Trustmark National Bank v. Molleston et al

Filing 38

Order re: 34 MOTION for Default Judgment filed by Trustmark National Bank. The motion as to defendant Molleston is denied. As to the vessel defendant, default has been entered & it is appropriate to consider the motion for default judgment. Plaintiff is ordered by 4/19/2011 to file whatever materials it deems necessary to support its claim for fees and related nontaxable expenses. Signed by Chief Judge William H. Steele on 4/11/2011. (tgw)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
TRUSTMARK NATIONAL BANK,

)
)
Plaintiff,
)
)
v.
) CIVIL ACTION 10-0702-WS-M
)
MICHAEL C. MOLLESTON, etc., et al., )
)
Defendants.
)
ORDER
This matter is before the Court on the plaintiff’s motion for default judgment.
(Doc. 34). The plaintiff seeks a default judgment against both defendants. (Id.).
As noted in a contemporaneous order, the automatic stay remains in place with

respect to the debtor defendant. Accordingly, the motion for default judgment as to
defendant Molleston is denied. As to the vessel defendant, default has been entered, and
it is appropriate to consider the motion for default judgment.
“The defendant, by his default, admits the plaintiff’s well-pleaded allegations of
fact .... A default judgment is unassailable on the merits but only so far as it is supported
by well-pleaded allegations, assumed to be true.” Nishimatsu Construction Co. v.
Houston National Bank, 515 F.2d 1200, 1206 (5th Cir. 1975). Thus, “a default judgment
cannot stand on a complaint that fails to state a claim.” Chudasama v. Mazda Motor
Corp., 123 F.3d 1353, 1371 n.41 (11th Cir. 1997). Rather, “before entering a default
judgment for damages, the district court must ensure that the well-pleaded allegations of
the complaint ... actually state a cause of action and that there is a substantive, sufficient
basis in the pleadings for the particular relief sought.” Tyco Fire & Security, LLC v.
Alcocer, 218 Fed. Appx. 860, 863 (11th Cir. 2007) (emphasis in original).
[1]

The complaint alleges that Molleston executed a promissory note in favor of the
plaintiff, that the indebtedness reflected by the note has not been satisfied, that Molleston
is in default, and that all conditions have been satisfied. The complaint further alleges
that the plaintiff has a recorded preferred ship mortgage (“PSM”) on the vessel, granted
by Molleston to secure the debt. The complaint seeks to enforce the PSM. The plaintiff
has submitted evidence to confirm all these points. The Court concludes that the
complaint actually states a cause of action and that there is a substantive, sufficient basis
in the pleadings for the relief sought.
The restrictions on entering default judgment against an infant, incompetent or
member of the armed services, 50 U.S.C. app. § 521; Fed. R. Civ. P. 55(b)(2), do not
apply to the vessel. The procedural predicates for entry of default judgment thus being
satisfied, the Court turns to the amount of the judgment to be entered.
“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 the character of damages.” Capitol
Records v. Carmichael, 508 F. Supp. 2d 1079, 1084 n.4 (S.D. Ala. 2007); see also
Anheuser Busch, Inc. v. Philpot, 317 F.3d 1264, 1266 (11th Cir. 2003) (“A court [on
entering default judgment] has an obligation to assure that there is a legitimate basis for
any damage award it enters ....”); Adolph Coors Co. v. Movement Against Racism and the
Klan, 777 F.2d 1538, 1544 (11th Cir. 1985) (on default judgment, “[d]amages may be
awarded only if the record adequately reflects the basis for award ....”); 10A Charles Alan
Wright & Arthur R. Miller, Federal Practice and Procedure § 2688 at 58-59 (3rd ed. 1998)
(“If the court determines that [the] defendant is in default, the factual allegations of the
complaint, except those relating to the amount of damages, will be taken as true.”). Thus,
the mere granting of default judgment does not establish the plaintiff’s entitlement to any
quantum of damages.

[2]

“A judgment by default shall not be different in kind from or exceed in amount
that prayed for in the demand for judgment.” Fed. R. Civ. P. 54(c). The complaint
identifies the amount due under the note and PSM as of December 9, 2010 as
$466,182.39. (Doc. 1 at 4). The complaint demands recovery against the vessel of “the
remaining principal balance due plus the expense of insurance, interest to be determined,
late charges, amounts due for attorney fees, costs and expenses, repossession costs, and
all other costs relating to this foreclosure action in accordance with the terms of the
Mortgage and Promissory Note.” (Id. at 5). The motion for default judgment seeks
recovery “in the amount of $466,182.39 as of December 9, 2010, plus interest accruing
thereafter at a per diem rate of $89.93, plus attorney fees, court costs, and legal
expenses.” (Doc. 34 at 1). The motion for default judgment thus does not seek recovery
more expansive in kind from or exceeding in amount that prayed for in the demand for
judgment.
The affidavit and exhibits submitted by the plaintiff establish that the amount
owing under the note as of December 9, 2010 is $466,182.39; that interest accrues
thereafter at the rate of $89.93 per diem; that the note provides for the payment of
attorney’s fees, legal expenses and court costs of collection; and that the PSM secures all
obligations of Molleston under the note. These points are adequately established by the
record and permit entry of judgment in an amount encompassing principal and interest to
the date of judgment.
The plaintiff has not, however, submitted any evidence to establish the amount and
reasonableness of its attorney’s fees, legal expenses and court costs. The plaintiff
believes this can be accomplished later pursuant to Local Rule 54.3. (Doc. 34, Exhibit
E). By its terms, however, Rule 54.3 applies only to fees “authorized by statute or the
equitable or inherent powers of the court,” not fees sought by contract.
Rule 54(d), which the plaintiff does not invoke, allows a claim for attorney’s fees
and related nontaxable expenses to be made by post-judgment motion “unless the
substantive law requires those fees to be proved at trial as an element of damages.” Fed.
[3]

R. Civ. P. 54(d)(2)(A). “As noted in subparagraph (A), it [Rule 54(d)(2)] does not,
however, apply to fees recoverable as an element of damages, as when sought under the
terms of a contract ….” Id. 1993 advisory committee notes; see also Brandon, Jones,
Sandall, Zeide, Kohn, Chalal & Musso, P.A. v. MedPartners, Inc., 312 F.3d 1349, 1355
(11th Cir. 2002) (“In this Circuit, a request for attorneys’ fees pursuant to a contractual
clause is considered a substantive issue ….”); Ierna v. Arthur Murray International, Inc.,
833 F.2d 1472, 1476 (11th Cir. 1987) (“When the parties contractually provide for
attorneys’ fees, the award is an integral part of the merits of the case.”).
An award of attorney’s fees and nontaxable costs thus must be made prior to entry
of judgment. The plaintiff has not presented evidence to support such an award. The
plaintiff is ordered to file, on or before April 19, 2011, whatever materials it deems
necessary and appropriate to support its claim for fees and related nontaxable expenses.
The Court will take the motion for entry of default judgment as to the vessel under
submission on April 19, 2011.
DONE and ORDERED this 11th day of April, 2011.

s/ WILLIAM H. STEELE
CHIEF UNITED STATES DISTRICT JUDGE

[4]