Soles4Souls, Inc. v. Gleaning for the World, Inc. et al

Filing 247

REPORT AND RECOMMENDATION: Accordingly, the undersigned RECOMMENDS that judgment be entered in favor of plaintiff Soles4Souls, Inc., and against defendants Brooks, Cohen, and Halcomb, in the sum of $29,928.00. Signed by Magistrate Judge John S. Bryant on 9/7/11. (xc:Pro se party by regular and certified mail.)(tmw)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF TENNESSEE
NASHVILLE DIVISION
SOLES4SOULS, INC.

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v.
GLEANING FOR THE WORLD, INC., et al.

To:

No. 3:08-1188
Judge Campbell/Bryant

The Honorable Todd J. Campbell, Chief Judge

REPORT AND RECOMMENDATION
I.
The subject of this Report and Recommendation is the proper award of
monetary damages to plaintiff Soles4Souls, Inc., upon the prior entry of default judgment in
its favor as to the liability of defendants James Brooks, Avie Cohen, and Claude Halcomb.
See Docket Entry No. 190. The issue of damages was referred to the undersigned on March
7, 2011 (Docket Entry Nos. 190), and an evidentiary hearing was held on March 30, 2011
(Docket Entry Nos. 191, 215). None of the defaulted defendants attended the hearing, and
the evidence received was limited to the testimony of plaintiff’s Chief Financial Officer,
Kevin Goughary. (Docket Entry No. 215) In light of the record made at the hearing, as well
as the paper record made in this case prior to the damages hearing, the undersigned
recommends that the Court enter judgment against these three defendants in the amount of
$29,928.00.

II.
In 2010, in support of its motions for default judgment against defendants
Brooks, Cohen, and Halcomb, plaintiff submitted the affidavit of Mr. Goughary to establish
its damages. In pertinent part, Mr. Goughary’s affidavit testimony was as follows:
3. As a result of the Defendants’ actions, Soles4Souls has incurred
substantial damages. The shoes that were wrongfully taken or converted by
the Defendants were donated to Soles4Souls for distribution to needy people.
Once we learned from Minnetonka Moccasins, our donor, that the shoes at
issue in this case were being sold to the public on eBay and other sources,
Soles4Souls made every effort to recover the shoes and redirect them to those
in need in order to protect and maintain our relationship with the donor as
well as benefit the intended recipients.
4. We learned that some of the shoes were located in the Cincinnati,
Ohio, area. After discovering this fact, we made arrangements to reacquire
them. Soles4Souls was only able to recover a portion of the shoes,
approximately 5,500 pairs. In order to do so, we were forced to purchase these
shoes from Frank and Jeanie Re for the amount of $28,000. Mr. and Mrs. Re
had purchased the shoes in good faith from Defendant David Galt. In the
process of investigating and attempting to retrieve the shoes, Soles4Souls
incurred expenses for travel, shipping, etc. in the amount of $1,928.00.
5. We were unable to recover 10,000 pairs of the shoes that were
wrongfully taken or converted by the Defendants. The wholesale value of the
shoes that we were unable to recover is $400,000.00.
6. Soles4Souls has also incurred attorneys’ fees in this matter in the
amount of $95,000.00 to date.
(Docket Entry No. 106-1)
Upon entry of default, the complaint’s well pleaded allegations pertaining to
liability are taken as true. In re Family Resorts of America, Inc., 1992 WL 174539, at *4 (6th
Cir. July 24, 1992). However, unliquidated damages must still be proven. Antoine v. Atlas

