United States of America v. Mance

Filing 34

ORDER ADOPTING REPORT AND RECOMMENDATIONS, The court finds no clear error in Judge Bulsara's thorough and well reasoned R&R and hereby AFFIRMS and ADOPTS the R&R in its entirety as the opinion of the court. Accordingly, the United States' Motion for Default Judgment (Dkt. 27) is GRANTED, and relief is awarded in accordance with the R&R. So Ordered by Judge Nicholas G. Garaufis on 3/6/2020. (fwd'd for jgm) (Lee, Tiffeny)

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK
-X

D/F

UNITED STATES OF AMERICA,

Plaintiff,
ORDER

-against17-CV-2902(NGG)(SJB)
SHONDELL A. MANCE a/k/a SHONDELL
MANCE,
Defendant.
-X

NICHOLAS G. GARAUFIS, United States District Judge.
The United States of America ("United States" or "PlaintifP') commenced the instant

action to recover the amounts owed by Defendant ShondeU Mance on Mance's defaulted

student loan.(Compl.(Dkt. 1).) The court initially granted Plaintiffs first motion for default
judgment and referred the case for an inquest on damages,see United States v. Mance, No.
17-CV-2902, 2017 WL 4857566, at *1 (E.D.N.Y. Oct. 24,2017), but, after several filings and

a hearing, Plaintiff withdrew its motion for defaultjudgment and filed an Amended
Complaint.(Dkt. 21.) Mance failed to respond to the Amended Complaint, and the Clerk
entered a certificate of default (Clerk's Entry of Default (Dkt. 26).) Plaintiff filed a new

motion for defaultjudgment(Dkt. 27), which the court referred to Magistrate Judge Sanket
J. Bulsara for a report and recommendation ("R&R").(Apr. 19, 2019 Order Referring Mot.)
Judge Bulsara issued the annexed R&R on January 16,2020,recommending the court grant
PlaintifPs motion and award damages.

The court assumes familiarity with the facts of the instant action as thoroughly set
forth in Magistrate Judge Bulsara's R&R.(See R&R at 2-8.) The R&R notified Mance of his
right to file written objections under 28 U.S.C. § 636(b)(1) and Federal Rule of Civil
Procedure 72(b). (Id. at 19.) The statutory period for filing objections has now expired, and
no objections to Judge Bulsara's R&R have been filed.

In reviewing a report and recommendation, the district court"may accept, reject, or

modify, in whole or in part, the findings or recommendations made by the magistrate." 28
U.S.C. § 636(b)(1)(C). Where no party has objected, the district court"need only satisfy
itself that there is no clear error on the face of the record." Jarvis v. N. Am. Globex Fund L.P.,

823 F. Supp. 2d 161,163 (E.D.N.Y. 2011)(citation omitted).

Upon review, the coiut finds no clear error in Judge Bulsara's thorough and wellreasoned R8cR and hereby AFFIRMS and ADOPTS the RSdR in its entirety as the opinion of
the court. Accordingly, the United States' Motion for Default Judgment(Dkt. 27) is
GRANTED, and relief is awarded in accordance with the R8dR.

SO ORDERED.

Dated:

Brooklyn, New York
March 6,2020

s/Nicholas G. Garaufis
[CHOLAS G. GARAUFIS

r

United States District Judge

REPORT AND RECOMMENDATION

BULSARA, United States Magistrate Judge:
The United States of America ("PlaintifP') commenced this action to recover the

amoimts ov^ed by Shondell Mance ("Mance") on Mance's defaulted student loan. (Compl.
dated May 12, 2017, Dkt. No. 1). After Mance did not appear or respond to the Complaint,
the Clerk of Court entered a certificate of default against Mance. (Entry of Default dated
June 30, 2017, Dkt. No 8). The Court granted Plaintiffs motion for defaultjudgment on

liability on the loan's promissory note and referred the case for an inquest on damages.
United States v. Mance, No. 17-CV-2902, 2017 WL 4857566, at *'1 (E.D.N.Y. Oct. 24, 2017).

After several additional filings and a hearing. Plaintiff withdrew its motion for default

judgment, the Clerk's entry of default was vacated, and Plaintiff filed an Amended
Complaint. (Min. Order dated June 5,2018; Am. Compl. dated June 15,2018, Dkt. No.
21). Mance then failed to respond to the Amended Complaint, and the Clerk entered a
certificate of default. (Entry of Default dated Aug. 2, 2018, Dkt. No. 26). Plaintiff filed a
new motion for defaultjudgment, which was referred to the undersigned in its entirety.

(Mot.for Default J. dated Apr. 18, 2018,Dkt. No. 27; Order Referring Mot. dated Apr. 19,
2019). For the reasons stated below, it is respectfully recommended that the motion be

granted and judgment be entered against Mance as indicated herein.
I.

FACTUAL BACKGROUND AND PROCEDURAL HISTORY

A.

