Leo v. Hunter et al

Filing 2

MEMORANDUM OPINION-This cause is before the court on pltf-petitioner Rocco Leo's Petition to Withdraw Reference of Trustee's Motion for Entry of Default Judgment. The motion to withdraw the reference is GRANTED and the reference of this ac tion to the Bankruptcy Court is due to be WITHDRAWN. The Pltfs request for entry of default judgment based merely on the affidavits and exhibits is due to be DENIED. The court requires an evidentiary hearing to determine the amount of damages before entering judgment. The cause will be REFERRED to a magistrate judge to conduct said hearing in Gadsden, Alabama. Signed by Judge Robert B Propst on 8/23/2012. (AVC)

FILED
2012 Aug-23 PM 12:02
U.S. DISTRICT COURT
N.D. OF ALABAMA

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
EASTERN DIVISION
Rocco Leo, Trustee

Plaintiff-Petitioner
v.

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CASE NO.: 1:12-mc-2636-RBP

Roy Hunter, individually and doing business
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as Hunter Construction; R&F Construction )
Company, Inc.
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Defendants-Respondents.
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MEMORANDUM OPINION
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WITHDRAWAL OF REFERENCE
This cause is before the court on plaintiff-petitioner Rocco Leo’s Petition to Withdraw
Reference of Trustee’s Motion and Entry of Default Judgment against defendants-respondents
Roy Hunter, et al. Defendants do not oppose the motion and have not appeared. The Bankruptcy
Court has acknowledged that it lacks Article III authority to enter a final judgment for money
damages in favor of the Trustee in this adversary proceeding: See Stern v. Marshall, 131 S. Ct.
2594. Accordingly, plaintiff’s motion to withdraw the reference is GRANTED and the reference
of this action to the Bankruptcy Court is due to be WITHDRAWN.
DEFAULT JUDGMENT
Plaintiff is the trustee of the Chapter 7 joint bankruptcy estate of Kevin Ashley and Krista
Ashley. Defendant Roy Hunter is a contractor licensed by the Alabama Home Builders Licensure
Board and does business as Hunter Construction. Mr. Ashley hired Defendant to build a home at

1107 Scenic Drive in Gadsden, AL for $251,000.00 pursuant to a contract between the parties.
Ashley alleges in his affidavit that Hunter was paid $201,401.20, leaving a balance of $49,598.80
as of January 29, 2008. Ashley claims he did not pay Hunter further due to suppliers’ liens
allegedly filed against his home after Hunter’s failure to pay suppliers. Ashley claims he and his
wife/co-debtor had to borrow $81,235.00 to complete the construction of the home. Additionally,
Ashley claims to have spent $2,500 on attorney’s fees defending himself from the supplier liens
in the Circuit Court of Etowah County. Ashley’s affidavit alleges a total monetary loss of
$83,735.00, including the legal fees, plus “time and mileage for attending evidentiary hearings,
for which I did not keep an account.”
Rule 55 of the Federal Rules of Civil Procedure govern the process of default judgments.
This process implies two steps. First, “[w]hen 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. After the clerk’s entry, the
plaintiff must seek an entry of the default judgment. This can be done by the clerk if the amount
is a “sum certain,” and if the defendant has not made any appearance and is not a minor or
incompetent. Id.
In the instant case, the Bankruptcy clerk entered the Defendant’s default on February 23,
2012. The Plaintiff must seek entry of the default judgment from the court, since the claim is not
for a “sum certain” but rather for unliquidated damages pursuant to the breach of contract. A
hearing must be conducted to determine the proper amount of damages for the judgment. The
case law is clear that “judgment of default awarding cash damages could not properly be entered
‘without a hearing unless the amount claimed is a liquidated sum or one capable of mathematical
calculation.’”Adolph Coors Co. v. Movement Against Racism and the Klan, 777 F.2d 1538, 1543

(11th Cir. 1985) (quoting United States Artist Corporation v. Freeman, 605 F.2d 854, 857 (5th
Cir.1979)). Rule 55 allows for the Court to “ conduct hearings or make referrals—preserving any
federal statutory right to a jury trial—when, to enter or effectuate judgment, it needs to . . .
determine the amount of damages . . . .” Fed. R. Civ. P. 55(b)(2). Though Ashley’s affidavit sets
out a specific amount, the amount is not a liquidated sum. Additional un-specified damages are
also alleged in the form of “time and mileage.”
Thus, the Plaintiff’s request for entry of default judgment based merely on the affidavits
and exhibits is due to be DENIED. The court requires an evidentiary hearing to determine the
amount of damages before entering judgment. The cause will be REFERRED to a magistrate
judge to conduct said hearing in Gadsden, Alabama.
This the 23rd day of August, 2012.

ROBERT B. PROPST
SENIOR UNITED STATES DISTRICT JUDGE