Bank of the West v. Mayan Construction, Inc.

Filing 15

MEMORANDUM OPINION AND ORDER by Chief District Judge William P. Johnson GRANTING IN PART 14 Amended Motion for Default Judgment as to liability, but DENYING with regard to damages. (mag)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO
______________________
BANK OF THE WEST,
Plaintiff,
vs.
No. 17-cv-01154 WJ/JHR
MAYAN CONSTRUCTION, INC.,
Defendant.

MEMORANDUM OPINION AND ORDER
GRANTING MOTION FOR DEFAULT JUDGMENT
and
ORDER FOR SUPPLEMENTAL INFORMATION
TO DETERMINE IF AWARD OF SUM CERTAIN IS APPROPRIATE
THIS MATTER comes before the Court upon Plaintiff’s Renewed Motion for Default
Judgment, filed July 16, 2018 (Doc. 14).1 Having reviewed the parties’ briefs and applicable
law, the Court grants Defendant’s motion with regard to liability, but the motion is denied at this
time as to damages, subject to Plaintiff’s providing supplemental information to the Court in a
manner that allows the Court to determine damages.
BACKGROUND
This case began as an effort by Plaintiff (or the “Bank”) to collect a debt owed on a
commercial credit card extended by the Bank to Defendant Mayan Construction, Inc. (“Debtor”).
Plaintiff filed a Complaint for Judgment on Commercial Credit Agreement (“Agreement”) on
November 21, 2017 under this Court’s diversity jurisdiction, alleging that it had extended to
Defendant (“Debtor” in the complaint) a commercial credit card with a maximum credit limit of

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The Court denied Plaintiff’s previous motion without prejudice because of deficiencies in the motion. See Doc.
13.

$100,000. The Agreement between the parties required regular monthly payments to the Bank
for all charges made on that card; however, the Bank did not receive a payment under the
Agreement for payment due on July 20, 2017 or thereafter. At that time, the Bank gave notice to
Defendant for all outstanding balances under the Agreement to be paid in full by September 20,
2017. Ex. 2 to Compl. As of January 31, 2018, the balance of the Agreement was $104,354.88,
including accrued interest through January 31, 2018, plus interest thereafter at the rate of 18%
per annum, plus late fees, attorney fees, taxes, and expenses.
Defendant Mayan Construction, Inc. was served on December 26, 2017, according to the
summons that was returned as executed. A summons was issued on Mayan Construction and
returned as Executed on December 26, 2017, and the proof of service indicates that service was
accepted by Defendant’s designated agent and owner. See Doc. 4 at 2 (summons served and
accepted by “Carlos Chavez, Registered Agent”). However, after Defendant was served, there
was no activity in this case for almost four months served because of Mr. Chavez’ passing in
early 2018. See Doc. 6. In response to the Court’s Order to Show Cause regarding this
inactivity, the Bank explained that it had entered an appearance in the state court probate case for
Mr. Chavez’ estate, and was now prepared to move ahead with its request for default judgment.
Id. at 2.
I.

Liability
Plaintiff now seeks a default judgment from Defendant on a Complaint for Judgment on

Commercial Credit Agreement for the amount of $104,354.88, including accrued interest and
late fees. Fed.R.Civ.P. 55 sets out a two-step process for a party seeking a default judgment.
First, a party must obtain the clerk’s entry of default against the opposing party. Second, the
party must move the Court to enter a default judgment. Fed.R.Civ.P. 55(a). The trial court is

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given broad discretion in deciding whether to enter a default judgment. See Grandbouche v.
Clancy, 825 F.2d 1463, 1468 (10th Cir. 1987).
A Clerk’s Entry of Default was entered on June 5, 2018 (Doc. 11). Service on Defendant
has also been effected, as required under Rule 55. See Rogers v. Hartford Life and Acc. Ins. Co.,
167 F.3d 933, 936 (5th Cir. 1999) (Until the plaintiff serves the defendant, the defendant has no
duty to answer the complaint and the plaintiff cannot obtain a default judgment); Omni Capital
Int'l, Ltd. v. Rudolf Wolff & Co., Ltd., 484 U.S. 97, 104 (1987) (“Before a federal court may
exercise personal jurisdiction over a defendant, the procedural requirement of service of
summons must be satisfied.”).
There has been no entry of appearance on behalf of Defendant, or any other activity
which could constitute a response to the Complaint. Once a defendant is found to be in default, a
court must “t[ake] as true all factual allegations in the complaint, except those pertaining to the
amount of damages.” Archer v. Eiland, 64 F. App’x 676, 679 (10th Cir. 2003). Plaintiff offers
the following documented information:
1. The Commercial Card Agreement, Ex. B, describing the parties’ Agreement consistent
with the allegations in the complaint;
2. An Affidavit of Sum Certain by Joel Spencer, Vice President of the Bank. Ex. A, stating:
a. Defendant is a corporation organized and operated under the laws of the State of
New Mexico with its principal place of business in New Mexico;
b. For consideration received, the Bank and Defendant executed a Commercial Card
Agreement (see #1);
c. In the Agreement, the Bank agreed to extend a commercial credit card, or cards,
to the Defendant for use in its business in exchange for the Defendant’s
Agreement to abide by all terms in the Agreement, including timely repayment;
d. The Bank agreed to a maximum credit limit of $100,000 for the Defendant’s
commercial credit card use under the Agreement;

