Mainsail Development, LLC et al v. Rusco Investments, Inc. et al

Filing 61

ORDER: Plaintiffs' Amended Motion for Final Default Judgment 56 is GRANTED.The Clerk is directed to enter judgment in favor of Plaintiffs and against Defendants in the amount of $1,211,681.10. The Clerk shall thereafter CLOSE THIS CASE. Signed by Judge Virginia M. Hernandez Covington on 8/17/2012. (MEB)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
MAINSAIL DEVELOPMENT, LLC, and
AUSTIN PARK DEVELOPMENT, LLC,
Plaintiffs,
v.

Case No. 8:11-cv-45-T-33AEP

RUSCO INVESTMENTS, INC.,
PINNACLE MUTUAL, INC., LASS
ACCOUNTING AND BUSINESS
SERVICES, INC., JULIE HOLDEN,
RUTH LIVERPOOL, AND ALDWYN
LIVERPOOL,
Defendants.
________________________________/
ORDER
This cause is before the Court pursuant to Plaintiffs’
Amended Motion for Final Default Judgment (Doc. # 56), which
was filed on August 2, 2012.

Also before the Court is

Defendant Ruth Liverpool’s correspondence to the Court (Doc.
# 57) filed on August 8, 2012, which the Court construes as a
response to the Motion for Final Default Judgment.

For the

reasons that follow, the Court grants the Motion.
I.

Procedural History
Plaintiffs Mainsail Development, LLC and Austin Park

Development, LLC initiated this action on January 6, 2011, by
filing a fifteen count Verified Complaint against Defendants
Rusco

Investments,

Inc.,

Pinnacle

Mutual,

Inc.,

Lass

Accounting & Business Services, Inc., Julie Holden, Ruth

Liverpool, and Aldwyn Liverpool.
alleges

counts

enrichment,

for

RICO

breach

of

(Doc. # 1).

violations,

contract,

The Complaint

conspiracy,

rescission,

unjust

unfair

and

deceptive trade practices, fraud, breach of fiduciary duty,
civil theft, replevin, and tortious interference with business
relationships.

On January 28, 2011, all of the Defendants

except for Julie Holden responded to the Complaint by filing
a Motion to Compel Arbitration.1

(Doc. # 4).

The Magistrate Judge issued a Report & Recommendation on
June 20, 2011, in which he recommended granting the Motion to
Compel Arbitration.

(Doc. # 17). On July 19, 2011, the Court

adopted the Report & Recommendation, and granted the Motion to
Compel Arbitration. (Doc. # 21).

The Court also stayed and

administratively closed the case pending the resolution of the
arbitration proceedings and directed the parties to file a
joint

status

report

within

90

days

and

every

90

days

thereafter. Id.
Plaintiffs filed unilateral status reports on September
19, 2011, December 19, 2011, and January 16, 2012, which
indicated that Plaintiffs were attempting to proceed with

1

Following Julie Holden’s failure to respond to the
Complaint, Plaintiffs moved for entry of a Clerk’s Default on
February 18, 2011, and the Clerk entered Default against
Holden on February 22, 2011. (Doc. ## 9, 10).
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arbitration but had not received a response to emails and
written letters from Defendants’ counsel. (Doc. ## 22, 23,
24).
On February 15, 2012, Defendants’ counsel, Shendell &
Pollock, moved to withdraw as counsel for Defendants.

(Doc.

# 27). On February 29, 2012, the Magistrate Judge granted the
motion, but warned Defendants that "[p]ursuant to Local Rule
2.03(e), a corporation may appear and be heard only through
counsel admitted to practice in the Court." Accordingly, the
order directed the Corporate Defendants to obtain new counsel
within 30 days. (Doc. # 28).

Shendell & Pollock provided a

copy of the Court's order to all Defendants by certified mail
on March 1, 2012. (Doc. # 29).
Despite the Court's warning, the Corporate Defendants
failed to retain new counsel in the time provided by the
Court's order.

Based on this failure, Plaintiffs filed a

Motion for Default as to all Defendants on May 15, 2012 (Doc.
# 30).

On May 16, 2012, the Court entered an endorsed order

denying the motion without prejudice and stating as follows:
ENDORSED ORDER denying without prejudice Motion for
default. At this juncture, default is not the
appropriate remedy. There are two individual
defendants, Ruth Liverpool and Aldwyn Liverpool.
They are free to represent themselves pro se in
this proceeding if they desire. As for the
corporate defendants, Rusco, Pinnacle, and Lass
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Accounting, the Local Rules require that they be
represented by counsel. Because they have filed a
responsive pleading to the complaint, default at
this juncture is premature and that remedy would be
appropriate upon the pleadings being stricken.
Within 14 days, the individual defendants are
ordered to file a status report with the Court
informing the Court of their desire to proceed pro
se in this case or whether they intend to proceed
with counsel. Also within 14 days they shall file a
response to the motion to set aside abatement. The
corporate defendants are reminded that they can not
proceed without counsel in this Court. Their
pleadings are subject to being stricken and
judgement being entered against them. Corporate
defendants are to file a notice of appearance of
counsel within 14 days as well as file a response
to the motion to set aside abatement. If the
defendants fail to comply with this order, the
Court will lift the stay in this case, and the case
will be reopened. The Clerk is directed to mail a
copy of this Order to all of the defendants.
(Doc. # 32).
Copies of the Court’s order were mailed to the Defendants
on May 17, 2012, but were returned as undeliverable by all
Defendants except for Ruth Liverpool. On June 7, 2012, copies
of the Court’s order were successfully re-mailed to updated
addresses

