Western Union Financial Services, Inc. v. Red Partners, LLC et al
Filing
32
MEMORANDUM OPINION (c/m to Defendants 4/18/14 sat). Signed by Chief Judge Deborah K. Chasanow on 4/18/14. (sat, Chambers)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
:
WESTERN UNION FINANCIAL
SERVICES, INC.
:
v.
:
Civil Action No. DKC 13-0470
:
RED PARTNERS, LLC, et al.
:
MEMORANDUM OPINION
Presently pending and ready for resolution is a motion for
default
judgment
Services, Inc.
filed
by
Plaintiff
(ECF No. 30).
Western
Union
Financial
The relevant issues have been
briefed and the court now rules pursuant to Local Rule 105.6, no
hearing being deemed necessary.
For the reasons that follow,
the motion will be granted in part and denied in part.
I.
Background
On April 1, 2011, Defendant Red Partners, LLC, d/b/a Check
Cashed, by its principal, Defendant Jason Keene, entered into an
agreement with Plaintiff Western Union Financial Services, Inc.,
which permitted Red Partners “to sell Plaintiff’s money orders
and money transfers to the public.”
(ECF No. 1 ¶ 8; ECF No. 1-
2).
was
In
exchange,
Red
Partners
required
“to
provide
Plaintiff with periodic reports detailing its sales[;] . . . to
place
the
funds
received
from
sales
of
money
orders,
money
transfers and other miscellaneous fees into a trust account[;] .
. . and to hold that money in trust for Plaintiff.”
¶¶ 10, 11).
(ECF No. 1
On the same date, Defendant Keene “executed a
Personal Guaranty and Indemnity Agreement . . . guaranteeing the
payment of all sums that [Red Partners was] required to tender
under the Trust Agreement.”
At
some
point,
(Id. at ¶ 13; ECF No. 1-3).
Plaintiff
exercised
a
right
under
the
agreement to conduct an audit of Red Partners’ records, which
revealed that Red Partners had “failed or refused to account for
at least $91,637.53 (plus accumulated interest and costs) in
money order sales and other miscellaneous fees.”
15).
When
Red
Partners
was
unable
“to
(ECF No. 1 ¶
account
for
the
unremitted funds” and Mr. Keene “failed or refused to satisfy
the outstanding balance” (id. at ¶¶ 16, 18), Plaintiff commenced
this action, alleging breach of contract, breach of guaranty,
and related claims, and seeking a judgment “in the amount of
$91,637.53, plus interest, costs, and attorneys’ fees.”
(Id. at
4).1
Defendants were served on July 26, 2013.
25).
(ECF Nos. 24,
When they failed to respond within the requisite time
period, Plaintiff moved for clerk’s entry of default.
26).
(ECF No.
Default was entered by the clerk on November 27, 2013 (ECF
1
Plaintiff also sought punitive damages in relation to
claims for fraud and conversion.
It does not, however, seek
punitive damages in the pending motion for default judgment.
2
No. 27), and, on January 23, 2014, Plaintiff filed the pending
motion for default judgment (ECF No. 30).
II.
Standard of Review
Pursuant to Federal Rule of Civil Procedure 55(a), “[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
party’s default.”
or
otherwise,
the
clerk
must
enter
the
Where a default has been previously entered
by the clerk, the court may enter a default judgment upon the
plaintiff’s
application
and
notice
pursuant to Fed.R.Civ.P. 55(b)(2).
to
the
defaulting
party,
A defendant’s default does
not automatically entitle the plaintiff to entry of a default
judgment; rather, that decision is left to the discretion of the
See Lewis v. Lynn, 236 F.3d 766, 767 (5th Cir. 2001).
court.
The Fourth Circuit has a “strong policy” that “cases be decided
on their merits,” Dow v. Jones, 232 F.Supp.2d 491, 494 (D.Md.
2002) (citing United States v. Shaffer Equip. Co., 11 F.3d 450,
453 (4th Cir. 1993)), but default judgment may be appropriate
where
a
party
is
unresponsive,
see
S.E.C.
v.
Lawbaugh,
359
F.Supp.2d 418, 421 (D.Md. 2005) (citing Jackson v. Beech, 636
F.2d 831, 836 (D.C. Cir. 1980)).
