Gateway One Lending & Finance, LLC v. Golden Auto Brokers Incorporated et al

Filing 15

OPINION AND ORDER. The Court will hold an evidentiary hearing to receive evidence regarding the damages claimed for the breaches of contract, fraud, and attorney's fees. The hearing will be held on January 16, 2018, at 9:30 a.m., in Courtroom 17 05, Richard B. Russell Federal Building and Courthouse, 75 Ted Turner Drive, S.W., Atlanta, GA 30303. At the hearing, Plaintiff shall present evidence on the following issues: (1) the amount of damages it claims for breaches of each of the Contracts (Count I through Count IX); (2) the amount of damages it seeks for its fraud claim against Defendant Hamilton and Defendant Golden Auto; (3) the attorneys fees it seeks under O.C.G.A. § 13611; and (4) the grounds and calculation for the award of $11,656.38 in additional attorneys fees. Signed by Judge William S. Duffey, Jr on 12/14/2017. (bgt)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
GATEWAY ONE LENDING &
FINANCE, LLC,
Plaintiff,
v.

1:15-cv-1808-WSD

GOLDEN AUTO BROKERS
INCORPORATED a/k/a GOLDEN
AUTO BROKERS, INC., and RAY
MAURICE HAMILTON,
Defendants.

OPINION AND ORDER
This matter is before the Court on Plaintiff Gateway One Lending &
Finance, LLC’s (“Plaintiff”) Motion for Entry of Default Judgment [14] (the
“Motion”).
I.

BACKGROUND
A.

Facts
Defendant Golden Auto Brokers Incorporated a/k/a Auto Brokers, Inc.

(“Golden Auto”) owns and operates an automobile dealership in Atlanta, Georgia.
(Amended Complaint [9] ¶ 10). Ray Maurice Hamilton (“Hamilton”) (together
with Golden Auto, “Defendants”) is the principal owner of, and Finance Manager

for, Golden Auto. (Id.). Golden Auto sells motor vehicles to consumers pursuant
to motor vehicle installment sales contracts. ([9] ¶ 11). The motor vehicle
installment sales contracts are then approved and purchased by finance companies,
such as Plaintiff. (Id.). The finance companies contemporaneously receive
assignment of the motor vehicle installment sales contracts. (Id.).
On or about October 4, 2012, Golden Auto and Plaintiff entered into a
Dealer Agreement (the “Dealer Agreement”). ([9] ¶ 12). The Dealer Agreement
established a relationship in which Golden Auto submitted to Plaintiff, for
purchase, “contract and/or security agreements evidencing installment sales of
goods and/or services to [b]uyers, including their successors in interest, in
connection with the retail credit sales of motor vehicles.” (Id.; see also [9] ¶ 12;
[9.1]). Hamilton signed the Dealer Agreement on behalf of Golden Auto. ([9] ¶
13).
The Dealer Agreement sets forth the terms, conditions, and warranties under
which Plaintiff could purchase the motor vehicle installment sales contracts from
Golden Auto. ([9] ¶ 14). Under the Dealer Agreement, Golden Auto represented
and warranted to Plaintiff that Golden Auto had the right to sell the motor vehicles
that were the subject of the motor vehicle installment sales contracts. ([9] ¶ 15).
Golden Auto also made the following representations and warranties under the
2

Dealer Agreement: (i) that the motor vehicles sold under the motor vehicle
installment sales contracts were free from all liens and encumbrances except those
in favor of Plaintiff; (ii) that the motor vehicle installment sales contracts were
valid and enforceable; (iii) that Golden Auto was unaware of any facts indicating
the motor vehicle installment sales contracts were uncollectable; and (iv) that the
motor vehicle installment sales contracts arose from a bona fide sale in the
ordinary course of business. ([9] ¶ 16). Golden Auto’s failure, for any reason, to
perfect Plaintiff’s first priority lien interest in a vehicle within 120 days of the date
of execution of the motor vehicle installment sales contract would mean Golden
Auto was in breach of the Dealer Agreement. ([9] ¶ 17).
Between late 2012 and late 2014, Plaintiff purchased from Golden Auto
numerous motor vehicle installment sales contracts pursuant to the Dealer
Agreement. ([9] ¶ 18). Beginning in mid-2014, Golden Auto submitted, and
Gateway One purchased, seven motor vehicle installment sales contracts under the
Dealer Agreement, including the Wakely Contract [9.2], the Moore Contract [9.3],
the Cleveland Contract [9.4], the Gordon Contract [9.5], the Howard Contract
[9.6], the Carter Contract [9.7], and the Mordica Contract [9.8] (collectively, the
“Contracts”). The Contracts are the subject of this dispute.