for

the

Corporate

Defendants

and

for

Aldwyn

Liverpool.
Based on the Corporate Defendants’ failure to timely
retain new counsel and the failure of all Defendants to comply
with the Court’s May 16, 2012, order, Plaintiffs filed a
Second Motion to Set Aside Abatement and Motion for Default as

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to all Defendants on June 5, 2012. (Doc. # 33).

In the

motion, Plaintiffs asserted that they had attempted since July
2011,

to

contact

arbitration

the

process,

Defendants
but

regarding

received

no

beginning

response

to

the

their

telephone calls and written letters. Plaintiffs also supplied
evidence showing that the Corporate Defendants have been
administratively dissolved and have not filed an annual report
since April 2010. (Doc. # 33-1). Plaintiffs requested the
Court

to

lift

the

abatement

of

the

action,

strike

the

pleadings of all Defendants and enter a default as to all
Defendants for failure to comply with the Court’s May 16,
2012, order and for failure to obtain counsel.

None of the

Defendants filed a response to the Motion for Default.
On June 22, 2012, the Court entered an order lifting the
stay imposed on July 19, 2011, reopening the case, and setting
the Motion for Default for a hearing. (Doc. # 34).

At the

hearing held on June 28, 2012, none of the Defendants appeared
at

the

hearing,

nor

did

anyone

appear

on

their behalf.

Accordingly, based on the Defendants' failure to comply with
Court orders, failure to appear at the hearing, and the
Corporate Defendants' failure to retain new counsel, the Court
struck the Defendants' pleadings and granted the Motion for
Default. (Doc. ## 37, 38). The Clerk entered Default against
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each of the Defendants on June 29, 2012. (Doc. ## 41-45).
On July 9, 2012, Defendant Ruth Liverpool, on behalf of
all Defendants, filed a motion which the Court construed as a
Motion to Set Aside the Clerk’s Defaults. (Doc. # 46).

Upon

finding that the Defendants failed to establish good cause for
setting aside the Clerk’s entries of default, the Court denied
the construed Motion to Set Aside Clerk’s Default as to the
Corporate Defendants on July 11, 2012, and denied the motion
as to the Individual Defendants, Ruth Liverpool and Aldwyn
Liverpool, on July 20, 2012. (Doc. ## 47, 52).
Plaintiffs filed a Motion for Final Default Judgment on
July 30, 2012. (Doc. # 54). The Court denied the motion
without prejudice on July 31, 2012, because the motion did not
state whether all of the Corporate Defendants were served with
the motion. (Doc. # 55).

Accordingly, Plaintiffs filed the

instant Amended Motion for Final Default Judgment on August 2,
2012, which indicates that all of the Defendants have been
served with the Motion. (Doc. # 56). Defendant Ruth Liverpool
filed a letter with the Court on August 8, 2012, which the
Court construes as a response to the Motion for Final Default
Judgment.
II.

(Doc. # 57).

Legal Standard
Federal Rule of Civil Procedure 55(a) sets forth the
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following regarding an entry of default:
(a) Entering a Default. When a party against
whom a judgment for affirmative relief is
sought has failed to plead or otherwise defend,
and that failing is shown by affidavit or
otherwise, the clerk must enter the party’s
default.
A

district court may also strike pleadings and direct

the Clerk to enter default against defendants who have made an
appearance

as

a

sanction

for

discovery

abuses

or

the

abandonment of defenses. Fed. R. Civ. P. 37(b)(2)(A)(vi);
Pickett v. Executive Preference Corp., No. 6:05-cv-1128, 2006
WL 2947844 (M.D. Fla. Oct. 16, 2006) (striking defendant's
pleadings for abandoning its defense, and directing clerk to
enter default against defendant).
Pursuant to Federal Rule of Civil Procedure 55(b)(2),
following the entry of a Clerk’s default and upon motion by
the plaintiff, the Court may enter a default judgment against
a defaulting party. If necessary, the Court may first conduct
a

hearing

in

order

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). Additionally, “[i]f the
party against whom a default judgment is sought has appeared
personally

or

by

a

representative,

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that

party

or

its

representative must be served at least 7 days before the
hearing.” Id.
However, the mere entry of a default by the Clerk does
not, by itself, warrant the Court entering a default judgment.
See Tyco Fire & Sec. LLC v. Alcocer, 218 F. App’x 860, 863
(11th Cir. 2007) (citing Nishimatsu Constr. Co. v. Houston
Nat’l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975)).

