Cedar Rapids Lodge & Suites, LLC et al v. JFS Development, Inc. et al

Filing 257

ORDER re 255 MOTION for Default Entry against John F. Seibert: The court reserves ruling on the Motion for Default Judgment and an evidentiary hearing on the issue of damages to be awarded from John Seibert to Plaintiffs will be held on 9/27/ 2012 8:00 AM Central Time at 4200 C Street SW, Cedar Rapids, Iowa Building B, Courtroom 1 before Chief Judge Linda R Reade. Because evidence will be presented, telephonic participation by counsel or pro se parties will not be permitted. Signed by Chief Judge Linda R Reade on 8/28/12. (ksy)(NEF/copy mailed to DEF Vosburg)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF IOWA
CEDAR RAPIDS DIVISION

CEDAR RAPIDS LODGE & SUITES,
LLC et al.,
Plaintiffs,

No. 09-CV-175-LRR

vs.

ORDER

JFS DEVELOPMENT, INC., f/k/a JCS
DEVELOPMENT, INC., et al.,
Defendants.
____________________
I. INTRODUCTION
The matter before the court is Plaintiffs’ “Motion for Entry of Default Against
Defendant John F. Seibert” (“Motion for Default Judgment”) (docket no. 255).
II. PROCEDURAL HISTORY AND RELEVANT FACTS
On December 3, 2009, Plaintiffs filed an eighty-seven-page, eighteen-count
Complaint (docket no. 1). The Complaint arises from the development of an AmericInn
hotel (“Hotel”) in Cedar Rapids, Iowa. Plaintiffs are investors in Cedar Rapids Lodge and
Suites, LLC (“CRLS”), a limited liability company that owns the Hotel. In the Complaint,
Plaintiffs allege that the former governors of the Hotel fraudulently induced them to invest
in the Hotel and proceeded to mishandle the financing, construction and/or management
of the Hotel.
Defendant John F. Seibert was an original CRLS governor. In the Complaint,
Plaintiffs name Seibert as a defendant in Counts 1 through 5 and 8 through 18, asserting
RICO violations, prayers for equitable relief, fraud, negligent misrepresentation, violations
of the Iowa Consumer Fraud Act, breach of fiduciary duty and/or omission and waste.
On July 20, 2010, Seibert filed an Amended Answer (docket no. 78) to the Complaint.

On August 20, 2012, Seibert emailed a letter to the court indicating that he would
not be attending either the final pretrial conference scheduled for August 22, 2012 or the
trial scheduled for September 17, 2012. See Notice (docket no. 253). Seibert did not
appear at the final pretrial conference on August 22, 2012, and he did not make any
attempt to contact the court on that date or appear by telephone. On August 23, 2012,
Plaintiffs filed the Motion for Default Judgment. On August 24, 2012, the Clerk of Court
entered a default against Seibert. See Order (docket no. 256). The court finds that it is
unnecessary to wait for Seibert to respond to the Motion for Default Judgment.
III. ANALYSIS
The Clerk of Court entered a default against Defendant pursuant to Federal Rule of
Civil Procedure 55(a). “Entry of a default under Federal Rule of Civil Procedure 55(a)
is not, as such, entry of a judgment; it merely permits the plaintiff to move for a default
judgment under Rule 55(b)(2), assuming that the default is not set aside under Rule 55(c).”
Inman v. Am. Home Furniture Placement, Inc., 120 F.3d 117, 118 n.2 (8th Cir. 1997).
Pursuant to Federal Rule of Civil Procedure 55(b), a default judgment may be entered 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 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. . . . The court may
conduct hearings or make referrals—preserving any
federal statutory right to a jury trial—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
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(D)

investigate any other matter.

Fed. R. Civ. P. 55(b).
“‘[W]hen a default judgment is warranted based on a party’s failure to defend, the
allegations in the complaint with respect to the amount of the damages are not deemed
true.’” In re Catt, 368 F.3d 789, 793 (8th Cir. 2004) (quoting Credit Lyonnais Sec.
(USA), Inc. v. Alcantara, 183 F.3d 151, 155 (2d Cir. 1999)); see also Greyhound
Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992) (“While
a party’s default is deemed to constitute a concession of all well pleaded allegations of
liability, it is not considered an admission of damages.”). “‘The district court must instead
conduct an inquiry in order to ascertain the amount of damages with reasonable
certainty.’” In re Catt 368 F.3d at 793 (quoting Credit Lyonnais Sec., 183 F.3d at 155);
see also Oberstar v. Fed. Deposit Ins. Corp., 987 F.2d 494, 505 n.9 (8th Cir. 1993) (“[I]n
civil litigation between private parties, a party entitled to judgment by default is required
to prove the amount of damages that should be awarded.”).
“[A] default judgment cannot be entered until the amount of damages has been
ascertained.” DIRECTV, Inc. v. Meyers, 214 F.R.D. 504, 510 (N.D. Iowa 2003) (quoting
Hagen v. Sisseton-Wahpeton Cmty. Coll., 205 F.3d 1040, 1042 (8th Cir. 2000)) (internal
marks omitted). “[I]f the judgment sought is not for a sum certain, Rule 55(b)(2) provides
that ‘the court may conduct such hearings or order such references as it deems necessary
and proper’ in order to ‘enable the court to enter judgment.’” Id. (quoting Fed. R. Civ.
P. 55(b)(2)).
In the instant action, Seibert notified that court that he would not participate in
either the final pretrial conference or the upcoming trial and subsequently failed to appear
at the final pretrial conference. The Clerk of Court subsequently entered a default against
Seibert. The court shall hold an evidentiary hearing to determine the damages amount to
which Plaintiffs are entitled, and the court shall reserve ruling on the Motion for Default

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Judgment until after the hearing. See DIRECTV, 214 F.R.D. at 510.
IV. CONCLUSION
For the foregoing reasons, it is hereby ORDERED:
(1)

The court RESERVES RULING on the Motion for Default Judgment
(docket no. 255); and

(2)

An evidentiary hearing on the issue of damages to be awarded from John
Seibert to Plaintiffs will be held on Thursday, September 27, 2012, at 8:00
a.m. central time before the undersigned in Courtroom 1/Bldg. B, 4200 C
Street SW, Cedar Rapids, Iowa. Because evidence will be presented,
telephonic participation by counsel or pro se parties will not be permitted.

DATED this 28th day of August, 2012.

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