United States of America v. Mance

Filing 10

MEMORANDUM & ORDER re 9 Motion for Default Judgment. Plaintiff's Motion for Default Judgment is GRANTED as to Defendant's liability under the Promissory Note. Pursuant to 28 U.S.C. § 636(b)(1)(B) and Federal Rule of Civil Procedu re 72(b)(1), the court refers this matter to Magistrate Judge Robert M. Levy for an inquest and Report and Recommendation regarding damages, including and awards of interest, attorneys' fees, or costs. So Ordered by Judge Nicholas G. Garaufis on 10/24/2017. (c/m to dft at address listed in Doc. 6 ) (Lee, Tiffeny)

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P/F UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK -X UNITED STATES OF AMERICA, MEMORANDUM & ORDER Plaintiff, 17-CV-2902(NGG) -against- SHONDELL A. MANCE a/k/a SHONDELL MANCE, Defendant. -X NICHOLAS G. GARAUFIS,United States District Judge. Plaintiffthe United States of America ("Plaintiff") commenced this student loan debt enforcement action against Defendant Shondell A. Mance a/k/a Shondell Mance on May 11, 2017. (Compl.(Dkt. 1).) To date. Defendant has not answered or moved with respect to the complaint. Plaintiff"now moves for defaultjudgment. (Mot. for Default J.("Mot.")(Dkt. 9).) For the reasons set forth below,the court GRANTS Plaintiffs motion. I. BACKGROUND Plaintifffiled its complaint in this action on May 11,2017, seeking to enforce a student loan agreement pursuant to 20 U.S.C. § 1080.^ (Compl.) In support of its claim. Plaintiff attaches to the complaint a "Certificate ofIndebtedness" issued by the United States Department ' relevant part, 20 U.S.C. § 1080 provides: In (a) Upon default by the student borrower on any loan covered by Federal loan insurance pursuant to this part, and prior to the commencement of suit or other enforcement proceedings upon security for that loan, the insurance beneficiary shall promptly notify the Secretary, and the Secretary shall if requested (at that time or after further collection efforts) by the beneficiary, or may on the Secretary's own motion, if the insurance is still in effect, pay to the beneficiary the amount of the loss sustained by the insured upon that loan as soon as that amount has been determined (b) Upon payment of the amount of the loss pursuant to subsection (a), the United States shall be subrogated for all of the rights of the holder of the obligation upon the insured loan and shall be entitled to an assignment of the note or other evidence ofthe insured loan by the insurance beneficiary. 1 of Education (the "Certificate"). (Compl. at ECF p.3.) The Certificate alleges that Defendant executed a promissory note on or about April 5,2000,to secure a loan from the Department of Education, and that this loan was disbursed in two payments of$46,397.39 and $8,190.82, respectively, on August 2, 2002, with interest accruing at a rate of6.75 percent per annum. (Id.) The Certificate further alleges that Defendant defaulted on her obligation on September 17, 2009, after Plaintiff demanded payment. (Id.) Pursuant to 34 C.F.R. § 685.202(b), the Department ofEducation capitalized an amount of$13,778.23 in unpaid interest and added it to the principal balance. (Id) The interest rate of6.75 percent per annum equals $11.87 per day. (IdJ As of May 11, 2017,the principal was $64,211.51 and the capitalized interest balance and accrued interest was $36,703.81, totaling a debt of $100,915.32. (Compl.^ 3.) Plaintiff calculates that, due to interest accrual and out-of-pocket expenses incurred by Plaintifffor the service ofthe summons and complaint, the total balance owed by Defendant has risen to $101,668.74 as of July 7, 2017. (Affirmation of Michael T. Sucher, Esq.,("Sucher Affirm.") (Dkt. 9-1)nil.) The complaint further alleges that "[d]emand has been made upon the defendant for payment of the indebtedness, and the defendant has neglected and refused to pay the same." (Compl. n 5.) Plaintiff seeks damages ofthe total balance allegedly owed, plus prejudgment interest through the date ofjudgment, post-judgment interest pursuant to 28 U.S.C. § 1961, adniinistrative costs, and attorneys' fees. (Compl. nil 3-5). Service of process was effected on May 31,2017, at Defendant's residence by leaving copies ofthe summons and complaint vdth an adult ofsuitable age and discretion.^ (See Aff. of Service (Dkt. 6).) Copies were also mailed to Defendant's residence by first-class mail on June 1,2017. (Id) ^ The person on whom service was made indicated that the premises was Defendant's residence and identified herself as "Mrs. Mance," but refused to provide her first name. (Aff. of Service.) Because Defendant failed to file an answer or otherwise move with respect to the complaint, the Clerk of Court entered a notice of default on June 30,2017, pursuant to Federal Rule of Civil Procedure 55(a). (Entry of Default(Dkt. 8).) On July 7, 2017,Plaintiff moved the court to enter defaultjudgment(the "Motion"). (Mot.) In support ofthe Motion,Plaintiff annexed a copy ofthe promissory note that forms the basis for the present claim (the "Promissory Note").