Bank of America, N.A. v. Elite Satellite Communications, Inc. et al
OPINION and ORDER: The Court GRANTS Plaintiff Bank of America, N.A.'s Motion for Default Judgment (Dkt. 10 ). Although Plaintiff's action against Defendant Byram D. Smith, Sr., remains pending, the Court sees no just reason to delay enteri ng judgment against Defendant ESCI under Rule 54(b) of the Federal Rules of Civil Procedure. The Court thus DIRECTS the Clerk to enter Judgment in Plaintiff's favor against Defendant Elite Satellite Communications, Inc.: (a) $229,130.78 rep resenting unpaid principal; plus (b) $5,101.16 in interest accrued through February 1, 2019, together with interest accruing on the principal amount thereafter at the default rate of 10.5% per annum, or $28.64135 per day, through the d ate of this judgment; plus (c) $23,448.19 in attorneys' fees under § 13-1-11(a)(2), representing 15% of the first $500.00 of all principal and interest owed, plus 10% of the amount of principal and interest owed in excess of $500.00; plus (d) Post-judgment interest accruing thereafter at the default rate of 10.5% per annum, or $28.64135 per day, until paid in full or as otherwise provided by law. Signed by Judge Michael L. Brown on 10/4/19. (jta)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
Bank of America, N.A.,
Case No. 1:18-cv-05836
Michael L. Brown
United States District Judge
Elite Satellite Communications,
Inc., and Byram D. Smith, Sr.,
OPINION & ORDER
Plaintiff Bank of America, N.A., sued Defendants Elite Satellite
Communications, Inc. (“ESCI”) and Byram D. Smith, Sr. (together,
“Defendants”), alleging they defaulted under a promissory note by failing
to make payments when due. (Dkt. 1.) Neither Defendant answered the
complaint. Plaintiff now moves for default judgment as to Defendant
ESCI.1 (Dkt. 10.) The Court agrees that Plaintiff has a right to default
judgment as to Defendant ESCI and grants Plaintiff’s motion.
Plaintiff filed a suggestion of bankruptcy for Defendant Byram D.
Smith, Sr., and claims against him remain stayed under 11 U.S.C. § 362.
In May 2013, Defendant ESCI and Plaintiff executed a promissory
note (labeled a loan agreement) for a loan in the original principal
amount of $280,000. (Dkts. 1 ¶ 5; 1-1 at 1.) To secure the debt, Defendant
ESCI also executed a security deed pledging all its right, title, and
interest in its real property located at 1677 Forest Parkway in Lake City,
Clayton County, Georgia, and all rents, royalties, or other income derived
from it. (Dkts. 1 ¶ 6; 1-1 at 3.) Defendant Smith signed a guarantee in
favor of Plaintiff, guaranteeing and promising to pay promptly when due,
all indebtedness of Defendant ESCI. (Dkt. 1 ¶ 7.) Collectively the loan
agreement, security deed, and guarantee are referred to as the “loan
Plaintiff is the holder and owner of the loan documents. (Id. ¶ 8.)
Plaintiff concluded Defendants were in default of the loan documents
because they failed to make payments when due and failed to pay the
2017 Clayton County real property taxes for the property (leading to a
tax lien on the property in the amount of $4,720.16). (Id. ¶ 9.) In October
(Dkts. 9; 11.) Plaintiff only moved for default judgment against
2018, Plaintiff notified Defendants that they were in default and that, as
permitted in the loan documents, it had elected to accelerate all sums due
on the loan and demanded full and immediate payment of the entire debt.
(Id. ¶ 10.) Defendants have paid no further amounts owed under the loan
documents. (Id. ¶ 11.)
Plaintiff sued Defendants for breach of the loan documents, seeking
to recover $229,130 in unpaid principal; $3,497.24 in accrued interest as
of December 7, 2018; $213.78 in late charges; and additional interest, late
charges, fees, costs, and expenses accrued since December 7, 2018. (Id.
¶ 12.) Plaintiff served Defendants, but Defendants failed to answer by
the time required. (Dkts. 6; 7.) Plaintiff then requested a clerk’s entry
of default for Defendant ESCI under Rule 55(a). The Clerk entered that
default. (Dkt. 8.) Plaintiff then moved for default judgment against
Defendant ESCI and provided updated damages for interest accruals and
attorneys’ fees. (Dkt. 10.) Defendant ESCI did not oppose the motion,
and in fact, has not responded here since being served in December 2018.
If a defendant fails to plead or otherwise defend a lawsuit within
the time required by the Federal Rules of Civil Procedure and the
plaintiff moves for default, the clerk must enter default. See FED. R. CIV.
Default constitutes admission of all well-pleaded factual
allegations in the complaint but not an admission of facts incompletely
pleaded or conclusions of law. See Cotton v. Mass. Mut. Life Ins. Co., 402
F.3d 1267, 1278 (11th Cir. 2005).