Mance's Student Loan History

Mance obtained nine education loans between 1994 and 1997. (Decl. of Chad KeUer

dated Apr. 5,2018 ("Keller Decl. I"), Dkt. No. 18 22). Eight of the nine loans were issued
imder the Federal Family Education Loan Program ("FFELP"); the other was a Federal
Perkins Loan. (Zd. *119,10, 21, 32). Mance failed to make payment in accordance with the

terms of the promissory notes, and the FFELP loans were declared in default. (Id.
34). In September 1998, the Rhode Island Higher Education Assistance Authority,
1

32,33,

guarantor for the FFLEP loans, reimbursed the lenders and took ownership of these loans.
(Id. •[•134-42).

In May 2001, Mance applied for and secured a Direct Consolidation loan (the "2001
Direct Consolidation Loan")from the United States Department of Education ("DOE")

through the Direct Loan Consolidation Center, which operated under contract with the DOE.
(7d. •[ 45). Mance signed a promissory note dated May 12,2001, and returned the signature

page to the DOE. (Id. •[ 52). The funds disbursed for this 2001 Direct Consolidation Loan,
$37,924.62 as a subsidized loan and $7,761.48 as an unsubsidized loan, paid off the eight
FFELP loans, but not the Perkins Loan. (Id. •[ 56).

Mance also failed to make payment in accordance with the terms of the Perkins Loan,
which was reported in default on September 7,2002. (Id. •[•[ 43, 44).

In 2002, Mance applied for and secured another Direct Consolidation loan from the
DOE (the "2002 Direct Consolidation Loan"). (Id. •[ 57; Certificate of Indebtedness dated

June 6,2018 ("June 2018 Certificate of Indebtedness"), attached as Ex. A to Am. Compl.,
Dkt. No.21 at 1). Mance signed a promissory note dated July 1, 2002, and returned the

signature page to the DOE. (Keller Decl. I *\ 59; Promissory Note dated July 1,2002,
attached as Ex. O to Keller Decl I., Dkt. No 18 at 1). The 2002 Direct Consolidation Loan

included, and paid off, the 2001 Direct Consolidation Loan and the Perkins loan. (Keller
Decl. I •[•[ 64,67). On August 2, 2002,the 2002 Direct Consolidation Loan was disbursed as
a subsidized loan in the amount of $46,397.39 and an unsubsidized loan in the amoimt of
$8,190.82. (Id. •[•[ 64,66; June 2018 Certificate of Indebtedness at 1). The interest rate on
the loan was 6.75% per year. (June 2018 Certificate of Indebtedness at 1).
The DOE demanded repayment in accordance with the terms of the 2002 Direct
Consolidation Loan note, and Mance defaulted on this obligation on September 17,2009.

(Id.). Payments totaling $11,950.97 were credited to the balance of the 2002 Consolidation
Loan from all sources, and pursuant to 34 C.F.R. § 685.202(b), $13,778.23 in unpaid
interest due as of the default date was capitalized and added to the principal balance. (Id.).
2

As of June 6,2018, Mance owed Plaintiff $64,211.51 in principal and $41,343.43 in
interest, a total of $105,554.94. (Id.; Am. Compl. 15(A)). Interest on the principal accrues

at a rate of 6.75% per year, which is the equivalent of $11.87 per day. (See June 2018
Certificate of Indebtedness at 1; Keller Decl. ^ 70; Am. Compl.^4).

On May 3,2017, Mance was sent a demand letter warning of a civil lawsuit because
of Mance's default on the loan. (Decl. of Rhoda Terry dated Jan. 23,2018 CTerry Decl."),

Dkt. No. 14 *121; Letter from U.S. Dep't of Justice to ShondeU Mance dated May 3, 2017,
attached as Ex. H to Terry Decl, Dkt. No. 14 at 1).
II.

PROCEDURAL HISTORY

On May 12,2017,Plaintiff commenced this lawsuit. (Compl., Dkt. No. 1). The
Complaint alleged Mance owed Plaintiff $64,211.51 in principal and $36,703.81 in

capitalized interest through May 11, 2017,for a total of $100,915.32. (Id. 3). The
Certificate of Indebtedness dated April 26, 2017, attached to the Complaint, listed these
same amoimts as owed for a debt based on a promissory noted signed by Mance on April 5,

2000. (Certificate of Indebtedness dated Apr. 26, 2017, Dkt. No. 1 at 1). Mance was served
with the summons and Complaint on June 1, 2017, by leaving a copy witii a "Mrs. Mance"
at Mance's home in Jamaica, New York, and mailing a copy to the same address. (Aff. of

Service of Compl. dated June 1, 2017("Compl. Aff. of Service"), Dkt. No.6).
A.

