Synergy Projects, Inc v. Green et al
Filing
92
ORDER denying as moot 54 Motion for Partial Summary Judgment; granting 62 Motion for Default Judgment; granting 63 Motion for Default Judgment; granting 68 Motion for Default Judgment; denying 74 Motion for Extension of Time to File; d enying 75 Motion to Enforce Settlement. The Clerk of Court is directed to enter judgment in favor of Plaintiff Synergy Projects, Inc. and against Defendant Edward R. Green in the amount of $230,000; against Defendant Lucas Denn in the amount of $0; against Defendant Lance M. Hale in the amount of $0; and against Defendant Lance M. Hale & Associates in the amount of $0. Signed by Chief Judge Linda R Reade on 07/15/15. (copy w/NEF mailed to non-ECF parties) (jjb)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF IOWA
CEDAR RAPIDS DIVISION
SYNERGY PROJECTS, INC.,
Plaintiff,
No. 14-CV-10-LRR
vs.
ORDER
EDWARD R. GREEN et al.,
Defendants.
____________________
I. INTRODUCTION
The matters before the court are Plaintiff Synergy Projects, Inc.’s (“Synergy”)
“Renewed Motion for Partial Summary Judgment Against Edward R. Green” (“Motion
for Summary Judgment”) (docket no. 54); Synergy’s “Motion for the Entry of Default
Judgment Against Lance M. Hale and Lance M. Hale & Associates” (“Motion for Default
Judgment Against Hale and Hale & Associates”) (docket no. 62); Synergy’s “Motion for
Entry of Default Judgment Against Lucas Denn” (“Motion for Default Judgment Against
Denn”) (docket no. 63); Synergy’s “Motion for the Entry of Default Judgment Against
Edward R. Green” (“Motion for Default Judgment Against Green”) (docket no. 68);
Lance M. Hale and Lance M. Hale & Associates’ (“Hale & Associates”) Motion to File
Answers to the Second Amended Complaint and Set Aside Default Entry (“Motion to Set
Aside Default Entry”) (docket no. 74); and Synergy’s “Motion to Enforce Settlement
Agreement” (docket no. 75).
II. PROCEDURAL HISTORY
On January 29, 2014, Synergy filed a Complaint (docket no. 2) against Edward R.
Green, Lance M. Hale, Lance M. Hale & Associates, Wisdom International Investment
Group, Ltd., Northwest Premier, Inc. and Lucas Denn, alleging various claims of breach
of contract, fraudulent misrepresentation, breach of fiduciary duty and fraudulent
concealment. On February 6, 2014, Synergy filed an Amended Complaint (docket no. 4)
that added claims for violations of Washington, Iowa and federal securities laws. On May
8, 2014, Green filed an Answer to the Amended Complaint (docket no. 9). On May 16,
2014, Hale filed an Answer to the Amended Complaint (docket no. 12). On October 22,
2014, the court granted Synergy leave to file a Second Amended Complaint (docket no.
36). On October 23, 2014, Synergy filed a Motion for Partial Summary Judgment Against
Green (docket no. 38). On October 29, 2014, the Second Amended Complaint was
separately docketed (docket no. 39). The Second Amended Complaint is against Denn,
Hale, Hale & Associates and Green.
On November 18, 2014, Synergy filed a “Motion for the Entry of Default Against
Defendants Lance M. Hale and Lance M. Hale & Associates” (docket no. 41). On
November 19, 2014, the Clerk of Court entered default against Hale and Hale &
Associates (docket no. 42). On December 9, 2015, Synergy filed a “Motion for Clerk’s
Entry of Default Against Lucas Denn” (docket no. 47). On December 9, 2014, the Clerk
of Court entered default against Lucas Denn (docket no. 48).
On February 5, 2015, the court denied without prejudice Synergy’s Motion for
Partial Summary Judgment Against Edward R. Green. On March 27, 2015, Synergy filed
the Motion for Summary Judgment. On May 11, 2015, Synergy filed the Motion for
Default Judgment Against Hale and Hale & Associates. On May 11, 2015, Synergy filed
the Motion for Default Judgment Against Denn. On May 19, 2015, Synergy filed a
Motion for Default Entry Against Green (docket no. 66). On May 20, 2015, the Clerk of
Court entered default against Green (docket no. 67). On May 21, 2015, Synergy filed the
Motion for Default Judgment Against Green. On June 9, 2015, Hale filed the Motion to
Set Aside Default Entry. On June 11, 2015, Synergy filed the Motion to Enforce
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Settlement. On June 29, 2015, the court held a hearing on the motions (“Hearing”). See
June 29, 2015 Minute Entry (docket no. 85).1
The court will first address the Motion to Enforce Settlement Agreement. Next the
court will address the four motions for default judgment, along with Hale’s Motion to Set
Aside Default Entry.
