Southern Bank and Trust Company v. Prosperity Beach, LLC et al

Filing 30

OPINION & ORDER: Plaintiffs Motion for Default Judgment against Granby and Dean is GRANTED. Plaintiff is DIRECTED to submit a motion for attorneys fees with affidavit in support by May 28, 2015. Further, by May 28, 2015, Plaintiff is DIRECTED to su bmit a calculation of pre-judgment interest for each day from June 17, 2015 through July 1, 2015. Defendants may file a response to Plaintiffs motion for attorneys fees and calculation of pre- judgment interest by June 11, 2015, to which Plaintiff can reply by June 16, 2015. A copy of this order was forwarded to 426 Granby St., LLC, and Craig Dean at the addresses listed on the summons and to all counsel of record. Signed by Magistrate Judge Tommy E. Miller on 5/13/15 and filed on 5/14/15. (tbro)

UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
Norfolk Division
SOUTHERN BANK AND TRUST COMPANY,
Plaintiff,
v.

Action No. 2:14cv271

426 GRANBY STREET, LLC,
ROBERT F. WRIGHT,
CRAIG DEAN,
Defendants.

OPINION & ORDER
This breach of contract action is brought by Plaintiff Southern Bank and Trust Company
(“Southern”) seeking judgment against Defendants for their failure to perform their obligations
under three contracts—a Promissory Note entered into by 426 Granby Street, LLC (“Granby”), a
Guaranty entered into by Robert F. Wright (“Wright”), and a Guaranty entered into by Craig
Dean (“Dean”). The parties consented to proceed before a United States Magistrate Judge in
accordance with the provisions of 28 U.S.C. § 636(c) and Federal Rule of Civil Procedure 73.
The matter is before the Court on Plaintiff’s Motion for Default Judgment against Granby and
Dean (ECF No. 9). For the reasons stated herein, Plaintiff’s Motion for Default Judgment is
GRANTED.
I. JURISDICTION AND VENUE
Based on the facts of this case, the Court holds both subject matter jurisdiction over the
case and personal jurisdiction over the defendants. Similarly, venue is proper.
A. Subject Matter Jurisdiction
A federal district court has subject matter jurisdiction over all civil actions where the

matter in controversy exceeds $75,000, exclusive of interest and costs, and is between citizens of
different States. See 28 U.S.C. § 1332 (2012). A corporation is a citizen of every state by which
it has been incorporated and the one state where it has its principal place of business. Id.
Here, Southern is a banking corporation incorporated and maintaining its principal place
of business in North Carolina. Pl. Mem. in Support of Mot. for Sum. Judg. (“Pl. Mem.”) 3, ECF
No. 20. Granby, Dean, and Wright are all citizens of the Commonwealth of Virginia. Id.; ECF
No. 1. Because the parties are of diverse citizenship, and the amount in dispute exceeds $75,000,
the Court holds subject matter jurisdiction over this case.
B. Personal Jurisdiction
Personal jurisdiction over a defendant is established when a defendant has sufficient
“minimum contacts with [the forum state] such that the maintenance of the suit does not offend
‘traditional notions of fair play and substantial justice,’” Int’l Shoe Co. v. Washington, 326 U.S.
310, 316 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1941)), and when the defendant
is subject to the personal jurisdiction of the courts of general jurisdiction of the forum state. See
Fed. R. Civ. P. 4(k)(1)(A). The Court has personal jurisdiction over Granby, Wright, and Dean
pursuant to Virginia Code Section 8.01-328.1 because they transact business, including the
transaction at issue in this case, in the Commonwealth of Virginia. Va. Code § 8.01-328.1; see
also Pl. Mem., ECF No. 20; ECF No. 1.
C. Venue
Venue is proper under 28 U.S.C. § 1391(b)(1)-(2) because a substantial part of the events
giving rise to Southern’s claim occurred in this judicial district and division. Pl. Mem., ECF No.

