PNC Equipment Finance, LLC v. Birkdale GC, LLC et al
Filing
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ORDER granting 8 Motion for Default Judgment. Signed by Chief Judge Frank D. Whitney on 9/19/2013. (blf)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NORTH CAROLINA
CHARLOTTE DIVISION
DOCKET NO. 3:13-CV-00360-FDW-DSC
PNC EQUIPMENT FINANCE, LLC, A
DELAWARE LIMITED LIABILITY
COMPANY, SUCCESSOR TO PNCEF,
LLC D/B/A PNC EQUIPMENT
FINANCE, AN INDIANA LIMITED
LIABILITY COMPANY, F/K/A
NATIONAL CITY COMMERCIAL
CAPITAL COMPANY, LLC,
Plaintiff,
vs.
BIRKDALE GC, LLC D/B/A
BIRKDALE GOLF CLUB & IRI GOLF
MANAGEMENT, LP,
Defendants.
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ORDER &
ENTRY OF JUDGMENT
THIS MATTER is before the Court upon Plaintiff PNC Equipment Finance, LLC’s
Motion for Default Judgment Against Defendants Birkdale Golf Club, LLC dba Birkdale Golf
Club [(“Defendant Birkdale”)] and IRI Golf Management [(“Defendant IRI Golf”)]. (Doc. No.
8). Upon review by the Court, Plaintiff’s Motion is hereby GRANTED with a few variations as
described in this Order, and Default judgment is entered against Defendants. Defendants are
ORDERED to pay Plaintiff $207,613.64 with interest calculated individually for each specific
unmade payment, and to pay Plaintiff’s costs and attorneys’ fees.
Furthermore, Defendant
Birkdale is ORDERED to return the equipment at issue in this case to Plaintiff, who the Court
considers to be its permanent owner.
Plaintiff alleges that, on approximately July 20, 2008, Defendant Birkdale executed a
Lease Agreement (“the Lease”) for a certain set of equipment (the “Equipment”)1 with National
City Golf Finance, which is a division of National City Commercial Capital Company, LLC
(“National”). IRI Golf executed a corporate guarantee regarding any lease agreement entered
into by and between Birkdale and National. This Lease required monthly payments in exchange
for leasing the Equipment. Plaintiff is the successor in interest to the Lease. Birkdale defaulted
under the Lease, in part, for failure to make monthly rental payments on or after September 15,
2011.
On approximately January 25, 2012, Plaintiff and both Defendants entered into a
Settlement Agreement and Mutual Release (“Settlement Agreement”) to resolve the default.
Following a failure by Defendants to make payments under the Settlement Agreement, Plaintiff
and Defendants then entered into an Amended Settlement Agreement and Mutual Release
(“Amended Settlement Agreement”) on March 14, 2012.
Under the Amended Settlement
Agreement, Defendants again failed to make the required payments.
Plaintiff originally filed this case in this Court on June 12, 2013, making claims for
breach of contract, conversion, claim and delivery, and attorneys’ fees. (Doc. No. 1). On July 1,
2013, Plaintiff filed an Affidavit of Service with the Court indicating that Defendant Birkdale
was served with a summons and complaint by certified mail on June 22, 2013 and that Defendant
IRI Golf was served with a summons and complaint by certified mail on June 21, 2013. (Doc.
No. 4). However, as of August 26, 2013, Defendants had still not filed an answer to Plaintiff’s
Complaint. Following an Order to Show Cause by this Court, (Doc. No. 5), Plaintiff moved for
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Documents in this case refer to the Lease as “Lease No. 113685000.” The language in the Lease states
that the Lease is for equipment listed on the attached Schedule A. The Court notes that in one copy of the Lease
filed with the Court as Exhibit 1 to the Complaint, it appears the wrong Schedule A for Lease Number 113684000 is
attached (although the Lease number on that document is difficult to read). (See Doc. No. 1-1). The Court
interprets the proper Schedule A to be one later filed with the Court that lists Lease Number 113685000. (See Doc.
No. 9). As such, all references to “the Equipment” refer to the items listed on Schedule A for Lease No. 113685000
appearing as part of Doc. No. 9.
