Federal Deposit Insurance Corporation v. Cobalt Partners, LLC et al

Filing 125

ORDER denying 119 Motion for Default Judgment. Signed by Judge J. Randal Hall on 4/12/16. (cmr)

IN THE UNITED
FOR THE

STATES DISTRICT COURT

SOUTHERN DISTRICT OF GEORGIA
SAVANNAH DIVISION

CADLEROCK III,

LLC,

*
*

*

Plaintiff,

*

v.

*

COBALT PARTNERS,
ALVAREZ;

LLC;

ADAM BEELER;

ALBERTO

*

RODNEY

CV 413-099

*

M. COOK, JR.; WILLIAM M.
*
TUTTLE, II; and CHARLES K. WERK,*
*

Defendants.

*

ORDER

Presently

default

before

judgment

reasons below,

as

the

to

Court

Defendant

is

Werk

(Doc.

motion

119) .

For

for

the

Plaintiff's motion is DENIED.

I.

On

Plaintiff's

January

3,

BACKGROUND

2008,

Defendant

Cobalt

Partners,

LLC,

("Cobalt") executed a promissory note ("note") to First National
Bank of Savannah, Georgia,

("FNB") in the amount of $1,000,000.

(Compl.,

Then,

Doc.

1,

f 10.)

as part of this arrangement,

Defendants Alvarez, Beeler, Cook, Tuttle, and Werk each executed

a personal,

unconditional guaranty of the note.

(Id- 1 H-)

Later, for various reasons, Defendant Cobalt renewed its note on
January 20, 2009.

(Id^ 1 12.)

Having failed to make full payment by the renewed note's

maturity date of July 20, 2009, Defendant Cobalt defaulted, and

the

remaining

guaranties.
note,

the

receiver

Defendants

1 13.)

(Id.
Federal

for

FNB,

that

note,

and

other

renewed note,

outstanding

and

filing

108.)

default
Court

the

Corporation

its

Cobalt,

Clerk

as maker
as

the

43,

89,

FDIC

93.)

responses,

and

thus

as

filed

Yet,

its

FDIC's

April

the

of

for the

1,

against
motion

19,

renewed

guarantors

11

as

the

note's

15.)

Defendants
for

summary

just as Defendants began

Plaintiff

the

on

of

(Id.

default

replaced the

Thereafter,

judgment

interest.

entered

and

acquired

purported

("FDIC"),

complaint

Defendants,

and

Werk,

their

instruments

105,

named

principal

("Cadlerock")

filed

Defendant

(Docs.

judgment.

their

were jointly and severally liable

Subsequently,
Cobalt

fulfill

Insurance

ultimately

alleging

not

Thus, without payment for the renewed

Deposit

2013,

the

did

Cadlerock

interest
FDIC

in

in

this

III,

the

LLC,

disputed

suit.

(Docs.

Plaintiff Cadlerock filed a motion for

to Defendant

Werk

(Doc.

119),

which the

now considers.

II.

Under

Federal Rule of

DISCUSSION

Civil Procedure 55,

entry of default,

a plaintiff may obtain

against a party.

However,

upon the clerk's

a default

judgment

"a Defendant's default does not in

itself warrant the court in entering a default judgment." Pitts

ex rel. Pitts v.

(S.D.

Ga.

2004).

Seneca Sports, Inc., 321 F. Supp. 2d 1353, 1356

For a plaintiff to obtain such a judgment,

"[t]here

must

Nishimatsu

be

a

Constr.

sufficient
v.

Co.

basis
Nat'l

Houston

in

the

Bank,

pleadings."

515

F.2d

1200,

1206 (5th Cir. 1975).x By his default, a defendant is deemed to
have

admitted

to

fact," but not

conclusions

satisfied

the

"plaintiff's

"to facts

of

law."

that

allegations

that are not well-pleaded or to

Id.

such

well-pleaded

Ultimately,

well-pleaded

facts

the

Court

provide

Court's jurisdiction,

(2) the defendant's liability,

plaintiff's damages.

. . .

must

for

of

be

(1)

the

Pitts, 321 F. Supp. 2d at 1356.

"In

a

suit

to

enforce

a promissory

note

and (3) the

[in Georgia],

a

plaintiff establishes a prima facie case by producing the note

and showing that it was executed."2 L.D.F. Family Farm, Inc. v.
Charterbank,

756

S.E.2d

593,

596

(Ga.

that prima facie case has been made,
to

judgment

as

a

matter

establish a defense." Id.

omitted) .

the

"Similarly,

signature

instrument

is

law

App.

2014).

"Once

the plaintiff is entitled
unless

the

defendant

in a suit on a personal guaranty,

the

can

(internal quotation marks and citation

admitted

entitles

of

Ct.

or established,

holder

to

recover

production
on

it

when

of the

unless

the

defendant establishes a defense."3 Id.

1

See Bonner v. City of Prichard, Ala., 661 F.2d 1206, 1207 (11th Cir. 1981)

(holding that Fifth Circuit decisions made on or before September 30, 1981,
are binding precedent in the Eleventh Circuit).

2

For the reasons

stated

in the Court's Order

on Plaintiff's

motion

for

summary judgment (Doc. 124), the Court applies Georgia substantive law to the
issues

at

hand.

3 As used here, a "holder" includes "(i) the holder of the instrument; (ii) a
nonholder in possession of the instrument who has the rights of a holder; or

(iii) a person not in possession of the instrument who is entitled to enforce
3

Based

upon

the

Defendant Werk has

note;

the

(2)

he

FDIC's

initial

admitted that

(1)

complaint

and

his

Cobalt executed the renewed

executed an absolute and unconditional

renewed note;

unfulfilled.

and

(3)

(Compl.)

the $1,000,000

However,

default,

guaranty of

renewed note

is

still

because the complaint contains

no allegations regarding who possesses the original renewed note

and guaranties,

Defendant Werk does not admit that Plaintiff is

in possession of these instruments.

Thus, while Defendant Werk

has admitted that he faces liability on the renewed note,

he has

not admitted that Plaintiff is the person - the holder - to whom
he is liable.

For that reason,

basis

pleadings

in

Defendant

the

for

the Court finds an insufficient

judgment

to

be

entered

against

Werk.

III.

For the reasons above,

CONCLUSION

the Court DENIES Plaintiff's motion

for default judgment as to Defendant Werk (Doc. 119) .

ORDER ENTERED at Augusta,
April,

Georgia,

this

/^Z^day of

2016.

ROmR&gfZTJ. RANDAL HALL

UNITED/STATES DISTRICT JUDGE
SOUTHERN DISTRICT OF GEORGIA

the

instrument

pursuant

to

[O.CG.A.

418(d)]." See O.C.G.A. § 11-3-301.
4

§ 11-3-309]

or

[O.C.G.A.

§ 11-3-