^ (Ex.2 to Mot.("Promissory Note")(Dkt. 9-3).) Of note, the Promissory Note does not list the loan or disbursement amounts. (Id.) Defendant neither responded to the complaint nor requested additional time to respond. II. DISCUSSION Before the court is Plaintiffs motion for defaultjudgment seeking relieffor Defendant's alleged failure to pay back student loans. Defendant has not moved or responded to the allegations, and the clerk has entered a notation of default. Plaintiffs allegations, accepted as true, establish a legitimate cause of action entitling Plaintiffto relief. Plaintiff has not filed sufficient documentation on which to base an award of damages, however, and so the court refers this matter to Magistrate Judge Robert M.Levy for an inquest and Report and Recommendation regarding damages. A. Liability The Federal Rules of Civil Procedure have prescribed procedural steps for entering a defaultjudgment. Fed. R. Civ. P. 55. The procedure "following a defendant's failure to plead or defend as required by the Rules begin[s] with the entry of default by the clerk upon a plaintiffs request." Meehan v. Snow.652 F.2d 274,276(2d Cir. 1981) tner curiam). Federal Rule of Civil Procedure 55(a) states that "[wjhen a party against whom ajudgment for affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by ^ Plaintiff also appended a copy ofthe process server's bill to the Motion. (Ex. 3 to Mot.(Dkt. 9-4).) 3 affidavit or otherwise, the clerk must enter the party's default." Fed. R. Civ. P. 55(a). Once the clerk has entered default, pursuant to Rule 55(c), the defendant has an opportunity to move to have the default set aside. Meehan,652 F.2d at 276. If the defendant fails to do so or the motion is unsuccessful,judgment by default may be entered by the court pursuant to Rule 55(b)(2). Id. When deterrniiiing whether to enter defaultjudgment in the first instance,the court is guided by the same factors that apply to a motion to set aside entry of default. Enron Oil Corp. V. Diakuhara. 10 F.3d 90,96(2d Cir. 1993); Pecarskv v. Galaxiworld.com, Ltd., 249 F.3d 167,170-71 (2d Cir. 2001). These factors are "(1) whether the defendant's default was willful; (2) whether the defendant has a meritorious defense to plaintiffs claims; and(3)the level of prejudice the non-defaulting party would suffer as a result ofthe denial of the motion for default judgment." Mason Tenders Dist. Council v. Puce Constr. Corp., No.02-CV-9044(LTS) (GWG),2003 WL 1960584, at * 2(S.D.N.Y. Apr. 25,2003) (citation omitted): see also Basile V. Wiggs,No.08-CV-7549(CS) (GAY),2009 WL 1561769, at *4(S.D.N.Y. May 29,2009) (listing factors for court's consideration including defaulting party's bad faith,"possibility of prejudice to the plaintiff, the merits ofthe plaintiff['s] substantive claim, the sufficiency ofthe complaint, the sum at stake,[and] whether the default was due to excusable neglect")(second alteration in the original)(quoting Feelv v. Whitman Corp.. 65 F. Supp. 2d 164,171 (S.D.N.Y. 1999)). As to the first factor, the failure by Defendant to respond to the complaint sufficiently demonstrates willfulness. See, e.g.. Indvmac Bank v. Naf1 Settlement Agencv. Inc.. No. 07- CV-6865(LTS) (GWG),2007 WL 4468652, at * 1 (S.D.N.Y. Dec.20, 2007). Defendant has not attempted to defend herselfin the present action, nor did she request an extension oftime to respond to the complaint. Based on its review ofthe docket, the court concludes that Defendant has had sufficient notice ofthe present litigation. Plaintiff has demonstrated that Defendant was properly served with the summons and complaint. (Aff. of Service.) On May 31,2017,a true copy ofthe summons and complaint was left with a person ofsuitable age and discretion at Defendant's residence. (Id.) A copy ofthe summons and complaint was also mailed to Defendant on June 1,2017. (Id.) On July 10, 2017,Plaintiff served the instant motion for defaultjudgment and supporting papers, by post, at the residence ofDefendant. (Ex. 5 to Mot. ("Martsenyuk Aff.")