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e. The Agreement requires regular monthly payments to the Bank for all Purchases,
Cash Advances, and all other fees and other charges made or incurred by the
Defendant during the previous billing period for which payment has not been
received by the Bank;
f. The Bank did not receive a payment under the Agreement for the payment due on
July 20, 2017 or thereafter;
g. On July 20, 2017, the Bank gave notice to the Defendant stating that the Bank
exercised its rights under the Agreement to reduce the Defendant’s credit limit
(including the credit limits offered to any employees of the Defendant pursuant to
the Agreement) to zero dollars ($0). The Bank further stated that Bank had
terminated the use of any credit card services contemplated by the Agreement.
The Bank further made demand that all outstanding balances under the
Agreement must be paid in full by September 20, 2017. See Compl., Ex. 2 and
Ex. C to motion.
h. Defendant has failed to pay all outstanding balances in full and the Agreement is
in default due to this failure:
The Bank seeks to exercise its right and option to declare immediately due the entire
principal balance of the Agreement. It claims it is entitled to:
The sum of $104,354.88, including accrued interest and late fees through January
31, 2018, plus interest thereafter at the rate of 18% per annum until the date of
entry of judgment, plus attorney fees, tax, costs and expenses incurred herein, plus
interest on the judgment at the rate of 18% per annum, until paid in full.
Ex. A, ¶¶16-17. In addition, Plaintiff also seeks incurred attorney’s fees, tax, costs and expenses
in the amount of $3,610.95.
Based on this documentation, the Court finds that Plaintiff has stated adequate grounds
for entry of default judgment on liability under Rule 55, and hereby declares that Defendant
Mayan Construction, Inc. is in default by virtue of its failure to answer the Complaint for
Judgment on Credit Card Agreement which was filed in federal court on November 21, 2017
(the “Complaint”) or otherwise plead as required by the Federal Rules of Civil Procedure.
However, the Court finds that Plaintiff has not adequately pled a “sum certain” under Rule 55(b).
II.

Damages
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Under Fed.R.Civ.P. 55(b)(1), judgment can be entered for a “sum certain” or a “sum that
can be made certain by computation” where a defendant has been defaulted for a failure to
appear. KPS & Assocs., Inc. v. Designs By FMC, Inc., 318 F.3d 1, 20 (1st Cir. 2003). To be a
“sum certain” there must be no doubt as to the amount that must be awarded. The Bank seeks a
sum certain in the following two categories:
(1) The sum of $104,354.88, including accrued interest and late fees through
January 31, 2018, plus interest thereafter at the rate of 18% per annum until the
date of entry of judgment, plus attorney fees, tax, costs and expenses incurred
herein, plus interest on the judgment at the rate of 18% per annum, until paid in
full.
and
(2) . . . attorney’s fees, tax, costs and expenses herein in the amount of
$3,610.95, including the attorney’s fees, taxes, costs and expenses estimated to
complete this action.
Doc. 14, Ex. A, ¶¶16-17.
Under Rule 55, to be a “sum certain,” there must be no doubt as to the amount that must
be awarded. See KPS & Assocs., Inc. v. Designs By FMC, Inc., 318 F.3d 1, 20 (1st Cir. 2003).
Here, Plaintiff relies solely on the affidavit of Mr. Spencer, the Bank’s Vice President, to
convince the Court it seeks a “sum certain,” but on what does Mr. Spencer base his knowledge?
Simply because a plaintiff is certain of the sum does not make its damage claim a “sum certain”
within the meaning of Rule 55(b)(1). CSXT Intermodal, Inc. v. Mercury Cartage, LLC, 271
F.R.D. 400, 401 (D. Me. 2010). Mr. Spencer’s statements regarding the amounts owed are not
subject to mathematical calculation, nor does he point to a provision in the Agreement for
liquidated damages. See World All. Consulting, Inc. v. DocPlanet.com, Inc., 57 F. App'x 390,
392 (10th Cir. 2003) (where plaintiff's request in complaint for a $1,000,000 penalty upon
defendant's default did not modify the parties' original agreement to include a liquidated damages

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provision, plaintiff's lawsuit was not for a sum certain under Rule 55(b)). The amount owed by
Defendant in this case does not flow directly from Mr. Spencer’s statements about what is owed,
but rather from the credit card purchases and bills that resulted from those purchases. According
to Plaintiff, Defendant has missed many months of bill payments—but the actual documentation
from which a calculation may be made (or even reasonably inferred)—is lacking.

