Bowen et al v. Stephenson et al

Filing 21

SUMMARY ORDER - That plaintiffs motion for default judgment (Dkt. No. 13) is GRANTED IN PART and DENIED IN PART. That the Clerk is directe to enter judgment against Timothy F. Stephenson and Stephenson & Associates, LLC, in the amount of $245,000, plus $108,738.80, and $60.41 per diem from May 5, 2014 until judgment is entered, in prejudgment interest. Signed by Chief Judge Gary L. Sharpe on 11/20/2014. (jel, )

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
_________________________________
JOYCE A. BOWEN et al.,
Plaintiffs,

1:14-cv-229
(GLS/RFT)

v.
TIMOTHY F. STEPHENSON et al.,
Defendants.
_________________________________
SUMMARY ORDER
Plaintiffs Joyce A. Bowen, Sheila Cran-Barry, Barbara K. Mills, and
Bonnie C. Vandevender commenced this action against defendants
Timothy F. Stephenson, Stephenson & Associates, LLC (S&A), and
Kathleen M. Boyd, alleging breach of contract and fraud claims related to
an allegedly fraudulent real estate investment scheme. (See generally Am.
Compl., Dkt. No. 4.) Pending is plaintiffs’ motion for default judgment
against Stephenson and S&A. (Dkt. No. 13.) For the reasons that follow,
the motion is granted.
Briefly, the background of the instant action is as follows. In early
2008, Stephenson, through his company, S&A, engaged in a scheme to
seek investors for “a project to develop affordable houses on a parcel of
land in Schaghticoke, NY.” (Am. Compl. ¶¶ 1-2.) Stephenson, personally

and by way of an agent, told potential investors that S&A would use their
investments to purchase and develop a parcel of real property in the area,
and that, in exchange, investors would receive security interests in the
property in the form of duly recorded notes and mortgages. (Id. ¶ 4.)
Plaintiffs here invested a total of $245,000, and each received a
“Note and Mortgage,” signed by Stephenson on behalf of S&A, in which
S&A agreed to repay the invested amount, with interest, and convey an
interest in the property to the investors as security for the repayment. ( Id.
¶ 6; Dkt. No. 4 at 30-34, 37-41, 44-48, 51-55.) Each agreement provided
that interest was to be paid “every six months . . . until such time that the
note is terminated.” (Dkt. No. 4 at 30, 37, 44, 51.) The agreements further
stated that S&A “warrants the title to the [p]roperty,” and that the investors
“may declare the full amount of the [d]ebt to be due and payable
immediately for any default,” which includes the “fail[ure] to make any
payment required by this Note and Mortgage within [thirty] days of the date
it is due.” (Id. at 32-33, 39-40, 46-47, 53-54.) In addition, the notes
provided that “reasonable attorney’s fees” and “legal interest” would be due
to plaintiffs in the event of a breach of the agreement. (Id. at 33, 40, 47,
54.)
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S&A made the first of its required interest payments pursuant to the
agreements, but subsequently defaulted on all of the notes. (Am. Compl.
¶ 8.) Further, S&A did not in fact own the land in which it purported to
convey a legal interest to plaintiffs. (Id. ¶¶ 87-89.)
On March 4, 2014, after unsuccessful attempts to recover the
amounts invested with S&A, which total $245,000, (id. ¶¶ 111-121; Dkt. No.
13, Attach. 2 ¶ 7), plaintiffs commenced this action, (see generally Am.
Compl.). Stephenson and S&A were served with process on March 14.
(Dkt. Nos. 5, 6.) However, neither Stephenson nor S&A has yet filed an
appropriate responsive pleading or otherwise appeared in this action, and
the time to do so has expired. See Fed. R. Civ. P. 12(a). On April 3,
plaintiffs filed a request for entry of default against both Stephenson and
S&A, pursuant to Federal Rule of Civil Procedure 55 and Local Rule 55.1,
(Dkt. No. 9), which the Clerk entered on April 4, (Dkt. No. 10). Plaintiffs
now move for a default judgment against Stephenson and S&A, seeking:
(1) “the entire aggregate principal balance of $245,000 [that] is due and
owing to plaintiffs”; (2) prejudgment interest; and (3) a total of $9,642.86 in
costs and attorneys’ fees. (Dkt. No. 13, Attach. 2 ¶¶ 9-11, 15.)
Stephenson and S&A still have not responded.
3

