K. Neal Idealease, Inc. v WTC 2 Inc.

Filing 12

MEMORANDUM OPINION. Signed by Judge Theodore D. Chuang on 4/11/2016. (bus, Deputy Clerk)

UNITED STATES DISTRICT COURT
DISTRICT OF MARYLAND

K. NEAL IDEALEASE INC.,
Plaintiff,

v.
Civil Action No. TDC-15-2121
WTC 2 INC.,
Trading as World Trade Company,
Defendant.

MEMORANDUM OPINION
On July 21,2015, PlaintiffK. Neal Idealease Inc. ("K. Neal") filed a complaint alleging
breach of contract and conversion by Defendant WTC 2 Inc. ("WTC").

The Clerk entered

WTC's default on October 8, 2015. Pending before the Court is K. Neal's Motion for Entry of
Default Judgment.

Having reviewed the pleadings, briefs, and supporting documents, the Court

finds no hearing necessary.

See D. Md. Local R. 105.6. For the reasons set forth below, the

Motion is GRANTED IN PART and DENIED IN PART.
DISCUSSION
I.

Legal Standard
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 or otherwise, the clerk must enter the party's default."

Under Rule

55(b)(2), after a default has been entered by the clerk, the court may, upon the plaintiff's
application and notice to the defaulting party, enter a default judgment.

Fed R. Civ. P. 55(b)(2).

A defendant's default does not, however, automatically entitle the plaintiff to entry of a default

judgment; rather, that decision is left to the discretion of the court. United States v. Moradi, 673
F.2d 725, 727 (4th Cir. 1982) ("[T]rial judges are vested with discretion, which must be liberally
exercised, in entering [default] judgments and in providing relief therefrom."); Dow v. Jones,
232 F. Supp. 2d 491, 494 (D. Md. 2002).

The United States Court of Appeals for the Fourth

Circuit has a "strong policy that cases be decided on their merits," United States v. Shaffer
Equip. Co., 11 F.3d 450,453 (4th Cir. 1993), but default judgment may be appropriate "when the
adversary process has been halted because of an essentially unresponsive
Lawbaugh,

359 F. Supp. 2d 418, 421 (D. Md. 2005); see H

Aktiengesellschaft

party,"

F. Livermore

s.E.c.

v.

Corp. v.

Gebruder Loepje, 432 F.2d 689, 691 (D.C. Cir. 1970) ("[T]he default

judgment must normally be viewed as available only when the adversary process has been halted
because of an essentially unresponsive

party.

In that instance, the diligent party must be

protected lest he be faced with interminable delay and continued uncertainty as to his rights.").
In reviewing a Motion for Default Judgment, the court accepts as true the well-pleaded
factual allegations in the complaint relating to liability. Ryan v. Homecomings Fin. Network, 253
F.3d 778, 780-81 (4th Cir. 2001). However, it remains for the court to determine whether these
unchallenged

factual allegations constitute a legitimate cause of action.

fd.; see also lOA

Charles Allan Wright & Arthur R. Miller, Federal Practice & Procedure ~ 2688 (3d ed. 2010)
("[L]iability is not deemed established simply because of the default ...

and the court, in its

discretion, may require some proof of the facts that must be established in order to determine
liability.").

If liability is established, the court must then determine the appropriate amount of

damages. See Ryan, 253 F.3d at 780-81.
As to damages, the court cannot accept as true the factual allegations of the plaintiff, but
must instead make an independent determination.

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See Dundee Cement Co. v. Howard Pipe &

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III.

Conversion
Because K. Neal acknowledges that WTC's initial possession of the trucks was lawful, K.

Neal can only recover under a theory of constructive conversion. See K & K Mgmt., Inc. v. Lee,
557 A.2d 965, 982-83 (Md. 1989). A constructive conversion does not occur unless the plaintiff
demands that the defendant return the unlawfully retained property. Mattingly v. Mattingly, 133
A. 625, 626 (1926).

Here, after WTC failed to make required payments, K. Neal invoked a

contractual provision requiring that WTC purchase the trucks.

The Complaint, however, does

not allege that K. Neal at any point demanded that WTC return the trucks. Therefore, the facts in
the Complaint do not establish a claim for constructive conversion.
Judgment on this claim is denied.

