100 Mount Holly Bypass et al v. Axos Bank et al
Filing
276
MEMORANDUM DECISION AND ORDER denying as moot 262 Motion to Bifurcate; denying 264 Motion to Dismiss ; denying 264 Motion for Attorney Fees; granting 269 Motion for Default Judgment; denying 274 Motion to Dismiss for Lack of Jurisdiction ; denying 274 Motion for Reconsideration of Order. Signed by Judge Ted Stewart on 1/27/2025. (alf)
IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH
CENTRAL DIVISION
100 MOUNT HOLLY BYPASS et al.,
Plaintiffs,
v.
AXOS BANK, et al.,
Defendants.
MEMORANDUM DECISION AND
ORDER GRANTING PLAINTIFFS’
MOTION FOR DEFAULT, DENYING
PLAINTIFFS’ AND DEFENDANT AXOS
BANK’S MOTION TO BIFURCATE AS
MOOT, DENYING DEFENDANT WIDI
JR.’S MOTION TO DISMISS, AND
DENYING DEFENDANT WIDI SR.’S
MOTION
Case No. 2:20-cv-856
Judge Ted Stewart
Magistrate Judge Cecilia M. Romero
This matter comes before the Court on a Motion to Bifurcate filed by Plaintiffs
Christopher Miles and 100 Mount Holly Bypass and Defendant Axos Bank; 1 a Motion to
Dismiss and for Attorney’s Fees filed by David Widi Jr.; 2 a Motion for Default Judgment filed
by Plaintiffs; 3 and a single Motion containing an Objection to Plaintiffs’ Motion for Default
Judgment; Motion to Dismiss for Lack of Jurisdiction; Response to Motion to Bifurcate; and
Reconsideration of Order Granting Withdrawal of Counsel filed by David Widi Sr. 4 For the
reasons discussed below, the Court will grant Plaintiffs’ Motion for Default Judgment, deny the
Motion to Bifurcate as moot, deny Widi Jr.’s Motion, and deny Widi Sr.’s Motions.
1
Docket No. 262.
2
Docket No. 264.
3
Docket No. 269.
4
Docket No. 274.
I. BACKGROUND
Plaintiffs are 100 Mount Holly Bypass, LLC, Miles Technologies, Inc., and Christopher
Miles. Plaintiffs sued Defendants New Jersey Clean Energy Solutions d/b/a Solar Experts
(“Solar Experts”), David Widi Sr., David Widi Jr., Axos Bank (“Axos”), Gregory Garrabrants,
Jeff Pistorius, Barr Gordon, Kristin Phillips, Tech Equipment Finance, LLC, and Everett Dorand,
under the Racketeer Influenced and Corrupt Organizations Act (“RICO”) 5 and for state law
claims. The Court has recited the facts of this case many times and will not repeat them here.
In April 2024, the Court addressed competing motions for summary judgment. At present
the only remaining Defendants in this matter are Solar Experts and Axos Bank. Below is a
summary of the Court’s Order on the motions for summary judgment:
• Count 1: RICO § 1962(c) against Garrabrants, Gordon, Phillips, Pistorius, Solar Experts
Defendants, and TechEFI Defendants, alleging Axos as the enterprise. The Court granted
summary judgment in favor of Defendants.
• Count 2: RICO § 1962(d) against Garrabrants, Gordon, Phillips, Pistorius, Solar Experts
Defendants and TechEFI Defendants, alleging Axos as the enterprise in a conspiracy. The
Court granted summary judgment in favor of Defendants.
• Count 3: RICO § 1962(c) against all Defendants as the enterprise. The Court granted
summary judgment in favor of all Defendants.
• Count 4: RICO § 1962(d) against all Defendants as the enterprise in a conspiracy. The
Court granted summary judgment in favor of all Defendants.
• Count 5: Fraud against all Defendants. The Court granted summary judgment in favor
of all Defendants.
5
18 U.S.C. §§ 1961 et seq.
2
• Count 6: Civil Conspiracy against all Defendants. The Court granted summary
judgment in favor of all Defendants.
• Count 7: Breach of Contract and Covenant of Good Faith and Fair Dealing against Solar
Experts. The Court granted summary judgment in favor of Plaintiffs on the breach of
contract claim for failure to keep the property free of liens. However, the Court did not
grant summary judgment to either party on the remaining breach of contract claims. 6 The
Court granted summary judgment on delay damages in favor of Solar Experts, but did not
grant summary judgment on the remaining damages in favor of either party. The Court
did not grant summary judgment in favor of either party on Plaintiffs’ breach of good
faith and fair dealing claim.