The First Default Judgment Motion

On June 29, 2017, Plaintiff requested a certificate of default, which the Clerk of
Court entered the next day. (Request for Certificate of Default dated June 29, 2017, Dkt.
No. 7; Clerk's Entry of Default dated June 30,2017,Dkt. No 8). Plaintiff filed a motion for
defaultjudgment on July 10, 2017,(Mot.for Default J. dated July 10, 2017, Dkt. No. 9),
and the Honorable Nicholas G. Garaufis granted the motion as to liability on the promissory
note on October 24, 2017. Mance, 2017 WL 4857566, at *1. In his order granting the

defaultjudgment on liability. Judge Garaufis referred the matter to the Honorable Robert M.
Levy for an inquest and Report and Recommendation on damages because "Plaintiff ha[d]
3

failed to provide the court with a document containing both the borrower's signature and
the amotmt of the loan applied for and disbursed, without which the court [could ]not
determine the amount of damages with reasonable certainly." Id at *4.

The case was reassigned from Judge Levy to the undersigned on October 25,2017.
(Case Reassignment dated Oct. 25,2017).

On October 30, 2017,Plaintiff fQed a letter stating "that all papers necessary to make

a determination of damages and other relief sought in this matter [we]re annexed to the
Summons and Complaint... and [we]re contained in the PlaintifPs electronically filed
notice of motion for defaultjudgment and supporting papers[.]" (Letter from Michael T.
Sucher to the Hon. Robert M.Levy dated Oct. 30,2017, Dkt. No. 11). Attached to the letter
was a promissory note dated April 12, 2000. (Id.).

By order dated December 11,2017, this Court directed Plaintiff to supplement its
submissions with evidence of the principal balance and interest owed by Mance. (Order

dated Dec. 11,2017). While Plaintiff filed some supplemental documentation on December

27,2017,(Mem.in Supp. dated Dec. 27,2017), as of January 10,2018,"Plaintiff ha[d] not

yet provided, per Judge Garaufis's 10/24/2017 Order,'a document containing both the
borrower's signature and the amount of th.e loan applied for and disbursed, without which
the court cannot determine the amount of damages with reasonable certainty.'" (Order
dated Jan. 10, 2018).

Plaintiff filed a declaration by DOE loan analyst Rhoda Terry (the 'Terry

Declaration") that outlined Mance's loan history with supporting documents. (Terry Decl.
dated Jan. 23,2018, Dkt. No. 14). On February 15,2018, this Court issued an order noting
that the documents submitted with the declaration "raise[d] more questions than they

answer" and directed Plaintiff to attend a hearing on damages, provide support for its

damages inquest, and be "prepared to explain the relationship between a liabilityjudgment
based on an April 2000 document and the damages sought [.]" (Order dated Feb. 15, 2018,
Dkt. No. 15 at 5, 7).
4

Plaintiff then filed two declarations by DOE supervisory program and management

analyst Chad Keller (the "Keller Declarations"), along with a letter submission, in support of
the damages inquest. (Letter from Michael T. Sucher to the Hon. Sanket J. Bulsara dated
Apr. 5, 2018, Dkt. No. 17; Keller Decl. I; Decl. of Chad Keller dated Apr.5,2018 ("Keller
Decl. n"), Dkt. No. 19).

A damages hearing was held on June 5,2018. (Min. Order dated June 5, 2018). At

the hearing. Plaintiff agreed to withdraw its motion for defaultjudgment and file an
amended complaint—Plaintiffs counsel acknowledged that the date of execution of the

promissory note listed on the certificate of indebtedness attached to the original Complaint
(April 5,2000) was erroneous. (Tr. dated June 5,2018 ("June 5 Tr."), Dkt. No. 31 at 5:045:09).

B.

The Amended Complaint and Second Default Judgment Motion

An Amended Complaint was filed on June 15, 2018. (Am. Compl. dated June 15,

2018, Dkt. No. 21). The Amended Complaint seeksjudgment of $105,554.94 (the principal
of $64,221.51 and interest as of June 6,2018, of $41,343.43); prejudgment interest from
June 6, 2018, through the date ofjudgment at 6.75% per year; post-judgment interests,

pursuant to 28 U.S.C. § 1961; administrative costs; attorney's fees; and other relief. (Id.
•j 5). Attached to the Amended Complaint is a Certificate ofIndebtedness listing July 1,

2002, as the date of execution of the promissory note to secure a Direct Consolidation loan
from the DOE. (June 2018 Certificate of Indebtedness at 1). The loan to which the note
referred was disbursed for amotmts of $46,397.39 and $8,190.82 on August 2, 2002, at a

yearly interest rate of6.75% and was"made by the [DOE] under the William D. Ford
Federal Direct Loan Program tmder Tide IV,Part D of the Higher Education Act of 1965, as
amended 20 U.S.C. 1087a et seq.(34 C.F.R. Part 685)." (Id.). Per the Certificate of
Indebtedness, on September 17,2009, the DOE demanded payment according to the terms
of the note. (Id.). "Pursuant to 34 C.F.R. § 685.202(b), a total of $13,778.23 in unpaid

interest was capitalized and added to the principal balance." (Id.). The Certificate of
5

Indebtedness claims Mance owed the same amount listed as those alleged in the Amended

Complaint: a total of $105,554.94 as of June 6, 2018, $64,211.51 of which is unpaid
principal and $41,343.43 is impaid interest. (Id).
Mance was served vwth the Amended Complaint on June 26, 2018,by leaving a copy
of the summons and Amended Complaint with "Mrs. Mance" who was beheved to be a

"Family Relative" at Mance's home address in Jamaica, New York. (Aff. of Service of Am.

