SecurityNational Mortgage Corporation v. Head et al

Filing 78

ORDER. ORDERED that plaintiff SecurityNational Mortgage Company's Renewed Motion for Entry of Default and Default Judgment Against Head & Associates, P.C. 69 is GRANTED. ORDERED that default judgment shall enter in favor of plaintiff Securi tyNational Mortgage Company and against defendant Head & Associates, P.C. in the amount of $90,769.33, plus prejudgment interest of $83,737.70. Post-judgment interest shall run in accordance with 28 U.S.C. § 1961. Signed by Judge Philip A. Brimmer on 12/29/16. (jhawk, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Philip A. Brimmer
Civil Action No. 13-cv-03020-PAB-NYW
SECURITYNATIONAL MORTGAGE COMPANY,
Plaintiff,
v.
JOHN FREDERIC HEAD and
HEAD & ASSOCIATES, P.C.,
Defendants.

ORDER

This matter is before the Court on the Renewed Motion for Entry of Default and
Default Judgment Against Head & Associates, P.C. [Docket No. 69] filed by plaintiff
SecurityNational Mortgage Company (“SecurityNational”). This case arises out of
plaintiff’s claim for legal malpractice. The Court has jurisdiction pursuant to 28 U.S.C.
§ 1332.
I. BACKGROUND
Plaintiff filed this action on November 5, 2013, asserting claims for professional
negligence, breach of fiduciary duty, breach of contract, and unjust enrichment. Docket
No. 1. On December 3, 2013, plaintiff served the complaint on defendants via email.
Docket No. 15-3 at 2. The complaint was accompanied by waivers of service, which
state that defendants “must file and serve an answer or a motion under Rule 12 within
60 days from December 3, 2013, the date when this request was sent.” Docket Nos. 6
and 7 at 2. Defendant John Head (“Mr. Head”) signed the waivers of service on behalf

of both defendants on December 12, 2013. Id. Accordingly, responsive pleadings were
due by February 3, 2014. See Fed. R. Civ. P. 6(a)(1) and 12(a)(1)(A)(ii).
On February 4, 2014, after no answer or Rule 12 motion had been filed, plaintiff
moved for the entry of default. Docket Nos. 9 and 12. The Clerk of Court entered
default as to both defendants. Docket Nos. 10 and 13. On February 12, 2014,
defendants moved to set aside the entry of default and filed an answer to the complaint.
Docket Nos. 15 and 16. On September 15, 2014, the Court set aside the Clerk’s entry
of default against defendants. Docket No. 35.
On August 14, 2014, Mr. Head filed a motion to withdraw as attorney for Head &
Associates, P.C. (“Head & Associates”) [Docket No. 27] and, on Septem ber 5, 2014,
the magistrate judge granted his motion. Docket No. 34. The magistrate judge
informed Head & Associates that as “a corporation, partnership, or other leg al entity, []
it may not appear without counsel admitted to the bar of this court. Absent prompt
appearance of substitute counsel, pleadings and papers may be stricken, and default
judgment or other sanctions may be imposed against Head & Associates.” Id. (citations
omitted). On August 26, 2015, the Court ordered that the Clerk of the Court enter
default as to Head & Associates. Docket No. 50. On July 8, 2016, plaintiff filed its
renewed motion for entry of default and entry of judgment against Head & Associates.
Docket No. 69. Defendant Head & Associates has not filed a response.
II. ANALYSIS
In order to obtain a judgment by default, a party must follow the two-step process
described in Federal Rule of Civil Procedure 55. First, it must seek an entry of default

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from the Clerk of the Court under Rule 55(a). Rule 55(a) provides that “[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(a). Second, after default has been entered by the
Clerk, the party must seek default judgment according to the strictures of Rule 55(b).
See Williams v. Smithson, 1995 WL 365988, at *1 (10th Cir. June 20, 1995) (citing
Meehan v. Snow, 652 F.2d 274, 276 (2d Cir. 1981)).
The decision to enter default judgment is “committed to the district court’s sound
discretion.” Olcott v. Del. Flood Co., 327 F.3d 1115, 1124 (10th Cir. 2003) (citation
omitted). In exercising that discretion, the Court considers that “[s]trong policies favor
resolution of disputes on their merits.” Ruplinger v. Rains, 946 F.2d 731, 732 (10th Cir.
1991) (quotation and citations omitted). “The default judgment must normally be
viewed as available only when the adversary process has been halted because of an
essentially unresponsive party.” Id. It serves to protect a plaintiff against “interminable
delay and continued uncertainty as to his rights.” Id. at 733. The Court finds that Head
& Associates’ failure to respond has thwarted the ability of the Court to resolve the
matter on the merits.
Plaintiff seeks entry of default judgment by the Clerk of the Court pursuant to
Federal Rule of Civil Procedure 55(b)(1), which provides that, “[i]f the plaintiff's claim is
for a sum certain or a sum that can be made certain by computation, the clerk – on the
plaintiff's request, with an affidavit showing the amount due – must enter judgment for
that amount and costs against a defendant who has been defaulted for not appearing