• Count 8: Breach of Contract and Covenant of Good Faith and Fair Dealing against
Axos. The Court granted summary judgment in favor of Axos on all breach of contract
claims and entered summary judgement in favor of Plaintiffs on the breach of good faith
and fair dealing claim.
• Count 9: Breach of Fiduciary Duty against Axos. The Court granted summary judgment
in favor of Axos.
• Count 10: Declaratory Judgment against Axos. The Court granted summary judgment in
favor of Axos.
After the Court ruled on the summary judgment motions, it ordered the parties to
participate in a settlement conference. The conference was not held as the parties and Court
6
The Third Amended Complaint asserted seven instances of breach against Solar
Experts. Plaintiffs only sought summary judgment on four of the breaches. Docket No. 251, at
30.
3
determined that settlement was not viable at that time. 7 Thereafter, on September 25, 2024, Solar
Experts’ attorney, Robert T. Spjute, filed a Motion to Withdraw as counsel.
On September 30, 2024, the Magistrate Judge granted counsel’s Motion to Withdraw and
ordered Solar Experts to obtain new counsel to enter an appearance on its behalf pursuant to
local rule 83-1.3. 8 The Court stayed the matter for 21 days for Solar Experts to do so.
Subsequently, Defendants David Widi Sr., on behalf of himself and Solar Experts, filed a pro se
Motion for Reconsideration of the Order allowing counsel to withdraw. 9 On December 23, 2024,
the Magistrate Judge denied Solar Experts and Widi Sr.’s Motion to Reconsider. 10 An attorney
has not yet filed an appearance on behalf of Solar Experts, and Plaintiffs have filed a Motion for
Default Judgment for Solar Experts’ failure to obtain counsel. 11 On January 23, 2025, Widi Sr.
filed a pro se Objection, Motion, and request for reconsideration on behalf of Solar Experts. 12
Also pending before the Court is David Widi Jr.’s Motion to Dismiss and for Attorney’s
Fees filed on December 13, 2024, 13 and Plaintiffs’ and Axos Bank’s Motion to Bifurcate filed on
October 30, 2024. 14
7
Docket No. 258.
8
Docket No. 260; see DUCivR 83-1.4(b)(2)(G).
9
Docket No. 261.
10
Docket No. 266.
11
Docket No. 269.
12
Docket No. 274.
13
Docket No. 264.
14
Docket No. 262.
4
II. DISCUSSION
A. Default Judgment
On December 30, 2024, Plaintiffs moved for default judgment against Defendant Solar
Experts for failure to obtain counsel or otherwise participate in these proceedings. Solar Experts
failed to respond to the Motion by the deadline. 15 Instead on January 23, 2025, Widi Sr.,
purporting to act on behalf of Solar Experts, filed a pro se Objection.
“A corporation, association, partnership, or other artificial entity must be represented by
an attorney who is admitted” to this court. 16 “An unrepresented party who fails to appear within
21 days after entry of the order [of withdrawal], or within the time the court requires, may be
sanctioned under Fed. R. Civ. P. 16(f)(1), including entry of a default judgment.” 17 Federal Rule
of Civil Procedure 16(f)(1)(C) provides that a court “may issue any just orders, including those
authorized by Rule 37(b)(2)(A)(ii)-(vii), if a party or its attorneys . . . fails to obey a . . . pretrial
order.” Rule 37(b)(2)(A) referenced in Rule 16(f)(1)(c) provides for sanctions including
“rendering a default judgment against the disobedient party.” 18
To determine whether sanctions are appropriate, courts consider the following factors: (1)
the degree of actual prejudice to the plaintiff; (2) the amount of interference with the judicial
process; (3) the culpability of the litigant; (4) whether the court warned the party in advance that
dismissal or default judgment of the action would be a likely sanction for noncompliance; and
(5) the efficacy of lesser sanctions. 19
15
See DUCivR 7-1(a)(4)(D).
16
DUCivR 83-1.3(c)(2).
17
DUCivR 83-1.4(d).
18
Fed. R. Civ. P. 37(b)(2)(A)(vi).
19
See Ehrenhaus v. Reynolds, 965 F.2d 916, 921 (10th Cir. 1992).
5
“[D]ismissal or other final disposition of a party’s claim ‘is a severe sanction reserved for
the extreme case, and is only appropriate where a lesser sanction would not serve the ends of
justice.’” 20 “Only when the aggravating factors outweigh the judicial system’s strong
predisposition to resolve cases on their merits is dismissal [or default judgment] an appropriate
sanction.” 21 Furthermore, the factors listed above are not “a rigid test; rather, they represent
criteria for the district court to consider [before] imposing dismissal as a sanction.” 22 The Court
considers each factor below.
