AgStar Financial Services, PCA et al v. Eastwood Diary, LLC et al

Filing 62

DEFAULT JUDGMENT ENTRY granting 57 Motion for Default Judgment. Signed by Judge Thomas M Rose on 08/07/12. (pb1)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
AGSTAR FINANCIAL SERVICES, PCA,
et al.,
Plaintiffs,
vs.
EASTWOOD DAIRY, LLC, et al.,
Defendants.

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CASE NO. 3:11-cv-00280
JUDGE THOMAS M. ROSE

DEFAULT JUDGMENT ENTRY
This matter is before the Court on an Application for Default Judgment Against
Defendants Pursuant to Rule 55 of the Federal Rules of Civil Procedure (ECF No. 48),
filed on May 1, 2012, by Plaintiffs AgStar Financial Services, PCA (“AgStar PCA”) and
AgStar Financial Services, FLCA (“AgStar FLCA”, and collectively, “AgStar”). The
Plaintiffs ask the Court to enter judgment by default against Defendants Eastwood
Dairy, LLC (“Eastwood Dairy”) and Eastwood Dairy, an Ohio general partnership (the
“Dairy Partnership”, and together with Eastwood Dairy, the “Defendants”).

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On August 8, 2011, the Plaintiffs filed a Complaint for Breach of Contract,
Foreclosure and Other Relief (ECF No. 1), to which is attached an Appendix containing
Exhibits referenced in the Complaint.
On August 9, 2011, the Defendants were served with a Summons and a copy of
the Complaint by personal process server. (ECF No. 29-1) On August 10, 2011, the
Defendants filed Voluntary Petitions for relief under Chapter 11 of Title 11 of the United
States Code (the “Bankruptcy Code”), and thereafter filed a Notice of Filing and
Suggestion of Stay in this action on August 12, 2011. (ECF No. 14) Thereafter, on
November 30, 2011, the bankruptcy stay was lifted and this case resumed on the
Court’s active docket. (ECF No. 19) The Defendants were required to serve an answer
to the Complaint within 21 days of the automatic stay being lifted on November 30, 2011
(i.e., by December 21, 2011). The Defendants failed to answer or otherwise plead in
response to the Complaint, and on February 3, 2012, this Court entered default against
the Defendants. (ECF No. 32)
From a review of the record in this case, it appears that the Defendants have
been duly served with process to appear and answer the Complaint in accordance with
the rules of this Court; that Defendants failed to appear and answer the Complaint; and
that the Clerk has entered Default against Defendants.
The Court finds that, pursuant to the terms of the FLCA Note (as that term is
defined in the Complaint) and as supported by the Affidavit of Joe Oliver, which is
included in the Appendix as Exhibit A, AgStar FLCA is entitled to damages for breach of
the FLCA Note in the amount of $1,412,654.67, plus interest at the default rate of 5.75%
per annum from August 8, 2011, on the unpaid principal balance of $1,411,772.31.

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The Court further finds that, pursuant to the terms of the PCA Note (as that term
is defined in the Complaint) and as supported by the Affidavit of Joe Oliver, AgStar PCA
is entitled to damages for breach of the PCA Note in the amount of $2,255,994.61, plus
interest at the default rate of 6.25% per annum from August 8, 2011, on the unpaid
principal balance of $2,219,599.92.
The Court further finds that, pursuant to the terms of the Reimbursement
Agreement, AgStar FLCA is entitled to damages for breach of the Reimbursement
Agreement in the amount of $2,750,000.00, plus interest at the default rate of 5% per
annum.
The Court further finds that the Property (as that term is defined in the Complaint)
secured the amounts due and owing to the Plaintiffs; that the FLCA Mortgage is a valid
and subsisting first lien on the Mortgaged Premises (as the term is defined in the
Complaint and more particularly described in Exhibit H in the Appendix) owned by
Defendant Eastwood Dairy, LLC; that the PCA Mortgage, which Mortgage secured the
PCA Note is a valid and subsisting second lien on the Mortgaged Premises junior only
to the FLCA Mortgage.
The Court further finds that by virtue of the security interest granted in the PCA
Security Agreement and the FLCA Security Agreement (as those terms are defined in
the Complaint) the amounts due and owing to Plaintiffs are further secured by the
Collateral; that by virtue of the security interest granted to AgStar PCA pursuant to the
PCA Security Agreement, AgStar PCA has a properly perfected security interest in the
Collateral, which interest is a valid and subsisting first lien on the Collateral (as the term
is defined in the Complaint and more particularly described in Exhibit E to the