“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, Inc. v. E.L.U.L. Realty Corp., 973
F.2d 155, 158 (2d Cir. 1992). “Damages[ ] which are neither susceptible of
mathematical computation nor liquidated as of the default, usually must be
established by the plaintiff in an evidentiary proceeding in which the
defendant has the opportunity to contest the amount.” Id. In determining
the propriety of damage claims, however, a hearing is not required where
the court is able to “rely on detailed affidavits or documentary evidence . . .
to evaluate the proposed sum.” Fustok v. ContiCommodity Servs., Inc.,
873 F.2d 38, 40 (2d Cir. 1989). Upon a review of plaintiffs’ unopposed
submissions and calculations, the court finds that their claim for damages
is supported.
In support of their motion, plaintiffs submitted an affidavit, and
attached copies of the notes and mortgages at issue, and recording pages
for the real property in which they purportedly received a security interest.
(Dkt. No. 13, Attach. 2; Dkt. No. 13, Attach. 3 at 30-57.) These documents
indicate that plaintiffs tendered a total of $245,000 to S&A, as part of an
agreement in which they were supposed to receive semi-annual interest
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payments. (Dkt. No. 13, Attach. 3 at 30-57.) Accordingly, plaintiffs are
collectively entitled to the $245,000 paid as principal.
Plaintiffs also seek prejudgment interest pursuant to N.Y. C.P.L.R.
§ 5004. (Dkt. No. 13, Attach. 2 ¶ 11.) In diversity cases such as this one,
the award of prejudgment interest is a substantive issue, which, in this
case, is governed by New York law. See Gov’t Emps. Ins. Co. v. IAV Med.
Supply, Inc., No. 11-CV-4261, 2013 WL 764735, at *8 (E.D.N.Y. Feb. 8,
2013). Section 5001 of the New York Civil Practice Law and Rules
provides, in pertinent part, that “[i]nterest shall be recovered upon a sum
awarded because of a breach of performance of a contract.” N.Y. C.P.L.R.
§ 5001(a); see, e.g., J. D’Addario & Co., Inc. v. Embassy Indus., Inc., 20
N.Y.3d 113, 117-18 (2012). Courts ordinarily apply a statutory interest rate
of nine percent per annum in determining prejudgment interest under New
York law. See N.Y. C.P.L.R. § 5004. Under § 5001(b), “[i]nterest shall be
computed from the earliest ascertainable date the cause of action existed.”
N.Y. C.P.L.R. § 5001(b).
Here, plaintiffs’ causes of action existed, and they thus seek
prejudgment interest, beginning on the date the contracts were breached.
(Dkt. No. 13, Attach. 2 ¶¶ 11-12.) In this case, “the date of the breach was
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one year after the date each of the notes was signed—i.e., the date on
which [S&A] failed to make its second schedule[d] interest payment.” 1 (Id.
¶ 11.) Because of the variations in the amounts of the principal invested by
each plaintiff here, as well as the differing dates on which they signed their
respective notes with S&A, the accrued prejudgment interest 2 amount
varies by plaintiff. For Bowen, the amount of prejudgment interest that
accrued between July 17, 2009—one year after her note was signed, and
thus when the second interest payment was due to her—and May 5,
2014—the date plaintiffs filed their motion for default—on her principal
amount of $40,000, totals $17,277.53. For Cran-Barry, the amount of
prejudgment interest between June 6, 2009 and May 5, 2014 on her
principal amount of $75,000 totals $33,161.30. For Mills, the amount of
prejudgment interest between May 27, 2009 and May 5, 2014 on her
principal amount of $30,000 totals $13,334.18. For Vandevender, the
amount of prejudgment interest between May 6, 2009 and May 5, 2014 on
her principal amount of $100,000 totals $44,965.07.

1

Because the notes for each plaintiff were signed on different dates, the date of breach
varies by plaintiff, as follows: for Bowen, July 17, 2009, (Dkt. No. 4 at 51); for Cran-Barry, June
6, 2009, (id. at 30); for Mills, May 27, 2009, (id. at 44); and for Vandevender, May 6, 2009, (id.
at 37).
2

Interest equals principal times rate times time.