III. SETTLEMENT AGREEMENT
In the Motion to Enforce Settlement Agreement, Synergy requests that the court
enforce an agreement allegedly entered into by Green and Synergy in November of 2014.
See generally Settlement Agreement and Release (docket no. 78-4).
“Settlement agreements are to be construed according to principles of contract law.”
Amana Refrigeration, Inc. v. Pidgeon’s Furniture & Appliance Stores, Inc., 883 F.2d 657,
658 (8th Cir. 1989) (quoting Wright v. Scott, 410 N.W.2d 247, 249 (Iowa 1987)). “Under
Iowa contract law, the intent of the parties controls the construction of the contract. The
parties’ intent will be determined ‘in conformity with a reasonable application of the
circumstances under which the instrument was executed.’” Id. (quoting First Nat’l Bank
in Creston v. Smith, 331 N.W.2d 120, 122 (Iowa 1983)) (internal citation omitted).
Synergy argues that Green, through his counsel, Michael Mone, agreed to the terms
of a written settlement agreement. The settlement agreement was prepared by counsel for
Synergy and signed by David Wild, president of Synergy. However, Green has not signed
the settlement agreement. See Settlement Agreement and Release at 2. Furthermore, the
e-mails exchanged between Mone and counsel for Synergy do not include Green. The only
evidence of Green’s intent to enter into a settlement is a memorandum with Green’s typed
1
The court notes that Hale did not appear at the Hearing. The court received
Hale’s “Motion for Continuance” (docket no. 90) after the Hearing took place and,
subsequently, denied the Motion for Continuance as moot. See July 2, 2015 Order (docket
no. 91).
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signature that was sent to Wild. See Memorandum (docket no. 78-3). An additional
complicating factor is that Mone is not Green’s attorney of record in this case—Green is
a pro se party and Mone has not made an appearance. Based on the record, the court
cannot find that Green should be bound by a settlement agreement that he has not signed
and of which there is little evidence of his involvement. Accordingly, the Motion to
Enforce Settlement Agreement shall be denied.
IV. DEFAULT JUDGMENT
Pursuant to Federal Rule of Civil Procedure 55, “[w]hen a party against whom a
judgment for affirmative relief is sought has failed to plead or otherwise defend, and that
failure is shown by affidavit or otherwise, the clerk must enter the party’s default.” Fed.
R. Civ. P. 55(a). When a plaintiff’s claim is not for a sum certain, “the party must apply
to the court for a default judgment.” Fed. R. Civ. P. 55(b)(2). When a defendant is in
default, its “liability to the plaintiff is deemed established and the plaintiff is not required
to establish [its] right to recover.” Brown v. Kenron Aluminum & Glass Corp., 477 F.2d
526, 531 (8th Cir. 1973) (quoting 3 Barron & Holtzoff, Federal Practice & Procedure
§ 1216, 85-86 (1958)). “When a default judgment is entered on a claim for an indefinite
or uncertain amount of damages, facts alleged in the complaint are taken as true, except
facts relating to the amount of damages, which must be proved in a supplemental hearing
or proceeding” by a preponderance of the evidence. Everyday Learning Corp. v. Larson,
242 F.3d 815, 818 (8th Cir. 2001).
The Clerk of Court entered defaults against all Defendants. See Clerk’s Default
Entry (docket nos. 42, 48 and 67). However, Synergy’s claim is not for a sum certain.
Therefore, the court held the Hearing for the purpose of establishing, among other things,
the amount to which Synergy is entitled.
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A. Motion to Set Aside Default Entry
Prior to the Hearing, Hale filed the Motion to Set Aside Default Entry, on behalf
of himself and Lance M. Hale & Associates.2 In the Motion to Set Aside Default Entry,
Hale requests that the court grant him leave to file an answer to the Second Amended
Complaint and set aside the default entry. Once a default has been entered, “the district
court may set aside an entry of default ‘[f]or good cause shown.’” Johnson v. Dayton
Elec. Mfg. Co., 140 F.3d 781, 783 (8th Cir. 1998) (quoting Fed. R. Civ. P. 55(c))
(alteration in original). “Although the same factors are typically relevant in deciding
whether to set aside entries of default and default judgments, ‘[m]ost decisions . . . hold
that relief from a default judgment requires a stronger showing of excuse than relief from
a mere default order.’” Id. (quoting Conn. Nat’l Mortgage Co. v. Brandstatter, 897 F.2d
883, 885 (7th Cir. 1990)) (alterations in original). “When examining whether good cause
exists, the district court should weigh ‘whether the conduct of the defaulting party was
blameworthy or culpable, whether the defaulting party has a meritorious defense, and
whether the other party would be prejudiced if the default were excused.’” Stephenson v.