Compl. dated July 31,2018("Am. Compl. Aff. of Service"), Dkt. No. 24 at 1). A copy of the
same was mailed to Mance at the same address. (Id.).

Plaintiff requested a certificate of default and default was entered on August 2, 2018,

because Mance had still not appeared and failed to defend the action after the filing of the

Amended Complaint. (Request for Certificate of Default dated July 31,2018, Dkt. No. 25;
Clerk's Entry of Default dated Aug. 2, 2018, Dkt. No. 26).

Eight months later, after Plaintiff had not acted, the Court directed Plaintiff to file

any motion for defaultjudgment. (Order dated Apr. 9, 2019). Plaintiff filed a motion for
defaultjudgment as to the Amended Complaint (the "Motion"),(Mot.for Default J. dated

Apr. 18, 2019, Dkt. No. 27), and Judge Garaufis referred the Motion to the undersigned,
(Order Referring Mot. dated Apr. 19, 2019). A supporting memorandum of law, as required
by Local Rule 7.1(a)(2), was filed on November 12,2019. (Mem.in Supp. dated Nov. 12,
2019 ("PL's Br."), Dkt. No. 30). The Motion is compliant with Local Rule 55.2 for motions
for defaultjudgment.

The Motion seeks the entry ofjudgment on liability as to the 2002 Direct

Consolidation Loan and an award of damages in "the sum of $64,211.51 in principal,

together with interest of $47,563.31 through November 12,2019, plus costs for service of
process in the sum of $77.08, totaling $111,851.90, plus additional per diem interest at
$11.87 per day for each day after November 12,2019 through the date ajudgmenf is
entered. (PL's Br. at 7-8). For the reasons stated below, it is respectfully recommended that
the Motion be granted and judgment be entered as indicated below.
6

III.

DISCUSSION

Rule 55 of the Federal Rules of Civil Procedure establishes a two-step process for

obtaining a defaultjudgment. See Shariffv. Beach 90th St. Realty Corp., No. ll-CV-2551,
2013 WL 6835157, at *3 (E.D.N.Y. Dec. 20, 2013)(adopting report and recommendation).

First,"[w]hen a party against whom ajudgment for affirmative relief is sought has failed to

plead or otherwise defend, and that failure is shown by affidavit or otherwise, the clerk must

enter the party's default." Fed. R. Civ. P. 55(a). Second, after default has been entered, and
a defendant fails to appear or move to set aside the default under Rule 55(c), the Court

may, on Plaintiffs motion, enter a defaultjudgment against that defendant. Fed. R. Civ. P.
55(b)
(2). The Clerk entered default against Mance on August 2, 2018. (Clerk's Entry of
Default dated Aug. 2, 2018, Dkt. No. 26).
A.

Entry of Default Judgment

A threshold question before reaching liability or damages is whether Mance's conduct
is sufticient to warrant defaultjudgment being entered. In determining whether to enter a

defaultjudgment, the Court is guided by the same factors that apply to a motion to set aside
an entry of a default. See Enron Oil Corp. v. Diakuhara, 10 F.3d 90,96(2d Cir. 1993);

Pecarskyv. 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 of the denial of the motion for defaultjudgment." Mason Tenders Dist.
Council V. Duce Constr. Corp., No.02-CV-9044, 2003 WL 1960584, at *2(S.D.N.Y. Apr. 25,
2003).

As to the first factor, the failure by Mance to respond to the Amended Complaint
sufficiently demonstrates -willfulness. See, e.g.,Indymac Bank v. Natfl Settlement Agency, Inc.,
No.07-CV-6865, 2007 WL 4468652, at *1 (S.D.N.Y. Dec. 20, 2007). Mance has not

attempted to defend the present action, nor has Mance requested an extension of time to

respond to the Amended Complaint. Based on its review of the docket, the Court concludes
7

that Mance has had sufficient notice of the present litigation. Plaintiff has demonstrated
that Defendant was properly served all required papers. First, on May 31, 2017, a true copy

of the summons and Complaint was left with a person of suitable age and discretion at

Mance's residence.^ (Compl. Aff. of Service at 1). An additional copy of the summons and

original Complaint was also mailed to Mance on June 1,2017. (Id.). On July 10,2017,
Plaintiff served the first motion for defaultjudgment and supporting papers by mailing them
to Mance's last known residence. (Aff. of Service of Mot. for Default J., attached as Ex. 5 to

Mot., Dkt. No.9 at 1). The same is true for the Amended Complaint and second motion for
defaultjudgment. On June 26, 2018, a copy of the summons and Amended Complaint was

left with a person of suitable age and discretion at Mance's residence. (Am. Compl. Aff. of
Service at 1). A copy of the same was mailed to Mance on June 27,2018. (Id.). On April
22,2019,the second motion for defaultjudgment and supporting papers were mailed to
Mance. (Aff. of Service of Mot. for Default J. dated Apr. 22, 2019, Dkt. No. 29 at 1). Mance

has willfully failed to plead or defend any interest in this action. See, e.g.. United States v.