6

Plaintiffs are thus entitled to $245,000, plus $108,738.08 in
prejudgment interest accrued as of May 5, 2014, the date plaintiffs’ motion
for default was filed, plus $60.41 per diem 3 from May 5, 2014 until
judgment is entered, in prejudgment interest under N.Y. C.P.L.R. § 5001.
Lastly, with respect to plaintiffs’ request for costs and attorneys’ fees,
(Dkt. No. 13, Attach. 2 ¶¶ 14-15), plaintiffs have submitted time and
expense entries purporting to demonstrate the work performed on this case
by plaintiffs’ attorney, Philip Wellner, at a rate of $275 per hour, and a
paralegal, Kristina Jensen, at a rate of $75 per hour. (Dkt. No. 13, Attach.
6.) However, in his affidavit in support of the motion for default, Wellner
simply states that his hourly rate “is reasonable,” with no explanation. (Dkt.
No. 13, Attach. 2 ¶ 15.) Further, his submitted time entries are all simply
labeled “Mortgage Default” and do not give the court any idea of the work
performed on this matter. (Id.)
“In order to award attorney’s fees . . . the [c]ourt needs information
enabling it to determine whether the requested hourly rate is ‘presumptively
reasonable’” given the nature of the case and the work performed, the
3

This figure represents the sum of the per diem to which each plaintiff is entitled,
according to her respective principal amount, at an annual interest rate of 9%. Broken down,
the amounts are as follows: $9.86 per diem to Bowen; $18.49 per diem to Cran-Barry; $7.40
per diem to Mills; $24.66 per diem to Vandevender.

7

status, experience, and/or expertise of the individual performing the work,
and “the prevailing rates of similarly-situated attorneys in the relevant legal
community.” A. Duda & Sons, Inc. v. Oswego Growers & Shippers, Inc.,
No. 5:07-CV-376, 2008 WL 4426607, at *1 (N.D.N.Y. Sept. 24, 2008)
(quoting Arbor Hill Concerned Citizens Neighborhood Ass’n v. County of
Albany, 522 F.3d 182, 192-93 (2d Cir.2008)). Further, “[a]pplications for
fee awards should generally be documented by contemporaneously
created time records that specify, for each attorney, the date, the hours
expended, and the nature of the work done.” Dotson v. City of Syracuse,
No. 5:04-CV-1388, 2014 WL 1764494, at *3 (N.D.N.Y. Apr. 30, 2014)
(citing Kirsch v. Fleet Street, Ltd., 148 F.3d 149, 173 (2d Cir.1998)).
“Where descriptions of work done are vague and ambiguous, the [c]ourt
cannot assess the reasonableness of the entries.” Id. Given that Wellner’s
request for attorneys’ fees is supported only by his vague and generic time
entries, and his conclusory assertion that his hourly rate is reasonable, he
has not demonstrated entitlement to his requested fee, and his request is
therefore denied. See Jimico Enters., Inc. v. Lehigh Gas Corp., No.
1:07-CV-0578, 2014 WL 1239030, at *5 (N.D.N.Y. Mar. 25, 2014) (“[T]he
fee applicant bears the burden of documenting the hours reasonably
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expended and the reasonable hourly rates.”) However, Wellner may renew
his request for attorneys’ fees, with a properly filed motion containing
further information as described above.
ACCORDINGLY, it is hereby
ORDERED that plaintiffs’ motion for default judgment (Dkt. No. 13) is
GRANTED IN PART and DENIED IN PART as indicated below; and it is
further
ORDERED that the Clerk is directed to enter judgment against
Timothy F. Stephenson and Stephenson & Associates, LLC, in the amount
of $245,000, plus $108,738.80, and $60.41 per diem from May 5, 2014
until judgment is entered, in prejudgment interest; and it is further
ORDERED that plaintiffs’ request for costs and attorneys’ fees is
DENIED with leave to renew; and it is further
ORDERED that the Clerk provide a copy of this Summary Order to
the parties.
IT IS SO ORDERED.
November 20, 2014
Albany, New York

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