Trinity Chemical Industries, LLC v. Cornhusker Energy Lexington,LLC

Filing 39

OPINION AND ORDER by Judge John E Dowdell The plaintiff's Rule 55 motion for default judgment (Doc. 32) is granted. The earlier motion for sanctions (Doc. 27), which also sought default judgment, is moot. A hearing on the amount of damag es to be awarded in the judgment is set for April 9, 2018 at 2:00 p.m. ; setting/resetting deadline(s)/hearing(s): ( Motion Hearing set for 4/9/2018 at 02:00 PM before Judge John E Dowdell); finding as moot 27 Motion for Default Judgment; granting 32 Motion for Default Judgment (Re: 32 MOTION for Default Judgment against Cornhusker Energy Lexington, LLC ) (JED1, Chambers)

UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF OKLAHOMA
TRINITY CHEMICAL, LLC,
Plaintiff,
v.
CORNHUSKER ENERGY LEXINGTON, LLC

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Case No. 16-CV-311-JED-JFJ

OPINION AND ORDER
I.

Background
The plaintiff, Trinity Chemical Industries, LLC (Trinity) initiated this action against the

defendant, Cornhusker Energy Lexington, LLC (Cornhusker) by Complaint filed on May 31, 2016.
The Court granted Cornhusker’s request to extend the time to answer or otherwise respond to the
Complaint (Doc. 20), and Cornhusker subsequently filed a motion to dismiss for failure to state a
claim. The Court denied the dismissal motion on July 27, 2017. (Doc. 28). Pursuant to Fed. R.
Civ. P. 12(a)(4)(A), Cornhusker was required to serve its answer within 14 days of the Court’s
denial of the dismissal motion. That deadline – August 10, 2017 – passed, and Cornhusker did not
file any responsive pleading and failed to seek any extension of time to respond. In addition,
before then, Cornhusker had ceased cooperating with Trinity’s requests to coordinate discovery
and case scheduling.
Trinity accordingly moved for default judgment as a sanction against Cornhusker for
failing to cooperate in discovery (Doc. 27) and moved for a Clerk’s entry of default under Fed. R.
Civ. P. 55(a) (Doc. 30). In accordance with Fed. R. Civ. P. 55(a), the Clerk of Court entered
default on August 29, 2017 upon a determination that Cornhusker “failed to plead or otherwise
defend.” (Doc. 31). The Court conducted a hearing on the motion for default as a sanction (Doc.

27). The following day, Trinity filed a Motion for Default Judgment under Rule 55(b) (Doc. 32).
Cornhusker remains in default.
The facts underlying Trinity’s breach of contract claim are set forth in the Complaint and
the evidentiary submission made with Trinity’s motion for default judgment. (Doc. 1, 32). Trinity
and Cornhusker entered into a Master Railcar Service Agreement (Master Agreement) and three
Riders to the Master Agreement, pursuant to which Trinity was to lease a total of 30 railcars to
Cornhusker. Cornhusker was contractually required to pay monthly service charges for each
railcar for certain terms. In addition to monthly service charges, Cornhusker was also responsible
for cleaning and certain repair expenses for the leased railcars and for reimbursing Trinity for
excess mileage, in-service freight charges, and other railroad charges.
On or about May 27, 2016, Cornhusker breached the Master Agreement and Riders by
selling its assets and relinquishing control and abandoning the railcars to a third party, in effect
assigning such railcars without Trinity’s consent. The Master Agreement prohibits such
assignments without Trinity’s prior written consent. (See Doc. 32-2 at 6). Under the agreement,
upon termination of the agreement for Cornhusker’s breach of any obligations thereunder, Trinity
was entitled to “declare the entire amount of the rent to become payable during the remainder of
the term of [the agreement] to be due immediately, in which [Cornhusker] agree[d] to pay the same
to [Trinity] on demand.” (Id.).
Trinity alleges that it is entitled to a total of $551,146.73 in damages, consisting of
accelerated and unpaid rents and expenses compensable under the Master Agreement. Trinity
requests that the Court also award it interest under Article 2 of the Master Agreement, which it
asserts is 18 percent per annum, for an amount of $111,437.34 through August 30, 2017 and
continuing to accrue. (See Doc. 32-1 at 2, ¶ 7). With respect to interest, Article 2 provides:

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“Payments not made within forty-five (45) days of invoice may, at [Trinity’s] option, bear interest
at the rate of 1% over the prime rate of interest quoted by Citibank N.A. per month on the unpaid
balance (or such lesser interest rate as may be consistent with the law of the state of Customer’s
domicile) until the balance is paid.” (Doc. 32-2 at 2).
II.

Discussion
The Court has personal jurisdiction over the parties. Cornhusker did not challenge personal

jurisdiction when it filed its motion to dismiss under Fed. R. Civ. P. 12(b)(6), such that any
challenge to personal jurisdiction was waived. See Fed. R. Civ. P. 12(h)(1). The Court also has
subject matter jurisdiction, pursuant to 28 U.S.C. § 1332. At the time the Complaint was filed,
Trinity was an Oklahoma limited liability company with its principal place of business located in
Tulsa, Oklahoma, and Cornhusker was a Nevada company with its principal place of business
located in Omaha, Nebraska. Trinity also sought an amount of damages that exceeded the requisite
amount in controversy for diversity purposes. (See Doc. 1).
Cornhusker is plainly in default, as it did not file an answer to the Complaint or otherwise
defend the suit, and Cornhusker also failed to cooperate with discovery. The Clerk previously
entered default in accordance with Rule 55(a). Trinity’s Complaint and evidentiary submission
establish that Cornhusker breached the Master Agreement and Riders, and that Trinity has been
damaged. Accordingly, Trinity is entitled to default judgment against Cornhusker under Fed. R.
Civ. P. 55, and its Rule 55 motion will be granted.
The Court concludes that a hearing is necessary to determine the precise amount of
damages to which Trinity is entitled. See Fed. R. Civ. P. 55(b)(2) (court may conduct hearings
when necessary to determine the amount of damages); Hunt v. Inter-Globe Energy, Inc., 770 F.2d
145, 148 (10th Cir. 1985) (“A court may enter a default judgment without a hearing only if the

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amount claimed is a liquidated sum or one capable of mathematical calculation.”). While Trinity
has submitted an affidavit in support of a total amount of damages, the Court cannot determine
from that total how the damages were calculated under the specific provisions of the agreements.
Likewise, from Trinity’s submission, it is unclear how Trinity arrived at its 18% interest
calculation under the terms of Article 2 of the Master Agreement.
III.

Conclusion
For the foregoing reasons, Trinity’s Rule 55 motion for default judgment (Doc. 32) is

granted. Because Trinity’s earlier motion for default judgment as a sanction (Doc. 27) seeks the
same remedy, the Court determines that motion is moot. A hearing on the amount of damages to
be awarded in the judgment will be held on April 9, 2018 at 2:00 p.m.
SO ORDERED this 27th day of March, 2018.

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