The Motion for Default

The Court notes, however, that the alleged damages for

conversion are fully encompassed by the damages for breach of contract, such that the damages
award would not be higher even if the Motion were granted as to the conversion claim.

IV.

Damages
K. Neal's Motion seeks $214,818.56 in damages and costs, as well as post-judgment

interest.

K. Neal claims that, pursuant to the Lease Agreement, WTC owes $154,998 for the

purchase of the three trucks, $41,789 for missed monthly lease payments, $5,624 for unpaid
service and repair invoices, $2,283 for 2015 Personal Property taxes on the vehicles, $3,232.06
in pre-judgment late charges on invoices unpaid as of August 31, 2015 at the rate set in the Lease
Agreement, and $6,892.50 for attorney's fees, costs, and expenses related to this action. K. Neal
supports its damages request with an affidavit from Sharon Richard, its Senior Vice President
and Chief Financial Officer, as well as worksheets showing its calculations of the present value
of the trucks and of the pre-judgment late charges.

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The Complaint sought similar, but not identical, damages for the breach of contract
claim.

It requested a total of $198,086.80, consisting of $162,613 for the purchase of the

vehicles and $35,473.80 for invoices unpaid as of July 1,2015.

It also sought pre-judgment late

charges on unpaid invoices at the rate set in the Lease Agreement, post-judgment

interest,

attorney's fees, costs, and expenses. The Complaint made no mention of property taxes.
"A default judgment
demanded in the pleadings."

must not differ in kind from, or exceed in amount, what is
Fed. R. Civ. P. 54(c).

"When a complaint demands a specific

amount of damages, courts have generally held that a default judgment cannot award additional
damages.

The rationale is that a default judgment cannot be greater than the specific amount

sought because the defendant could not reasonably have expected that his damages would exceed
that amount."

Meindl v. Genesys Pac. Techs., Inc. (In re Genesys Data Techs., Inc.), 204 F.3d

124, 132 (4th Cir. 2000) (internal citations omitted); see also lOA Charles A. Wright & Arthur
R. Miller, Federal Practice & Procedure ~ 2663 (3d ed. 2010). Consequently, the Court will cap
the damage award for the vehicles, missed monthly payments, and unpaid service and repair
invoices at the amount requested in the Complaint, $198,086.80.

See Silge v. Merz, 510 F.3d

157, 159-60 (2d Cir. 2007) (affirming a decision to cap damages on a default judgment at the
amount requested in the complaint). The Complaint also put WTC on notice that K. Neal would
be seeking pre-judgment late charges on unpaid amounts at the rate set by the Lease Agreement,
so the Court will award $3,232.06 in pre-judgment late charges. K. Neal is entitled by statute to
post-judgment interest as calculated under federal law, so the Court need not specifically award
it. See 28 U.S.C. ~ 1961(a) (2012) ("Interest shall be allowed on any money judgment in a civil
case recovered in a district court.").

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The Court will not award damages for property taxes, which were not mentioned in the
Complaint.

Furthermore, although the Complaint made a demand for attorney's fees, costs, and

expenses, the Motion provided no support for its request for $6,892.50 in these categories other
than a reference to this amount in the affidavit submitted by the Chief Financial Officer of K.
Neal. Ordinarily, awards of attorney's fees and legal costs and expenses must be supported by
evidence of the number and purpose of billable hours, the attorney's hourly rate, the attorney's
years of experience, and an itemized list of costs. D. Md. Local R. 109, App. B. In the absence
of such information as contemplated by Rule 109 and Appendix B of the Local Rules of this
District, the Court does not find sufficient basis to award attorney's fees and costs.
award is thus $201,318.86.

The total

K. Neal may file a motion for award of attorney's fees and costs

within 14 days of the date of this Order attaching supporting information sufficient to permit the
Court to make an award. See D. Md. Local R. 109, App. B.
CONCLUSION
For the foregoing reasons, it is hereby ORDERED that K. Neal's Motion for Default
Judgment is GRANTED IN PART and DENIED IN PART.

The Motion is GRANTED with

respect to the breach of contract claim (Count I) and DENIED with respect the conversion claim
(Count II). K. Neal is awarded $201,318.86 in damages. A separate Order shall issue.

Date: April 11,2016
THEODORE D. C
United States Distric

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