Ideal Holdings of Michigan, LLC et al v. The High Consultants, LLC et al

Filing 44

OPINION on Plaintiff's 38 Motion for Default Judgment as to Defendant Marc Steimer. Signed by District Judge Sean F. Cox. (EVra)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
IDEAL HOLDINGS OF MICHIGAN,
LLC, et al.,
Plaintiffs,
v.

Case No. 24-10780

THE HIGH CONSULTANTS, LLC, et al.,

Sean F. Cox
United States District Court Judge

Defendants.
___________________________________/
OPINION
ON PLAINTIFFS’ MOTION FOR DEFAULT JUDGMENT
AS TO DEFENDANT MARC STEIMER
In this action, Plaintiffs asserted three causes of action against two Defendants. Plaintiffs
previously obtained a default judgment against the other Defendant – The High Consultants,
LLC. Plaintiffs now seek a default judgment against the remaining Defendant – Marc Steimer
(“Steimer”). Although Steimer appeared pro se in this case, and filed some motions of his own,
Steimer did not respond to Plaintiffs’ Motion for Default Judgment against him. The Court held
an evidentiary hearing on March 6, 2025. For the reasons that follow, this Court GRANTS the
motion, to the extent that the Court will issue a default judgment in favor of Plaintiffs and
against Defendant Steimer in the amount of $5,000,000.00.
BACKGROUND
On March 27, 2024, Plaintiffs Ideal Holdings of Michigan, LLC and Done Right
Properties, LLC filed this diversity action against Defendants The High Consultants, LLC and
Marc Steimer. Plaintiffs’ Complaint includes the following three counts: 1) “Breach of
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Contract” (Count I); 2) “Breach of Fiduciary Duties” (Count II); and 3) “Member and Company
Oppression” (Count III). Plaintiffs’ Complaint alleges that its damages expert “will testify that
Plaintiffs’ damages are in a range from $2.5-$5 million based on past and future lost profits from
the enterprise.” (Compl. at ¶¶ 51, 58 & 64).
Acting pro se, on May 14, 2024, Defendant Steimer filed a Motion to Dismiss, pursuant
to Fed. R. Civ. P. 12(b)(6). This Court denied that motion in an Opinion and Order issued on
September 17, 2024. (See ECF No. 28). Thus, pursuant to Fed. R. Civ. P. 12(a)(4)(A),
Defendant Steimer was required to file an answer to the Complaint within fourteen days of
September 17, 2024. Steimer did not do so and, on October 28, 2024, a Clerk’s Entry of
Default was issued as to Defendant Steimer. (ECF No. 32).1
Meanwhile, Plaintiffs sought, and obtained, a default judgment against Defendant The
High Consultants, LLC, after this Court heard oral argument and held an evidentiary hearing.
That default judgment was issued on December 2, 2024.
On December 9, 2024, Plaintiffs filed the instant Motion for Default Judgment against
Defendant Steimer. (ECF No. 38). Defendant Steimer did not file any response to the motion
and the time permitted for doing so has passed.
The Court held an evidentiary hearing, on March 6, 2025, at which time it heard witness
testimony and also received a number of exhibits.

ANALYSIS

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Meanwhile, on October 17, 2024, Steimer filed another pro se Motion to Dismiss. (ECF
No. 30). This Court denied that motion as well. (See ECF No. 36).
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Pursuant to Fed. R. Civ. P. 55(b), a judgment by default may be entered against a
defendant who has failed to plead or otherwise defend against an action. When reviewing a
motion seeking a default judgment, this Court views this as a two-part inquiry: 1) whether the
factual allegations in the operative complaint are sufficient to establish liability for the claims
asserted; and 2) if so, determining the amount of damages, or other relief, to be awarded.
The effect of a default is that the factual allegations of the complaint, except those
relating to the amount of damages, will be taken as true. New London Tobacco Mkt., Inc. v.
Kentucky Fuel Corp., 44 F.4th 393, 403 (6th Cir. 2022). After a default, it remains the district
court’s responsibility to determine whether the well-pleaded factual allegations in the complaint
at issue are sufficient to establish a defendant’s liability. Nishimatsu Constr. Co. Ltd. v. Houston
Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975); United States v. $525,695.24 Seized from
JPMorgan Chase, 869 F.3d 429, 441 (6th Cir. 2017).
The burden of establishing damages rests squarely on the plaintiff seeking the default
judgment. Flynn v. People’s Choice Home Loans, Inc., 440 F App’x 452, 455 (6th Cir. 2011).
Under Fed. R. Civ. P. 55(b)(2), this Court has discretion to hold an evidentiary hearing,
conduct an accounting, or investigate any matter, in order to determine the amount of damages.
This Court held an evidentiary hearing on March 6, 2025.
Pursuant to Fed. R. Civ. P. 54(c), a “default judgment must not differ in kind from, or
exceed in amount, what is demanded in the pleadings.” The reason behind this rule is to “ensure
a party pondering default has meaningful notice, based on the complaint alone, of her exposure
in the event of a default.” Ditech Fin., LLC v. Naumann, 742 F. App’x 810, 813 (5th Cir. 2018).
Here, Plaintiffs’ Complaint indicates that Plaintiff are seeking damages in this case in the
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range of 2.5 to five million dollars. (Compl. at ¶¶ 51, 58 & 64). As such, in deciding the other
default judgment motion, this Court ruled that Plaintiffs are limited to five million dollars – the
amount of the damage exposure stated in Plaintiffs’ Complaint.
In this second motion, Plaintiffs ask the Court to rule differently and award it more than
five millions dollars as to Defendant Steimer. In a footnote to its brief, Plaintiffs also belatedly
asks the Court to amend the December 2, 2024 default judgment that was entered against the
other Defendant. The Court declines to do so, and again rules that damages are capped at five
million dollars.
While Plaintiffs’ Complaint includes three causes of action, that are based on the same
underlying factual allegations, Plaintiffs can only be made whole. That is, Plaintiffs cannot
obtain a double (or triple) recovery and recover five million dollars to as to each of the three
counts. See, eg., U.S. ex rel. Augustine v. Century Health Servs., Inc., 289 F.3d 409, 417 (6th Cir.
2002) ((“[T]he election-of-remedies doctrine is properly invoked to prevent a double recovery
based on two causes of actions that arose from the same wrong.”) (citing Hickson Corp. v.
Norfolk S. Ry. Co., 260 F.3d 559, 566–67 (6th Cir. 2001)).
And, like their prior motion that sought a default judgment against the other Defendant,
Plaintiffs’ motion does not seek a double or triple recovery. (See Pl.’s Br. at 16) (seeking a
default judgment in the total amount of $5,670,000.00 (as opposed to double or triple that
amount).
In order for Plaintiffs to obtain a $5,000,000.00 default judgment, Plaintiffs must only
establish that they have established liability on the part of Steimer and those damages as to one
of its three causes of action.