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Complaint) owned by Defendants (the “PCA Security Interest”); that by virtue of the
security interest granted to AgStar FLCA pursuant to the FLCA Security Agreement
AgStar FLCA has a properly perfected security interest in the Collateral which interest is
a valid and subsisting second lien on the Collateral (the “FLCA Security Interest”).
The Court further finds that the Property was sold by the Receiver, Roach &
Associates, on April 10, 2012, pursuant to and consistent with the terms of the Court’s
February 24, 2012, Order Approving Bid Procedures, Setting Sale Hearing Date and
Related Matters (ECF No. 40), to Miami Valley Dairy, LLC (the “Purchaser”) for the
amount of $4,890,000 (the “Purchase Price”), which sale was confirmed by this Court in
an Order dated April 11, 2012 (ECF No. 45). The Court further finds that the sale
closed on April 26, 2012, and the Purchase Price, less certain deposit and adjustment
amounts, was paid by the Purchaser (the “Sale Proceeds”) and were distributed by the
Receiver to AgStar pursuant to this Court’s June 4, 2012 Order Authorizing
Disbursements of Proceeds to AgStar Financial Services, FLCA and AgStar Financial
Services, PCA (ECF No. 52).
For these reasons, the Court GRANTS the Plaintiffs’ Application for Default
Judgment Against Defendants Eastwood Dairy, LLC and Eastwood Dairy, an Ohio
General Partnership, Pursuant to Rule 55 of the Federal Rules of Civil Procedure (ECF
No. 57).
IT IS THEREFORE ORDERED, ADJUDGED, AND DECREED that, on the First
Claim for Relief (breach of contract on the FLCA Note), judgment is entered in favor of
Plaintiff AgStar Financial Services, FLCA against Defendant Eastwood Dairy, LLC,
pursuant to the FLCA Note in the amount of $1,412,654.67 (constituting principal in the

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amount of $1,411,772.31, accrued and unpaid interest in the amount of $882.36), plus
interest at the default rate of 5.75% per annum from August 8, 2011, on the principal
balance of $1,411,772.31 (the “FLCA Note Judgment”).
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED, that, on the Second
Claim for Relief (breach of contract on the PCA Note), judgment is entered in favor of
Plaintiff AgStar Financial Services, PCA against Defendant Eastwood Dairy, LLC,
pursuant to the PCA Note in the amount of $2,255,994.61 (constituting principal in the
amount of $2,219,599.92, accrued and unpaid interest in the amount of $36,394.69),
plus interest at the default rate of 6.25% per annum from August 8, 2011, on the
principal balance of $2,243,163.93 (the “PCA Judgment”).
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED, on the Fifth Claim
for Relief (Breach of Reimbursement Agreement), judgment is entered in favor of
Plaintiff AgStar Financial Services, FLCA, against Defendant Eastwood Dairy, LLC in
the amount of $2,750,000.00 plus default interest at the rate of 5% per annum (the
“FLCA Reimbursement Judgment” and, together with the FLCA Note Judgment, the
“FLCA Judgment”).
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED, on the Third Claim
for Relief:
1.

The FLCA Mortgage is declared to be a valid and subsisting first lien on

the Mortgaged Premises, which lien was effectively transferred to the proceeds of sale
with the same priority and in the amount of the FLCA Judgment pursuant to the Court’s
April 11, 2012, Order Confirming Sale of Receivership Property Free and Clear of all
Liens, Claims and Encumbrances (ECF No. 45);

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2.

The PCA Mortgage is declared to be a valid and subsisting second lien on

the Mortgaged Premises as now transferred to the Sale Proceeds with the same priority
and in the amount of the PCA Judgment;
3.

The PCA Security Interest is declared a valid and subsisting first lien on

the Collateral as now transferred to the Sale Proceeds with the same priority and in the
amount of the PCA Judgment;
4.

The FLCA Security Interest is declared a valid and subsisting second lien

on the Collateral as now transferred to the Sale Proceeds with the same priority and in
the amount of the FLCA Judgment; and
5.

All Defendants are forever barred from asserting claims or interests in the

Property.

August 7, 2012
SO ORDERED on _____________________________.

s/Thomas M. rose
THOMAS M. ROSE
U.S. District Court Judge

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