After the clerk enters default, the “entry of a default judgment is
committed to the discretion of the district court.” See Hamm v. DeKalb
Cty., 774 F.2d 1567, 1576 (11th Cir. 1985). Because of the “strong policy
of determining cases on their merits,” the Eleventh Circuit has cautioned
that “default judgments are generally disfavored” and not granted as a
matter of right. Surtain v. Hamlin Terrace Found., 789 F.3d 1239, 1244–
45 (11th Cir. 2015). A court enters default judgment only “when there is
‘a sufficient basis in the pleadings for the judgment entered.’ ” Id. at 1245
(citing Nishimatsu Constr. Co. v. Hous. Nat’l Bank, 515 F.2d 1200, 1206
(5th Cir. 1975)).
The standard for determining the sufficiency of the basis for the
judgment is “akin to that necessary to survive a motion to dismiss for
failure to state a claim.”
A motion for default judgment is
conceptually like a reverse motion to dismiss for failure to state a claim.
“At the motion to dismiss stage, all well-pleaded facts are accepted
as true, and the reasonable inferences therefrom are construed in the
light most favorable to the plaintiff.” Bryant v. Avado Brands, Inc., 187
F.3d 1271, 1273 n.1 (11th Cir. 1999). So in considering a motion for
default judgment, a court accepts all well-pleaded facts as true and
determines whether those facts state a claim for relief that is plausible
on its face — that is, whether the plaintiff’s allegations allow “the court
to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Singleton v. Dean, 611 F. App’x 671, 671 (11th Cir.
2015) (per curiam).
And when assessing default judgment damages, the court has “an
obligation to assure that there is a legitimate basis for any damage award
it enters.” Anheuser Busch, Inc. v. Philpot, 317 F.3d 1264, 1266 (11th
Courts may enter such awards without holding an
evidentiary hearing, but only 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, 1543–44 (11th
Because the Clerk entered default and Defendant ESCI failed to
acknowledge or otherwise respond to Plaintiff’s lawsuit, the Court
considers admitted all well-pleaded factual allegations in Plaintiff’s
complaint. See Cotton, 402 F.3d at 1278.
Liability for Breach of Contract
Under Georgia law, “[a] promissory note is an unconditional
contract to pay.” Ray Mashburn Homes, LLC v. Charterbank, 793 S.E.2d
655, 657 (Ga. Ct. App. 2016); see also GA. CODE ANN. § 11–9–102(a)(64)
(“ ‘Promissory note’ means an instrument that evidences a promise to pay
a monetary obligation. . . .”). The elements for a breach of contract claim
in Georgia are the (1) breach and (2) resultant damages (3) to the party
who has the right to complain about the contract being broken. SAWS at
Seven Hills, LLC v. Forestar Realty, Inc., 805 S.E.2d 270, 274 (Ga. Ct.
App. 2017). And the holder of a promissory note has a prima facie right
to recover on the note “as a matter of law by producing the promissory
note and showing that it was executed.” Gentile v. Bower, 477 S.E.2d
130, 133 (Ga. Ct. App. 1996); see also Wells Fargo Bank, N.A. v. SFPD II,
LLC, No. 1:11-cv-04001-JEC, 2013 WL 541410, at *2 (N.D. Ga. Feb. 12,
Based on the allegations in Plaintiff’s complaint, then, the Court
finds that Plaintiff has done just that.
Plaintiff has presented a
promissory note — the loan agreement at issue, or “a contract evidencing
a debt and specifying terms under which one party will pay money to
another.” See Reese v. Ellis, Painter, Ratterree & Adams, LLP, 678 F.3d
1211, 1216 (11th Cir. 2012).
The Court holds that the complaint
sufficiently alleges the elements necessary to state a claim for breach of
contract under Georgia law based on Defendant ESCI’s failure to pay the
promissory note. Plaintiff has stated a claim for relief that is plausible
on its face — that is, facts that allow the Court to draw the reasonable
inference that ESCI is liable to it for the breach of a promissory note (i.e.,
the loan agreement).
Plaintiff has shown that it is the original owner and holder of the
promissory note. There is thus no issue of its standing or status as an
assignee. (Dkts. 1-1; 1-2.) Plaintiff has also sufficiently alleged that
Defendant ESCI breached the loan agreement.
Section 8.1 of the
agreement, for example, provides that Defendant ESCI is in default if it
“fails to make a payment under this Agreement when due.” (Dkt. 1-1 at
9.) Defendant ESCI thus breached the loan agreement when it did not
pay the amounts owed when due. (Dkt. 1 ¶ 9(a).) Section 8.13 of the loan
agreement also states that Defendant ESCI is in default of the agreement
if it defaults “under any . . . security agreement, deed of trust, mortgage,
or other document required by or delivered in connection with this
Agreement.” (Dkt. 1-1 ¶ 8.13.) Defendant ESCI failed to pay the Clayton
County property taxes owed on the real property when they were due, a
breach of Section 5.2 of the security deed. (Dkt. 1-2 ¶ 5.2.) Plaintiff has
thus sufficiently pled two separate breaches of the loan agreement.
And the loan agreement signed by the parties allows Plaintiff to
accelerate the entire balance owed under the agreement in the event of a
default. (Dkt. 1-1 at 8.) Plaintiff thus has shown that Defendant ESCI
is liable for breach of contract and that there is sufficient basis in the
pleadings for the default judgment requested. See Nishimatsu Constr.