Rather, a

Court must ensure that there is a sufficient basis in the
pleadings for the judgment to be entered.
judgment

has

plaintiff’s
defendant

the

effect

well-pled

from

of

establishing

allegations

contesting

those

of

fact

facts

on

Id.

A default

as

fact

the

and

bars

the

appeal.

Id.

Although in default, a defendant is still entitled to contest
the amount of damages before the Court enters a judgment by
default.

Id. at 863 n.5.

III. Analysis
Based upon the Clerk’s entry of default, the well-pled
factual

allegations

contained

in

the

Complaint

and

the

exhibits attached thereto, the affidavits of Roy Melvin and
Kenneth R. Case, Esq. regarding amounts due, and the Motion,
the Court determines that the Motion is due to be granted and
that a hearing on this matter is not needed. Furthermore, the
Court finds that Defendant Ruth Liverpool’s construed response
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to the Motion does not set forth good cause to prevent the
Court from entering a default judgment, but merely reiterates
Defendants’ arguments that the Court has previously considered
and found lacking.

Although a default judgment is a severe

sanction appropriate only as a last resort, Chambers v. NASCO,
Inc., 501 U.S. 32, 51 (1991), the Court finds that lesser
sanctions would not suffice in light of the circumstances of
this case and Defendants’ actions detailed above.
Thus, Plaintiffs are entitled to a judgment against
Defendants for $1,211,681.10, which includes the principal
amount

of

$398,000.00,

treble

damages

in

the

amount

of

$796,000.00, attorneys’ fees in the amount of $16,958.50, and
taxable costs in the amount of $722.65. This amount, which is
capable of accurate and ready mathematical computation or
ascertainment from the face of the documents attached to the
Complaint and the affidavits filed by Plaintiffs, represents
the sums due and owing to Plaintiffs, treble damages pursuant
to Florida’s Civil Theft Statute, § 772.11, Fla. Stat.,
attorneys' fees, and costs.
Specifically, Roy Melvin, President of the Plaintiff
corporations, filed an affidavit stating that Plaintiffs paid
deposits to Defendants in the amounts of $298,000.00 and
$100,000.00 pursuant to a Letter of Commitment and a Financial
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Services Agreement with Defendants. (Doc. # 56-1 at ¶¶ 3-6).
The documents attached to the Complaint reflect such payments
as well. (Doc. ## 1-1 - 1-7).

Melvin explains that:

Defendants would collude to introduce an individual
or entity to deposit monies with one of the
Defendants serving as an ‘investor’ to whom they
would raise the required capital for a project and
the other Defendant as the ‘advisor’ and upon the
receipt of the monies, perform no actions to
further any investment or project but to divert the
monies through multiple subsidiary companies all of
which performed no functions.
(Doc. # 56-1 at ¶ 7).
Furthermore,

the

Court

finds

that

Plaintiffs

have

satisfied, or Defendants have waived, all conditions precedent
required by Florida’s Civil Theft Statute, § 772.11, Fla.
Stat., including making written demand for treble damages to
Defendants and receiving no response to the demand from
Defendants, before filing the instant action.

(Doc. # 1-7).

Accordingly, Plaintiffs are entitled to recover treble damages
in the amount of $796,000.00 and reasonable attorneys’ fees
and costs as provided by that statute.
Regarding attorneys’ fees, Plaintiffs have filed the
detailed time sheets of their attorneys in this case and
Attorney Kenneth R. Case has filed an affidavit supporting the
attorneys’ fees and costs sought.

Attorney Case’s affidavit

contains an analysis of the oft-cited factors set forth in
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Florida Patient's Compensation Fund v. Rowe, 472 So. 2d 1145
(Fla. 1985), and its progeny.

Based upon the detailed time

sheets and this affidavit, the Court determines that the
attorneys' fees and costs sought are reasonable, especially in
light of the amount in controversy.

Accordingly, the Court

directs the clerk to enter a final default judgment against
Defendants

and

in

favor

of

Plaintiffs

in

the

amount

of

$1,211,681.10.
Accordingly, it is
ORDERED, ADJUDGED, and DECREED:
(1)

Plaintiffs’ Amended Motion for Final Default Judgment
(Doc. # 56) is GRANTED.

(2)

The Clerk is directed to enter judgment in favor of
Plaintiffs

and

against

Defendants

in

the

amount

of

$1,211,681.10.
(3)

The Clerk shall thereafter CLOSE THIS CASE.
DONE and ORDERED in Chambers in Tampa, Florida, this 17th

day of August, 2012.

Copies: All Parties and Counsel of Record
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