Grupo HGM Tecnologias Submarinas, S.A. v. Energy Subsea, LLC

          REPORT AND RECOMMENDATIONS

          KATHERINE P. NELSON UNITED STATES MAGISTRATE JUDGE.

         This action is before the Court on the motion for default judgment under Federal Rule of Civil Procedure 55(b) (Doc. 15) filed by Plaintiff GRUPO HGM Tecnologias Submarina, S.A. (“Grupo”). The assigned District Judge has referred the motion to the undersigned Magistrate Judge for appropriate action under 28 U.S.C. § 636(a)-(b), Federal Rule of Civil Procedure 72, and S.D. Ala. GenLR 72(a). See (Doc. 19 at 2); (5/2/2019 electronic reference); S.D. Ala. GenLR 72(b). Defendant Oddgeir Ingvartsen has submitted pro se a document styled “Defendants Respond to Plaintiff Application for Default Judgement and this case overall” (Doc. 16), purportedly on behalf of both himself and Defendant Energy Subsea, LLC (“Energy Subsea”), that opposes Grupo's motion and also requests that this case be dismissed or transferred to a Florida court. Grupo subsequently submitted a reply in further support of its motion for default judgment (Doc. 18). To date, neither Defendant has submitted any additional filings with the Court. Upon consideration, and pursuant to § 636(b)(1)(B)-(C) and Rule 72(b)(1), the undersigned will recommend that the Court (1) deny Ingvartsen any relief requested in his pro se response (Doc. 16), and (2) deny Grupo's motion for default judgment without prejudice.

         I. General Legal Standards

         “When a defendant has failed to plead or defend, a district court may enter judgment by default. Fed.R.Civ.P. 55(b)(2). “Because of [the Eleventh Circuit Court of Appeals's] strong policy of determining cases on their merits, however, default judgments are generally disfavored. While a defaulted defendant is deemed to admit the plaintiff's well-pleaded allegations of fact, he is not held to admit facts that are not well-pleaded or to admit conclusions of law. Entry of default judgment is only warranted when there is a sufficient basis in the pleadings for the judgment entered.” Surtain v. Hamlin Terrace Found., 789 F.3d 1239, 1244-45 (11th Cir. 2015) (per curiam) (quotations, footnote, and some citations omitted). See also Eagle Hosp. Physicians, LLC v. SRG Consulting, Inc., 561 F.3d 1298, 1307 (11th Cir. 2009) (“ ‘A default judgment is unassailable on the merits, but only so far as it is supported by well-pleaded allegations.' ” (quoting Nishimatsu Const. Co. v. Houston Nat. Bank, 515 F.2d 1200, 1206 (5th Cir. 1975))).

Conceptually, … a motion for default judgment is like a reverse motion to dismiss for failure to state a claim. See Wooten v. McDonald Transit Assocs., Inc., 775 F.3d 689, 695 (5th Cir. 2015) (stating in the context of a motion for default judgment, “whether a factual allegation is well-pleaded arguably follows the familiar analysis used to evaluate motions to dismiss under Rule 12(b)(6)”).

When evaluating a motion to dismiss, a court looks to see whether the complaint “contain[s] sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.' ” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 1949, 173 L.Ed. 2D 868 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 1974, 167 L.Ed.2d 929 (2007)). This plausibility standard is met “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556, 127 S.Ct. at 1965).

Surtain, 789 F.3d at 1245.

         Moreover, in cases involving a default judgment, “there must be strict compliance with the legal prerequisites establishing the court's power to render the judgment.” Varnes v. Local 91, Glass Bottle Blowers Ass'n of U.S. & Canada, 674 F.2d 1365, 1369 (11th Cir. 1982).

         II. Procedural History

         Grupo commenced this civil action on October 4, 2018, by filing a four-count complaint (Doc. 1) with the Court against Ingvartsen and Energy Subsea. Grupo subsequently filed evidence indicating that Ingvartsen was served with the summons and complaint on October 11, 2018 (see Doc. 7), and that Energy Subsea was served on October 19, 2018 (see Doc. 11). Thus, Ingvartsen and Energy Subsea were required to serve their responsive pleadings by November 1 and November 9, 2018, respectively. See Fed. R. Civ. P. 12(a)(1). After those deadlines passed with no response from either Defendant, on Grupo's applications (see Docs. 12, 13) the Clerk of Court entered default against both Defendants on November 14, 2018, under Federal Rule of Civil Procedure 55(a). (See Doc. 14). Neither Defendant appeared in this action following entry of default, and on February 11, 2019, Grupo moved the Court for entry of default judgment against the Defendants under Federal Rule of Civil Procedure 55(b)(2). (See Doc. 15). The motion for default judgment was served on the Defendants at the same addresses where they were served with the summons and complaint. (See Doc. 15 at 3).

