BMO Harris Bank NA v. DVS Freight LLC et al

Filing 43

ORDER DISMISSING CASE signed by Chief Judge Pamela Pepper on 2/22/2021. 42 Plaintiff's amended motion for default judgment GRANTED; default judgment to be entered against defendants OMG Express, OMG Enterprise, DVS Freight. (cc: all counsel)(cb)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN

BMO HARRIS BANK N.A.,
Plaintiff,
Case No. 18-cv-595-pp
v.
DVS FREIGHT LLC, OMG EXPRESS CORP.,
OMG ENTERPRISE INC., and VIOLETA VELEVA,
Defendants.
ORDER GRANTING PLAINTIFF’S MOTION FOR DEFAULT JUDGMENT
(DKT. NO. 42) AND DISMISSING CASE

On April 16, 2018, the plaintiff filed a complaint against the defendants
for breach of contract. Dkt. No. 1. On June 6, 2018, defendant Violeta Veleva,
without counsel, filed an answer on behalf of herself, DVS Freight and OMG
Express. Dkt. No. 7. The plaintiff then filed a motion to strike the answer as to
DVS Freight and OMG Express. Dkt. No. 9. Magistrate Judge William E. Duffin
struck the answer as it pertained to the DVS Freight and OMG Express
because “[a] corporation or limited liability company cannot proceed pro se.”
Dkt. No. 11 at 1. On August 22, 2018, the plaintiff asked the Clerk of Court to
enter default as to defendants DVS Freight LLC and OMG Express Corporation,
dkt. no. 12; the clerk’s office entered default on August 23, 2018. The plaintiff
then filed a motion for default judgment against the corporate defendants. Dkt.
No. 13. The court denied the motion without prejudice on January 14, 2019

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and ordered that by February 8, 2019, the plaintiff must provide proof that
DVS Freight was aware of the suit. Dkt. No. 14 at 6.
On January 23, 2019, the plaintiff filed returns of service for Veleva and
for DVS Freight LLC through Veleva as an officer/member and OMG Express
Corp. through Veleva as registered agent. Dkt. Nos. 15, 16, 17. The next day,
the plaintiff filed a supplemental declaration from Attorney James Haney,
indicating that the two corporations were “personally served” through Veleva.
Dkt. No. 18. On February 26, 2019, the plaintiff filed a second motion for
default judgment as to DVS Freight LLC and OMG Express Corp. Dkt. No. 20.
On June 5, 2019, the plaintiff filed a motion for leave to file an amended
complaint and an amended motion for default judgment, indicating that the
original complaint had not named the proper defendant. Dkt. No. 21. The court
granted that motion. Dkt. No. 22. The plaintiff filed an amended complaint on
July 9, 2019. Dkt. No. 23. The next day, the plaintiff filed a certificate of
service, certifying that copies of the amended complaint and order granting
leave to file the amended complaint were served through U.S. First Class
Regular Mail and Certified Mail on DVS Freight LLC (c/o Veleva), OMG Express
Corp. (c/o Veleva) and Violeta Veleva. Dkt. No. 24.
On October 11, 2019, the plaintiff filed a motion for extension of time to
serve OMG Enterprise Inc. and for alternative service. Dkt. No. 25. Several
months later, the court issued an order denying the February 26, 2019 second
motion for summary judgment (noting that the plaintiff still had not tried to
effect service on the person the Wisconsin Department of Financial Institutions
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had identified as the registered agent of DVS Freight, LLC, Sevdalin Zhekov,
and that it had not served OMG Enterprise—which had been administratively
dissolved—at all). Dkt. No. 27 at 4-5. The court granted the motion for an
extension of time to serve OMG Express and granted the plaintiff’s request to
serve that entity through mail and publication as permitted under Wis. Stat.
§§801.11(1)(c) and (5)(b). Id. at 5-8. The court stayed the case as to Veleva
pending the result of Veleva’s Chapter 7 bankruptcy proceedings. Id. at 7.
On April 22, 2020, the plaintiff filed a return of service for OMG Express
Corp.; again, it indicated that it had served the corporation through Veleva.
Dkt. No. 29. Two months later, the plaintiff filed a motion for extension of time
to serve DVS Freight LLC and OMG Enterprise, Inc. Dkt. No. 30. It indicated
that it had tried several times to serve DVS Freight through its “new” registered
agent, but had been unsuccessful, and that it had served OMG by mail but was
still going through the publication process. Id. at ¶¶3-5. The court granted the
motion the next day and ordered the plaintiff to effectuate service on DVS
Freight LLC and OMG Enterprise, Inc. by the end of the day on July 31, 2020.
Dkt. No. 31.
On July 23, 2020, the plaintiff filed proof of service by publication on
OMG Enterprise in The Kenosha News, dkt. no. 32, as well as a certificate of
service on OMG Enterprise by first-class mail to two different addresses—9931
70th Street in Kenosha and 4128 6th Street in Kenosha, dkt. no. 33. The next
week, the plaintiff filed a motion for extension of time to serve DVS Freight.
Dkt. No. 34. The court granted that motion. Dkt. No. 35. On August 26, 2020,
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the plaintiff filed another motion for extension of time to serve DVS Freight and
for alternate service on DVS Freight. Dkt. No. 36. The court granted this
motion, allowing the plaintiff to serve DVS Freight through mail and
publication under Wis. Stats. §§801.11(1)(c) and (5)(b). Dkt. No. 37. On October
12, 2020, the plaintiff filed a proof of service by publication on DVS Freight in
the Kenosha News, dkt. no. 38, as well as a certificate of service, dkt. no. 39.
On October 19, 2020, the plaintiff filed a notice of dismissal with
prejudice as to Violeta Veleva. Dkt. No. 40. That same day, the plaintiff filed a
request for entry of default as to DVS Freight, OMG Express and OMG
Enterprise. Dkt. No. 41. The court terminated Violeta Veleva as a party and the
Clerk of Court entered default as to DVS Freight, OMG Enterprise and OMG
Express.
The plaintiff has filed an amended motion for default judgment as to the
remaining defendants. Dkt. No. 42. The court will grant that motion.
I.