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Plaintiffs’ Complaint asserts a breach of contract claim against both named Defendants
and asks the Court to award damages of $5,647,000.00 with respect to the breach of contract
claim. Plaintiffs allege that “Defendants” breached the “Holdings Operating Agreement” by the
following actions: “1) diverting company opportunity; 2) withdrawing in bad faith from the
company; 3) interfering with relationships among the Members; 4) breaching Defendants’
fiduciary duties; 5) engaging in impermissible conflicts of interest, 6) refusing to enter into
agreements and commitments contemplated and required by the Holdings Operating Agreement
to effectuate the purpose of the company and 7) causing the company to fail.” (Compl. at ¶ 49).
Unlike the prior motion for default judgment, in this one, Plaintiffs do link alleged
breaches with specific provisions of the contract at issue (the Holdings Operating Agreement).
Thus, Plaintiffs can obtain a default judgment as to this count, so long as they establish damages.
Moreover, like the prior motion, Plaintiffs’ factual allegations regarding Defendant’s
conduct fit with the other two causes of action. In Count II, Plaintiffs assert a breach of fiduciary
duties claim against Defendant Steimer and in Count II they assert a similar claim brought under
a Michigan statute – Mich. Comp. Laws § 450.4515. Under that statute, members of limited
liability companies like Plaintiffs may bring an action to “establish that the acts of the managers
or members in control of the limited liability are illegal or fraudulent or constitute willfully
unfair and oppressive conduct toward the limited liability company or the member” and may
seek an award of damages for such conduct. Mich. Comp. Laws § 450.4515(1)(e).
“At a minimum, a viable claim for the breach of fiduciary duty must include facts
alleging: ‘(1) the existence of a fiduciary duty, (2) a breach of that duty, (3) proximately causing
damages.’” Fisher v. Perron, 30 F.4th 289, 299 (6th Cir. 2022) (citation omitted). As Plaintiffs

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note, the Michigan statute requires a manager of an LLC to act “in good faith, with the care an
ordinarily prudent person in a like position would exercise under similar circumstances, and in a
manner the manager reasonably believes to be in the best interests of the limited liability
company.” Mich. Comp. Laws § 450.4404.
Here, Plaintiffs allege that Defendant Steimer breached his fiduciary duties, and violated
the statute, in several ways, including “improperly diverting company opportunity,” “interfering
with relationships among the members,” and “engaging in impermissible conflicts of interest.”
(Compl. at ¶¶ 56 & 61). It further alleges that those action caused Plaintiffs to incur monetary
damages. Thus, liability for these counts is established too.
At the March 6, 2025 hearing, Plaintiffs presented expert testimony in support of their
requested damages. Having considered that testimony, along with the exhibits submitted by
Plaintiffs, the Court concludes that Plaintiffs have established that Defendant Steimer’s conduct
caused Plaintiffs to incur damages of five million dollars, based on past and future lost profits
from the enterprise. As such, the Court shall enter a default judgment against Defendant Steimer
in that amount.

CONCLUSION

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For the reasons above, the Court ORDERS that Plaintiffs’ Motion for Default Judgment
is GRANTED, to the extent that the Court will issue a default judgment against Defendant
Steimer in the amount of $5,000,000.00.
IT IS SO ORDERED.

Dated: March 12, 2025

s/Sean F. Cox
Sean F. Cox
United States District Court Judge

I hereby certify that on March 12, 2025, the document above was served on counsel and/or the
parties of record via electronic means and/or First Class Mail.
s/Emily Vradenburg
Case Manager

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