         On February 22, 2019, Ingvartsen filed pro se a document styled “Defendants Respond to Plaintiff Application for Default Judgement and this case overall, ” purportedly on behalf of both Defendants. (Doc. 16). On February 27, 2019, the District Judge assigned to this case entered an order informing Ingvartsen that, as a non-attorney, he could not file a response or otherwise defend this case on behalf of artificial entity Energy Subsea. (See Doc. 17). The District Judge also stated that the Court would hold the motion for default judgment in abeyance until April 1, 2019, in order to allow both Defendants the opportunity to obtain counsel. (See id.). Finally, the District Judge directed Ingvartsen “to provide appropriate contact information to the Clerk of Court for the purposes of addressing the current issues before the Court.” (Id.).

         The Court has heard nothing further from either Defendant since Ingvartsen filed his pro se response on February 22, 2019. On April 8, 2019, Grupo filed a reply (Doc. 18) to Ingvartsen's response, noting that as of that morning it had “not received any notification that Defendants complied with the Court's directives.” On May 2, 2019, the District Judge entered another order noting the lack of additional filings from either Defendant and warning the Defendants “that the Court intends to proceed with this case including the Motion for Default Judgment with or without counsel for the Defendants.” (Doc. 19). The District Judge further noted: “At present, the Court will only consider the letter previously received on behalf of Defendant Ingvartsen. There is no appropriate response on file for Energy Subsea LLC.” (Id.). Finally, the District Judge referred this action to the undersigned “pursuant to 28 U.S.C. § 636(b)(1) … for consideration and disposition or recommendation on all pretrial matters as may be appropriate.” (Id.).

         III. Analysis

         A. Subject Matter Jurisdiction

         “It is . . . axiomatic that the inferior federal courts are courts of limited jurisdiction. They are ‘empowered to hear only those cases within the judicial power of the United States as defined by Article III of the Constitution,' and which have been entrusted to them by a jurisdictional grant authorized by Congress.” Univ. of S. Ala. v. Am. Tobacco Co., 168 F.3d 405, 409 (11th Cir. 1999) (quoting Taylor v. Appleton, 30 F.3d 1365, 1367 (11th Cir. 1994)). Accordingly, “it is well settled that a federal court is obligated to inquire into subject matter jurisdiction sua sponte whenever it may be lacking.” Id. See also Arbaugh v. Y&H Corp., 546 U.S. 500, 514, (2006) (“[C]ourts, including this Court, have an independent obligation to determine whether subject-matter jurisdiction exists, even in the absence of a challenge from any party.”). “When a plaintiff files suit in federal court, [the plaintiff] must allege facts that, if true, show federal subject matter jurisdiction over [the] case exists.” Travaglio v. Am. Exp. Co., 735 F.3d 1266, 1268 (11th Cir. 2013).

         The complaint alleges diversity of citizenship under 28 U.S.C. § 1332 as the sole basis for subject matter jurisdiction. Subject to inapplicable exceptions, § 1332(a)(2) grants district courts “original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75, 000, exclusive of interest and costs, and is between… citizens of a State and citizens or subjects of a foreign state…” Plaintiff Grupo is alleged to be a Panamanian corporation with its principal place of business in Panama (see Doc. 1 at 1), thus making it a citizen of the foreign state of Panama. See 28 U.SC. § 1332(c)(1). Defendant Ingvartsen, a natural person, is alleged to be domiciled in, and therefore a citizen of, the state of Alabama.^[1] (Doc. 1 at 1). Ingvartsen is also alleged to be the only member of Defendant Energy Subsea, a limited liability company, thus also making Energy Subsea a citizen of Alabama.^[2] (Doc. 1 at 1 - 2). Because neither Defendant shares Grupo's citizenship, there is complete diversity among the parties. See Triggs v. John Crump Toyota, Inc., 154 F.3d 1284, 1287 (11th Cir. 1998) (“Diversity jurisdiction requires complete diversity; every plaintiff must be diverse from every defendant.”). Section 1332(a)'s requisite minimum amount in controversy is also satisfied because Grupo expressly seeks damages exceeding $75, 000, exclusive of interest and costs. Thus, the undersigned is satisfied that subject matter jurisdiction exists in this action.