Afyers, 236 F. Supp. 3d 702,707(E.D.N.Y. 2017) CThe instant motion was mailed to ... the
same address where [defendant] was served with the Summons and Amended

Complaint

Defendant has not responded to the Government's motion for default

judgment nor appeared in anyway in this action. Defendant's failure to answer the
Amended Complaint and to respond to the iastant motion demonstrates willfulness under
existing case law.").
As to the second factor—whether Mance has a meritorious defense—^the Court

cannot conclude there is any meritorious defense to PlaintifFs allegations because Mance has

not appeared and no defense has been presented to the Court. See, e.g.,IndyMac Bank,
2007 WL 4468652, at *1 (finding no meritorious defense where defendants had not

^ The address at which Mance was served with all documents described herein is the same address

in the underlying loan documents. (See "Debtor's Data Screen Capture," undated, attached as Ex.F to
Terry Decl., Dkt. No 14 at 1) Oisting Mance's biolographical and 2002 Direct Consolidation Loan
information).
8

presented such a defense to the Court); see also United States v. Hemberger, No. ll-CV-2241,
2012 WL1657192, at *2 (E.D.N.Y. May 7, 2012)(same). The defects in Plaintiffs previous

defaiiltjudgment applcation were not defenses for liability.^ 5ee Mance,2017 WL 4857566,
at *4("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.").
The third and final factor permits enry of defaultjudgment because the Court finds
that the non-defaulting party. Plaintiff, would be prejudiced if the motion for default were
denied in this case "as there are no additional steps available to secure relief in this Court."

Bridge Oil Ltd. v. Emerald Reefer LineSy LLC, No. 06-CV-14226,2008 WL 5560868, at *2
(S.D.N.Y. Oct. 27,2008), report and recommendation adopted,2009 U.S. Dist. LEXIS 6074
(Jan. 26, 2009).

As a result, all three factors permit entry of a defaultjudgment. The Court now turns
to the liability to be imposed.
B.

Liability

When a defendant defaults, a court, on consideration of a plaintifFs defaultjudgment

motion "is required to accept all of the [plaintifPs] factual allegations as true and draw all
reasonable inferences in its favor[.]" Finkel v. Romanowicz, 577 F.3d 79,84(2d Cir. 2009).

In addition, a party's default is deemed as an admission of all of well-pleaded allegations of
liabihty. See Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155,158 (2d.
Cir. 1992); Morales v. B&M Gen. Renovatbn Inc., No. 14-CV-7290, 2016 WL 1266624, at *2
(E.D.N.Y. Mar. 9,2016), report and recommendation adopted, 2016 WL 1258482(Mar. 29,
2016).

"Nevertheless, it remains for the court to consider whether the imchallenged facts

constitute a legitimate cause of action, since a party in default does not admit conclusions of

2 The Court has no basis to conclude Mance has any available "borrower defense."
See 20 U.S.C.§ loSyefg); 34 C.F.R. §§ 685.206,685.222.

law." Labarbera v. ASTCLabs. Inc., 752 F. Supp. 2d 263,270 (E.D.N.Y. 2010)(quotations

omitted); see also lOA Charles Alan Wright & Arthur R. Miller et al.. Federal Practice and
Procedure § 2688.1 (3d ed. 2017)("Once the default is established, defendant has no further

standing to contest the factual allegations of plaintiffs claim for relief. Even after default,
however,it remains for the court to consider whether the unchallenged facts constitute a

legitimate cause of action, since a party in default does not admit conclusions of law."
(foomote omitted)).

"In an action commenced by the DOE to collect funds due on an impaid student loan,

the DOE is entitled to judgment in its favor if it establishes that the defendant signed a

promissory note to secure the loan, the DOE issued the loan funds, the defendant defaulted
on the loan and the remaining amount due on the loan." United States v. Thomas, No. 16CV-6076,2017 WL 2656123, at *2(E.D.N.Y. June 19,2017)(collecting cases); see also
United States v. Ramdawah, No. 17-CV-7562,2018 WL 2225305, at *2(E.D.N.Y. Apr. 20,

2018)("PlaintifPs allegations in the complaint and the certificate ofindebtedness establish
Defendant's liability for unpaid [Direct Consolidation] student loan payments."), report and

recommendation adopted, 2018 WL 2224994(May 15, 2018). "The DOE may establish all of
the elements entitling it to a judgment if it includes facts alleging each element in its

complaint and provides the court with the promissory note the defendant executed and a
certificate of indebtedness." Thomas,2017 WL 2656123, at *2; see also United States v.