El-Batrawi, 524 F.3d 907, 912 (8th Cir. 2008) (quoting Johnson, 140 F.3d at 784).
Hale argues that he did not respond to the Second Amended Complaint because he
believed it was the same as the Amended Complaint. He also states that he has been
unable to hire counsel in Iowa due to various financial difficulties, a divorce and health
issues relating to his children. Hale states that he “does not have electronic filing
capabilities with [the] [c]ourt and did not know” there was a default entry against him.
However, the docket reflects the fact that the Clerk’s Default Entry (docket no. 42) was
mailed to Hale. In fact, each filing in this case has been mailed to him, per the docket
2
The docket lists Lance Hale and Lance Hale & Associates as pro se parties.
However, Hale is an attorney licensed in the state of Virginia and is capable, therefore,
of representing Hale & Associates.
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text. Hale’s excuses do not rise to the level of good cause. Although Hale has not
obtained counsel to represent him in these proceedings, he is an attorney. He should be
familiar with the deadlines and procedures that govern judicial proceedings. Furthermore,
Hale has been only minimally responsive to Synergy throughout the course of litigation and
failed to appear for the Hearing. To set aside the default at this stage of the proceedings
would prejudice Synergy. Accordingly, the court shall deny the Motion to Set Aside
Default Entry.
B. Motions for Default
The Clerk of Court entered default against Green, Denn, Hale and Hale &
Associates. Neither Denn nor Green responded to the entries of default. As discussed
above, the court declines to set aside the default against Hale and Hale & Associates.
Therefore, the four pending motions for default judgment shall be granted. However,
because the damages are not for a “sum certain,” the court must determine the amount,
if any, to which Synergy is entitled.
Synergy is seeking the following damages against Green: (1) compensatory damages
for fraudulent misrepresentation, fraudulent concealment and negligent misrepresentation,
including reliance and benefit of the bargain damages, past and future lost profits, out of
pocket expenditures and other past and future economic damages; (2) amounts owed on
promissory notes, plus interest; and (3) interest on the judgment and costs.
Synergy is seeking the following damages against Denn: (1) compensatory damages
for fraudulent misrepresentation and fraudulent concealment, including but not limited to
reliance and benefit of the bargain damages, past and future lost profits, out of pocket
expenditures and other past and future economic damages; (2) compensatory damages for
conversion; (3) punitive damages due to Denn’s fraudulent misrepresentations,
concealment and conversion; and (4) interest on the judgment and costs.
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Synergy is seeking the following damages against Hale and Hale & Associates: (1)
compensatory damages for fraudulent misrepresentation and fraudulent concealment,
including reliance and benefit of the bargain damages, past and future lost profits, out of
pocket expenditures and other past and future economic damages; (2) compensatory
damages caused by Hale and Hale & Associates’ negligence, negligent misrepresentation
and breach of contract; (3) punitive damages due to Hale and Hale & Associates’
fraudulent misrepresentations and concealment; and (4) interest on the judgment and costs.
To prove its damages, Synergy presented various documents and the testimony of
Wild.3 The evidence includes a contract between Wild and Green “for the purpose of
dividing and disbursement of proceeds derived from a trading program.” Agreement,
Exhibit 2 (docket no. 33-1). The trading program is outlined in Exhibits 3, 4 and 5
(docket nos. 33-2, 33-3 and 33-4). An Escrow Agreement indicates that $150,000 was
designated for use in the trading program. See Exhibit 6 (docket no. 33-5). The parties
to the Escrow Agreement are Green, Denn and non-party Sam Mayes Johnson III. There
are also numerous promissory notes signed by Green and payable to Synergy, which will
be discussed in more detail below. Furthermore, Synergy filed various e-mails involving
Green, Hale, Wild and several non-parties. See Exhibits 18-23 and 25 (docket nos. 86-1
through 86-6 and 86-8). Other exhibits included documents such as Instructions to the
Paymaster (docket no. 33-13, 33-14) and a Bank of America account statement that
appears to belong to Denn. See Account Statement (docket no. 33-15) and Business
Financial Relationship Agreement (docket no. 33-16).
The court finds that Synergy has not demonstrated by a preponderance of the
evidence that it is entitled to damages from Denn, Hale or Hale & Associates. Based on
3
The exhibits also include documents presented at a September 29, 2014 hearing
on default judgment. See September 29, 2014 Minute Entry (docket no. 32). The record
from that hearing was incorporated into the record for the instant Hearing.
