
(affirming lower court's decision not to award damages on
default judgment, where ...