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an entry of default on September 4, 2013, (see Doc. No. 6), and default was entered by the
Clerk’s Office on September 6, 2013. (See Doc. No. 7). Plaintiff filed the present Motion on
September 9, 2013. (Doc. No. 8).
The award of default judgment is governed by Rule 55(a) of the Federal Rules of Civil
Procedure, which provides in relevant part that “[w]hen a party against whom a judgment 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.” Upon entry of default, a
defaulted party is deemed to have admitted all well-pleaded allegations of fact contained in the
complaint. Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780 (4th Cir. 2001); Weft, Inc.
v. GC Inv. Assocs., 630 F. Supp. 1138, 1141 (E.D.N.C. 1986) (citations omitted); see also Fed.
R. Civ. P. 8(b)(6) (“An allegation-other than one relating to the amount of damages-is admitted if
a responsive pleading is required and the allegation is not denied.”). However, the defendant is
not deemed to have admitted conclusions of law, and the entry of “default is not treated as an
absolute confession by the defendant of his liability and of the plaintiff's right to recover.” Ryan,
253 F.3d at 780 (citations omitted); see also E.E.O.C. v. Carter Behavior Health Servs., Inc., No.
4:09–cv–122–F, 2011 WL 5325485, at *3 (E.D.N.C. Oct. 7, 2011). Rather, in determining
whether to enter judgment on the default, the court must determine whether the well-pleaded
allegations in the complaint support the relief sought. See Ryan, 253 F.3d at 780 (citing Weft,
630 F. Supp. at 1141); DIRECTV, Inc. v. Pernites, 200 F. App'x 257, 258 (4th Cir. 2006) (a
‘“defendant is not held to admit facts that are not well-pleaded or to admit conclusions of law”’)
(quoting Nishimatsu Constr. Co. v. Houston Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975));
Arista Records, LLC v. Gaines, 635 F. Supp. 2d 414, 416 (E.D.N.C. 2009); 10A Wright, Miller
& Kane, Federal Practice and Procedure § 2688 (3d ed. Supp. 2010) (“[L]iability is not deemed
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established simply because of the default . . . and the court, in its discretion, may require some
proof of the facts that must be established in order to determine liability.”).
To that end, the Fourth Circuit has “repeatedly expressed a strong preference that, as a
general matter, defaults be avoided and that claims and defenses be disposed of on their merits.”
Colleton Preparatory Acad., Inc. v. Hoover Univ., Inc., 616 F.3d 413, 417 (4th Cir. 2010)
(citations omitted). Nonetheless, default judgment “may be appropriate when the adversary
process has been halted because of an essentially unresponsive party.” SEC v. Lawbaugh, 359 F.
Supp. 2d 418, 421 (D. Md. 2005).
If the court finds that liability is established, it must then determine damages. Carter
Behavior Health, 2011 WL 5325485, at *4 (citing Ryan, 253 F.3d at 780-81; Gaines, 635 F.
Supp. 2d at 416-17). The court must make an independent determination regarding damages and
cannot accept as true factual allegations of damages. Id. (citing Lawbaugh, 359 F. Supp. 2d at
422). While the court may conduct an evidentiary hearing to determine damages, it is not
required to do so, but may rely instead on affidavits or documentary evidence in the record to
determine the appropriate sum. See E.E.O.C. v. North Am. Land Corp., No. 1:08–cv–501, 2010
WL 2723727, at *2 (W.D.N.C. Jul.8, 2010).
