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Bank of America, N.A. v. Elite Satellite Communications, Inc.

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

October 4, 2019

Bank of America, N.A., Plaintiff,
Elite Satellite Communications, Inc., and Byram D. Smith, Sr., Defendants.

          OPINION & ORDER


         Plaintiff Bank of America, N.A., sued Defendants Elite Satellite Communications, Inc. (“ESCI”) and Byram D. Smith, Sr. (together, “Defendants”), alleging they defaulted under a promissory note by failing to make payments when due. (Dkt. 1.) Neither Defendant answered the complaint. Plaintiff now moves for default judgment as to Defendant ESCI.[1] (Dkt. 10.) The Court agrees that Plaintiff has a right to default judgment as to Defendant ESCI and grants Plaintiff's motion.

         I. Background

         In May 2013, Defendant ESCI and Plaintiff executed a promissory note (labeled a loan agreement) for a loan in the original principal amount of $280, 000. (Dkts. 1 ¶ 5; 1-1 at 1.) To secure the debt, Defendant ESCI also executed a security deed pledging all its right, title, and interest in its real property located at 1677 Forest Parkway in Lake City, Clayton County, Georgia, and all rents, royalties, or other income derived from it. (Dkts. 1 ¶ 6; 1-1 at 3.) Defendant Smith signed a guarantee in favor of Plaintiff, guaranteeing and promising to pay promptly when due, all indebtedness of Defendant ESCI. (Dkt. 1 ¶ 7.) Collectively the loan agreement, security deed, and guarantee are referred to as the “loan documents.”

         Plaintiff is the holder and owner of the loan documents. (Id. ¶ 8.) Plaintiff concluded Defendants were in default of the loan documents because they failed to make payments when due and failed to pay the 2017 Clayton County real property taxes for the property (leading to a tax lien on the property in the amount of $4, 720.16). (Id. ¶ 9.) In October (Dkts. 9; 11.) Plaintiff only moved for default judgment against Defendant ESCI. 2018, Plaintiff notified Defendants that they were in default and that, as permitted in the loan documents, it had elected to accelerate all sums due on the loan and demanded full and immediate payment of the entire debt. (Id. ¶ 10.) Defendants have paid no further amounts owed under the loan documents. (Id. ¶ 11.)

         Plaintiff sued Defendants for breach of the loan documents, seeking to recover $229, 130 in unpaid principal; $3, 497.24 in accrued interest as of December 7, 2018; $213.78 in late charges; and additional interest, late charges, fees, costs, and expenses accrued since December 7, 2018. (Id. ¶ 12.) Plaintiff served Defendants, but Defendants failed to answer by the time required. (Dkts. 6; 7.) Plaintiff then requested a clerk's entry of default for Defendant ESCI under Rule 55(a). The Clerk entered that default. (Dkt. 8.) Plaintiff then moved for default judgment against Defendant ESCI and provided updated damages for interest accruals and attorneys' fees. (Dkt. 10.) Defendant ESCI did not oppose the motion, and in fact, has not responded here since being served in December 2018.

         II. Legal Standard

         If a defendant fails to plead or otherwise defend a lawsuit within the time required by the Federal Rules of Civil Procedure and the plaintiff moves for default, the clerk must enter default. See Fed. R. Civ. P. 55(a). Default constitutes admission of all well-pleaded factual allegations in the complaint but not an admission of facts incompletely pleaded or conclusions of law. See Cotton v. Mass. Mut. Life Ins. Co., 402 F.3d 1267, 1278 (11th Cir. 2005).

         After the clerk enters default, the “entry of a default judgment is committed to the discretion of the district court.” See Hamm v. DeKalb Cty., 774 F.2d 1567, 1576 (11th Cir. 1985). Because of the “strong policy of determining cases on their merits, ” the Eleventh Circuit has cautioned that “default judgments are generally disfavored” and not granted as a matter of right. Surtain v. Hamlin Terrace Found., 789 F.3d 1239, 1244- 45 (11th Cir. 2015). A court enters default judgment only “when there is ‘a sufficient basis in the pleadings for the judgment entered.' ” Id. at 1245 (citing Nishimatsu Constr. Co. v. Hous. Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975)).

         The standard for determining the sufficiency of the basis for the judgment is “akin to that necessary to survive a motion to dismiss for failure to state a claim.” Id. A motion for default judgment is conceptually like a reverse motion to dismiss for failure to state a claim. Id.

         “At the motion to dismiss stage, all well-pleaded facts are accepted as true, and the reasonable inferences therefrom are construed in the light most favorable to the plaintiff.” Bryant v. Avado Brands, Inc., 187 F.3d 1271, 1273 n.1 (11th Cir. 1999). So in considering a motion for default judgment, a court accepts all well-pleaded facts as true and determines whether those facts state a claim for relief that is plausible on its face - that is, whether the plaintiff's allegations allow “the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Singleton v. Dean, 611 Fed.Appx. 671, 671 (11th Cir. 2015) (per curiam).

         And when assessing default judgment damages, the court has “an obligation to assure that there is a legitimate basis for any damage award it enters.” Anheuser Busch, Inc. v. Philpot, 317 F.3d 1264, 1266 (11th Cir. 2003). Courts may enter such awards without holding an evidentiary hearing, but only if “the amount claimed is a liquidated sum or one capable of mathematical calculation.” Adolph Coors Co. v. Movement Against Racism and the Klan, 777 F.2d 1538, 1543-44 (11th Cir. 1985).

         III. Discussion

         Because the Clerk entered default and Defendant ESCI failed to acknowledge or otherwise respond to Plaintiff's lawsuit, the Court considers admitted all well-pleaded factual allegations ...

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