HICA Education Loan Corporation v. Little

Filing 12

DEFAULT JUDGMENT in favor of HICA Education Loan Corporation against Walter K. Little, granting 9 Motion for Default Judgment. Signed by Judge Kristi K. DuBose on 6/11/2015. (copy mailed to Walter Little) (cmj)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
HICA EDUCATION LOAN
CORPORATION,
Plaintiff,
v.
WALTER K. LITTLE a/k/a
WALTER K. LITTLE, JR.
Defendants.

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CIVIL ACTION NO. 14-550-KD-M

ORDER
This matter is before the Court on Plaintiff’s Motion for Default Judgment. (Doc. 9).
Upon consideration, the motion is GRANTED.
I.

Background
On November 26, 2014, Plaintiff HICA Education Loan Corporation filed a complaint

(the “Complaint”) against Defendant Walter K. Little seeking enforcement of a federally
guaranteed Health Education Assistance Loan that was signed by the Defendant pursuant to the
provisions of the United States Health Education Assistance Loan Program, 42 U.S.C. § 292 et
seq. and 42 C.F.R. Part 60. (Doc. 1). The Complaint contains the following relevant allegations.
On December 30, 1994, the Defendant signed a promissory note (“the Note”) borrowing
$81,557.75 from the Student Loan Marketing Association. (Doc. 1 at 2). The sum set forth in the
Note was “loaned and advanced to the Defendant.” (Id.). On an unspecified date, the Note was
“sold, transferred, and assigned to Plaintiff by the Student Loan Marketing Association (SLMA)”
and “Plaintiff is the owner and/or holder of the Note.” (Id.). Defendant has since failed to make
the required payments on the Note, and therefore is in default. (Id. at 2-3). Plaintiff is entitled to
collect the unpaid amounts due and owing under the Note, including, but not limited to, the

unpaid principal, interest, and late charges. (Doc. 1-5, the Note). The Complaint “requests
judgment and damages against Defendant for actual damages, including (1) unpaid principal, (2)
accrued, unpaid, prejudgment interest calculated in accordance with the terms of the Note and (3)
accrued, unpaid late charges, as applicable, with post-judgment interest on these amounts at the
variable rate set forth in the Note.” (Doc. 1 at 4). Plaintiff also requests an award of attorney's
fees and costs. Id.
On February 12, 2015, Plaintiff filed a return of service, in which the process server
averred that Defendant was personally served on January 16, 2015. (Doc. 6). On March 4, 2015,
Plaintiff filed an application for entry of default, which was granted on March 6, 2015. (Docs. 78). A copy of the default was mailed to the Defendant. (Doc. 8 docket entry).
On March 30, 2015, Plaintiff filed a motion for default judgment. (Doc. 9). The
declaration of Robin Zimmermann, an employee of Navient Solutions, Inc., the servicing agent
for Plaintiff was included with the motion. (Doc. 9-2). Zimmermann declares that as of February
12, 20151 – the date of her declaration – Defendant owed Plaintiff the following amounts under
the Note: 1) $38,998.66 in unpaid principal; 2) $977.66 in unpaid interest; and 3) interest through
the date of judgment at the rate of $3.33 per day. (Doc. 9-2 at 1). Plaintiff maintains that the
allegations in the Complaint and the evidence presented in support of the motion demonstrate
that it is entitled to default judgment against Defendant “in the amount of $39,976.32, plus
additionally prejudgment interest from February [1]3, 2015 to the date of judgment at the rate of
$3.33 per day”2 and post-judgment interest at the rate set forth in the Note or, in the alternative,
the rate established pursuant to 28 U.S.C. § 1961. (Doc. 9 at 2 at n.1).

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The Zimmerman declaration was misdated as February 12, 2014. The correct date is February 12, 2015. (Doc. 11).
The Zimmerman declaration stated this date as February 3, 2015. However, Plaintiff clarified that prejudgment
interest is to be calculated from February 13, 2015. (Doc. 11).

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II.

Standard of Review
When a party against whom a judgment for affirmative relief is sought fails to plead or

otherwise defend as provided by the Federal Rules of Civil Procedure, and that fact is made to
appear by affidavit or otherwise, the Clerk enters default. Fed.R.Civ.P. 55(a). However, the mere
entry of default by the Clerk does not in itself warrant the entry of default judgment by the Court.
Nishimatsu Constr. Co., Ltd. v. Houston Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir.1975).4
Rather, the Court must find that there is a sufficient basis in the pleadings for the judgment to be
entered. Id.; see Chudasama v. Mazda Motor Corp., 123 F.3d 1353, 1370 n. 41 (11th Cir.1997)
(“[A] default judgment cannot stand on a complaint that fails to state a claim.”). A default
judgment has the effect of establishing as fact the plaintiff's well-pled allegations of fact, and
bars the defendant from contesting those facts on appeal. Buchanan v. Bowman, 820 F.2d 359,
361 (11th Cir.1987) (citing Nishimatsu, 515 F.2d at 1206). Although it must accept well-pled
facts as true, the Court is not required to accept a plaintiff's legal conclusions. Ashcroft v. Iqbal,
556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).
Notwithstanding the propriety of default judgment against a defendant, it remains
incumbent on the plaintiff to prove the amount of damages to which he or she is entitled. “While
well-pleaded facts in the complaint are deemed admitted, plaintiff's 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 Am., Inc. v. Lacey, 510 F.Supp.2d 588,
593 n. 5 (S.D.Ala.2007); Whole Space Indus., Ltd. v. Gulfcoast Int'l Prods., Inc., Case No. 2:09–
cv–217–UA–SPC, 2009 WL 2151309, at *3 (M.D.Fla. July 13, 2009) (same). Therefore, 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