         B. Ingvartsen's Response

         Ingvartsen's pro se response (Doc. 16) was purportedly filed on behalf of both himself and Energy Subsea. However, as the Court's prior orders (Docs. 17, 19) informed him, Ingvartsen, who is not an attorney licensed to practice in this Court, can defend this action on his own behalf but cannot do so on behalf of Energy Subsea, an artificial entity. “The rule is well established that...an artificial entity that can act only through agents, cannot appear pro se, and must be represented by counsel.” Palazzo v. Gulf Oil Corp., 764 F.2d 1381, 1385 (11th Cir. 1985). See also Nat'l Indep. Theatre Exhibitors, Inc. v. Buena Vista Distribution Co., 748 F.2d 602, 609 (11th Cir. 1984) (“[C]orporations must always be represented by legal counsel.”). “The general rule applies even where the person seeking to represent [a] corporation is its president and major stockholder[, ]” Palazzo, 764 F.2d at 1385 - or, as here, in the case of an LLC, its sole, managing member. Thus, as the Court previously informed Ingvartsen, his “Response filed shall only be on behalf of Defendant Oddgeir Ingvartsen as an individual person.” (Doc. 17 at 2. See also Doc. 19 at 2 (“At present, the Court will only consider the letter previously received on behalf of Defendant Ingvartsen. There is no appropriate response on file for Energy Subsea LLC.”)). Accordingly, the undersigned will hereinafter treat Ingvartsen's response (Doc. 16) as only being filed on his own behalf and will deem Energy Subsea as having filed no response at all. Nevertheless, given that “there must be strict compliance with the legal prerequisites establishing the court's power to render [a default] judgment[, ]” Varnes, 674 F.2d at 1369, the undersigned will consider Ingvartsen's representations as to Energy Subsea in addressing the issues of service of process and personal jurisdiction.^[3]

         To the extent Ingvartsen's response can be construed as a motion to set aside default, ^[4] it is due to be denied. Under Federal Rule of Civil Procedure 55(c), the “court may set aside an entry of default for good cause…” The Eleventh Circuit has described Rule 55(c)'s “good cause” standard as follows:

We have … noted that “ ‘[g]ood cause' is a mutable standard, varying from situation to situation.” Compania Interamericana Export-Import, S.A. v. Compania Dominicana de Aviacion, 88 F.3d 948, 951 (11th Cir. 1996) (citation omitted). While the standard must be construed to have substance, we have nonetheless described it as a “liberal one.” Id. (citation omitted). As we have explained, “ ‘good cause' is not susceptible to a precise formula....” Id. Rather, we evaluate various factors that may be applicable in a given case. See Id. For example, courts generally consider whether the default was culpable or willful, whether setting it aside would prejudice the non-moving party, and whether the defaulting party may have a meritorious defense. Id. Depending on the circumstances, courts have also considered factors such as “whether the public interest was implicated, whether there was significant financial loss to the defaulting party, and whether the defaulting party acted promptly to correct the default.” Id. (citation omitted). On the other hand, where a party demonstrates an intentional or willful disregard of the judicial proceedings, good cause to set aside the default does not exist. Id. at 951-52.

Perez v. Wells Fargo N.A., 774 F.3d 1329, 1338 n.7 (11th Cir. 2014).

         As will be explained herein, Ingvartsen's response does not indicate that he has a meritorious defense to Grupo's claims. Moreover, while he claims that he only received notice of this case on February 16, 2019 (Doc. 16 at 1) - five days after the present motion for default judgment was filed - Grupo has presented evidence indicating that Ingvartsen personally signed for the summons and complaint on October 11, 2018, see infra. Ingvartsen has also failed to comply with the District Judge's prior directive “to provide appropriate contact information to the Clerk of Court for the purposes of addressing the current issues before the Court” (Doc. 17 at 2), and he has failed to defend this case or otherwise respond to the Court's orders issued since he filed his response.^[5] Accordingly, the undersigned finds that Ingvartsen has failed to show good cause to set aside the default entered against him.

         C. Service of Process

         “Service of process is a jurisdictional requirement: a court lacks jurisdiction over the person of a defendant when that defendant has not been served.” Pardazi v. Cullman Med. Ctr., 896 F.2d 1313, 1317 (11th Cir. 1990). In his response, Ingvartsen claims that neither he nor Energy Subsea were served with process in this action, and that they “received notification about this case for the first time on 2.16.2019 emailed from Energy Subsea LLC agent in Florida.” (Doc. 16 at 1). The undersigned liberally construes Ingvartsen's response (Doc. 16) as asserting a motion to dismiss under Federal Rule of Civil Procedure 12(b)(5) based on insufficient service of process. In deciding a Rule 12(b)(5) motion, a district court may consider matters outside of the pleadings and make findings of fact based on affidavits and other evidence relevant to the issue. Bryant v. Rich, 530 F.3d 1368, 1376 (11th Cir. 2008). “A defendant's actual notice is not sufficient to cure defectively executed service.” Albra v. Advan, Inc., 490 F.3d 826, 829 (11th Cir. 2007) (per curiam).

         Federal Rule of Civil Procedure 4(e) states that, with certain inapplicable exceptions,

an individual … may be served in a judicial district for the United States by:

(1) following state law for serving a summons in an action brought in courts of general jurisdiction in the state where the district court is located or where service is made; or

(2) doing any of the following:

(A) delivering a copy of the summons and of the complaint to the individual personally;

(B) leaving a copy of each at the individual's dwelling or usual place of abode with someone of suitable age and ...