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Branch Banking & Trust Co. v. NU Hot, Inc.

United States District Court, N.D. Alabama, Middle Division

October 23, 2018

BRANCH BANKING & TRUST COMPANY, Plaintiff,
v.
NU HOT, INC., et al., Defendants.

          MEMORANDUM OPINION

          ANNEMARIE CARNEY AXON UNITED STATES DISTRICT JUDGE

         This matter comes before the court on Plaintiff Branch Banking & Trust Company's (“BB&T”) motion for default judgment, (doc. 19).

         BB&T filed its complaint against Nu Hot, Inc., Nu Personnel, Inc., C3D Services, LLC, and John R. Pennington, asserting that it issued commercial loans to Nu Hot, Nu Personnel, and C3D Services, and Mr. Pennington served as the guarantor on all of those loans. (Doc. 1). Defendants have defaulted on the loans, so BB&T asserts claims for breach of contract and unjust enrichment against each Defendant, seeking to recover the principal, accrued interest, late charges, and attorneys' fees and costs of collection. (Id.).

         The court WILL GRANT IN PART and DENY IN PART the motion for default judgment. The court WILL ENTER DEFAULT JUDGMENT in favor of BB&T and against Nu Hot, Nu Personnel, C3D Services, and Mr. Pennington on BB&T's claims for breach of contract, but the court WILL DISMISS BB&T's claim for unjust enrichment.

         I. BACKGROUND

         A defaulting defendant “admits the plaintiff's well-pleaded allegations of fact” for purposes of liability. Buchanan v. Bowman, 820 F.2d 359, 361 (11th Cir. 1987) (quotation marks omitted)). Accordingly, the court takes as true the well-pleaded allegations of BB&T's complaint.

         A. The Nu Hot Loans

         On October 2, 2014, BB&T made a loan to Nu Hot in the amount of $100, 000, with interest accruing at the “[v]ariable rate of the Bank's Prime Rate plus 1.000% per annum to be adjusted Monthly.” (Doc. 1 at 2; Doc. 1-1 at 1). All payments on the loan were due on October 6, 2017. (Doc. 1 at 2-3; Doc. 1-1 at 1; Doc. 19-1 at 25). The promissory note provided for a late fee of five percent “of any installment past due for ten (10) or more days.” (Doc. 1-1 at 2). It also provided: “If this Note is placed with an attorney for collection, the undersigned agrees to pay . . . all costs of collection, including but not limited to reasonable attorneys' fees.” (Id. at 4).

         On August 26, 2016, BB&T made a second loan to Nu Hot in the amount of $650, 000, with the same interest accruing from that date. (Doc. 1 at 3; Doc. 1-2 at 2). Like the first loan, the second loan contained provisions for late fees and the payment of reasonable attorneys' fees in connection with collection efforts. (Doc. 1-2 at 2, 4). All payments were due on August 26, 2017. (Doc. 1 at 3-4; Doc. 1-2 at 2).

         Despite a demand letter sent after the loans matured, Nu Hot did not pay any part of the principal on either loan. (Doc. 1 at 5, 12; Doc. 1-4). According to an affidavit by Steven W. Blevins, BB&T's Senior Vice President, as of July 31, 2018, Nu Hot owed BB&T $750, 000 in principal, $38, 817.09 in accrued interest, and $351.64 in late charges, for a total of $789, 168.73, with interest continuing to accrue at a rate of $14.60 per diem on the first loan and $108.33 per diem on the second loan. (Doc. 19-1 at 8).

         B. The Nu Personnel Loan

         On April 21, 2015, BB&T loaned Nu Personnel $200, 000, with interest accruing at the “[v]ariable rate of the Bank's Prime Rate plus 1.000% per annum to be adjusted Monthly.” (Doc. 1 at 5-6; Doc. 1-5 at 2). The promissory note provided for a late fee of five percent “of any installment past due for ten (10) or more days.” (Doc. 1-5 at 2). It also provided for the payment of “reasonable attorneys' fees” if the note was placed with an attorney for collection. (Id. at 4). BB&T and Nu Personnel later modified the loan amount from $200, 000 to $165, 000 and set the date of maturity for August 26, 2017. (Doc. 1 at 6; Doc. 19-1 at 55).

         Despite a demand letter sent after the loan matured, Nu Personnel did not pay any part of the principal. (Doc. 1 at 7; Doc. 1-7 at 2; Doc. 1-7). According to Mr. Blevins' affidavit, as of July 31, 2018, Nu Personnel owed BB&T $165, 000 in principal, $8, 545.85 in accrued interest, $56.00 in fees, and $72.08 in late charges, for a total of $173, 673.93, with interest continuing to accrue at a rate of $27.50 per diem. (Doc. 19-1 at 12).

         C. The C3D Services Loan

         On January 20, 2015, BB&T loaned C3D $248, 000, with interest accruing at a “[f]ixed ratio of 5.1500% per annum.” (Doc. 1 at 8; Doc. 1-8 at 2). The promissory note provided for a late fee of five percent “of any installment past due for ten (10) or more days” and for “reasonable attorneys' fees” related to efforts to collect on the loan. (Doc. 1-8 at 2, 4). The C3D Services loan was secured by a mortgage on real property owned by C3D Services. (Doc. 1 at 9; Doc. 1-9).

         C3D Services agreed to make monthly payments of $1, 990.21, with the final payment due on January 20, 2020. (Doc. 1 at 8; Doc. 1-8 at 2). The promissory note provided:

The failure to pay any part of the principal or interest when due on this Note . . . by any affiliate of the undersigned . . . shall be a material default hereunder and this Note and other debts due the Bank by any one or more of undersigned shall immediately become due and payable at the option of the ...

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