3

B.

Procedural History
On May 20, 2015, Plaintiff filed its Complaint [1] asserting seven counts of

breach of contract and two counts of fraud. The seven counts of breach of contract
correspond to each of the seven Contracts. Plaintiff generally asserts Defendants
failed to secure a perfected first priority lien interest in favor of Plaintiff1 and failed
to deliver clean title to the vehicles that are the subject of the Contracts.2 ([9] at
10–18). Plaintiff also claims that Defendants fraudulently represented that they
would perfect a lien interest in favor of Plaintiff for those vehicles that are the
subject of the Contracts, and that Defendants represented they would do so within
120 days of the date of execution of each Contract. ([9] at 18–21). Plaintiff claims
that, by submitting the Contracts, Defendants represented that they could, and
would, convey “good title” and a “perfected lien interest” in favor of Plaintiff for
the vehicles. (Id.). Plaintiff seeks, in addition to damages, attorney’s fees under
O.C.G.A. § 13-1-11 and § 13-6-11. ([9] at 21–23).

1

Plaintiff makes this claim only with respect to the Wakely Contract, Moore
Contract, Cleveland Contract, Gordon Contract, Howard Contract, and Carter
Contract. ([9] ¶ 20).
2
Plaintiff acknowledges in the Motion that it has recovered the amounts owed
to it in reference to the Gordon Contract in Count IV. ([14.1] at 2, n.1). Plaintiff
notes that it is not seeking any damages with respect to Count IV. (Id.).
4

On May 31, 2015, Defendants were served with the summons and
Complaint. ([3]). On August 14, 2015, upon Plaintiff’s request, the Clerk entered
default. On May 31, 2016, Plaintiff filed its initial Motion for Default Judgment
[7] (“First Default Motion”). On September 22, 2016, the Court issued an order
[8] (“September 22nd Order”) directing Plaintiff to amend its Complaint to
adequately allege citizenship of the parties. On September 28, 2016, Plaintiff filed
its Amended Complaint pursuant to the Court’s September 22nd Order. On
December 28, 2016, Plaintiff filed its second Motion for Default Judgment [10]
(“Second Default Motion”). On March 10, 2017, the Court entered an order
denying the Second Default Motion on the grounds that Plaintiff failed to serve
Defendants with the Amended Complaint. On March 16, 2017, Plaintiff served
Defendants with the Amended Complaint. ([12]). On March 31, 2017, Plaintiff
requested the Clerk enter default. On April 3, 2017, the Clerk entered default. The
same day, Plaintiff submitted the Motion—its third Motion for Default Judgment.
Defendants have not filed a response to the Motion.
II.

LEGAL STANDARD
Rule 55(b) of the Federal Rules of Civil Procedure provides that default

judgment may be entered against defaulting defendants as follows:
(1)

By the Clerk. If the plaintiff’s claim is for a sum certain or a
sum that can be made certain by computation, the clerk—on
5

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 and who is
neither a minor nor an incompetent person.
(2)

By the Court. In all other cases, the party must apply to the
court for a default judgment. . . . If the party against whom a
default judgment is sought has appeared personally or by a
representative, that party or its representative must be served
with written notice of the application at least 7 days before the
hearing. The court may conduct hearings or make referrals . . .
when, to enter or effectuate judgment, it needs 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).
“[T]here is a strong policy of determining cases on their merits . . . . [Courts]
therefore view defaults with disfavor.” In re Worldwide Web Sys., Inc., 328 F.3d
1291, 1295 (11th Cir. 2003). “The entry of a default judgment is committed to the
discretion of the district court.” Hamm v. DeKalb Cnty., 774 F.2d 1567, 1576
(11th Cir. 1985), cert. denied, 475 U.S. 1096 (1986) (citing 10A Charles Alan
Wright, et al., Federal Practice & Procedure § 2685 (1983)).
When considering a motion for default judgment, a court must investigate
the legal sufficiency of the allegations and ensure that the complaint states a
plausible claim for relief. Cotton v. Mass. Mut. Life Ins. Co., 402 F.3d 1267, 1278
(11th Cir. 2005); Bruce v. Wal-Mart Stores, Inc., 699 F. Supp. 905, 906 (N.D. Ga.
6