This

information is not part of the Agreement that is presented as an exhibit, nor is it part of any
attachments to Mr. Spencer’s affidavit. See World All. Consulting, Inc. v. DocPlanet.com, Inc.,
57 F. App'x 390, 392 (10th Cir. 2003) (citing KPS & Assoc., Inc. 318 F.3d 1) (holding the fact
that complaint and accompanying affidavit identified a particular amount of damages did not
transform the suit into one for a “sum certain” under Rule 55(b)(1)).
A.

Requested Amount Regarding Debt

In the first amount requested for the debt ($104,354.88), the Court has these questions:
1. Does the amount of $104,354.88 refer solely to the debt owed by Defendant, exclusive of
interest and late fees?
2. With regard to Plaintiff’s request in ¶16 of the Affidavit for accrued interest, postjudgment interest at 18% and late fees, what is the amount being requested at least for the
categories of accrued interest and late fees?
3. Because this is a diversity case, state law applies as to prejudgment interest, which is
being sought by Plaintiff. See Strickland Tower Maintenance, Inc. v. AT&T
Communication, Inc., 128 F.3d 1422, 1429 (10th Cir. 1997). Plaintiff has presented no
basis for the Court to consider whether an award of prejudgment interest is appropriate
here. The Bank does not state whether prejudgment interest was envisioned in the
agreement or whether a state statute is relevant on this issue. The Court will not do
counsel’s work for him or her, and expects counsel to provide a discussion as to why the
Bank is entitled to such interest. See Perry v. Woodward, 199 F.3d 1126, 1141, n.13 (10th
Cir. 1999) (Court “will not craft a party’s arguments for him”).
B.

Attorney Fee Request

Plaintiff’s motion is even more nebulous in the amounts sought for attorney’s fees, tax,
costs and expenses (¶17 of the Affidavit). These questions remain:
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1. In ¶17, Mr. Spencer refers to “incurred attorney’s fees, tax, costs and expenses” in the
amount of $3,610.95. He thus mentions “tax, costs and expenses” in the Bank’s requests
for amounts due under both the Agreement and also under attorney’s fees (that is, in ¶¶16
as well as ¶17). Is the Bank asking for amounts in these categories twice, as part of the
Debt owed as well as part of attorney’s fees?
2. Mr. Spence states that the Bank has incurred “attorney’s fees, tax, costs and expenses . . .
in the amount of $3,610.95 . . . .” Does that amount include the fees, tax, costs and
expenses, or is the $3,610.95 for attorney’s fees alone?
3. There is no documentation at all to support the Bank’s request for attorney’s fees.
The Court’s discussion here should make it abundantly clear that the amount sought by
the Bank is far from a “sum certain” for purposes of Rule 55. Plaintiff should have found it a
relatively simple matter to provide the Court with sufficient detail to make its case for the
amount of money it requests here; banks are generally no strangers to drafting comprehensive
negotiable instruments that envision every possible contingency that can arise. Plaintiff will be
afforded yet another opportunity to present the documentation necessary to support its request
for damages. Rule 55 does not require the Court to hold a hearing on such issues, and the Court
finds that a hearing really should not be necessary to get this information before the undersigned
so that a determination on damages can be made. See Rule 55(b)(2)(B). However, a hearing will
be set in the event counsel’s supplementation is deficient.
THEREFORE,
IT IS ORDERED that Plaintiff’s Renewed Motion for Default Judgment (Doc. 14) is
hereby GRANTED IN PART as to liability, but DENIED with regard to damages, and the Court
finds that Plaintiff has stated adequate grounds for entry of default judgment on liability under
Rule 55, and hereby declares that Defendant Mayan Construction, Inc. is in default by
virtue of its failure to answer the Complaint for Judgment on Credit Card Agreement
which was filed in federal court on November 21, 2017;

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IT IS FURTHER ORDERED that Plaintiff shall rectify the deficiencies set out above in a
manner that is organized, clear and complete, to support its claim for damages, within three (3)
weeks from the entry of this Order. Failure to do so may result in the Court’s denial of
Plaintiff’s request for damages.

_________________________________________
CHIEF UNITED STATES DISTRICT JUDGE

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