BRANCH BANKING AND TRUST COMPANY v. OWEN PAINT AND BODY INC et al

Filing 9

ORDER GRANTING 5 Motion for Default Judgment. The Defendants are jointly and severally liable for $215,721.11, which includes principal due on the loans, accrued interest to date, bank fees, and attorneys' fees. Ordered by U.S. District Judge MARC THOMAS TREADWELL on 4/29/2014. (tlh)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
MACON DIVISION
LSCG FUND 19, LLC,
Plaintiff,
v.
OWEN PAINT & BODY, INC., et al.,
Defendants.

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CIVIL ACTION NO. 5:13-CV-308 (MTT)

ORDER
This matter is before the Court on the Plaintiff’s motion for default judgment.
(Doc. 5). For the following reasons, the motion is GRANTED.
I. FACTUAL AND PROCEDURAL BACKGROUND
Defendant Owen Paint & Body (“Owen Paint”) executed a promissory note on
March 3, 2009 in favor of BB&T in the amount of $153,621.00 (“Note-1”)1. (Docs. 1 at
¶ 8; 1-1). Defendant Ferrell Owen (“Owen”) absolutely and unconditionally guaranteed
payment of Owen Paint’s then-existing or thereafter arising “notes, drafts, debts,
obligations and liabilities” to BB&T via a guaranty agreement dated March 25, 2009.
(Docs. 1 at ¶ 9; 1-2). The Defendants defaulted on Note-1 and the guaranty agreement
by failing to make payments when due. (Doc. 1 at ¶ 10).
Owen Paint also executed a promissory note on March 16, 2010 in favor of
BB&T in the amount of $25,000.00 (“Note-3”). (Docs. 1 at ¶ 17; 1-3). Pursuant to a
modification agreement dated June 13, 2011, the maturity date on this note was
extended to September 13, 2011. (Docs. 1 at ¶ 18; 1-4). Owen executed another

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The numbering of the notes is based on the numbers at the top of the documents.

guaranty agreement dated March 16, 2010 whereby he absolutely and unconditionally
guaranteed payment of Owen Paint’s then-existing or thereafter arising “notes, drafts,
debts, obligations and liabilities” to BB&T. (Docs. 1 at ¶ 19; 1-5). The Defendants
defaulted on Note-3 and the guaranty agreement by failing to make payments when
due. (Doc. 1 at ¶ 20).
The complaint informs the Defendants that the amount of principal and interest
due on both notes is accelerated and immediately due and payable.2 (Doc. 1 at ¶¶ 12,
22). The complaint further informs the Defendants that, pursuant to O.C.G.A. § 13-111, the lender will enforce to provisions in Note-1 and Note-3 regarding payment of
attorneys’ fees unless the total amount of the debt is paid within 10 days. (Doc. 1 at ¶¶
12, 22).
The Plaintiff filed suit against the Defendants on August 27, 3013, seeking to
recover amounts due pursuant to the promissory notes and guaranty agreements.
(Doc. 1). On or about September 24, 2013, LSCG Fund 19, LLC acquired the notes at
issue from BB&T. (Doc. 7-1 at ¶ 4).3 The Defendants both waived service of process
on September 25, 2013. (Doc. 2). More than 60 days have elapsed since the
Defendants waived service, and they have failed to plead or otherwise defend the suit.
See Fed. R. Civ. P. 12(a)(1)(A)(ii). On December 18, 2013, the Clerk entered default
against both Defendants. The Plaintiff now moves the Court for an entry of default
judgment. The Defendants have not responded to the motion.

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Both Note-1 and Note-3 provide: “The failure to pay any part of the principal or interest when due on this
Note … shall be a material default hereunder and this Note and other debts due the Bank by any one or
more of undersigned shall immediately become due and payable without notice, at the option of the
Bank.” (Docs. 1-1 at 3; 1-3 at 3).

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The Court previously granted the Plaintiff’s motion to substitute LSCG Fund 19 as the Plaintiff in this
action. (Doc. 3).

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II. DISCUSSION
Pursuant to Fed. R. Civ. P. 55(a), the Clerk must enter a party’s default if that
party’s failure to plead or otherwise defend an action against it “is shown by affidavit or
otherwise.” After default has been entered, the Clerk may enter a default judgment on
the plaintiff’s request if the claim “is for a sum certain or a sum that can be made certain
by computation,” as long as the party is not a minor or incompetent and has not made
an appearance. Fed. R. Civ. P. 55(b)(1). In all other cases, the plaintiff must apply to
the Court for a default judgment. Fed. R. Civ. P. 55(b)(2). The Court must hold an
evidentiary hearing to determine damages unless all the essential evidence is already
on the record. See S.E.C. v. Smyth, 420 F.3d 1225, 1232 n.13 (11th Cir. 2005); see
also Fed. R. Civ. P. 55(b)(2).
After the Clerk’s entry of default, the defendant is deemed to admit all wellpleaded factual allegations in the complaint. Nishimatsu Const. Co., Ltd. v. Houston
Nat’l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975).4 An entry of default against the
defendant does not in and of itself establish that the plaintiff is entitled to a default
judgment, however. The defendant is not deemed to admit facts that are not wellpleaded or admit conclusions of law. Id. “The Court must consider whether the
unchallenged facts constitute a legitimate cause of action, since the party in default
does not admit a mere conclusion of law. In considering any default judgment, the
Court must consider (1) jurisdiction, (2) liability, and (3) damages.” Johnson v.
Rammage, 2007 WL 2276847, at *1 (M.D. Ga.) (citing Pitts v. Seneca Sports, Inc., 321
F. Supp. 2d 1353 (S.D. Ga. 2004)). The defendant is not deemed to admit the plaintiff’s