As Defendants have defaulted on Plaintiff’s Complaint, the Court accepts the allegations
in the Complaint as true and now turns to the issue of damages. In its Complaint, Plaintiff seeks
the following damages:
(a)
(b)
(c)
That Plaintiff have permanent possession of the Equipment and all
products and / or proceeds thereof;
That the Equipment identified in Schedule A to Exhibit A to this
Complaint be returned to Plaintiff;
That Plaintiff be adjudged the owner of and entitled to immediate
possession of the Equipment identified in Schedule A to Exhibit A to this
Complaint;
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(d)
(e)
(f)
(g)
That the Plaintiff have and [sic] order foreclosing its security interest in
the Equipment, granting Plaintiff or an officer of the Court the authority
and right to sell the Equipment and apply the proceeds of said sale to the
aforesaid indebtedness; and that in the event the Court orders the marshal
or other officer of the Court to sell the Equipment, that the Clerk be
directed to issue such order to any marshal or other officer of the Court or
the State of North Carolina and that he be directed to seize and sell the
Equipment as under execution subject to the indebtedness in favor of
Plaintiff and that the order of sale have all force and effect of a writ of
possession as between the parties to this suit and any person claiming
under Defendants;
That Plaintiff have judgment [entered] against Defendants in the amount
of $232,613.64;
That this Court award Plaintiff its costs, including reasonable attorneys’
fees, incurred in filing and prosecuting this action pursuant to N.C. Gen.
Stat. § 6-21.2 and/or any other applicable provision of law;
That this Court award Plaintiff such other and further relief to which it
may be entitled, or as is just and proper.
(Doc. No. 1). In its Motion itself, however, Plaintiff asks for “Judgment by Default against
Defendants . . . in the amount of $207,613.64, plus interest at the statutory rate from May 15,
2012, attorney’s fees and costs as well as possession of that certain equipment listed on Exhibit
A hereto.” (Doc. No. 8).
The Court begins with the issue of monetary damages. In the Amended Settlement
Agreement, the Defendants agreed that “the outstanding indebtedness due and owing PNC . . . is
$416,673.26 . . . and that each is liable to PNC for payment of [such].” (Doc. No. 1-3).
However, it was agreed that Birkdale and/or IRI Golf would pay only $278,750.00 to settle the
matter. A payment schedule was established as follows:
(i)
(ii)
(iii)
One (1) payment of $25,000.00 on or before March 15, 2012;
Two (2) payments of $46,136.36 each on April 15, 2012 and May 15,
2012, respectively; and
Seven (7) payments of $23,068.18 each, commencing on or before June
15, 2012 and continuing on the 15th day of each successive month
thereafter for seven (7) months.
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(Doc. No. 1-3).2
According to Plaintiff, Defendants failed to make required payments “on or after May 15,
2012[.]” (Doc. No. 10). Of the two figures $232,613.64 and $207,613.64 that Plaintiff requests
in damages in various documents, the Court finds that $207,613.64 is the appropriate sum.
Plaintiff appears to be alleging that Defendants only made the first two payments in the list
above, which equal a total of $71,136.36. Subtracting that figure from $278,750.00 yields a total
amount of $207,613.64.3 For this reason, and as this is the amount specifically requested in
Plaintiff’s Motion, the Court will use that figure. Also, the Court notes that the Amended
Settlement Agreement states that Defendants owe a total of $416,673.26 under the Lease.
Settling this debt for $278,750.00 amounts to Defendants paying approximately two-thirds of
what they owe to Plaintiff. The Court sees no reason why such settlement terms would be
improper in this case. As such, this portion of Plaintiff’s Motion is granted, Defendants are
hereby ordered to pay Plaintiff the remaining unpaid portion of the Amended Settlement
Agreement of $207,613.64.
Plaintiff also seeks interest “at the statutory rate,” (Doc. No. 8) on this payment
beginning from May 15, 2012. The Amended Settlement Agreement contains a choice of law
provision, stating “[t]he validity, effect and construction of this Amended Agreement and any
obligations taken pursuant thereto shall be determined, construed and governed in accordance
with the laws of the State of Ohio.” (Doc. 1-3). As such, the Court turns to Ohio law for
guidance in this matter. In S & D Mechanical Contractors, Inc. v. Enting Water Conditioning
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The Court notes that these figures actually add up to $278,749.98.
If Defendants only made one payment, which the Court would presume to be the first payment of
$25,000.00 as agreed in the payment schedule, the amount remaining to be paid would be $253,750.00, not
$232,613.64. While $278,750.00 minus $46,136.36 does equal $232,613.64, the Court has no reason to believe that
Defendants paid the amount due in the second payment without first paying the $25,000.00 that was previously due.
Thus, it is unclear to the Court where Plaintiff derived the figure of $232,613.64.
