FRIENDS CHRISTIAN HIGH SCHOOL v. GENEVA FINANCIAL CONSULTANTS, LLC et al

Filing 48

MEMORANDUM AND OPINION accompanying 47 Order and Default Judgment as to defendant Isam Ghosh. Signed by Judge Ellen S. Huvelle on May 18, 2017. (AG)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
_________________________________________
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FRIENDS CHRISTIAN HIGH SCHOOL,
)
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Plaintiff,
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v.
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GENEVA FINANCIAL CONSULTANTS, et al., )
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Defendants.
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_________________________________________ )

Civil Action No. 13-1436 (ESH)

MEMORANDUM OPINION
Plaintiff Friends Christian High School (“Friends Christian”) filed the above-captioned
diversity action against defendants Geneva Financial Consultants, LLC (“Geneva”), Isam Ghosh,
and Mark Lezell, alleging various state law torts and seeking compensatory and punitive
damages. (Compl., Sept. 20, 2013, ECF No. 1.) Before the Court is Friends Christian’s motion
for entry of a default judgment against defendant Ghosh. (Mot. for Default Judgment, Apr. 24,
2017, ECF No. 46.) For the reasons stated herein, the motion will be granted and a default
judgment entered against Ghosh and in favor of plaintiff in the amount of $252,249.14.
BACKGROUND
Friends Christian is a California religious corporation that “engages in the business of
religious instruction through various mediums, including educational institutions like a high
school.” (Compl. ¶ 3.) On September 14, 2010, Friends Christian entered into a financing
commitment agreement (“Loan Commitment Letter”) with Geneva and Ghosh, who advertised
himself as Geneva’s managing member. (Compl. ¶¶ 5, 9.) Pursuant to the Loan Commitment
Letter, Geneva and Ghosh were to secure $30 million in construction loan funding for Friends

Christian in exchange for $3 million in fees reduced by an initial escrow deposit of $250,000.
(Compl. ¶¶ 9, 10.) Exhibit A to the Loan Commitment Letter was an Escrow Agreement
between Friends Christian and Lezell, an attorney in the District of Columbia. (Compl. ¶ 13.) If
financing could not be obtained by October 31, 2010, the $250,000 in escrow was to be returned
to Friends Christian. (Compl. ¶ 14.)
Friends Christian wired $250,000 into Lezell’s escrow account on September 16, 2010.
(Compl. ¶ 16.) No financing was ever obtained and the escrow funds were never returned to
Friends Christian. (Compl. ¶ 15.) On January 26, 2011, Friends Christian tried to contact Ghosh
to check on the current state of funding for the project. (Compl. ¶ 18.) On February 1, 2011,
Friends Christian made its initial request for return of the escrow funds. (Compl. ¶ 19.) On
September 8, 2011, Friends Christian asked Lezell for return of the escrow funds. (Compl. ¶ 20.)
On or about March 21, 2012, Ghosh acknowledged liability for the escrow funds and that the
escrow funds were to be returned to Friends Christian. (Compl. ¶ 21.) On August 3, 2012,
Friends Christian sent Lezell and Ghosh its final demand for payment and received no response.
(Compl. ¶ 22.)
On September 20, 2013, Friends Christian filed suit against Geneva, Ghosh and Lezell,
alleging breach of contract, civil conspiracy, breach of fiduciary duty, negligence, and
fraud/intentional misrepresentation and seeking return of the $250,000 it had put into the escrow
account plus punitive damages. (Compl. ¶¶ 23-49.) Friends Christian served Ghosh with a
summons and a copy of the complaint on February 18, 2014. (Return of Service/Affidavit, Mar.
4, 2014, ECF No. 16.) After Ghosh failed to timely file an answer or otherwise respond to the
complaint, plaintiff filed its affidavit for entry of default as to Ghosh pursuant to Federal Rule of

