United States of America v. Anthony
Filing
17
MEMORANDUM-DECISION AND ORDER granting 12 Motion for Entry of Default: The Court hereby ORDERS that Plaintiff's motion for default judgment (Dkt. No. 12) is GRANTED; and the Court further ORDERS that damages are awarded in the following am ounts: (1) unpaid principal and prejudgment interest through October 5, 2018 of $8,783.94; and (2) post-judgment interest accruing at the statutory rates as discussed above; and the Court further ORDERS that Plaintiff's request for attor ney's fees and costs is DENIED without prejudice; and the Court further ORDERS that Plaintiff shall serve a copy of this Memorandum-Decision and Order on Defendant by Certified Mail, Return Receipt Requested, and file the returned receipt using the Court's electronic filing system; and the Court further ORDERS that the Clerk of the Court shall enter judgment in Plaintiff's favor and close this case. Signed by U.S. District Judge Mae A. D'Agostino on 10/5/2018. (ban)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
____________________________________________
UNITED STATES OF AMERICA,
Plaintiff,
vs.
3:18-CV-00541
(MAD/DEP)
CYNTHIA L. ANTHONY, also known as
Cynthia L. Castelli,
Defendant.
____________________________________________
APPEARANCES:
OF COUNSEL:
MEGGESTO, CROSSETT & VALERINO, LLP
313 East Willow Street
Suite 201
Syracuse, New York 13203
Attorneys for Plaintiff
GARY J. VALERINO, ESQ.
Mae A. D'Agostino, U.S. District Judge:
MEMORANDUM-DECISION AND ORDER
I. INTRODUCTION
On May 4, 2018, Plaintiff United States of America commenced this action alleging that
Defendant defaulted on a promissory note. See Dkt. No. 1. On June 21, 2018, Plaintiff made a
request for entry of default, which was entered by the Clerk of the Court that same day. See Dkt.
No. 9.
Currently before the Court is Plaintiff's motion for entry of a default judgment against
Defendant pursuant to Rule 55(b) of the Federal Rules of Civil Procedure.
II. DISCUSSION
A.
Standard of Review
"Generally, 'Federal Rule of Civil Procedure 55 provides a two-step process that the Court
must follow before it may enter a default judgment against a defendant.'" United States v.
Simmons, No. 5:10-CV-1272, 2012 WL 685498, *2 (N.D.N.Y. Mar. 2, 2012) (quotation omitted).
"'First, under Rule 55(a), when a party fails to "plead or otherwise defend . . . the clerk must enter
the party's default."'" Id. (quotation omitted); Fed. R. Civ. P. 55(a). "'Second, pursuant to Rule
55(b)(2), the party seeking default is required to present its application for entry of judgment to
the court.'" Id. (quotation omitted). "'Notice of the application must be sent to the defaulting
party so that it has an opportunity to show cause why the court should not enter a default
judgment.'" Id. (quotation omitted); Fed. R. Civ. P. 55(b)(2).
"When a default is entered, the defendant is deemed to have admitted all of the wellpleaded factual allegations in the complaint pertaining to liability." Bravado Int'l Group Merch.
Servs. v. Ninna, Inc., 655 F. Supp. 2d 177, 188 (E.D.N.Y. 2009) (citing Greyhound Exhibitgroup,
Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992)). "While a default judgment
constitutes an admission of liability, the quantum of damages remains to be established by proof
unless the amount is liquidated or susceptible of mathematical computation." Flaks v. Koegel,
504 F.2d 702, 707 (2d Cir. 1974) (citations omitted); see also Bravado Int'l, 655 F. Supp. 2d at
189-90 (citation omitted). "[E]ven upon default, a court may not rubber-stamp the non-defaulting
party's damages calculation, but rather must ensure that there is a basis for the damages that are
sought." Overcash v. United Abstract Group, Inc., 549 F. Supp. 2d 193, 196 (N.D.N.Y. 2008)
(citing Credit Lyonnais Sec. (USA), Inc. v. Alcantara, 183 F.3d 151, 155 (2d Cir. 1999)). "The
burden is on the plaintiff to establish its entitlement to recovery." Bravado Int'l, 655 F. Supp. 2d
at 189 (citing Greyhound Exhibitgroup, Inc., 973 F.2d at 158). "While 'the court must ensure that
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there is a basis for the damages specified in a default judgment, it may, but need not, make the
determination through a hearing.'" Id. at 190 (quotation omitted).
B.
Application
In the present matter, Plaintiff has established through its complaint and attached exhibits
that it is entitled to judgment in its favor. The complaint and summons were properly served on
May 14, 2018, see Dkt. No. 5, and Defendant has failed to answer the complaint or otherwise
appear in this matter. Plaintiff has complied with the requirements set forth in Local Rule 55.2(b)
to the extent required for the Court to grant Plaintiff's motion as to liability.1 As such, Defendant
has defaulted within the meaning of Rule 55(b)(2) of the Federal Rules of Civil Procedure and the
following factual allegations are deemed true for purposes of establishing liability. See United
States v. Beam, No. 6:12-CV-0087, 2012 WL 1802316, *2 (N.D.N.Y. May 17, 2012) (holding
that by failing to answer the plaintiff's complaint or respond to the motion, the defendant "has
effectively conceded" that he is subject to the terms of the promissory note, and is liable for the
money owed).