4
The Eleventh Circuit has adopted as binding precedent the decisions of the former Fifth Circuit
rendered prior to October 1, 1981. Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir.
1981) (en banc).
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allegations relating to the amount of damages. Patray v. Nw. Pub., Inc., 931 F. Supp.
865, 869 (S.D. Ga. 1996); see also Anheuser Busch, Inc. v. Philpot, 317 F.3d 1264,
1266 (11th Cir. 2003) (“A court has an obligation to assure that there is a legitimate
basis for any damage award it enters … .”).
The allegations in the complaint establish the Court has jurisdiction based on
diversity of citizenship. (Doc. 1 at ¶¶ 1-3, 13, 14, 23, 24). See also 28 U.S.C. § 1332.
The complaint also establishes the Court has personal jurisdiction over both
Defendants. (Doc. 1 at ¶¶ 2, 3).
A. Liability for Breach of Promissory Notes and Guaranties
As discussed above, the Plaintiff in this case is seeking to recover sums due
pursuant to two promissory notes and guaranties. Pursuant to Georgia law, “[w]here …
the record shows that the promissory note and guarantees were duly executed by the
debtors and that they are in default, a prima facie right to judgment as a matter of law
[is] established, and the burden shift[s] to [the defendants] to produce or point to
evidence in the record which establishe[s] an affirmative defense.” Secured Realty Inv.
v. Bank of N. Ga., 314 Ga. App. 628, 629, 725 S.E.2d 336, 338 (2012). See also
Collins v. Regions Bank, 282 Ga. App. 725, 726, 639 S.E.2d 626, 627 (2006). The
Plaintiff has shown the Defendants are in default on Note-1, Note-3, and the guaranty
agreements based on the allegations in the complaint that are deemed admitted. Thus,
the Defendants’ liability is established.
B. Damages
No hearing is necessary because there is sufficient evidence on the record for
the Court to determine the amount of damages. The Plaintiff has submitted the affidavit

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of Adam Siddiqi, an asset manager for the servicer of LSCG Fund 19 and the
custodian/keeper of records for LSCG Fund 19 with respect to this matter. (Doc. 7-1).5
Payment histories and loan screens for Note-1 and Note-3 are also attached to Siddiqi’s
affidavit. The evidence submitted shows the Defendants are liable for $167,148.99 on
Note-16 and $29,314.19 on Note-37 as of the date of this Order.
C. Attorneys’ Fees
The Court can also determine attorneys’ fees without an evidentiary hearing
because there is a statutory formula for their calculation. Note-1 and Note-3 both
provide that if the notes are placed with an attorney for collection, “the undersigned
agrees to pay, in addition to principal and interest, all costs of collection and reasonable
attorneys’ fees.” (Docs. 1-1 at 4; 1-3 at 4). Pursuant to O.C.G.A. § 13-1-11(a),
“[o]bligations to pay attorney's fees upon any note or other evidence of indebtedness, in
addition to the rate of interest specified therein, shall be valid and enforceable and
collectable as a part of such debt if such note or other evidence of indebtedness is
collected by or through an attorney after maturity.” If the note provides for “reasonable
attorney’s fees” but does not specify a percentage of the principal and interest, “such
provision shall be construed to mean 15 percent of the first $500.00 of principal and
interest owing on such note or other evidence of indebtedness and 10 percent of the

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The Court previously ordered the Plaintiff to supplement the record with an affidavit setting forth the
amount of damages and the basis for their calculation. (Doc. 6).

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$139,368.33 – unpaid principal
$19,569.90 – accrued interest as of December 30, 2013
$4,377.96 – bank fees
$3,832.80 – $31.94 per diem interest from December 30, 2013 to April 29, 2014. (Doc. 7-1 at ¶ 8).
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$25,000.00 – unpaid principal
$3,620.68 – accrued interest as of December 30, 2013
$5.91 – bank fees
$687.60 – $5.73 per diem interest from December 30, 2013 to April 29, 2014. (Doc. 7-1 at ¶ 10).

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amount of principal and interest owing thereon in excess of $500.00.” O.C.G.A.
§ 13-1-11(a)(2). A party seeking to collect attorneys’ fees as part of this statute must
give the debtor written notice of its intent, and the notice must state the debtor has ten
days to pay the principal and interest due without being liable for attorneys’ fees.
O.C.G.A. § 13-1-11(a)(3). If all these requirements are met, the provision for attorneys’
fees in the note is enforceable. TermNet Merch. Servs., Inc. v. Phillips, 277 Ga. 342,
344, 588 S.E.2d 745, 747 (2003).
The complaint, notes, and guaranties show the above requirements have been
met. Accordingly, the Court finds the Defendants are liable to the Plaintiff for attorneys’
fees in the amount of $16,302.10 for Note-1 and $2,955.83 for Note-3, which is 15% of
the first $500.00 of the outstanding principal and interest, plus 10% of the remaining
principal and interest.
III. CONCLUSION
The Plaintiff’s motion for default judgment (Doc. 5) is GRANTED. The
Defendants are jointly and severally liable for $215,721.11, which includes principal due
on the loans, accrued interest to date, bank fees, and attorneys’ fees.
SO ORDERED, this 29th day of April, 2014.
S/ Marc T. Treadwell
MARC T. TREADWELL, JUDGE
UNITED STATES DISTRICT COURT

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