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the evidence in the record, it appears that any damages based on breach of contract,
negligent misrepresentation, fraudulent misrepresentation and concealment, negligence or
conversion are purely speculative. See Everyday Learning Corp., 242 F.3d at 818
(upholding a district court’s decision not to award damages when said damages were
speculative, in addition to not being proved by a preponderance of the evidence).
Furthermore, Synergy presented no evidence on what it believes it is entitled to for
violations of Washington, Iowa and federal securities laws. The terms of the agreement
lack clarity, as does how exactly money was to be earned. Additionally, Synergy has not
detailed the amounts to which it believes it is entitled from Denn, Hale or Hale &
Associates, aside from estimating that Synergy expected to earn approximately one million
dollars per week for forty weeks under the trading program, apparently to be earned from
a $150,000 investment. This bare assertion does not satisfy the court by a preponderance
of evidence that Synergy is entitled to $40 million. Based on the record, therefore, the
court finds that Synergy has not met its burden of showing damages due to the conduct of
Denn, Hale or Hale & Associates.
The court finds that Synergy is entitled to damages from Green in the amount of
$230,000, based on the promissory notes outlined below. On July 13, 2010, Green signed
a Promissory Note in the amount of $100,000, payable to Synergy. Exhibit 7 (docket no.
33-6). On August 30, 2010, Green signed a Personal Promissory Note in the amount of
$10,000, payable to Synergy. Exhibit 8 (docket no. 33-7). On December 23, 2010, Green
signed a Personal Promissory Note in the amount of $20,000, payable to Synergy. Exhibit
9 (docket no. 33-8). On February 25, 2011, Green signed a Personal Promissory Note in
the amount of $70,000, payable to Synergy. Exhibit 10 (docket no. 33-9). On May 11,
2012, Green signed a Personal Promissory Note in the amount of $7,500, payable to
Synergy. Exhibit 11 (docket no. 33-10). On May 19, 2012, Green signed a Personal
Promissory Note in the amount of $2,500, payable to Synergy. Exhibit 12 (docket no. 338
11). On August 2, 2012, Green signed a Personal Promissory Note in the amount of
$20,000, payable to Synergy. Exhibit 13 (docket no. 33-12). The promissory notes are
each accompanied by various bank documents. Therefore, the court finds that Synergy has
demonstrated that it is entitled to $230,000 from Green based on the unpaid promissory
notes.
Synergy also seeks interest on the promissory notes. According to all of the
promissory notes, except the July 13, 2010 promissory note, interest accrues upon the
unpaid principal at a rate of ten percent per annum and payment is due on demand.4
However, the record does not indicate on what date Synergy demanded payment of the
notes from Green.5 Because Synergy has not provided evidence of the time at which
payment was demanded, the court cannot accurately calculate interest on the promissory
notes. Therefore, the court shall not award Synergy interest on the promissory notes.
V. CONCLUSION
In light of the foregoing, the court ORDERS the following:
(1)
Synergy’s “Motion to Enforce Settlement Agreement” (docket no. 75) is
DENIED.
(2)
Hale and Hale & Associates’ “Motion to File Answers to the Second
Amended Complaint and Set Aside Default Entry” (docket no. 74) is
DENIED.
4
In its Motion for Partial Summary Judgment, Synergy states that it “only seeks
interest from the date that [Synergy’s original complaint] was filed” with respect to the
July 13, 2010 promissory note. Motion for Partial Summary Judgment at 3.
5
In its Partial Motion for Summary Judgment, Synergy appears to have calculated
interest at a rate of ten percent per annum from the time the promissory notes were signed
until the date it filed the Partial Motion for Summary Judgment. However, the ten percent
interest rate would cease to apply once a demand for payment is made.
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(3)
Synergy’s “Renewed Motion for Partial Summary Judgment Against Edward
R. Green” (docket no. 54) is DENIED AS MOOT.6
(4)
Synergy’s “Motion for the Entry of Default Judgment Against Lance M.
Hale and Lance M. Hale & Associates” (docket no. 62) is GRANTED.
(5)
Synergy’s “Motion for Entry of Default Judgment Against Lucas Denn”
(docket no. 63) is GRANTED.
(6)
Synergy’s “Motion for the Entry of Default Judgment Against Edward R.
Green” (docket no. 68) is GRANTED.
The Clerk of Court is DIRECTED to enter judgment in favor of Plaintiff Synergy
Projects, Inc. and against Defendant Edward R. Green in the amount of $230,000; against
Defendant Lucas Denn in the amount of $0; against Defendant Lance M. Hale in the
amount of $0; and against Defendant Lance M. Hale & Associates in the amount of $0.
IT IS SO ORDERED.
DATED this 15th day of July, 2015.
6
Counsel for Synergy confirmed at the Hearing that the Motion for Summary
Judgment is moot in light of the motions for default judgment.
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