On or about February 22, 2000, Defendant executed a promissory note to secure a Direct
Consolidation loan from the U.S. Department of Education. See Dkt. No. 1-2 at 2. The loan was
disbursed for $3,947.69 on April 6, 2000 at 8.00 percent interest per annum. See id. The loan
was made under the William D. Ford Federal Direct Loan Program under Title IV, Part D of the
Local Rule 55.2 mandates that a party submitting a motion for entry of default judgment
must also submit "a statement showing the principal amount due, not to exceed the amount
demanded in the complaint, . . . a computation of the interest to the day of the judgment, a per
diem rate of interest, and the costs and taxable disbursements claimed." LOCAL RULES N.D.N.Y.
55.2(a). Also in accordance with Local Rule 55.2, an affidavit must be submitted stating that,
"[u]pon Plaintiff's information and belief, the defendant is neither an infant nor an incompetent
person requiring special service . . . and is not serving with the armed forces of the United States."
See Dkt. No. 7-1 at 1; LOCAL RULES N.D.N.Y. 55.2(a)(2).
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Higher Education Act of 1965. See id. Pursuant to 34 C.F.R. § 685.202(b), $719.33 in unpaid
interest was capitalized and added to the principal balance. See id. On October 22, 2012, the
U.S. Department of Education demanded payment according to the terms of the note, and
Defendant defaulted on the obligation. See id.
The U.S. Department of Education has credited a total of $0.00 in payments from all
sources to the balance. See Dkt. No. 1-2 at 2.
As of April 4, 2017, Defendant owes Plaintiff the following:
Principal:
$4,667.02
Interest:
$3,556.94
Total:
$8,223.96
See id. According to the Certificate of Indebtedness, interest accrues on the principal at a rate of
$1.02 per day. See id.
Plaintiff requests that the Court enter default judgment for the remainder of the loan, the
prejudgment interest, post-judgment interest, administrative costs, service of process costs, and
attorney's fees. See Dkt. No. 1 at 2-3. Plaintiff has supported its claim with a Certificate of
Indebtedness, which was prepared, under penalty of perjury, by a loan analyst from the U.S.
Department of Education. See Dkt. No. 1-2 at 2. Further, Plaintiff included a copy of the
promissory note signed by Defendant. See Dkt. No. 1-1. These facts satisfy the Court that
Plaintiff is entitled to judgment for the unpaid principal balance of the loans.
Pursuant to 34 C.F.R. § 682.410(b)(3), Plaintiff is also entitled to the amount of interest
accrued on the loan. Plaintiff has calculated that, as of April 4, 2017, Defendant owed prejudgment interest of $3,556.94, and a total debt of $8,223.96. See Dkt. No. 1-2 at 2. Since April
4, 2017, pre-judgment interest as continued to accrue on the loan at a rate of $1.02 per day. See
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id. As such, including today, October 5, 2018, the date of judgment, 549 days have passed and,
therefore, Defendant owes an additional $559.98 in pre-judgment interest. When added to the
unpaid principal and pre-judgment interest already calculated, the total amount due under the
promissory note through today is $8,783.94.
Pursuant to 28 U.S.C. § 1961(a), Plaintiff is entitled to post-judgment interest, which it
has sought here. See Dkt. No. 1 at 2. The rate of such interest, as set forth in section 1961(a),
"shall be calculated from the date of the entry of the judgment, at a rate equal to the weekly
average 1-year constant maturity Treasury yield, as published by the Board of Governors of the
Federal Reserve System, for the calendar week preceding the date of judgment." 28 U.S.C. §
1961(a) (internal footnote omitted).
In addition to the principal and interest on the loan, Plaintiff seeks costs and attorney's
fees as allowed by law. The federal government may recover "reasonable collection costs" from a
borrower who defaults on a student loan. 20 U.S.C. § 1091a(b)(1). "'The Department of
Education has interpreted such costs to include, among other things, attorney's fees.'" United
States v. Washington, No. 08-CV-5083, 2009 WL 6636862, *3 (E.D.N.Y. Dec. 14, 2009)
(quotation omitted). However, 34 C.F.R. § 682.202(g)(1)(i) provides that attorney's fees may be
awarded only "[i]f provided for in the borrower's promissory note." 34 C.F.R. § 682.202(g)(1)(i).
In the present case, the promissory note signed by Defendant has a provision titled "Promise to
Pay," which states in relevant part, "[i]f I fail to make payments on this note when due, I will also
pay collection costs including but not limited to attorney's fees and court costs." See Dkt. No. 1-1
at 4.
In the present matter, although Plaintiff is entitled to attorney's fees based on the language
contained in the promissory note, it has failed to request any specific amount and failed to submit
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contemporaneous time records in support of such a request. As such, Plaintiff's request for
attorney's fees is denied without prejudice.
IV. CONCLUSION
After carefully reviewing Plaintiff's submissions and the applicable law, and for the
reasons stated herein, the Court hereby
ORDERS that Plaintiff's motion for default judgment (Dkt. No. 12) is GRANTED; and
the Court further
ORDERS that damages are awarded in the following amounts:
(1) unpaid principal and prejudgment interest through October 5, 2018 of $8,783.94; and
(2) post-judgment interest accruing at the statutory rates as discussed above; and the Court
further
ORDERS that Plaintiff's request for attorney's fees and costs is DENIED without
prejudice; and the Court further
ORDERS that Plaintiff shall serve a copy of this Memorandum-Decision and Order on
Defendant by Certified Mail, Return Receipt Requested, and file the returned receipt using the
Court's electronic filing system; and the Court further
ORDERS that the Clerk of the Court shall enter judgment in Plaintiff's favor and close
this case.
IT IS SO ORDERED.
Dated: October 5, 2018
Albany, New York
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