ENTRY OF DEFAULT
Federal Rule of Civil Procedure 55 requires a two-step process before the

entry of default judgment. A party first must seek an entry of default based on
the opposing party’s failure to plead. Fed. R. Civ. P. 55(a). This means that the
court must assure itself that the defendant was aware of the suit and still did
not respond.
A.

OMG Express Corp.

Under Federal Rule of Civil Procedure 4(h), plaintiffs may serve a
corporate defendant “in the manner prescribed by Rule 4(e)(1).” Fed. R. Civ. P.
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4(h)(1)(A). Rule 4(e)(1) allows the plaintiffs to serve an individual using the
methods allowed by state law in the state where the federal district is
located. Fed. R. Civ. P. 4(e)(1). Usually, Wisconsin requires plaintiffs to
personally serve an officer, director or managing agent of a corporate
defendant. Wis. Stat. § 801.11(5)(a).
The plaintiff filed a return of service for OMG Express Corp on April 22,
2020. Dkt. No. 29. The summons shows that the plaintiff’s process server
personally served Violeta Veleva as the registered agent for OMG Express Corp,
at 9931 70th Street, Kenosha, WI 53142. Id. Although OMG Express Corp. is
now administratively dissolved, the website for the Wisconsin Department of
Financial Institutions shows that Violeta Veleva was its most recent registered
agent and confirms the address. https://www.wdfi.org/apps/CorpSearch/
Details.aspx?entityID=O026233&hash=1864158482&searchFunctionID=60804
cf0-17fc-4276-b152-05d2c1372c9c&type=Simple&q=OMG+Express+Corp.
B.

OMG Enterprise Inc.