“Upon [entry of] default, the well-pled allegations in a
complaint as to liability are taken as true, but the allegations
as
to
damages
are
not.”
Lawbaugh,
3
359
F.Supp.2d
at
422.
Federal
Rule
of
Civil
Procedure
54(c)
limits
the
type
of
judgment that may be entered based on a party’s default: “A
default judgment must not differ in kind from, or exceed in
amount,
what
is
demanded
in
the
pleadings.”
Thus,
where
a
complaint specifies the amount of damages sought, the plaintiff
is
limited
to
entry
of
a
default
judgment
in
that
amount.
“[C]ourts have generally held that a default judgment cannot
award additional damages . . . because the defendant could not
reasonably
amount.”
have
expected
that
his
damages
would
exceed
that
In re Genesys Data Technologies, Inc., 204 F.3d 124,
132 (4th Cir. 2000).
III. Analysis
Assuming
the
truth
of
the
well-pleaded
allegations
contained in the complaint, as the court must upon the entry of
default,
Plaintiff
has
established
Defendants’
breach of contract and breach of guaranty.
liability
for
With respect to
damages, it seeks an award of $91,637.53 – the amount specified
in the complaint – plus prejudgment interest, from August 13,
2012, “accru[ing] at $13.18 per diem.”
In
support
of
the
requested
(ECF No. 30 ¶ 7).
damages
award,
Plaintiff
submits the declaration of David Machuca, a Risk and Credit
Manager at Western Union, who attests to the facts set forth in
the
complaint,
attaching,
inter
alia,
a
“repayment
schedule”
demonstrating that, as of August 13, 2012, Defendants owed a
4
principal balance of $91,637.53, with interest accruing at an
annual rate of 5.25%.
(ECF No. 30-4).
The agreement provides,
in relevant part, that, in the event of a default, Plaintiff may
collect “interest on the entire amount owed to [it] at the rate
of two percentage points (2%) above the prime rate of interest
published in the Wall Street Journal . . . in effect at that
time,
or
the
maximum
interest
law.”
(ECF No. 30-2 ¶ 8.3).
rate
allowed
under
applicable
The prime interest rate was 3.25%,
see Neel v. Mid-Atlantic of Fairfield, LLC, No. SAG-10-cv-405,
2012 WL 3264965, at *12 (D.Md. Aug. 9, 2012) (“The Court takes
judicial notice of the fact that the prime interest rate was
3.25% on December 2, 2009, . . . and has not changed since that
time”); thus, the 5.25% rate sought by Plaintiff is permissible
under the contract.
to
prejudgment
From August 13, 2012, Plaintiff is entitled
interest
in
the
amount
of
$8,092.52
or
approximately $13.18 per diem for 614 days.
Plaintiff additionally seeks an award of attorneys’ fees
and costs, providing as support a separate affidavit of Mr.
Machuca,
who
attests
that
“Plaintiff
legal fees” in this matter.
has
paid
$15,763.15
(ECF No. 30-5 ¶ 3).
in
The mere
assertion of the amount billed by counsel is insufficient to
establish the reasonableness of a fee award.
2014,
the
court
issued
a
paperless
On February 25,
correspondence,
directing
“Plaintiff’s Counsel [to] supplement the Request for Attorneys’
5
Fees and Costs,” providing a “breakdown of hours, rates, and
[showing the] reasonableness of the attorneys’ fees sought, and
a breakdown of costs sought, such as the filing fee and process
server fee.”
thus,
(ECF No. 31).
Plaintiff
has
attorneys’ fees.
even
identify
provide
not
To date, counsel has not responded;
shown
entitlement
to
an
award
of
Moreover, Mr. Machuca’s affidavit does not
the
evidentiary
costs
Plaintiff
support
for
seeks
such
to
tax,
amounts.
much
The
less
docket,
however, establishes that Plaintiff paid the $350 filing fee,
which it is entitled to recover.
IV.
Conclusion
For
the
above
stated
reasons,
Plaintiff’s
motion
for
default judgment will be granted in part and denied in part.
separate order follows.
________/s/_________________
DEBORAH K. CHASANOW
United States District Judge
6
A
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