1988). If “the plaintiff has alleged sufficient facts to state a plausible claim for
relief,” a motion for default judgment is warranted. Surtain v. Hamlin Terrace
Found., 789 F.3d 1239, 1246 (11th Cir. 2015). “Conceptually, then, a motion for
default judgment is like a reverse motion to dismiss for failure to state a claim.”
Id. at 1245. “[W]hile a defaulted defendant is deemed to ‘admit[] the plaintiff’s
well-pleaded allegations of fact,’ he ‘is not held to admit facts that are not
well-pleaded or to admit conclusions of law.’” Cotton, 402 F.3d at 1278 (quoting
Nishimatsu Constr. Co. v. Houston Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir.
1975)).
III.
A.

DISCUSSION
Breach of Contract
Plaintiff asserts breach of contract of the Dealer Agreement based on the

seven Contracts Plaintiff purchased in 2014. “Under Georgia law, the essential
elements of a breach of contract claim are (1) a valid contract; (2) material breach
of its terms; and (3) damages arising therefrom.” Wright v. Wells Fargo Bank,
N.A., No. 1:15–cv–02416–AT–JCF, 2015 WL 12159206, at *5 (N.D. Ga. Oct. 8,
2015). Plaintiff submits as evidence the Dealer Agreement—the “breached”
contract in this case. The contract includes the signatures of Golden Auto and
Plaintiff. ([9.1] at 8). The contract is dated October 4, 2012. (Id.). The Dealer
7

Agreement states that, in the event of a breach of the representations and
warranties provided in it, Golden Auto is liable to Plaintiff for (i) the unpaid
balance owing under the Contracts, including earned and unpaid finance charges;
(ii) Golden Auto’s portion of any unearned finance charges which it previously
received; (iii) all damages, losses, and expenses incurred by Plaintiff; and (iv) all
out of pocket expenses incurred by Plaintiff in connection with collecting any
amounts due, including reasonable attorney’s fees and court costs. ([9.1] ¶ 6(a)).
Plaintiff also submits as exhibits to the Motion the seven Contracts
evidencing the agreements to purchase vehicles under the Dealer Agreement.
([9.2]–[9.8]). The Contracts provide the description of the vehicles, the total sale
prices, the financing amounts, the trade-in values, and the signatures of the parties.
(Id.). They also state that Plaintiff is the assignee of the Contracts. (Id.). Plaintiff
alleges that, with regard to the Wakely Contract, Moore Contract, Cleveland
Contract, Gordon Contract, Howard Contract, and Carter Contract, Defendant
breached the Dealer Agreement by failing to perfect a lien interest in favor of
Plaintiff within 120 days. ([9] ¶¶ 27, 32, 37, 42, 47, 52). With respect to all of the
Contracts, Plaintiff alleges Defendant breached the Dealer Agreement by failing to
pay off the loans on the trade vehicles. ([9] ¶¶ 28, 33, 38, 43, 48, 53, 57). Plaintiff

8

also alleges damages for the breaches, including unpaid balances on the vehicles,
late charges, and finance charges. ([9] ¶¶ 29, 34, 39, 44, 49, 54, 58).
Here, considering Defendant is deemed to admit Plaintiff’s well-pleaded
allegations of fact, Plaintiff has submitted sufficient evidence for the Court to
conclude that a valid contract exists, a material breach of its terms occurred, and
damages arose from the breaches. Plaintiff has “alleged sufficient facts to state a
plausible claim for relief” as to its breach of contract claim. Surtain, 789 F.3d at
1246.
B.

Fraud
Plaintiff also asserts a claim for fraud against Golden Auto and Hamilton.

Fraud in Georgia includes five elements: (1) a false representation or omission of a
material fact; (2) scienter; (3) intention to induce the party claiming fraud to act or
refrain from acting; (4) justifiable reliance; and (5) damages as the proximate result
of defendant's action. McCabe v. Daimler AG, 160 F. Supp. 3d 1337, 1350 (N.D.
Ga. 2015) (citing Parrish v. Jackson W. Jones P.C., 278 Ga. App. 645, 629 S.E.2d
468 (2006)). Plaintiff alleges that, in submitting the Contracts for purchase to
Plaintiff, Defendants represented that they could, and would, convey good title to
the vehicles. ([9] ¶¶ 61, 71). Plaintiff alleges Defendants represented they could,
and would, within 120 days, perfect lien interests in the vehicles in favor of
9