Williams, No. 17-CV-566,2017 WL 7052280, at *2(E.D.N.Y. Dec. 8, 2017)(finding liability
based on "Plaintiffs allegations in the complaint and the certificate of indebtedness"for a
Direct Consolidation loan), report and recommendation adopted, 2018 WL 581050 (Jan. 25,
2018); United States v. Pelt, No. ll-CV-06156, 2013 WL 1173898, at *6 (E.D.N.Y. Mar. 18,

2013)("In general, the United States may demonstrate the existence of student loans by

providing promissory notes and may demonstrate that the loans remain unpaid by providing
certificates of indebtedness.").

10

Here, Plaintiff has established each element necessary to collect on Mance's unpaid

student loan. Mance executed a promissory note to secure the 2002 Direct Consolidation

Loan,(Am. Compl. 14), and the DOE issued the loan funds,(June 2018 Certificate of
Indebtedness attached as Ex. A to Am. Compl. Dkt. No. 21 ("This loan was disbursed [.]"))•
Mance also failed to pay the amounts due imder a loan held by Mance,(Am. Compl. *14 4,

5), and Plaintiff has filed the Promissory Note signature page,^ signed on July 1,2002,

(Promissory Note dated July 1,2002, Ex.2 to Mot., Dkt. No. 27), and the Certificate of
Indebtedness for the "promissory note to secure a Direct Consolidation loan from" the DOE,
executed on July 1, 2002,(June 2018 Certificate ofIndebtedness). Such evidence is

sufficient proof that a defendant has defaulted on his student loan. Kg., United States v.

Teny, No.08-CV-3785,2009 WL 4891799 (E.D.N.Y. Dec. 11,2009)(adopting report and
recommendation)(finding that promissory note and Certificate ofIndebtedness from the
DOE sufficient to hold defendant liable). Thus, the Court recommends the entry of a default

judgment against Mance on liability for nonpayment of the 2002 Direct Consolidation Loan.
The Court now turns to the damages to be awarded in such ajudgment.
C.

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 of damages." Greyhound
Exhibitgroup, 973 F.2d at 158. "Although the default estabhshes a defendanfs hability,
unless the amount of damages is certain, the court is required to make an independent
3 The second declaration of Chad Keller states that"Mance returned the signature page only to"

DOE for a promissory note that"Mance signed...dated July i, 2002,"that allegedly"said 1 promise to
pay the[DOE]all sums...disbursed to discharge my priorloan obligations, plus interest, and other fees
that may become due as provided in this Note.'" An unsigned copy ofthe the standard promissory note
was filed. (Form ofPromissory Note,undated, attached as Ex.3to Mot.for Default J., Dkt. No.27).
Other courts have found this to be sufficient evidence ofthe required promissory note. See, e.g.,Student

LoanMktg.Ass'n v. Hanes,181 F.R.D.629,634 n.5(S.D. Gal. 1998)("Sallie Mae filed a copy ofthe
promissory note. However,the document included only the initial signature page,and not the additional
pages that provide many ofthe terms ofthe agreement. However,a complete copy ofthe Note was filed
as part ofthe HoUoway Declaration. No party has challenged the authenticity or completeness ofthe Note
as filed with the HoUoway Declaration."); see abo United States v. Cogan,No.13-CV-1263, 2014 WL
4635605, at *2(D. Nev.Sept. 12,2014)(citing certificates ofindebtedness and a promissory note
signature page as proofofstudent loan debt owed).
11

determination of the sum to be awarded." Grijfiths v. Francillon, No. lO-CV-3101,2012 WL

1341077,at *1 (E.D.N.Y. Jan. 30,2012)(alteration and quotations omitted). 'The court

must conduct an inquiry to ascertain the amount of damages with reasonable certainly." Joe
Hand Promotions, Inc. v. ElNorteno Rest Corp., No.06-CV-1878, 2007 WL 2891016, at *2

(E.D.N.Y. Sept. 28,2007)(citing Transatlantic Marine Claims Agency, Inc. v. Ace Shipping

Corp., 109 F.3d 105, 111 (2d Cir. 1992)). "Where,on a damages inquest, a plaintiff fails to
demonstrate its damages to a reasonable certainty, the court should decline to award any
damages,even though liability has been established through default." Lenard v. Design
Studio,889 F. Supp. 2d 518,527-28 (S.D.N.Y. 2012)(collecting cases).