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Systems, Inc., the Court of Appeals of Ohio stated that “[i]n an action based on breach of
contract, damages based on interest are generally recoverable.” 593 N.E.2d 354, 362 (citing
Champion Ice Mfg. & Cold Storage v. Penn Iron Works Co., 67 N.E. 486 (1903)). Furthermore,
“[i]nterest is especially recoverable when the breach consists of failure to pay money because the
interest actually represents the value lost on the use of the money.” Id. (citing Champion Ice
Mfg., 68 Ohio St. 229, 234). As Ohio law generally allows for the recovery of interest for
contractual breaches and especially for failure to pay money, and because the breach in this case
involves a failure to pay money, the Court holds that the award of interest is appropriate.
Accordingly, Plaintiff’s Motion is granted regarding the award of interest on the remaining
unpaid portion of the Amended Settlement agreement of $207,613.64. However, while Plaintiff
appears to seek to have interest awarded on the entire amount beginning from the date of the first
missed payment, the Court does not believe this is appropriate. Instead, Defendant is only
ordered to pay interest on each unmade payment from the time it was due until it is paid.
With respect to attorneys’ fees and costs, the Amended Settlement Agreement states that
“[i]n the event that legal action is commenced by a Party to seek enforcement of this Amended
Agreement or damages from its breach, the prevailing Party, in addition to any penalties that it
may be entitled to, shall be entitled to recover the costs and reasonable attorneys’ fees in
connection with that action. Otherwise, except as expressly set forth herein, each party shall bear
its own [such expenses.]” (Doc. No. 1-3). Furthermore, under Rule 54(d)(1) of the Federal
Rules of Civil Procedure, “[u]nless a federal statute, these rules, or a court order provides
otherwise, costs—other than attorney’s fees—should be allowed to the prevailing party.” As the
clear language of the agreement requires that attorneys’ fees and costs may be awarded, and Rule
54(d)(1) requires the losing party to pay the costs of the prevailing party, the Court also grants
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this portion of Plaintiff’s Motion. Defendants are hereby ordered to pay Plaintiff’s attorneys’
fees and costs for this action.
Finally, the contract specifies that “[i]f an Event of Default occurs under this Amended
Agreement, Birkdale shall immediately return [the] Equipment . . . to PNC at Birkdale’s cost in
accordance with Paragraphs 8 and 9 of [the] Lease . . . .” (Doc. No. 1-3). Under the Amended
Settlement Agreement, default very specifically includes “IRI and/or Birkdale fail[ing] to pay
any installment of the Settlement Amount . . . .” As Defendants have failed to make the required
payments, it is accordingly clear to the Court that Defendant Birkdale is obligated to return the
Equipment to Plaintiff. As such, the portion of Plaintiff’s Motion seeking to have the Equipment
returned is hereby granted. Defendant Birkdale is ordered to return the Equipment to Plaintiff in
the manner described in the original Lease. The Court considers Plaintiff the permanent owner
of the Equipment and holds that Plaintiff is entitled to its immediate possession.
For the above reasons, Plaintiff’s Motion is hereby GRANTED with a few variations as
described in this Order, and default judgment is entered against Defendants. Defendants are
ORDERED to pay Plaintiff $207,613.64 with interest calculated individually for each specific
unmade payment, and to pay Plaintiff’s costs and attorneys’ fees. Furthermore, Defendant
Birkdale is ORDERED to return the Equipment to Plaintiff, who the Court considers to be the
Equipment’s permanent owner. If Defendant Birkdale fails to return the Equipment to Plaintiff,
Plaintiff may not attempt to repossess the Equipment on its own, but may request that the Court
direct the United States Marshal for the Western District of North Carolina to seize the
Equipment and return the Equipment to Plaintiff. Any motion or application making such a
request must be accompanied by a sworn affidavit by Plaintiff and an appropriately completed
Form USM-285. The costs of such a seizure by the Marshal must first be borne by Plaintiff, but
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Plaintiff may then add said costs to the costs already due and owing under this Judgment. The
Clerk’s Office is DIRECTED to CLOSE THE CASE.
IT IS SO ORDERED.
Signed: September 19, 2013
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