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Cir. 2003); see 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 a basis for an award of damages).
The Eleventh Circuit has explained that “[f]ederal law similarly requires a judicial
determination of damages absent a factual basis in the record,” even where the defendant is in
default. Anheuser Busch, 317 F.3d at 1266. Ordinarily, unless a plaintiff's claim against a
defaulting defendant is for a liquidated sum or one capable of mathematical calculation, the law
requires the district court to hold an evidentiary hearing to fix the amount of damages. See S.E.
C. v. Smyth, 420 F.3d 1225, 1231 (11th Cir. 2005). However, no hearing is needed “when the
district court already has a wealth of evidence from the party requesting the hearing, such that
any additional evidence would be truly unnecessary to a fully informed determination of
damages.” See Id. at 1232 n. 13; see also Wallace v. The Kiwi Grp., Inc., 247 F.R.D. 679, 681
(M.D.Fla. 2008) (“a hearing is not necessary if sufficient evidence is submitted to support the
request for damages”).
III.

Analysis
To recover on a promissory note, the plaintiff must establish the following: 1) defendant

signed the note; 2) plaintiff is the present owner of the note; and 3) the note is in default. HICA
Educ. Loan Corp. v. Perez, 2012 WL 4336026, at *1 (M.D.Fla. Sept. 20, 2012) (citing FDIC v.
Selaiden Builders, Inc., 973 F.2d 1249, 1254 (5th Cir.1992)). Here, the Complaint contains the
following relevant allegations: 1) Defendant signed the Note on December 30, 1994. (Docs. 1 at
2, 1-5); 2) Plaintiff is the present owner of the Note (Doc. 1 at 2); and 3) the Note is in default
due to Plaintiff's failure to make the required payments thereon. (Doc. 1 at 2). Accordingly, the
Plaintiff’s motion for default judgment is GRANTED.

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The amount Plaintiff seeks to recover under the Note is one capable of mathematical
calculation, thus there is no need for a hearing on damages. Zimmermann declares that as of
February 12, 2015 – the date of her declaration – Defendant owed Plaintiff the following
amounts under the Note: 1) $38,998.66 in unpaid principal; 2) $977.66 in accrued, unpaid
interest; and 3) interest through the date of judgment at the rate of $3.33 per day. (Doc. 9-2 at 1).
The declaration is uncontroverted. Accordingly, the Plaintiff is entitled to recover the amounts
set forth above, as well as post-judgment interest at the rate set forth in 28 U.S.C. §1961.3
IV.

Conclusion
For the foregoing reasons, the Court GRANTS Plaintiff’s Motion for Default Judgment.

(Doc. 9) and DIRECTS the Clerk of Court to enter default judgment in favor of Plaintiff and
against Defendant Walter K. Little a/k/a Walter K. Little, Jr. Plaintiff is entitled to the following
sums:

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Plaintiff requests that post-judgment interest accrue at the variable rate to which the parties contracted in the Note
and only seeks post-judgment interest pursuant to 28 U.S.C. § 1961 in the alternative. (Doc. 9 at 2, n.1). In support
of the contractual rate, plaintiff cites 42 U.S.C. § 292d(d), which provides that laws limiting interest rates on loans
do not apply to HEAL loans. Plaintiff does not provide any authority for the proposition that this provision
implicates 28 U.S.C. § 1961. “Post-judgment interest in a civil case is determined by 28 U.S.C. § 1961(a) which
provides that the rate of interest shall be calculated from the date of the entry of the judgment [ ] at a rate equal to
the weekly average 1—year constant maturity Treasury [bill] ... for the calendar week preceding the date of the
judgment. …Although the Eleventh Circuit has never addressed the issue, the consensus among courts that have is
that parties may agree to a different post-judgment interest rate. However, federal law requires language expressing
an intent that a particular interest rate apply to judgments or judgment debts' to be clear, unambiguous and
unequivocal. This requirement arises from the principal that the debt is extinguished upon entry of judgment and a
new debt, a judgment debt, is created. The parties must explicitly state that they are agreeing to a post-judgment
interest rate. SE Prop. Holdings, LLC v. Foley, 2012 WL 1382523, at *5 (S.D. Ala. Apr. 20, 2012)(internal
quotations and citations omitted). The Note in this case does not contain the type of “clear, unambiguous and
unequivocal language” necessary to circumvent the statutory interest rate. See HICA Educ. Loan Corp. v. Perkins,
2012 WL 3079132, at *1 n.2 (D.Colo. July 25, 2012) (holding the same). Accordingly, post-judgment interest is to
be calculated at the rate determined by 28 U.S.C. §1961.

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Unpaid principal:

$38,998.66

Unpaid interest:

$977.66

Pre-judgment interest from February 13, 2015 to June 11, 2015 at $3.33 per day: $386.28
Total:

$40,362.60
Plaintiff is also awarded post-judgment interest, which shall accrue beginning on the date

of entry of this Order, bearing the rate specified under federal law, 28 U.S.C. §1961. Final
default judgment shall be entered upon resolution of Plaintiff’s claim for attorney’s fees and
costs.
The Clerk is directed to mail a copy of this order to the Defendant at his address of
record.
DONE and ORDERED this the 11th day of June 2015.
s / Kristi K. DuBose
KRISTI K. DuBOSE
UNITED STATES DISTRICT JUDGE

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