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Turner, Inc., 66 F.3d 105, 110 (6th Cir. 1995).
The party seeking damages has the burden of proving them. In tort cases, the
proof of damages need not be exact or mathematically precise. Rather, the
proof must be as certain as the nature of the case permits and must enable the
trier of fact to make a fair and reasonable assessment of the damages. The
amount of damages is not controlled by fixed rules of law or mathematical
formulas. It is instead left to the sound discretion of the trier of fact.
Damages may never be based on mere conjecture or specularion. However,
uncertain or speculative damages are prohibited only when the existence, not
the amount, of damages is uncertain. Evidence required to support a claim for
damages need only prove the amount of damages with reasonable certainty.
Overstreet v. Shoney’s, Inc., 4 S.W.3d 694, 703 (Tenn. Ct. App. 1999) (internal citations
omitted).
In a prior Report and Recommendation (“R&R”) adopted by the Court, the
undersigned found that an evidentiary hearing was required in view of the limited proof of
record, with particular discussion of the Goughary affidavit, as follows:
[T]he Goughary affidavit is not sufficient for the court to mathematically
ascertain plaintiff’s damages. See O’Neal v. Nationstar Mortg., 2009 WL
1795305, at *4 (S.D. Ohio June 23, 2009). Plaintiff seeks an award of
$524,928.00, representing the sum of $28,000.00 paid to reacquire
approximately 5,500 pairs of shoes from Mr. and Mrs. Re; $1,928.00 in
associated expenses for traveling, shipping, etc.; $400,000.00 cited as the
wholesale value of the 10,000 pairs of shoes converted by defendants but
which plaintiff was unable to recover; and, $95,000.00 in attorneys’ fees.
While the undersigned is satisfied that Mr. Goughary, as plaintiff’s Chief
Financial Officer having personal knowledge of plaintiff’s business records
(Docket Entry No. 106-1 at ¶ 2), may establish through affidavit testimony
amounts spent in recovering the shoes from Mr. and Mrs. Re, see Moore v.
Cycon Enterprises, Inc., 2007 WL 475202, at *8 (W.D. Mich. Feb. 9, 2007), it
does not follow that his testimony is sufficient to establish the $400,000.00
wholesale value of the lost shoes, or even that such value is an appropriate
measure of damages to plaintiff. The shoes were not plaintiff’s commodities,
and although the amended complaint contains a reference to an agreement
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between plaintiff and Minnetonka that the donated shoes would be distributed
to people in need in Africa, not sold or transferred for value (Docket Entry No.
44 at ¶ 17), as well as the allegation that plaintiff purchased the
misappropriated shoes from Mrs. Re “so that Soles4Souls could fulfill its
obligations to Minnetonka...” (id. at ¶ 33), there is no allegation or showing
that plaintiff was required to or did reimburse Minnetonka for the wholesale
value of the lost shoes. Finally, the undersigned is not inclined to include an
undifferentiated, lump sum of attorneys’ fees in an award of damages upon
plaintiff’s victory by default.

(Docket Entry No. 182 at 7-8)
Unfortunately, Mr. Goughary’s testimony as a live witness at the March 30,
2011 evidentiary hearing was for all intents and purposes the same as his affidavit testimony.
No further proof or authority was offered to support the requested award, nor any argument
for the award to be based on anything other than the wholesale value of the lost shoes.1
As referenced in the prior R&R, the wholesale valuation of the
approximately 10,000 pairs of lost Minnetonka shoes by plaintiff’s CFO is simply not
competent proof of the damages to Soles4Souls, Inc., on account of their loss. Particularly
when compared with the $28,000.00 reacquisition cost for the approximately 5,500 pairs (or
$5.09 per pair) of recovered shoes, the forty dollar-per-pair figure promoted by Mr.
Goughary’s affidavit and hearing testimony does not constitute proof of damages to a
reasonable certainty. Without the benefit of any further proof or authority from plaintiff,
the undersigned finds that plaintiff has failed to carry its burden of proving its reasonable
damages associated with the loss of the 10,000 pairs of shoes.
1

On the day of the hearing, plaintiff submitted two notices of filing the transcripts of, and
exhibits to, the depositions of defendants James Brooks and James Hughes. (Docket Entry Nos. 216219) These filings were considered by the undersigned, without the benefit of any direction from
plaintiff toward evidence pertinent to the amount of plaintiff’s damages from the lost shoes.

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Nonetheless, the evidence of record supports the award to plaintiff of its outof-pocket costs in reacquiring the shoes from Mr. and Mrs. Re, being $28,000.00 for the
shoes and $1,928.00 in associated expenses.

III.
Accordingly, the undersigned RECOMMENDS that judgment be entered in
favor of plaintiff Soles4Souls, Inc., and against defendants Brooks, Cohen, and Halcomb, in
the sum of $29,928.00.
Any party has fourteen (14) days from receipt of this Report and
Recommendation in which to file any written objections to it with the District Court. Any
party opposing said objections shall have fourteen (14) days from receipt of any objections
filed in which to file any responses to said objections. Failure to file specific objections
within fourteen (14) days of receipt of this Report and Recommendation can constitute a
waiver of further appeal of this Recommendation. Thomas v. Arn, 474 U.S. 140 (1985);
Cowherd v. Million, 380 F.3d 909, 912 (6th Cir. 2004)(en banc).

7th
ENTERED this _____ day of September, 2011.

______________
s/ John S. Bryant
JOHN S. BRYANT
UNITED STATES MAGISTRATE JUDGE

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