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20. 1
II. UNDISPUTED FACTS
On April 30, 2004, Granby executed a Promissory Note in the amount of $600,000.00 in
favor of Bank of the Commonwealth (“Original Note”). Original Note, ECF No. 1-1; Def.’s Ans.
to Compl. (“Answer”) ¶ 7, ECF No. 5; ECF No. 20. On September 15, 2005, Granby executed
the first of two Change in Terms Agreements (“First Change Agreement”) in favor of Bank of
the Commonwealth which modified the terms of the Original Note. First Change Agreement,
ECF No. 1-2; Answer ¶ 8, ECF No. 5; ECF No. 20. On November 3, 2006, a second Change in
Terms Agreement (“Second Change Agreement”) was executed which further modified the
Original Note. Second Change Agreement, ECF No. 1-3; Answer ¶ 9, ECF No. 5; ECF No. 20.
On October 10, 2008, Granby executed a replacement Promissory Note (“First Replacement
Note”) in favor of Bank of Commonwealth which renewed the Original Note. First Replacement
Note, ECF No. 1-4; Answer ¶ 10, ECF No. 5; ECF No. 20. On October 15, 2009, Granby
executed a second replacement promissory note (“Second Replacement Note”) in favor of Bank
of the Commonwealth, which renewed the First Replacement note. Second Replacement Note,
ECF No 1-5; Answer ¶ 11, ECF No. 5; ECF No. 20. On February 29, 2012, Granby executed a
Note Modification Agreement in favor of Southern which had become the holder of the
obligation. Note Modification Agreement, ECF No. 1-6; Answer ¶ 12, ECF No. 5; ECF No. 20.
The Original Note, First Change Agreement, Second Change Agreement, First Replacement
Note, Second Replacement Note, and Note Modification Agreement will be collectively referred
to as the “Note.”
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Additionally, a Choice of Venue provision included in the October 15, 2009 Promissory
Note (ECF No. 1-5) stipulates as follows: “If there is a lawsuit, Borrower agrees upon
Lender’s request to submit to the jurisdiction of the applicable courts for the City of
NORFOLK, Commonwealth of Virginia.”
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Craig Dean executed a Commercial Guaranty (the “Dean Guaranty”) by which he
“absolutely and unconditionally guarantee[d] and promise[d] to pay . . . the Indebtedness. . . of
428 Granby Street, LLC” on April 29, 2004. Dean Guaranty, ECF No. 1-9. On March 6, 2012,
Wright executed a Commercial Guaranty (the “Wright Guaranty”) personally guarantying “full
and punctual payment and satisfaction of the Indebtedness of [426 Granby Street, LLC] to
Lender, and the discharge of all of [426 Granby Street, LLC]’s obligations under the Note and
Related Documents.” Wright Guaranty, ECF No. 1-8. Granby defaulted on the Note.
Answer ¶ 14, ECF No. 5; ECF No. 20. By a Demand Letter dated March 15, 2013, Southern
demanded payment in full under the Note from Granby, and under the Guaranty from Wright and
Dean. Demand Letter, ECF No. 1-7; Answer ¶ 16, ECF No 5; ECF No. 20. Southern made a
demand for payment in full of the principal balance of $194,433.85, interest in the amount of
$32,124.48 through June 6, 2014, late charges in the amount of $92.49, and an appraisal fee in
the amount of $10,250.00 due under the Note. Pl. Mem. at 5, ECF No. 20. No payment has been
made on the Note. Answer ¶ 22, ECF No. 5; ECF No. 20.
III. PROCEDURAL HISTORY
On June 6, 2014, Southern filed its Complaint against 426 Granby Street, LLC, Robert F.
Wright, and Craig Dean. ECF No. 1. Defendant Wright timely filed an Answer and Affirmative
Defenses on June 30, 2014. ECF No. 5. Granby and Dean failed to file an Answer within twentyone days of being served with the summons and complaint, or to make a timely waiver of service
pursuant to Federal Rule of Civil Procedure 12(a)(1). See Summons, ECF No. 4. The clerk
entered default as to defendants 426 Granby Street, LLC and Craig Dean on July 10, 2014 and
Southern submitted a Motion for Default Judgment on August 11, 2014. ECF Nos. 8, 9. To avoid
the possibility of inconsistent judgments, on October 3, 2014, Southern’s Motion for Default