1. Degree of actual prejudice to Plaintiffs
Prejudice may be inferred from delay, uncertainty, and accruing attorney’s fees. 23 Solar
Expert’s failure to engage in litigation and comply with the Court’s order has interfered with
20
Reed v. Bennett, 312 F.3d 1190, 1195 (10th Cir. 2002) (quoting Hancock v. City of
Okla. City, 857 F.2d 1394, 1396 (10th Cir. 1988)).
21
Ehrenhaus, 965 F.2d at 921 (quoting Meade v. Grubbs, 841 F.2d 1512, 1521 n.7 (10th
Cir. 1988) abrogated on other grounds by Schneider v. City of Grand Junction Police Dept., 717
F.3d 760 (10th Cir. 2016)).
22
Id.; see also Lee v. Max Int’l, LLC, 638 F.3d 1318, 1323 (10th Cir. 2011) (“The
Ehrenhaus factors are simply a non-exclusive list of sometimes-helpful criteria or guide posts the
district court may wish to consider in the exercise of what must always be a discretionary
function.”) (internal quotation marks and citation omitted); Chavez v. City of Albuquerque, 402
F.3d 1039, 1044 (10th Cir. 2005) (describing Ehrenhaus factors as “not exhaustive, nor . . .
equiponderant”); Archibeque v. Atchison, Topeka & Santa Fe Ry. Co., 70 F.3d 1172, 1174 (10th
Cir. 1995) (“[D]etermining the correct sanction is a fact specific inquiry that the district court is
in the best position to make.”).
23
Faircloth v. Hickenlooper, 758 F. App’x 659, 662 (10th Cir. 2018) (unpublished);
Jones v. Thompson, 996 F.2d 261, 264 (10th Cir. 1993); see also Auto-Owners Ins. Co. v.
Summit Park Townhome Ass’n, 886 F.3d 852, 860 (10th Cir. 2018) (finding substantial prejudice
when defendant “sparked months of litigation” and “wasted eight months of litigation”); Riviera
Drilling & Expl. Co. v. Gunnison Energy Corp., 412 F. App’x 89, 93 (10th Cir. 2011)
(unpublished) (upholding district court’s finding that delay would “prolong for the defendants
the substantial uncertainty faced by all parties pending litigation”) (internal quotation marks
omitted).
6
both Plaintiffs’ and the remaining Defendant’s ability to obtain a resolution in the matter. 24
Therefore, this factor weighs in favor of default judgment.
2. Amount of interference with the judicial process
The Court finds that Solar Experts’ actions have interfered with the judicial process. The
Court granted Solar Experts’ counsel’s Motion to Withdraw on September 30, 2024. Further, it
has been a month since the Court denied Solar Experts’ Motion for Reconsideration. Solar
Experts still have not filed a notice of appearance of counsel. Solar Experts have interfered with
the judicial process by disregarding the Court’s order and by failing to properly participate in the
litigation. This factor, therefore, weighs in favor of default judgment.
3. Litigant’s culpability
Solar Experts’ culpability is evident in its failure to file a notice of appearance and
disregard of the Court’s order in filing its first pro se Motion for Reconsideration and latest pro
se Objection/Motion/Reconsideration, which does not indicate that they have any intention to
comply with the Court’s order. The Tenth Circuit has articulated that while dismissal and default
judgment are “drastic sanction[s], [they are] appropriate in cases of willful misconduct.” 25 It has
further defined “willful failure” to mean “any intentional failure as distinguished from
involuntary noncompliance. No wrongful intent need be shown.” 26 “It is [Solar Experts’] acts,
not those of [its] counsel,” 27 that have caused the delay. Therefore, the Court finds that this
failure was intentional and finds that this factor weighs in favor of default judgment.
24
See Docket No. 262.
25
Lopez-Bignotte v. Ontivero, 42 F. App’x 404, 407 (10th Cir. 2002) (citing Ehrenhaus,
965 F.2d at 920).
26
Id. (quoting Sheftelman v. Standard Metals Corp., 817 F.2d 625, 628–29 (10th Cir.
27
Ehrenhaus, 965 F.2d at 921.
1987)).
7
4. Whether the Court warned noncomplying litigant that default judgment was a likely
sanction
The Court warned Solar Experts that its failure to file a notice of appearance could result
in default judgment. 28 This factor weighs in favor of default judgment.
5. Efficacy of lesser sanctions
The Court finds that lesser sanctions would be inadequate. Solar Experts has continued to
fail to participate in this litigation and has failed to comply with the Court’s orders. This factor
weighs in favor of default judgment.