Plaintiff. ([9] ¶¶ 62, 70). Plaintiff states that Defendants represented the Contracts
were valid and enforceable. ([9] ¶¶ 63, 73). Plaintiff argues that it reasonably
relied upon the representations made by Defendants. ([9] ¶¶ 65, 74). Plaintiff
states that Defendants’ representations concerning the Contracts were false and
were known by Defendants to be false, and that Defendants made the
representations for the purpose of defrauding Plaintiff. ([9] ¶¶ 66-67; 75-76).
Plaintiff also alleges damages in excess of $75,000 against Hamilton and $75,000
against Golden Auto—for a total of $150,000 in damages for the fraud. (Id.).
Accepting Plaintiff’s well-pleaded allegations of fact as admitted by
Defendants, Plaintiff has sufficiently demonstrated Defendants made false
representations to Plaintiff knowing the representations were false and intending to
induce Plaintiff to purchase the Contracts. The facts, as deemed admitted, are
further evidence that Plaintiff justifiably relied on the false representations, and
Plaintiff suffered damages as the result of Defendants’ wrongful conduct. Plaintiff
has “alleged sufficient facts to state a plausible claim for relief” for fraud. Surtain,
789 F.3d at 1246.

10

C.

Remedies
Plaintiff requests the Court enter judgment against Defendant Golden Auto

as follows:
Count I: $42,426.39, which includes (1) the principal amount
of $28,993.99; (2) $174.72 in late charges; (3) $90.00 in returned
payment charges; (4) $9.50 in pay-by-phone charges; (5) $1,814.87 in
finance charges; (6) $11,343.31 in additional finance charges,
calculated by the Court using Plaintiff’s suggested per diem rate of
$11.11 from February 25, 2015, through the date of judgment.
Count II: $30,964.24, which includes (1) the principal amount
of $23,280.16; (2) $75.60 in late charges; (3) $271.15 in finance
charges, and (4) $7,337.33 in additional finance charges, calculated by
the Court using Plaintiff’s suggested per diem rate of $7.33 from
March 17, 2015, through the date of the judgment.
Count III: $17,989.91, which includes (1) the principal amount
of $14,721.11; (2) $45.58 in late charges; and (3) $3,223.22 in
additional finance charges, calculated by the Court using Plaintiff’s
suggested per diem rate of $3.22 from March 17, 2015, through the
date of the judgment.
Count V: $40,737.81, which includes (1) the principal amount of
$30,843.33; (2) $174.77 in finance charges; and (3) $9,719.71 in
additional finance charges, calculated by the Court using Plaintiff’s
suggested per diem rate of $9.71 from March 17, 2015, through the
date of the judgment.
Count VI: $30,156.87, which includes (1) the principal amount of
$25,956.57; (2) $22.50 in late charges; (3) $89.30 in finance charges;
and (4) $4,088.50 in additional finance charges, calculated by the
Court using Plaintiff’s suggested per diem rate of $4.25 from April
25, 2015, through the date of the judgment.

11

Court VII: $33,151.80, which includes (1) the principal amount of
$24,855.34; (2) $160.78; (3) $277.60 in finance charges; and (4)
$7,858.08 in additional finance charges, calculated by the Court using
Plaintiff’s suggested per diem rate of $8.16 from April 24, 2015,
through the date of the judgment.
Count VIII: $116,313.82 for fraudulent misrepresentations.
([14.1] at 4–6). Plaintiff requests the Court further enter judgment against
Defendant Hamilton as follows:
Count IX: $116,313.82, for fraudulent misrepresentations.
([14.1] at 6). Finally, Plaintiff requests the Court enter judgment against both
Defendants as follows:
Count X: $11,656.38, for Plaintiff’s reasonable attorney’s fees.
Count XI: $6,156.70, for Plaintiff’s recovery of all costs and expenses
of litigation, including reasonable attorney’s fees, as provided for in
O.C.G.A. §13–6–11.
([14.1] at 6–7).
The Court may grant default judgment and award damages without a hearing
if “the amount claimed is a liquidated sum or one capable of mathematical
calculation.” Adolph Coors Co. v. Movement Against Racism and the Klan, 777
F.2d 1538, 1543 (11th Cir. 1985) (quoting United Artists Corp. v. Freeman, 605
F.2d 854, 857 (5th Cir. 1976)). “Damages may be awarded only if the record
adequately reflects the basis for the award.” Adolph Coors, 777 F.2d at 1544; see
12