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Judgment was stayed pending resolution of the Motion for Summary Judgment against Wright.
ECF No. 11.
Southern also filed suit against Prosperity Beach, LLC, Robert F. Wright, and Craig
Dean on June 5, 2014, for payment in full under a separate Promissory Note from Prosperity
Beach, LLC and Commercial Guaranties executed by Wright and Dean. Southern Bank and
Trust Company v. Wright et al., 2:14-cv-270 (E.D. Va. filed June 5, 2014). The actions against
Prosperity Beach, LLC (2:14-cv-270) and 426 Granby Street, LLC (2:14-cv-271) were
consolidated on November 18, 2014. 2 ECF No. 18.
Southern filed a Motion for Summary Judgment against Wright on March 4, 2015. ECF
19, 20 (consolidated under 2:14-cv-270). Southern’s Motion for Default Judgment against
Granby and Dean was stayed pending resolution of the Motion for Summary Judgment against
Wright. ECF No. 11. On May 8, 2015, Southern submitted a Motion for Entry of Dismissal with
respect to Wright and renewed the Motion for Default Judgment against Granby and Dean. ECF
No. 25. Dismissal of the claim against Wright was ordered on May 11, 2015. ECF No. 29.
IV. MOTION FOR DEFAULT JUDGMENT AGAINST
426 GRANBY STREET, LLC AND CRAIG DEAN
Rule 55 of the Federal Rules of Civil Procedure requires an entry of default against a
defendant who “has failed to plead or otherwise defend, and that failure is shown by affidavit or
otherwise.” Fed. R. Civ. P. 55(a). The Clerk properly entered a default against defendants
Granby and Dean on July 10, 2014, as the defendants failed to respond to the complaint within
the twenty-one days allowed by Rule 12 of the Federal Rules of Civil Procedure. ECF No. 7; see
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The Motion for Summary Judgment against Wright and the Motion for Default
Judgment against Dean and Prosperity Beach, LLC in the 2:14-cv-270 action were
granted in an Opinion and Order issued on May 7, 2015. ECF No. 27. On May 8, 2015,
Southern submitted a Motion to Dismiss the case against Wright. ECF No. 25. Dismissal
was granted on May 11, 2015. ECF No. 28.
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Fed R. Civ. P. 55(a).
Upon default, the facts alleged in the complaint are admitted. See, e.g., Airlines Reporting
Corp. v. Sarrion Travel, Inc., 846 F.Supp. 2d 533, 535 (E.D. Va. 2012); Globalsantafe Corp. v.
Globalsantafe.com, 250 F. Supp. 2d 610, 612 n.3 (E.D. Va. 2003). Conclusions of law are not
deemed admitted, and therefore, the Court must “determine whether the well-pleaded allegations
in [the] complaint support the relief sought in this action.” Ryan v. Homecoming Fin. Network,
253 F.3d. 778, 780 (4th Cir. 2001).
The Federal Rules require a “short and plain statement of the claim showing that the
pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). Recent Supreme Court decisions, however,
mandate that a well pleaded complaint “must contain sufficient factual matter, accepted as true,
to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Simple “legal
conclusion[s] . . . [are] not entitled to the assumption of truth.” Iqbal, 556 U.S. at 680 (citing
Twombly, 550 U.S. at 555).
Southern properly pleaded a breach of contract claim against Granby and Dean. Under
Virginia law, a properly pleaded breach of contract claim requires a showing of “(1) a legally
enforceable obligation of a defendant to a plaintiff; (2) the defendant’s violation or breach of that
obligation; and (3) injury or damage to the plaintiff caused by the breach of obligation.” Filak v.
George, 594 S.E.2d 610, 614 (Va. 2004); see also Brown v. Harms, 467 S.E.2d 805, 807 (Va.
1996); Fried v. Smith, 421 S.E.2d 437, 439 (Va. 1992).
Here, Southern alleges that Granby executed a Promissory Note in favor of Bank of the
Commonwealth and that defendant Dean executed a Commercial Guaranty. ECF No. 1. As the
present holder of the Note and the Dean Guaranty, Southern demanded payment in full under the

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Note and the Dean Guaranty, and no payments have been made. Id. As such, Southern alleges
that Granby is in default under the Note and Dean is in default under the Guaranty. Id. Plaintiff
Southern has made a well-pleaded complaint and the Court GRANTS Plaintiff’s Motion for
Default Judgment as to Granby and Dean.
Default judgment does not automatically grant the relief sought in the complaint, but the
relief granted cannot exceed the amount demanded in the pleadings. See Fed. R. Civ. P. 54(c). In
the Complaint, Southern seeks payment of the principal balance of $194,433.85, interest in the
amount of $32,124.48 through June 6, 2014, late charges in the amount of $92.49, and an
appraisal fee of $10,250.00. Pl. Mem. 6, ECF No. 20. Additionally, Southern requests payment
of reasonable attorneys’ fees and expenses incurred with this action. Id. Southern does not
specify the amounts requested in attorneys’ fees or expenses.
V. CONCLUSION
This Court GRANTS Plaintiff’s Motion for Default Judgment as to 426 Granby Street,
LLC and Craig Dean under Federal Rule of Civil Procedure 55(b)(1).
Plaintiff is DIRECTED to submit a motion for attorneys’ fees with affidavit in support by
May 28, 2015. Further, by May 28, 2015, Plaintiff is DIRECTED to submit a calculation of prejudgment interest for each day from June 17, 2015 through July 1, 2015. Defendants may file a
response to Plaintiff’s motion for attorneys’ fees and calculation of pre-judgment interest by June
11, 2015, to which Plaintiff can reply by June 16, 2015.

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The Clerk is DIRECTED to send copies of this Opinion and Order to 426 Granby St.,
LLC, and Craig Dean at the addresses listed on the summons (ECF No. 4), as well as to all
counsel of record.

_____________/s/__________________
Tommy E. Miller
United States Magistrate Judge
Norfolk, Virginia
May 13, 2015

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