Considering the factors above, the Court finds that default judgment is appropriate.
Having done so, the Court next turns to the “procedure for entry of default judgment as set forth
in Rule 55.” 29 “In order for a district court to enter default judgment, ‘there must be a sufficient
basis in the pleadings . . . constituting a legitimate cause of action, since a party in default does
not admit mere conclusions of law.’” 30
To state a claim for breach of contract, the plaintiff must show
first that the parties entered into a contract containing certain terms; second, that
plaintiffs did what the contract required them to do; third, that defendants did not
do what the contract required them to do, defined as breach of the contract; and
fourth, that defendants’ breach, or failure to do what the contract required, caused
a loss to the plaintiffs. 31
28
Docket No. 260, at 1 (“A party who fails to file a Notice of Substitution of Counsel or
Notice of Appearance as set forth above, may be subject to sanction pursuant to Federal Rule of
Civil Procedure 16(f)(1), including but not limited to dismissal or default judgment.”).
29
Stampin’ Up!, Inc. v. Hurst, No. 2:16-cv-00886, 2018 WL 2018066, at *3 (D. Utah
May 1, 2018) (internal quotation marks and citation omitted).
30
Id. (quoting Bixler v. Foster, 596 F.3d 751, 762 (10th Cir. 2010)).
31
Goldfarb v. Solimine, 245 A.3d 570, 577 (N.J. 2021) (internal quotation marks and
citation omitted); see Docket No. 251, at 28–34. New Jersey law shall govern the Purchase
Agreement “and the rights and obligations of the parties thereto.” Docket No. 128-4 ¶ 23.
8
Upon review of the Third Amended Complaint, the Court finds that the allegations,
accepted as true, contain sufficient facts to state a claim for breach of contract by (1) failing to
install the Solar System in accordance with engineered plans; (2) failing to complete installation
of the Solar System by December 31, 2019, or within a reasonable time thereafter; (3) failing to
perform all work in a good and workman-like manner; (4) failing to promptly correct work that
does not conform to the Purchase Agreement and to the Engineered Plans; (5) failing to complete
the Interconnection Application and approval process; (6) failing to convey title for work
covered by all payments free and clear of liens, security interest, or other encumbrances adverse
to Plaintiffs’ interests; and (7) failing to apply the roof coating and the installation in a manner to
obtain the manufacturer’s warranties. 32
Next, “[t]he covenant of good faith and fair dealing calls for parties to a contract to
refrain from doing ‘anything which will have the effect of destroying or injuring the right of the
other party to receive’ the benefits of the contract.” 33 The plaintiff must show that “the party
alleged to have acted in bad faith has engaged in some conduct that denied the benefit of the
bargain originally intended by the parties.” 34 After review of the Third Amended Complaint, the
Court finds that the allegations, accepted as true, contain sufficient facts to state a claim for
breach of good faith and fair dealing.
The Court next turns to damages. Federal Rule of Civil Procedure 55(b) states that “[t]he
court may conduct hearings . . . when, to enter or effectuate judgment, it needs to . . . determine
32
Docket No. 128 ¶ 183.
33
Brunswick Hills Racquet Club, Inc. v. Route 18 Shopping Ctr. Assocs., 864 A.2d 387,
396 (N.J. 2005) (quoting Palisades Props., Inc. v. Brunetti, 207 A.2d 522, 531 (1965)).
34
Id. (internal quotation marks and citation omitted).
9
the amount of damages.” However, if “the amount claimed is a liquidated sum or one capable of
mathematical calculation,” a court may enter judgment without a hearing. 35
Plaintiffs’ Third Amended Complaint seeks an award of compensatory damages and
interest. In its Motion, Plaintiffs seek damages in the amount of $4,981,957.00. This amount is
based on an expert report by Plaintiffs’ expert, Stephen J. Scherf, in which he calculated the
damages attributable to both Axos Bank and Solar Experts after the Court’s Order on the
summary judgment motions. The report states the following:
Table 1 – Summary of Damages 36
Description
Amount
Amount
(Solar Experts) (Axos)
Costs to complete the solar system
$173,488
Cost and Additional Losses Due to Roof Damage
4,163,455
Overcharges
2,412,988
Lien
545,910
545,910
Legal Fees and Costs - Lien
99,104
99,104
Total
$4,981,957
$3,058,002
35
Venable v. Haislip, 721 F.2d 297, 300 (10th Cir. 1983) (citation omitted); see Marcus
Food Co. v. DiPanfilo, 671 F.3d 1159, 1172 (10th Cir. 2011) (“Rule 55 of the Federal Rules of
Civil Procedure . . . does not require that the district court receive evidence on the claimed
damages amount before entering default judgment; rather, the Rule simply allows the district
court to conduct a hearing if it believes that additional investigation or evidence is necessary.”)