also Elektra Entm’t Grp., Inc. v. Jensen, No. 1:07-cv-54-JOF, 2007 WL 2376301,
at *2 (N.D. Ga. 2007) (“While a party in default admits the well-pleaded
allegations of the complaint against it, a plaintiff cannot satisfy the certainty
amount by simply requesting a specific amount. He must also establish that the
amount is reasonable under the circumstances.”). The Court is obligated to assure
(i) there is a proper basis for the damage award it enters, and (ii) that damages are
not awarded solely as the result of the unrepresented defendant’s failure to
respond. Anheuser Busch, Inc. v. Philpot, 317 F.3d 1264, 1265 (11th Cir. 2003).
In support of its Motion, Plaintiff submits an affidavit from Michael
Sismondo, an individual who claims to have personal knowledge of Plaintiff’s
business records. ([14.2] at 1). Sismondo represents that he is employed by
Plaintiff as a Legal Specialist in the Loss Mitigation Department. ([14.2] at 2).
The affidavit provides the “amounts that remain owing in respect of the Contracts.”
([14.2] at 4). The numbers presented in the affidavit differ widely from the
numbers provided in the Motion, and discussed above. While the amounts appear
“capable of mathematical calculation,” it is unclear which numbers require
calculating. The affidavit also appears to provide representations regarding the
damages resulting from Defendants’ fraudulent representations. The affidavit
states that “[t]he amount owed to Gateway One under the Contracts totals
13

$116,313.82,” and “[t]hat as a result of the actions of Golden Auto and Hamilton,
[Plaintiff] has suffered damages in the amount of $116,313.82.” ([14.2] at 5). It is
unclear to the Court whether Plaintiff is seeking $116,313.82 in two instances, or
$116,313.82 joint and severally from Defendant Golden Auto and Hamilton. The
Motion asserts damages in the amount of $116,313.82 against Hamilton under
Count IX, and $116,313.82 against Golden Auto under Count X. It is also unclear
on what basis Plaintiff calculated these amounts—especially considering Plaintiff,
in its Complaint, asserted damages of approximately $75,000 against Hamilton and
approximately $75,000 against Golden Auto.
Plaintiff also submits an affidavit from Christopher J. Reading, an associate
with the law firm of McCullough, Payne Haan & Nadler, LLC, and lead counsel
for Plaintiff in the action, to support its claim for attorney’s fees. ([14.3] at 1).
Reading represents that, through May 31, 2016, Plaintiff incurred $6,156.70 in
expenses in connection with the lawsuit. ([14.3] at 2). Reading attaches the billing
statements that his law firm submitted to Plaintiff, which support this $6,156.70
amount. ([14.3] at 5–10). This amount also matches the amount presented in
Plaintiff’s Motion for attorney’s fees under O.C.G.A. §13–6–11. Plaintiff fails,
however, to specially plead allegations regarding Defendant’s bad faith, stubborn
litigiousness, or actions causing Plaintiff unnecessary trouble and expense as
14

required by the statute. See O.C.G.A. §13–6–11. Plaintiff also fails to submit an
affidavit or other support regarding the $11,656.38 in additional attorney’s fees it
seeks under Count X.
The Court determines it necessary to hold a hearing to establish which
amounts Plaintiff is relying on to calculate the damages resulting from the breach
of contract, how it calculated fraud damages in the amount of $116,313.82,
whether fraud damages are asserted against each Defendant individually, or both
Defendants collectively, on what grounds Plaintiff is seeking attorney’s fees under
O.C.G.A. §13–6–11, and on what basis Plaintiff requests an award of additional
attorney’s fees in the amount of $11,656.38.
IV.

CONCLUSION
For the foregoing reasons,
IT IS HEREBY ORDERED that the Court will hold an evidentiary hearing

to receive evidence regarding the damages claimed for the breaches of contract,
fraud, and attorney’s fees. The hearing will be held on January 16, 2018, at
9:30 a.m., in Courtroom 1705, Richard B. Russell Federal Building and
Courthouse, 75 Ted Turner Drive, S.W., Atlanta, GA 30303. At the hearing,
Plaintiff shall present evidence on the following issues: (1) the amount of damages
it claims for breaches of each of the Contracts (Count I through Count IX); (2) the
15

amount of damages it seeks for its fraud claim against Defendant Hamilton and
Defendant Golden Auto; (3) the attorney’s fees it seeks under O.C.G.A. §13–6–11;
and (4) the grounds and calculation for the award of $11,656.38 in additional
attorney’s fees.

SO ORDERED this 14th day of December, 2017.

16