The court granted the plaintiff’s motion for an extension of time and for
alternate service on OMG Enterprise, Inc. Dkt. No. 27. Under the court’s order,
the plaintiff was authorized serve OMG Enterprise “through mail and
publication as described in Wisconsin Statute §801.11(1)(c) and (5)(b).” Id. at 7.
Wis. Stat. §801.11(5)(b) allows a plaintiff to serve a domestic corporation by
effecting service “upon an officer, director, or managing agent of the
corporation or limited liability company by publication and mailing as provided
in sub. (1).” Wis. Stat. §801.11(1)(c) describes service by publication and mail,
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indicating that if the plaintiff cannot effect personal service “with reasonable
diligence,
service may be made by publication of the summons as a class 3
notice, under ch. 985, and by mailing. If the defendant’s post-office
address is known or can with reasonable diligence be ascertained,
there shall be mailed to the defendant, at or immediately prior to the
first publication, a copy of the summons and a copy of the
complaint. The mailing may be omitted if the post-office address
cannot be ascertained with reasonable diligence.
Chapter 985 requires that legal notice be published “in a newspaper likely to
give notice in the area or to the person affected.” Wis. Stat. 985.02(1)
The plaintiff published notice of the suit in The Kenosha News for four
weeks, once a week—from June 25 to July 16, 2020. Dkt. No. 32. Although
OMG Express has been administratively dissolved, it’s last recorded address
was in Kenosha, Wisconsin. https://www.wdfi.org/apps/CorpSearch/
Details.aspx?entityID=O028992&hash=847828057&searchFunctionID=8785dc
4c-6ccc-4cc0-8da7-5efbd580c2bc&type=Simple&q=OMG+Enterprise+Inc. A
Google search of “newspaper Kenosha Wisconsin” yields one result—The
Kenosha News. The court finds that publication in The Kenosha News satisfies
the publication requirement for a newspaper likely to give notice in the area
where OMG Enterprise, Inc. was located.
The plaintiff also filed a return of service showing that it mailed copies of
the amended complaint, summons and the order granting alternative service to
OMG Enterprise, Inc. by first-class mail. Dkt. No. 33 at 1. The mail was sent to
two addresses: OMG Enterprise, Inc., 9931 70th Street, Kenosha, WI 53142
and OMG Enterprise, Inc., 4128 6th Street, Kenosha, WI 53144.
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Id. at 2, 3.
The court finds that the plaintiff has effected service on OMG Enterprise,
Inc. under Wis. Stat. §§801.11(1)(c) and (5)(b).
C.

DVS Freight, LLC

The court granted the plaintiff’s motion for an extension of time and for
alternate service on DVS Freight LLC. Dkt. No. 37. Under the court’s order, the
plaintiff was authorized to serve DVS Freight “by mail and publication as
described in Wisconsin Statute §801.11(1)(c) and (5)(b).” Id. at 5.
The plaintiff published notice of the suit in The Kenosha News for four
weeks, once per week—from September 14, 2020 to October 5, 2020. Dkt. No.
38. DVS Freight also has been dissolved; its last address was in Kenosha,
Wisconsin. https://www.wdfi.org/apps/CorpSearch/Details.aspx?entityID=
D052227&hash=2130663864&searchFunctionID=56aa9508-d059-453f-b8bfa2229f958756&type=Simple&q=DVS+Freight. The court concludes that
publication in The Kenosha News satisfies the requirement for service by
publication in a newspaper likely to give notice in the area of DVS Freight LLC.
The plaintiff also filed a return of service indicating that it mailed copies
of the amended complaint, summons and the order granting alternative service
to DVS Freight by first-class mail. Dkt. No. 39 at 1. The mail was sent to DVS
Freight LLC, c/o Sevdalin Zhekov, Registered Agent, 9931 70th Street,
Kenosha, WI 53144. Id. at 2.
The court finds that the plaintiff has properly served defendant DVS
Freight, LLC as permitted under Wis. Stat. §§801.11(1)(c) and (5)(b).
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II.

PLAINTIFF’S MOTION FOR DEFAULT JUDGMENT
After the entry of default, the plaintiff may move for default judgment

under Fed. R. Civ. P. 55(b). When the court determines that a defendant is in
default, the court accepts as true the well-pleaded allegations in the complaint.
e360 Insight v. The Spamhaus Project, 500 F.3d 594, 602 (7th Cir. 2007). “A
default judgment establishes, as a matter of law, that defendants are liable to
plaintiff on each cause of action in the complaint.” Id. However, “even when a
default judgment is warranted based on a party’s failure to defend, the
allegations in the complaint with respect to the amount of damages are not
deemed true.” Id. (quoting In re Catt, 38 F.3d 789, 793 (7th Cir. 2004)). A
district court “must conduct an inquiry in order to ascertain the amount of
damages with reasonable certainty.” Id. Rule 55(b)(2) allows the district court
to conduct this inquiry through hearings or referrals, if necessary, to determine
the amount of damages. Fed. R. Civ. P. 55(b). Such proceedings are
unnecessary, however, if the “amount claimed is liquidated or capable of
ascertainment from definite figures contained in the documentary evidence or
in detailed affidavits.” e360 Insight, 500 F.3d at 602 (quoting Dundee Cement
Co. v Howard Pipe & Concrete Prods., Inc., 722 F2d 1319, 1323 (7th Cir.
1983)).
The complaint states four claims for breach of contract, one against each
defendant. Dkt. No. 23 at 11-14. Because the court has dismissed defendant
Violeta Veleva, three claims remain. Each claim is based on the plaintiff’s
allegation that the particular defendant defaulted on its loans.
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The plaintiff had entered into Loan and Security agreements with each of
the defendants. Each of these agreements includes “Events of Default” clauses
making OMG Express in default as a debtor under the loan if it “fail[ed] to pay
when due any amount owed by it to BHB [BMO Harris Bank] under this
Agreement.” Id. at ¶¶12, 21, 30, 41. Each also includes a remedy clause,
whereby “upon default by OMG Express, BHB may “declare the indebtedness
hereunder to be immediately due and payable.” Id. at ¶¶13, 22, 31, 42. In all
the following contracts, the plaintiff states that each defendant defaulted by
failing to make the minimum required monthly payment.
A.

