FALATO et al v. FOTOGRAFIXUSA, L.L.C. et al

Filing 152

MEMORANDUM OPINION. Signed by Judge Michael A. Shipp on 7/25/2013. (gxh)

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

DEIRDRE M. FALATO, et al.,
Civil Action No. 09-5232 (MAS) (TJB)
Plaintiffs,
v.

MEMORANDUM OPINION

FOTOGRAFIXUSA, L.L.C., et al.,
Defendants.

SHIPP, District Judge

This matter comes before the Court upon Plaintiffs' Deirdre M. Falato, David B. McKee,
Mildred T. Mastroberte, Mary Ann B. Pieshala and Barbara David's (collectively, "Plaintiffs"),
Motion for Entry of Default Judgment ("Plaintiffs' Motion"), pursuant to Federal Rule of Civil
Procedure ("Rule") 55(b)(2). (Pis.' Mot., ECF No. 147.) Defendant Fotografixusa, L.L.C.,
("Fotografixusa" or "Defendant") has failed to file opposition. The Court has carefully
considered the submissions and decided the matter without oral argument pursuant to Local Civil
Rule 78. For the reasons set forth below, and good cause shown, Plaintiffs' Motion for Default
Judgment is GRANTED in part and DENIED in part.
I.

Background

This is a securities fraud action in which Plaintiffs assert violations of the Securities Acts
of 1933 and 1934 as well as various breach of contract and fraud claims against Fotografixusa in
relation to Plaintiffs' investment in Fotografixusa beginning in 2008. Plaintiffs brought this
action against Fotografixusa and its CEO, Raymond Heather. Mr. Heather attempted to represent
Fotografixusa pro se after its attorney withdrew, however, as a corporation, Fotografixusa is

required to be represented by counsel. As such, default as to Defendant was entered by
Magistrate Judge Tonianne Bongiovanni. The September 28, 2012 Opinion provided:
Plaintiffs' motion for the entry of default as to Defendant Fotografixusa, L.L.C. is
GRANTED. As Plaintiffs note, Defendant Fotografixusa, L.L.C. has not obtained
new counsel and pursuant to Third Circuit case law, corporations cannot represent
themselves prose. See Dougherty v. Snyder, 469 Fed. Appx. 71, 72 (3d Cir. 2012)
(citing Simbraw v. United States, 367 F.2d 373, 374 (3d Cir. 1966). As a result,
the entry of default as to Defendant Fotografixusa, L.L.C. is warranted.
(ECF No. 140.) Plaintiffs now seek an entry of default judgment against Fotografixusa.

II.

Analysis
Once a party has defaulted, the consequence is that "the factual allegations of the

complaint, except those relating to the amount of damages, will be taken as true." Comdyne I,
Inc. v. Corbin, 908 F.2d 1142, 1149 (3d Cir. 1990) (internal quotations omitted) (citing Thomson
v. Wooster, 114 U.S. 104 (1885)). Entry of default judgment where damages are not a "sum

certain" requires an application to the court to prove, inter alia, damages. Fed. R. Civ. P.
55(b)(2); Comdyne, 908 F.2d at 1149. In addition, liability is not established by default alone.
D.B. v. Bloom, 896 F. Supp. 166, 170 n.2 (D.N.J. 1995). The Court must first determine whether

default judgment is proper. Chamberlain v. Giampapa, 210 F.3d 154, 164 (3d Cir. 2000).
Default judgment is appropriate when a corporation is represented pro se. Dougherty v. Snyder,
469 F. App'x 71 (3d Cir. 2012). It has long been the law "that a corporation may appear in the
federal courts only through licensed counsel." Id. at 72. The rule applies to limited liability
corporations as well "because even single-member LLCs have a legal identity separate from their
members." Id. (internal quotations and citations omitted).
Here, default judgment is proper as Defendant Fotografixusa, a limited liability
corporation, has no licensed counsel. As such, Plaintiffs are entitled to all sums they can prove
they are owed. Plaintiffs are seeking judgment in the amount of$230,000. A portion ofthis sum
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was the amount invested by Plaintiffs while the remainder is the total of Plaintiffs' attorney's
fees.

A.

Plaintiffs are Entitled to the Return of Investment Funds

Plaintiffs allege that Defendant Fotografixusa fraudulently collected investment funds in
violation of the Securities Exchange Acts of 1933 and 1934, respectively. The Court, accepting
these allegations as true, finds that Plaintiffs are entitled to a return of their initial investment.
Plaintiffs have submitted to the Court evidence of canceled checks totaling $135,000. The Court
has reviewed this evidence and accepts it as sufficient proof to substantiate Plaintiffs' claims.
The Court finds that Plaintiffs are entitled to receive full payment of this amount.

B.

Plaintiffs are Not Entitled to Attorney's Fees

As discussed above, Plaintiffs are entitled to judgment only on monies to which they can
provide substantial proof. Local Civil Rule 54.2 permits attorney's fees to be awarded "only
where authorized by statute, court rule or contract." In this case, however, Plaintiffs do not cite
any statute or provide any other legal basis that would demonstrate their entitlement to attorney's
fees. As a result, the Court finds that Plaintiffs are not entitled to a default judgment award of
attorney's fees.

III.

Conclusion
For the reasons stated above, Plaintiffs' motion for default judgment against

Fotografixusa, L.L.C. is GRANTED in part and DENIED in part. The Court GRANTS
Plaintiffs' request for the return of investment funds in the amount of $135,000 but DENIES
Plaintiffs' request for attorney's fees. An Order consistent with this Opinion will be entered.

MICHAEL A. SHIPP

-K

A

UNITED STATES DISTRICT JUDGE

Dated: July,~\ 2013
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