(Dkt. 9-5).) A review ofthe docket therefore establishes that Defendant has willfully failed to plead or defend her interest in this action. As to the second factor—^whether Defendant has a meritorious defense—^the court concludes that Defendant's failure to present a de^nse precludes the court from finding in Defendant's favor. The court is unable to determine whether there is a meritorious defense to Plaintiffs allegations because Defendant has presented no such defense to the court. Following default, the court must accept the factual allegations ofthe complaint as true. Chen v. Jenna Lane. Inc.. 30 F.Supp. 2d 622,623(S.D.N.Y. 1998). Taking the allegations presented here as true, the court sees no meritorious defense and so concludes that the second factor favors granting defaultjudgment. The final factor the court must consider is whether the non-defaulting party would be prejudiced ifthe motion for default were denied. In this case, denying defaultjudgment would be prejudicial to Plaintiff"as there are no additional steps available to secure reliefin this Court." Bridge Oil Ltd. v. Emerald Reefer Lines, LLC.No. 06-CV-14226(RLC) (RLE),2008 WL 5560868, at *2(S.D.N.Y. Oct. 27, 2008). Accordingly,the court fmds that this factor, too, favors granting defaultjudgment. Additionally, the court finds that the complaint's allegations regarding Defendant's failure to make payments in connection with the loan, which have been admitted in light of Defendant's default, establish Defendant's liability. "Upon entry of defaultjudgment,the Court accepts as true all ofthe facts alleged in the complaint." J & J Snort Prods, v. M & J Wins. Inc.. No.07-CV-6019(RJH), 2009 WL 1107742, at *1 (S.D.N.Y. Apr. 23,2009)(citing AuJta Pain Corp. v. Artect. Inc.. 653 F.2d 61,65(2d Cir. 1981)). In determining whether to issue a defaultjudgment,the court has the "responsibility to ensure that the factual allegations, accepted as true, provide a proper basis for liability and relief." Rolls-Rovce pic v. Rolls-Rovce USA. Inc.. 688 F.Supp.2d 150, 153(E.D.N.Y. 2010)fciting Au Bon Pain Corp. v. Atect. Inc.. 653 F.2d 61,65(2d Cir. 1981)). In other words, a party in default does not admit conclusions oflaw, and the court must determine whether the facts, accepted as true, constitute a legitimate cause of action. Rolls-Rovce pic, 688 F.Supp.2d at 153 (citation omitted). Here,Plaintiff alleges that Defendant has failed to pay amounts due under a loan held by Plaintiff, and provides both the promissory note (Ex.2 to Mot.(Dkt. 9-3)) and the Certificate (Compl. at ECF p.3)to substantiate this claim for relief. Such evidence can constitute sufficient proofthat a defendant has defaulted on his student loan debt. E.g.. United States v. Terrv. No. 08-CV-3785(DRH) (ETB),2009 WL 4891799(E.D.N.Y. Dec. 11,2009)(finding that promissory note and Certificate ofIndebtedness from U.S. Department ofEducation sufficient to hold defendant liable). As all three factors have been met, and Plaintiffs allegations as set forth in the complaint are sufficient to establish Defendant's liability, the court concludes that entry of defaultjudgment against Defendant is warranted. B. Damages While the court finds that the complaint establishes Defendant's liability to Plaintiff for unpaid amounts under the loan, it cannot ascertain an amount of damages. "While a party's default is deemed to constitute a concession of all well pleaded allegations of liability, it is not considered an admission ofdamages." Greyhound Exhibitgroup. Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158(2d Cir. 1992): see also Flaks y. Koegel, 504 F.2d 702,707(2d Cir. 1974). The court has an independent obligation to assess requests for damages, which "usually must be established by the plaintiffin an eyidentiary proceeding in which the defendant has the opportunity to contest the amount." Greyhound Exhibitgroup. 973 F.2d at 158; see also Fed. R. Ciy. P. 55(b)(2)(proyiding that "the court may conduct... a hearing" to determine the amount of damages on defaultjudgment). The court finds that Plaintiff has proyided insufficient eyidence upon which to base an award ofdamages. Plaintiff has failed to proyide the court with a document containing both the borrower's signature and the amount ofthe loan applied for and disbursed, without which the court cannot determine the amount of damages with reasonable certainty. Cf.. e.g.. United States y. Linn. No. lO-CV-5289(KAM),2011 WL 2848208, at *1 (E.D.N.Y. July 14, 2011)(noting that the court required the plaintiff to "proyide a document containing both the borrower's signature and eyidence ofthe amoimt ofthe loan" as part ofits damages inquiry). Therefore, pursuant to 28 U.S.C. § 636(b)(1)(B)and Federal Rule of Ciyil Procedure 72(b)(1), the court refers this matter to Magistrate Judge Robert M.Leyy for an inquest and Report and Recommendation regarding damages, including any awards ofinterest, attorneys' fees, or costs, m. CONCLUSION Plaintiffs Motion for Default Judgment is GRANTED as to Defendant's liability under the Promissory Note. Pursuant to 28 U.S.C. § 636(b)(1)(B) and Federal Rule of Ciyil Procedure 7 72(b)(1), the court refers this matter to Magistrate Judge Robert M.Levy for an inquest and Report and Recommendation regarding damages, including and awards of interest, attomeys' fees, or costs. SO ORDERED. s/Nicholas G. Garaufis Dated: Brooklyn, New York October*^,2017 NICHOLAS G. GARAUHIS United States District Judge

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