OMG Express Corp.

The plaintiff entered two agreements with OMG Express Corp. On
November 22, 2013, OMG Express and the plaintiff entered into a Loan and
Security Agreement in the amount of $36,650.16. Dkt. No. 23 at ¶8. On
November 25, 2013, the parties entered into a second Loan and Security
Agreement in the amount of $106,624.80. Id. at ¶17. The plaintiff states that
OMG Express defaulted on these agreements on or about December 15, 2017.
Id. at ¶¶ 16, 25.
The plaintiff claims that OMG Express Corp. owes $46,639.84 plus
interest, attorneys’ fees and costs and any other relief the court deems
equitable and just. Id. at 12. The plaintiff has supported this amount through
affidavit. Dkt. No. 42-2 at ¶36; 70-72 (Exhibit I).

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B.

OMG Enterprise, Inc.

The plaintiff entered into one agreement with OMG Enterprise, Inc. On or
about August 8, 2014, OMG Enterprise and the plaintiff entered into a Loan
and Security Agreement in the amount of $152,178.48. Id. at ¶26. OMG
Enterprise defaulted on this agreement on or about December 15, 2017. Id. at
¶36.
The plaintiff seeks from OMG Enterprise. Inc. $59,879.85 plus interest,
attorneys’ fees and costs and any other relief the court deems equitable and
just. Id. at 12. It has supported this amount through affidavit. Dkt. No. 42-2 at
¶37; 73-74 (Exhibit J).
C.

DVS Freight LLC

The plaintiff entered into three agreements with DVS Freight LLC. On or
about October 30, 2014, DVS Freight and the plaintiff entered into a Loan and
Security Agreement in the amount of $143,181.60. Id. at ¶37. On or about
November 26, 2014, DVS Freight entered into a second Loan and Security
Agreement with the plaintiff in the amount of $154,106.64. Id. at ¶46. On or
about January 7, 2015, DVS Freight and the plaintiff entered into a third Loan
and Security Agreement in the amount of $158,058.00. Id. at ¶55. The plaintiff
states that DVS Freight defaulted on all three loans on or about December 1,
2017. Id. at ¶45, 54, 63.
The plaintiff claims that DVS Freight LLC owes $165,567.49 plus
interest, attorneys’ fees and costs and any other relief the court deems

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equitable and just. Id. at 13. It has supported this amount through affidavit.
Dkt. No. 42-2 at ¶35; 66-69 (Exhibit H).
III.

CONCLUSION
The court GRANTS the plaintiff’s motion for default judgment. Dkt. No.

42.
The court ORDERS that default judgment shall be entered in favor of the
plaintiff and against OMG Express Corp. in the amount of $46,639.84 plus
interest and costs.
The court ORDERS that default judgment shall be entered in favor of the
plaintiff and against OMG Enterprise Inc. in the amount of $59,879.85 plus
interest and costs.
The court ORDERS that default judgment shall be entered in favor of the
plaintiff and against DVS Freight Corp. in the amount of $165,567.49 plus
interest and costs.
The clerk will enter judgment accordingly.
The court ORDERS that this case is DISMISSED.
Dated in Milwaukee, Wisconsin this 22nd day of February, 2021.
BY THE COURT:
_____________________________________
HON. PAMELA PEPPER
Chief United States District Judge

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