First Bank & Trust v. Greene Enterprise, LLC et al
Filing
22
MEMORANDUM OPINION AND ORDER re 21 MOTION for Default Judgment as to Green Enterprise, LLC; James Greene; and Resolute Forest Products. Signed by U.S. District Judge Lawrence L. Piersol on 7/25/14. (DJP)
UNITED STATES DISTRlCT COURT
FILED
DISTRlCT OF SOUTH DAKOTA
JUL 25 201'1
SOUTHERN DIVISION
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CIV. 13-4017
FIRST BANK & TRUST d/b/a
FIRSTLTNE FUNDING GROUP,
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Plaintiff,
* MEMORANDUM OPINION AND
* ORDER REGARDING MOTION
vs.
FOR DEFAULT JUDGMENT
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GREENE ENTERPRlSE, LLC, and
JAMES GREENE,
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Defendants.
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Pending before the Court is Plaintiff's Motion for Default Judgment. (Doc. 21.) The Court
needs more information in order to rule on the motion.
FACTUAL BACKGROUND
On February 14, 2013, plaintiff First Bank & Trust (Bank), a South Dakota banking
corporation, brought this diversity action against defendants Greene Enterprise, a Tennessee limited
liability company, and James Greene (Greene) , a resident of Georgia. The Complaint alleges that
Bank entered into a factoring and security agreement with Greene and Greene Enterprise wherein
Bank agreed to purchase accounts of Greene Enterprise on a recourse basis. Pursuant to the
agreement, Bank became the assignee and owner of all Greene Enterprise accounts with the sole
right to collect the proceeds thereof. Bank claims that Greene, operating as a principal of Greene
Enterprise, created and sent mUltiple inflated, false and fraudulent invoices to induce the Bank to
purchase accounts and advance money to Greene Enterprise. The complaint asserts five causes of
action against Green and Greene Enterprise : 1) breach of contract; 2) unjust enrichment; 3)
enforcement of security interest; 4) fraud; and 5) conversion. Bank also seeks payment from Greene
pursuant to a personal guaranty he allegedly signed, obligating him to pay Bank any amounts owed
by Green Enterprise.
The record shows that Greene and Greene Enterprise were properly served with the summons
and complaint on MarchI 5, 2013, by serving copies on James Greene, owner of Greene Enterprise.
(Doc. 16.) The Court granted two requests by Greene for a 30-day extension of time to answer the
complaint. (Docs. 11, 13.) The requests could not be granted as to Greene Enterprise because
Greene is not a lawyer and he cannot appear on behalf of the company. See Steele v. City ofBemidji,
257 F.3d 902, 905 (8th Cir. 2001); United States v. 9. J9 Acres ofLand, More or Less, in Marquette
County, Michigan, 416 F.2d 1244, 1245 (6th Cir.1969) ("The United States District Court was
clearly correct in ruling that a corporate president may not represent his corporation before a federal
court. 28 U.S .c. § 1654 (1964), which provides that 'parties may plead and conduct their own cases
personally or by counsel * * *,' has been uniformly construed to mean that a corporation cannot
appear otherwise than through an attorney."). Greene and Greene Enterprise have failed to file an
answer to the complaint. On September 27,2013, Bank filed a Motion for Default Judgment. The
Court interpreted it as a request for the Clerk of Court to enter default pursuant to Rule 55(a) of the
Federal Rules of Civil Procedure. Default was entered by the Clerk on October 2,2013.
The pending motion for default judgment was filed on March 14,2014. As of today, neither
Greene nor Greene Enterprise have responded to or opposed the motion.
DISCUSSION
Under Rule 55 of the Federal Rules of Civil Procedure, "[ w]hen a party ' has failed to plead
or otherwise defend' against a pleading listed in Rule 7(a), entry of default under Rule 55(a) must
precede grant ofa default judgment under Rule 55(b)." See Johnson v. Dayton Elec. Mfg. Co., 140
F.3d 781, 783 (8th Cir. 1998). "Entry ofa default under Federal Rule of Civil Procedure 55(a) is not,
as such, entry of a judgment; it merely permits the plaintiff to move for a default judgment under
Rule 55(b)(2), assuming that the default is not set aside under Rule 55(c)." Inman v. American
Home Furniture Placement, Inc., 120 F.3d 117, 118 n. 2 (8th Cir. 1997). Thus, Rule 55 requires two
steps before entry ofa default judgment: "first, pursuant to Fed.R.Civ.P. 55(a), the party seeking a
default judgment must have the clerk enter the default by submitting the required proof that the
opposing party has failed to plead or otherwise defend; second, pursuant to Fed.R.Civ.P. 55(b), the
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moving party may seek entry ofjudgment on the default under either subdivision (b)(1) or (b )(2) of
the rule." Dahl v. Kanawha lnv. Holding Co., 161 F.R.D. 673, 683 (N.D.Iowa 1995). In this case,
the Clerk of Court has entered the default of Greene and Greene Enterprise pursuant to Rule 55(a),
completing the first step in the process toward default judgment. The Court must now decide
whether default judgment should be entered against the defendants pursuant to Rule 55(b )(2).
Whether to grant default judgment is a question within the discretion of the Court. See Ackra
Direct Marketing Corp. v. Fingerhut Corp., 86 F.3d 852, 856 (8th Cir. 1995). After default has been
entered, the defendant is deemed to have admitted all well pleaded factual allegations in the
complaint. See Taylor v. City of Ballwin, 859 F.2d 1330, 1333 n. 7 (8th Cir.1988); see also
Fed.R.Civ.P. 8(b)(6) (stating that any allegation other than one relating to the amount of damages
"is admitted if a responsive pleading is required and the allegation is not denied"). Before the Court
enters a default judgment it must be satisfied that "the unchallenged facts constitute a legitimate
cause of action." Murray v. Lene, 595 F.3d 868, 871 (8th Cir. 2010).
Although factual allegations in the complaint are generally taken as true, those allegations
relating to the amount of damages must be proven by the plaintiff, to a reasonable degree of
certainty. See Everyday Learning Corp. v. Larson, 242 F .3d 815, 818-19 (8th Cir. 2001). The party
seeking default must document "the mathematical calculation used to reach the final amount in each
category of damages requested," and the district court must provide specific, detailed findings
regarding damage calculations in default judgments. Stephenson v. EI-Batrawi, 524 F.3d 907,
916-17 (8th Cir. 2008) ("generic reference to evidentiary support for the damages determination"
is insufficient; default judgment vacated and remanded for additional findings).
Here, Bank has failed to establish which causes of action entitle it to damages, and it has not
submitted damage calculations or evidence to support damages. Thus, judgment cannot be entered
at this time. Bank will be given an opportunity to supplement its motion for default judgment with
a proposed calculation of damages for each cause of action it is pursuing, along with detailed
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affidavits and supporting documentation
In
support of its proposed damage calculations.]
Accordingly,
IT IS ORDERED that, within 20 days after entry of this Order, Plaintiffmust
file additional materials necessary to establish the authority for an award of damages
under the causes of action alleged in the complaint. The amount of damages sought
must be specifically documented with supporting affidavits and business records.
Upon receipt of Plaintiffs submissions, the Court will determine if the damages sum
is certain or if a hearing is necessary to determine the amount of damages prior to
entry of judgment in this case.
~ay
Dated this - -
ofJuly, 2014.
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awrence L. Piersol
United States District Judge
ATTEST:
JOSEPH HA'UQ"ERK
BY:
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(SEAL)
Q~
DEPUTY
]"A default judgment must not differ in kind from, or exceed in amount, what is
demanded in the pleadings." See Fed.R.Civ.P. S4(c).
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