The DOE provides Federal Direct Consolidation loans, and other Federal Direct loans,

pursuant to the William D.Ford Federal Direct Loan Program,Part D of the Higher
Education Act. See 20 U.S.C. § 1087a(b)(2). "Pursuant to the Higher Education Act of

1965,20 U.S.C. §§ 1071 etseq., the United States is entitled to the unpaid principal and
accrued interest on federally insured student loans in default." United States v. Defiris, No.
15-CV-2541,2016 WL 8711351, at *2(E.D.N.Y. Apr. 7, 2016)(citing 20 U.S.C. § 1091a

(b)(1))(quotations omitted), report and recommendation adopted, 2016 WL 8711196 (Sept.
30,2016). And "the Secretary of Education may require any borrower who has defaulted
on a loan made under the William D. Ford Federal Direct Loan Program to 'pay all
reasonable collection costs associated with such loan[.]'" United States v. Jones, No. 11-CV-

2869, 2015 WL 332115, at *2(E.D.N.Y. Jan. 23,2015)(quoting 20 U.S.C. §
1087e(d)(5)(A)-(B)). This includes "prejudgment interest and the costs of perfecting
service of the summons and complaint on a defendant-borrower." United States v.
Ramdawak, No. 17-CV-7562, 2018 WL 2225305, at *2(E.D.N.Y. Apr. 20,2018)(citing 20

U.S.C. § 1087e(d)(5)(A)), report and recommendation adopted, 2018 WL 2224994(May 15,

2018). 'The submission of[a Certificate of Indebtedness] along with evidence of costs of
service is sufficient to award both pre-judgment interests and costs of service, in addition to
the unpaid principal and accrued interest." Williams, 2017 WL 7052280, at *2.
12

The Motion seeks entry of ajudgment of $105,554.94 plus additional interest; that is,

the principal, inclusive of previously capitalized interest, of $64,221.51; interest as of June
6, 2018, of $41,343.43; prejudgment interest from June 6, 2018,through the date of

judgment at 6.75% per year; post-judgment interest pursuant to 28 U.S.C. § 1961; and the
cost of service of process of $77.08. (Aff. of Michael T. Sucher in Supp. of Mot.for Default
J. dated Apr. 18,2019 ("Aff. in Supp. of Mot."), Dkt. No. 27 •[•I 10,11; Am. Compl. «1«15(A)(D)). In support, the Motion references the Certificate of Indebtedness attached to the
Amended Complaint that lists July 1, 2002, as the date of execution of a promissory note to
secure a Direct Consolidation loan from the DOE; the KeUer Declarations, and the Terry

Declaration. (See PL's Br. at 4; Aff. in Supp. of Mot.^ 7; June 2018 Certificate of
Indebtedness at 1).

The Court initially declined to ascertain damages for the original Complaint,

explaining "Plaintiff has failed to provide the court with a document containing both the
borrower's signature and the amount of the loan applied for and disbursed, without which
the court cannot determine the amoimt of damages with reasonable certainty." Mance,

2017 WL 4857566, at *4. At a damages hearing, it was revealed that the papers filed in

support of this action contained an erroneous date of execution of the promissory note.
(June 5 Tr. at 5:04-5:09). Plaintiff has since filed papers that match the promissory note
execution date with the Certificate of Indebtedness, the subject of the allegations in the

Amended Complaint, and properly moved for defaultjudgment as to the debt reflected
therein.

The Certificate of Indebtedness, filed with the Amended Complaint, lists the same

principal and interest amounts as of June 8,2018, as the Amended Complaint. (June 2018
Certificate of Indebtedness at 1; Am. Compl.•I*!4(A)-(B)). The Certificate of Indebtedness

purports to be for a promissory note that was executed on July 1, 2002. (June 2018
Certificate of Indebtedness at 1). Unlike the Certificate of Indebtedness attached the

original Complaint, the one attached to the Amended Complaint corresponds with the
13

Promissory Note signature page attached to the Terry Declaration and attached to the
Motion: the signature date on the Promissory Note is the same as the promissory note
execution date listed on the Certificate of Indebtedness, namely, July 1,2002. (See

Promissory Note dated July 1,2002, attached as Ex.3 to Terry Decl., Dkt. No. 14;

Promissory Note dated July 1,2002, attached as Ex.2 to Mot., Dkt. No. 27). Thus, it is

respectfully recommended that Plaintiff be awarded the principal amount of $64,221.51,
and the amoimt of interest as of Jime 8,2018,listed in the Certificate of Indebtedness, of

$41,343.43. See, e.g.. United States v. Ballentine, No. 16-CV-6066, 2017 WL1653436, at *2

(E.D.N.Y. May 1,2017)("[P]laintiff has established, via a sworn certificate of indebtedness,
that defendant owes a principal balance of $15,439.97.... The Court orders that plaintiff be
awarded this amount. Next, plaintiff requests prejudgment interest

[T]he Court orders

an award of[the amount in the certificate of indebtedness.]")-

In addition. Plaintiff seeks to recover prejudgment interest accrued June 8,

2018,through the date ofjudgment at a rate of6.75% per year or $11.87 per day. (Am.