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Civil Procedure 55(a).1 (Aff. for Entry of Default, May 1, 2014, ECF No. 25.) On May 19,
2014, the Clerk of Court entered a default against Ghosh (see Clerk’s Entry of Default, May 19,
2014, ECF No. 30), but proceedings against him were then stayed due to Ghosh’s bankruptcy
proceeding in the Eastern District of Virginia. (See Suggestion of Bankruptcy, Oct. 29, 2014,
ECF No. 38; Minute Order, Jan. 28, 2015 (staying case against Ghosh).) Friends Christian has
now settled its claims against Lezell (see Minute Order, Jan. 28, 2015), and secured a default
judgment against Geneva in the amount of $250,000. (See Order and Default Judgment, May 28,
2015, ECF No. 43.)
On March 21, 2017, Friends Christian notified the Court that the bankruptcy stay against
Ghosh had been terminated and that it wished to pursue its claims against him. (Notice of
Termination of Bankruptcy Stay, ECF No. 44.) The Court lifted the stay, allowing Friends
Christian’s claims to proceed, but it also gave Ghosh until April 10, 2017, to move to vacate the
2014 default. (See Order, Mar. 22, 2017, ECF No. 45.) That Order was served on Ghosh and on
Ghosh’s bankruptcy counsel. Ghosh did not move to vacate the default. On April 24, 2017,
pursuant to Federal Rule of Civil Procedure 55(b)(2),2 Friends Christian filed the pending motion
for default judgment. As of the date of this Memorandum Opinion, Ghosh has not entered an
appearance nor filed any responsive pleadings.
DISCUSSION
Waiving any claim for punitive damages, Friends Christian seeks a default judgment
against Ghosh in the amount of $250,000, the amount it put into the escrow account, plus costs
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Rule 55(a) states: “When 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 clerks
must enter the party’s default.” Fed. R. Civ. P. 55(a).
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Rule 55(b)(2) allows a party to “apply to the court for a default judgment” against a party in
default.
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totaling $2,249.14. (See Mot. for Default Judgment at 1 & Ex. 1, ¶ 13 (Affidavit of Terry L.
Goddard, Jr., Apr. 24, 2017) (“Goddard Aff.”).)
The “entry of a default judgment is not automatic.” Mwani v. bin Laden, 417 F.3d 1, 6
(D.C. Cir. 2005). First, the procedural posture of a default does not relieve a federal court of its
“affirmative obligation” to determine whether it has subject-matter jurisdiction over the action.
James Madison Ltd. v. Ludwig, 82 F.3d 1085, 1092 (D.C. Cir. 1996). Here, the Court has
jurisdiction over this matter pursuant to 28 U.S.C. § 1332(a)(1), and venue is proper under 28
U.S.C. § 1391(b)(2) (“A civil action may be brought in . . . a judicial district in which a
substantial part of the events or omissions giving rise to the claim occurred . . . .”)
Moreover, the determination of whether default judgment is appropriate is committed to
the discretion of the trial court. Jackson v. Beech, 636 F.2d 831, 836 (D.C. Cir. 1980). Courts
strongly favor resolution of disputes on their merits. Id. However, default judgment is available
“when the adversary process has been halted because of an essentially unresponsive party. . . .
The diligent party must be protected lest he be faced with interminable delay and continued
uncertainty as to his rights.” Jackson v. Beech, 636 F.2d 831, 835-36 (D.C. Cir. 1980) (internal
quotations omitted). Where, as here, there is a complete “absence of any request to set aside the
default or suggestion by the defendant that it has a meritorious defense, it is clear that the
standard for default judgment has been satisfied.” Int’l Painters and Allied Trades Indus.
Pension Fund v. Auxier Drywall, LLC, 531 F. Supp. 2d 56, 57 (D.D.C. 2008) (internal quotations
omitted).
Finally, while the entry of default establishes defendant's liability for the well-pleaded
allegations of the complaint, Adkins v. Teseo, 180 F. Supp. 2d 15, 17 (D.D.C. 2001), it “does not
. . . establish liability for the amount of damages claimed.” Boland v. Elite Terrazzo Flooring,

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Inc., 763 F. Supp. 2d 64, 67 (D.D.C. 2011). If necessary, a court may hold a hearing to “(A)
conduct an accounting; (B) determine the amount of damages; (C) establish the truth of any
allegation by evidence; or (D) investigate any other matter.” Fed. R. Civ. P. 55(b)(2). Here,
though, no hearing is necessary as there are sufficient “detailed affidavits [and] documentary
evidence” to allow the Court to independently assess “the appropriate sum for the default
judgment.” Flynn v. Mastro Masonry Contractors, 237 F. Supp. 2d 66, 69 (D.D.C. 2006) (citing
United Artists Corp. v. Freeman, 605 F.2d 854, 857 (5th Cir. 1979)). Specifically, Friends
Christian has filed an affidavit executed by its attorney, Terry L. Goddard, Jr., which has
attached signed copies of the Loan Commitment Letter and Escrow Agreements and a cost
summary sheet with copies of available receipts. (See Goddard Aff. ¶ 15 & Exs. 1-3.) The Court
has reviewed these documents and finds that they substantiate its claim for compensatory
damages in the amount of $250,000.00 and for costs totaling $2,249.14.
CONCLUSION
Accordingly, and for the reasons set forth above, the Court will grant Friends Christian’s
motion for default judgment and enter judgment in favor of Friends Christian and against Ghosh
in the amount of $250,000.00 plus $2,249.14 in costs. A separate Order of Judgment
accompanies this Memorandum Opinion.

/s/ Ellen Segal Huvelle
ELLEN SEGAL HUVELLE
United States District Judge
Date: May 18, 2017

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