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and who is neither a minor nor an incompetent person.” Plaintiff has filed an affidavit
showing the sum certain due from the defaulted defendant.1 See Docket No. 21-1.
The entry of default judgment by the Clerk of the Court pursuant to Federal Rule of Civil
Procedure 55(b)(1) is appropriate without any additional action by the Court. See
Richfield Hosp., Inc. v. Shubh Hotels Pittsburgh, LLC, No. 10-cv-00526-PAB-MJW,
2010 WL 5129532, at *2 (D. Colo. Dec. 9, 2010). Plaintif f states that it suffered
damages in the amount of $90,769.33 on two promissory notes: $3,123.65 on the first
note, and $87,645.68 on the second note. Docket No. 21-1 at 3, ¶ 16; 4, ¶ 21.
A. Prejudgment Interest
Plaintiff is also seeking prejudgment interest at the rate of nine percent per
annum. Docket No. 69 at 3. Under Colorado law it is the duty of the Court when
entering judgment to add prejudgment interest to the amount of damages. See Colo.
Rev. Stat. § 13-21-101. 2 “Total prejudgment interest is arrived at by first calculating
simple interest on the amount of the judgment from the date the plaintiff’s action
accrued [here, the date plaintiff’s lawsuit was dismissed] until the day before the action
was filed.” Xiong v. Knight Transportation, Inc., 77 F. Supp. 3d 1016, 1025 (D. Colo.
2014) (citing Francis ex rel. Goodridge v. Dahl, 107 P.3d 1171, 1176 (Colo. App.
2005)). “This amount must then be added to the amount of the judgment and used as
1

Plaintiff notes that its complaint seeks other, non-liquidated damages, but that,
for purposes of default judgment, it is only seeking fixed damages under the two
promissory notes at issue in the lawsuit. Docket No. 69 at 3 n.2.
2

The Colorado Supreme Court held Colo. Rev. Stat. § 13-21-101
unconstitutional on other grounds concerning the calculation of post-judgment interest,
which is not at issue in this case. See Xiong v. Knight Transportation, Inc., 77 F. Supp.
3d 1016, 1025 n.3 (D. Colo. 2014) (citing Sperry v. Field, 205 P.3d 365 (Colo. 2009)).
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the initial base amount.” Id. “Finally, the initial base amount is used to calculate
compound interest annually from the date the suit was filed until the date judgment is
entered.” Id.
1. Pre-Filing Interest
Plaintiff's claim accrued on September 4, 2008, see Docket No. 1 at 4, ¶ 20, and
this suit was filed on November 5, 2013. See Docket No. 1. Simple interest is
calculated on the amount of judgment – $90,769.33 – from September 4, 2008 to
November 4, 2013.
Interest from September 4, 2008 through September 4, 2013 is $40,846.20. 3
Interest from September 4, 2013 through November 4, 2013 is $1,365.27. 4
In total, the pre-filing simple interest amounts to $42,211.47.
2. Post-Filing Compound Interest
Post-filing compound interest is calculated at a rate of nine percent per annum
on the initial base amount, here $132,980.80 – the sum of the amount of judgment
($90,769.33) and pre-filing interest ($42,211.47). Post-filing interest began accruing on
November 5, 2013 when the case was filed and continued through the entry of
judgment. Compound interest is calculated by summing the judgment and the total
accrued interest each year before determining interest for the following year.

3

Calculated by taking nine percent of $90,769.33 – $8,169.24 – and m ultiplying
it by five years.
4

Calculated by dividing nine percent of $90,769.33 – $8,169.24 – by 365; then
multiplying that number by 61 (the number of days that interest accrued).
5

Interest from November 5, 2013 through November 4, 2014 is $11,968.27. 5
Interest from November 5, 2014 through November 4, 2015 is $13,045.42. 6
Interest from November 5, 2015 through November 4, 2016 is $14,219.50. 7
Interest from November 5, 2016 through December 29, 2016 is $2,293.04. 8
In total, the post-filing compound interest amounts to $41,526.23. Adding this amount
to the pre-filing interest of $42,211.47 equals $83,737.70 in prejudgment interest.
III. CONCLUSION
For the foregoing reasons, it is
ORDERED that plaintiff SecurityNational Mortgage Company’s Renewed Motion
for Entry of Default and Default Judgment Against Head & Associates, P.C. [Docket No.
69] is GRANTED. It is further
ORDERED that default judgment shall enter in favor of plaintiff SecurityNational
Mortgage Company and against defendant Head & Associates, P.C. in the amount of
$90,769.33, plus prejudgment interest of $83,737.70. Post-judgment interest shall run
in accordance with 28 U.S.C. § 1961.

5

Calculated by taking nine percent of the initial base amount – $132,980.80.

6

Calculated by taking nine percent of the previous year’s total – $144,949.07.

7

Calculated by taking nine percent of the previous year’s total – $157,994.49.

8

Calculated by dividing nine percent of $172,213.99 – $15,499.26 – by 365;
then multiplying that number by 54 (the number of days that interest accrued before
entry of judgment on December 29, 2016).
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DATED December 29, 2016.
BY THE COURT:

s/Philip A. Brimmer
PHILIP A. BRIMMER
United States District Judge

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