Compl. 5(B); PL's Br. at 7-8; June 2018 Certificate ofIndebtedness at 1 (providing that
the 2002 Direct Consolidation Loan was disbursed at 6.75% interest per annum));see also

20 U.S.C. § 1087e(b) (D)("[A]ny Federal Direct Consolidation loan for which the
(6)

application is received on or after February 1,1999, and before July 1, 2006, shall bear
interest at an annual rate on the unpaid principal balance of the loan that is equal to the

lesser of—(i) the weighted average of the interest rates on the loans consolidated, rounded

to the nearest higher one-eighth of one percent; or (ii) 8.25 percent"). Plaintiff calculated
interest to be $6,219.88 from Jime 8, 2018,to November 12,2019, the date it filed its
memorandum of law. This is an erroneous calculation of the actual interest that accrued

between these two dates. Five hundred and twenty-two days passed between the two dates,

and at a rate of $11.87 per day,$6,196.14 in interest accrued. Thus,$6,196.14 should be
awarded to Plaintifffor the time period of June 8,2018, to November 12,2019. In

addition. Plaintiff should be awarded $11.87 per day for each day between November 12,
14

2019, until the date judgment is entered. See, e.g., Ballentine, 2017 WL1653436, at *2

(awarding prejudgment interest based on interest rate listed in Certificate of Indebtedness
until the date ofjudgment).

Plaintiff also seeks post-judgment interest pursuant to 28 U.S.C. § 1961 from the date

of the entry ofjudgment imtil the judgment is paid. (Am. Compl. *15(C)). "An award of

post-judgment interest is appropriate in cases seeking the recovery of unpaid student loans."
Deftris, 2016 WL 8711351, at *3. In addition,"[i]t is appropriate to award post-judgment
interest in the context of a defaultjudgment." N.Y.C. Dist Council of Carpenters v. Trinity

Phoenix Constr. Corp., No. 17-CV-609, 2018 WL 1521862, at *6(E.D.N.Y. Jan. 10, 2018),
report and recommendation adopted, 2018 U.S. Dist. LEXIS 41194(Mar. 12,2018).
Accordingly, it is recommended that Plaintiff be awarded interest post-judgment interest
pursuant to 28 U.S.C. § 1961.^ See, e.g., United States v. Champion, No. 17-CV-605, 2018
WL 1033244, at *1 (E.D.N.Y. Feb. 20,2018)(adopting report and recommendation and
awarding post-judgment interest in student loan defaultjudgment).

Finally, Plaintfif requests $77.08 for service of process of the Amended Complaint,
and this amount is substantiated by an invoice. (See Aff. in Supp. of Mot.^ 10; Process

Server's Bill dated July 2,2018, attached as Ex.4 to Mot., Dkt. No.27 at 1). The cost of

perfecting service of process on a defendant-borrower is a reasonable collection cost. See
Williams, 2017 WL 7052280, at *2 (citing 20 U.S.C. § 1087e(d)(5)(A))(recommending

judgment be entered for a default on a Direct Consolidation loan in an amount including the
cost of perfecting service, which was supported by a receipt). Thus,the Court recommends
that $77.08 be awarded in costs. See, e.g., Thomas,2017 WL 2656123, at *3 (awarding
service costs in Federal Direct loan defaultjudgment).
* While the Amended Complaint requests "attorneys'fees to the extent allowable by law," the

Affirmation in Support ofthe Motion for Default Judgment,states"no request for legal fees is being made
herein." (Aff.in Supp. of Mot.II9). Thus, no attorney's fees should be awarded. See,e.g.,Defiris, 2016
WL 8711351, at *3("The complaint seeksjudgment including 'attorneys'fees to the extent allowed by
law
The defaultjudgment motion, however, contains no request for such recovery and provides no
support,such as contemporaneous time records,for an award of attorneys'fees
Accordingly,it is
recommended that no attorneys'fees or costs be awarded at this time.").
15

IV.

CONCLUSION

For the reasons stated above, it is respectfully recommended that defaultjudgment

be entered as to liability on the Amended Complaint and Plaintiff be awarded the following:
$105,554.94, which is the principal plus interest as of June 6, 2018;

Pre-judgment interest from June 6, 2018, through the date of the entry ofjudgment
at the rate of6.75% per year or $11.87 per day;

Post-judgment interest pursuant to 28 U.S.C. § 1961 at the rate from the date of
entry ofjudgment until the judgment is paid in full; and
Costs of $77.08, the cost of service of process.

Any objections to the Report and Recommendation above must be filed with the
Clerk of the Court within 14 days of receipt of this Report. Failure to file objections within

the specified time waives the right to appeal anyjudgment or order entered by the District
Court in reliance on this Report and Recommendation. See 28 U.S.C. § 636(b)(1); Fed. R.
Civ. P. 72(b)(2). Failure to file timely objections may waive the right to appeal the District
Court's order. See Caidorv. Onondaga Cty., 517 F.3d 601,604(2d Cir. 2008)("[Fjailure to

object timely to a magistrate [judge's] report operates as a waiver of any further judicial
review of the magistrate [judge's] decision.").

Plaintiff shall serve a copy of this Report and Recommendation on the

Defendant and file proof of such service in the record within two weeks of the date of this
Report.
/s/ SanketJ. Bulsara Jan. 16, 2020
SANKET J. BULSARA

United States Magistrate Judge

Brooklyn, New York

16