United States of America v. Mance
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)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
UNITED STATES OF AMERICA,
MEMORANDUM & ORDER
SHONDELL A. MANCE
a/k/a SHONDELL MANCE,
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.
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:
(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.
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.
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.
The Federal Rules of Civil Procedure have prescribed procedural steps for entering a
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).)
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.
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
(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
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-
(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
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)
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
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.
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."
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,
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
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.
s/Nicholas G. Garaufis
Dated: Brooklyn, New York
NICHOLAS G. GARAUHIS
United States District Judge
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