Co., 515 F.2d at 1206.
stemming from Defendant ESCI’s breach. A court may award damages
“only if the record adequately reflects the basis for award via a hearing
or a demonstration by detailed affidavits establishing the necessary
facts.” Adolph Coors Co., 777 F.2d at 1544 (internal quotation marks
omitted). And a 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.” Crossfit, Inc. v. Quinnie, 232 F.
Supp. 3d 1295, 1310 (N.D. Ga. 2017) (quoting Adolph Coors Co., 777 F.2d
at 1543). Suits on promissory notes are particularly well-suited for entry
of default judgment for liquidated damages. See Annon Consulting, Inc.
v. BioNitrogen Holdings Corp., 650 F. App’x 729, 733 (11th Cir. 2016) (per
curiam) (holding district court did not abuse its discretion in granting
default judgment to holder of promissory note without first conducting
evidentiary hearing because damages were “capable of mathematical
Plaintiff seeks “a sum certain” here because “there is no doubt as to
the amount to which a plaintiff is entitled as a result of the defendant’s
default.” See Radiance Capital Receivables Seventeen, LLC v. Jivani, No.
1:16-CV-3492-MHC, 2017 WL 7660396, at *3 (N.D. Ga. Apr. 19, 2017).
Plaintiff’s verified complaint is evidence like an affidavit and binds
Plaintiff to the allegations and figures stated in it. Williams v. Rickman,
759 F. App’x 849, 852 (11th Cir. 2019). So the verified complaint obviates
the need for a hearing on damages because the Court “may forego a
hearing . . . where all essential evidence is already of record.” Nat’l Loan
Acquisitions Co. v. Pet Friendly, Inc., 743 F. App’x 390, 393 (11th Cir.
2018) (internal quotation marks omitted). The Court thus may enter
judgment in the amounts specified in Plaintiff’s verified complaint.
The Court also finds Defendant ESCI liable for Plaintiff’s attorneys’
fees. Georgia law allows a party to recover its attorneys’ fees up to 15%
of outstanding principal and interest if the contract provides for the
same. See GA. CODE ANN. § 13-1-11.
The loan agreement entitles Plaintiff to recover its reasonable
attorneys’ fees in collecting unpaid principal and interest. (Dkt. 1-1 at
11, ¶ 9.6.) When the contract does not specify an exact percentage, as
here, Georgia law alternatively sets allowable attorneys’ fees at “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 amount of
principal and interest owing thereon in excess of $500.00.”
Plaintiff also complied with the statutory ten-day notice
requirement triggered by § 13-1-11(a)(3), both by providing Defendant
ESCI pre-suit notice of its intent to seek attorneys’ fees through its
demand letter and by the filing of its complaint. See Long v. Hogan, 656
S.E.2d 868, 869 (Ga. Ct. App. 2008) (holding notice requirement met by
filing of a complaint).
Plaintiff is therefore entitled to statutory
attorneys’ fees under Georgia law.
The Court finds that, accepting as true all of Plaintiff’s allegations
and drawing all reasonable inferences in Plaintiff’s favor, there is “a
sufficient basis in the pleadings for the judgment entered,” i.e., a finding
Because Georgia statute provides for the calculation of attorneys’ fees
here, no affidavit attesting to the amount of fees incurred is required. See
Cmty. Marketplace Props., LLC v. SunTrust Bank, 693 S.E.2d 602, 605
(Ga. Ct. App. 2010) (noting that because “the agreement to pay attorney
fees of 15 percent of the principal and interest was enforceable, the
amount of attorney fees to be awarded was only a matter of mathematical
calculation” (internal quotation marks omitted)); see also Branch
Banking & Tr. Co. v. Camco Mgmt., LLC, 704 F. App’x 826, 829 (11th
of liability for breach of contract and a money judgment for all amounts
sought in the complaint, including attorneys’ fees. See Surtain, 789 F.3d
at 1245 (internal quotation marks omitted).
The Court GRANTS Plaintiff Bank of America, N.A.’s Motion for
Default Judgment (Dkt. 10).
Although Plaintiff’s action against Defendant Byram D. Smith, Sr.,
remains pending, the Court sees no just reason to delay entering
judgment against Defendant ESCI under Rule 54(b) of the Federal Rules
of Civil Procedure.
The Court thus DIRECTS the Clerk to enter
Judgment in Plaintiff’s favor against Defendant Elite Satellite
$229,130.78 representing unpaid principal; plus
$5,101.16 in interest accrued through February 1, 2019,
together with interest accruing on the principal amount
thereafter at the default rate of 10.5% per annum, or
$28.64135 per day, through the date of this judgment; plus
representing 15% of the first $500.00 of all principal and
interest owed, plus 10% of the amount of principal and
interest owed in excess of $500.00; plus
Post-judgment interest accruing thereafter at the default rate
of 10.5% per annum, or $28.64135 per day, until paid in full
or as otherwise provided by law.
SO ORDERED this 4th day of October, 2019.
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