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Gateway One Lending & Finance, LLC v. Golden Auto Brokers Inc.

United States District Court, N.D. Georgia, Atlanta Division

December 14, 2017

GATEWAY ONE LENDING & FINANCE, LLC, Plaintiff,
v.
GOLDEN AUTO BROKERS INCORPORATED a/k/a GOLDEN AUTO BROKERS, INC., and RAY MAURICE HAMILTON, Defendants.

          OPINION AND ORDER

          WILLIAM S. DUFFEY JR. UNITED STATES DISTRICT JUDGE

         This matter is before the Court on Plaintiff Gateway One Lending & Finance, LLC's (“Plaintiff”) Motion for Entry of Default Judgment [14] (the “Motion”).

         I. BACKGROUND

         A. Facts

         Defendant Golden Auto Brokers Incorporated a/k/a Auto Brokers, Inc. (“Golden Auto”) owns and operates an automobile dealership in Atlanta, Georgia. (Amended Complaint [9] ¶ 10). Ray Maurice Hamilton (“Hamilton”) (together with Golden Auto, “Defendants”) is the principal owner of, and Finance Manager for, Golden Auto. (Id.). Golden Auto sells motor vehicles to consumers pursuant to motor vehicle installment sales contracts. ([9] ¶ 11). The motor vehicle installment sales contracts are then approved and purchased by finance companies, such as Plaintiff. (Id.). The finance companies contemporaneously receive assignment of the motor vehicle installment sales contracts. (Id.).

         On or about October 4, 2012, Golden Auto and Plaintiff entered into a Dealer Agreement (the “Dealer Agreement”). ([9] ¶ 12). The Dealer Agreement established a relationship in which Golden Auto submitted to Plaintiff, for purchase, “contract and/or security agreements evidencing installment sales of goods and/or services to [b]uyers, including their successors in interest, in connection with the retail credit sales of motor vehicles.” (Id.; see also [9] ¶ 12; [9.1]). Hamilton signed the Dealer Agreement on behalf of Golden Auto. ([9] ¶ 13).

         The Dealer Agreement sets forth the terms, conditions, and warranties under which Plaintiff could purchase the motor vehicle installment sales contracts from Golden Auto. ([9] ¶ 14). Under the Dealer Agreement, Golden Auto represented and warranted to Plaintiff that Golden Auto had the right to sell the motor vehicles that were the subject of the motor vehicle installment sales contracts. ([9] ¶ 15). Golden Auto also made the following representations and warranties under the Dealer Agreement: (i) that the motor vehicles sold under the motor vehicle installment sales contracts were free from all liens and encumbrances except those in favor of Plaintiff; (ii) that the motor vehicle installment sales contracts were valid and enforceable; (iii) that Golden Auto was unaware of any facts indicating the motor vehicle installment sales contracts were uncollectable; and (iv) that the motor vehicle installment sales contracts arose from a bona fide sale in the ordinary course of business. ([9] ¶ 16). Golden Auto's failure, for any reason, to perfect Plaintiff's first priority lien interest in a vehicle within 120 days of the date of execution of the motor vehicle installment sales contract would mean Golden Auto was in breach of the Dealer Agreement. ([9] ¶ 17).

         Between late 2012 and late 2014, Plaintiff purchased from Golden Auto numerous motor vehicle installment sales contracts pursuant to the Dealer Agreement. ([9] ¶ 18). Beginning in mid-2014, Golden Auto submitted, and Gateway One purchased, seven motor vehicle installment sales contracts under the Dealer Agreement, including the Wakely Contract [9.2], the Moore Contract [9.3], the Cleveland Contract [9.4], the Gordon Contract [9.5], the Howard Contract [9.6], the Carter Contract [9.7], and the Mordica Contract [9.8] (collectively, the “Contracts”). The Contracts are the subject of this dispute.

         B. Procedural History

         On May 20, 2015, Plaintiff filed its Complaint [1] asserting seven counts of breach of contract and two counts of fraud. The seven counts of breach of contract correspond to each of the seven Contracts. Plaintiff generally asserts Defendants failed to secure a perfected first priority lien interest in favor of Plaintiff[1] and failed to deliver clean title to the vehicles that are the subject of the Contracts.[2] ([9] at 10-18). Plaintiff also claims that Defendants fraudulently represented that they would perfect a lien interest in favor of Plaintiff for those vehicles that are the subject of the Contracts, and that Defendants represented they would do so within 120 days of the date of execution of each Contract. ([9] at 18-21). Plaintiff claims that, by submitting the Contracts, Defendants represented that they could, and would, convey “good title” and a “perfected lien interest” in favor of Plaintiff for the vehicles. (Id.). Plaintiff seeks, in addition to damages, attorney's fees under O.C.G.A. § 13-1-11 and § 13-6-11. ([9] at 21-23).

         On May 31, 2015, Defendants were served with the summons and Complaint. ([3]). On August 14, 2015, upon Plaintiff's request, the Clerk entered default. On May 31, 2016, Plaintiff filed its initial Motion for Default Judgment [7] (“First Default Motion”). On September 22, 2016, the Court issued an order [8] (“September 22nd Order”) directing Plaintiff to amend its Complaint to adequately allege citizenship of the parties. On September 28, 2016, Plaintiff filed its Amended Complaint pursuant to the Court's September 22nd Order. On December 28, 2016, Plaintiff filed its second Motion for Default Judgment [10] (“Second Default Motion”). On March 10, 2017, the Court entered an order denying the Second Default Motion on the grounds that Plaintiff failed to serve Defendants with the Amended Complaint. On March 16, 2017, Plaintiff served Defendants with the Amended Complaint. ([12]). On March 31, 2017, Plaintiff requested the Clerk enter default. On April 3, 2017, the Clerk entered default. The same day, Plaintiff submitted the Motion-its third Motion for Default Judgment. Defendants have not filed a response to the Motion.

         II. LEGAL STANDARD

         Rule 55(b) of the Federal Rules of Civil Procedure provides that default judgment may be entered against defaulting defendants as follows:

(1) By the Clerk. If the plaintiff's claim is for a sum certain or a sum that can be made certain by computation, the clerk-on the plaintiff's request, with an affidavit showing the amount due-must enter judgment for that amount and costs against a defendant who has been defaulted for not appearing and who is neither a minor nor an incompetent person.
(2) By the Court. In all other cases, the party must apply to the court for a default judgment. . . . If the party against whom a default judgment is sought has appeared personally or by a representative, that party or its representative must be served with written notice of the application at least 7 days before the hearing. The court may ...

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