(citation omitted).
36
Docket No. 270, at 11. This report excludes delay damages as the Court previously
granted summary judgment to Defendant precluding Plaintiffs’ recovery based on delay. Id. at 6.
10
Upon review of Mr. Scherf’s updated report, the exhibits, and the Third Amended
Complaint, the Court finds there is sufficient information to award damages in the amount of
$4,981,957.00 to Plaintiffs.
B. Motion to Bifurcate
Plaintiffs and Defendant Axos Bank filed a Motion to Bifurcate to separate the claims
related to Solar Experts and those related to Axos Bank. Based upon default judgment being
entered against Solar Experts above, the Court will deny this Motion as moot.
C. Motion to Dismiss
The Court next turns to Widi Jr.’s pro se Motion to Dismiss and for an Award of
Attorney’s Fees. Widi Jr. asks the Court to dismiss him from the Complaint. However, there are
no pending claims against him as those claims were resolved in his favor on summary judgment.
Therefore, the Court denies Widi Jr.’s Motion to Dismiss as moot.
Widi Jr. also seeks an award of attorney’s fees. Plaintiffs object, arguing that under Utah
law, attorney’s fees are not warranted because Widi Jr. has not demonstrated that the claims are
without merit and were brought in bad faith. 37
The Court granted summary judgment in favor of Widi Jr. on two civil RICO claims.
Under RICO, a plaintiff is entitled to recover attorney’s fees, 38 but the statute does not provide a
means for a prevailing defendant to do so. 39 Courts have not “construed this provision as
precluding an award of fees to a prevailing defendant when authorized elsewhere,” 40 however,
Widi Jr. does not provide an alternate basis for awarding fees. Further, as discussed below, the
37
Docket No. 267, at 6.
38
18 U.S.C. § 1964(c).
39
See Sullivan v. Hunt, 350 F.3d 664, 665 (7th Cir. 2023).
40
Snyder v. Acord Corp., 811 F. App’x 447, 464 (10th Cir. 2020) (internal quotation
marks and citation omitted).
11
Court does not find that this action, including the RICO claims, was brought without merit or in
bad faith, therefore precluding an award of attorney’s fees under Utah law. The Court will
therefore deny attorney’s fees on the RICO claims.
The Court also granted summary judgment in favor of Widi Jr. on both claims of fraud
and civil conspiracy. Under Utah law, “[i]n civil actions, the court shall award reasonable
attorney fees to a prevailing party if the court determines that the action or defense to the action
was without merit and not brought or asserted in good faith.” 41 Having spent considerable time
presiding over this matter, the Court cannot conclude that this action was without merit or
brought in bad faith. Accordingly, the Court will deny attorney’s fees in favor of Widi Jr as it
relates to these claims.
D. Widi Sr.’s Objection, Motion, and Reconsideration
Widi Sr., acting on behalf of Solar Experts, seeks a number of remedies from the Court.
However, as a limited liability company, Solar Experts must be represented by an attorney
admitted to practice in the District of Utah. 42 Solar Experts has again failed to follow the Court’s
order to obtain counsel to file a notice of appearance and the Court will not address the
arguments raised pro se. Further, parties are responsible for notifying the Court of any change in
address. 43 Plaintiffs properly served Solar Experts at the address on file with the Court. The
Court will therefore overrule the Objection and deny the Motion.
41
Utah Code Ann. § 78B-5-825.
42
DUCivR 83-1.3(c)(2).
43
DUCivR 83-1.3(e).
12
III. CONCLUSION
It is therefore
ORDERED that Plaintiffs’ Motion for Default Judgment (Docket No. 269) is
GRANTED; It is further
ORDERED that Plaintiffs’ and Axos Bank’s Motion to Bifurcate (Docket No. 262) is
DENIED AS MOOT; It is further
ORDERED that Defendant Widi Jr.’s Motion to Dismiss and for Attorney’s Fees (Docket
No. 264) is DENIED; It is further
ORDERED that Defendants Widi Sr.’s and Solar Experts Objection to Plaintiff’s Motion
for Default; Motion to Dismiss for Lack of Jurisdiction; Response to Motion to Bifurcate; and
Reconsideration of Order Granting Withdrawal of Counsel (Docket No. 274) is DENIED.
DATED January 27, 2025.
BY THE COURT:
________________________________________
TED STEWART
United States District Judge
13
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