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Financial Pacific Leasing, Inc. v. Blackwater Transport, Inc.

United States District Court, E.D. Virginia, Norfolk Division

January 5, 2015

FINANCIAL PACIFIC LEASING, INC., Plaintiff,
v.
BLACKWATER TRANSPORT, INC., MILES WHITE, III, and DONNA WHITE, Defendants.

REPORT AND RECOMMENDATION

LAWRENCE R. LEONARD, Magistrate Judge.

This matter is before the Court on Plaintiff Financial Pacific Leasing, Inc.'s ("Financial Pacific") Motion for Default Judgment, ECF No. 6, which was referred to the undersigned United States Magistrate Judge pursuant to a Referral Order from the Chief United States District Judge, ECF No. 11; see also 28 U.S.C. §§ 636(b)(1)(B); Federal Rule of Civil Procedure 72(b); Eastern District of Virginia Local Civil Rule 72. The Defendants Blackwater Transport, Inc., Miles White, III, and Donna White (collectively, the "Defendants"), though properly served, have failed to respond to Financial Pacific's Complaint. Accordingly, Financial Pacific now seeks entry of default judgment and monetary damages. For the reasons discussed below, the undersigned recommends that the Court GRANT Financial Pacific's Motion for Default Judgment, ECF No. 6.

I. FACTUAL AND PROCEDURAL HISTORY

Financial Pacific filed its Complaint against the Defendants on April 1, 2014, alleging breach of contract claims against all Defendants and a petition in detinue against Blackwater Transport. ECF No. 1 at 5-8. Having failed to enter an appearance or otherwise file a responsive pleading, the Clerk entered default as to all Defendants on June 26, 2014. ECF No. 8. After referral, the undersigned conducted an evidentiary hearing on October 15, 2014, at which Miles White, III and Donna White ("Mr. and Mrs. White") appeared. The undersigned advised Mr. and Mrs. White of the posture of the proceedings, but with no pending motion by either Mr. or Mrs. White to set aside the entry of default, the undersigned conducted the evidentiary hearing.[1] The purpose of the evidentiary hearing was for Financial Pacific to submit additional evidence substantiating its Motion for Default Judgment. Instead, at the hearing, Financial Pacific relied on the evidence previously submitting which included only two affidavits and the attorneys' billing records. ECF No. 6, attachs. 1-2. This evidence, however, was wholly inadequate for the undersigned's determination of the appropriateness of default as the affidavits only conclusorily averred to the total money damages and failed to provide any documentary support substantiating how those damages were calculated. See, e.g., Int'l Painters & Allied Trades Indus. Pension Fund v. Dettrey's Allstate Painting, LLC, 763 F.Supp.2d 32, 36 (D.D.C. 2011) (denying without prejudice a motion for default judgment because the plaintiffs failed to give details as to how the damages were calculated). Accordingly, after Financial Pacific failed to proffer any additional evidence at the evidentiary hearing, the undersigned directed Financial Pacific to file supplementary evidentiary submissions. ECF No. 13. Financial Pacific timely complied with the undersigned's Order, submitting additional documentation and affidavits. ECF Nos. 14, 15. Accordingly, this matter is ripe for recommended disposition.

II. RECOMMENDED FINDINGS OF FACT AND CONCLUSIONS OF LAW

Pursuant to Federal Rule of Civil Procedure 55(a), default is appropriate when a defendant has failed to plead or otherwise defend against an action. Upon request of the party entitled to default, the court may enter against a defendant a default judgment for the amount claimed and costs of the action. Fed.R.Civ.P. 55(a). The Fourth Circuit has "repeatedly expressed a strong preference that, as a general matter, defaults be avoided and that claims and defenses be disposed of on their merits." Colleton Preparatory Acad., Inc. v. Hoover Univ., Inc., 616 F.3d 413, 417 (4th Cir. 2010). Thus, default judgment is only available when the "adversary process has been halted because of an essentially unresponsive party." S.E.C. v. Lawbaugh, 359 F.Supp.2d 418, 421 (D. Md. 2005).

Although default judgment conclusively establishes the defaulting party's admission to the allegations contained in the complaint, Globalsantafe Corp. v. Globalsantafe.com, 250 F.Supp.2d 610, 612 n.3 (E.D. Va. 2003), default does not establish liability for the amount claimed by the plaintiff, Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780 (4th Cir. 2001). Rather, the court must determine if the well-pleaded allegations in the complaint support the entry of default judgment. Id. Accordingly, the court must consider whether the complaint establishes the defendant's liability and then determine the amount of damages. See id. ("[A] default is not treated as an absolute confession by the defendant of his liability and of the plaintiffs right to recover.") (citations omitted).It is for this reason that after considering the defendant's liability, "[t]he court must make an independent determination regarding damages, and cannot accept as true factual allegations of damages." E.E.O.C. v. Carter Behavior Health Servs. No. 4:09-cv-122, 2011 WL 5325485, at *4 (E.D. N.C. Oct. 7, 2011). Thus, it is incumbent on the moving party "to provide the court with sufficient information to ascertain monetary damages with reasonable certainty." Int'l Painters & Allied Trades Indus. Pension Fund, 763 F.Supp.2d at 36. Moreover, the court "has considerable latitude in determining the amount of damages." Jones v. Winnepesaukee Realty, 990 F.2d 1, 4 (1st Cir. 1993) (citing Sony Corp. v. Elm State Elecs., Inc., 800 F.2d 317, 321 (2d Cir. 1986) (emphasis in original).

A. Jurisdiction and Venue

This Court has subject-matter jurisdiction as a result of complete diversity among the parties and an amount in controversy exceeding $75, 000.00. 28 U.S.C. § 1332. Financial Pacific is a Washington corporation with its principal place of business in Washington, while Defendant Blackwater Transport, Inc. is a Virginia corporation with its principle place of business in Franklin, Virginia, and Defendants Mr. and Mrs. White are citizens of Virginia. ECF No. 1 at 2. Personal jurisdiction is proper as all Defendants reside in Franklin, Virginia, which is located within the Eastern District of Virginia, Norfolk Division, and were properly served. ECF No. 4. Venue is proper in the Eastern District of Virginia, Norfolk Division. 28 U.S.C. § 1391(b). Mr. and Mrs. White are not active members of the United States Armed Forces. ECF No. 14, attachs. 5-6.

B. Defendants' Liability

Financial Pacific asserted two general claims in its Complaint: a breach of contract claim against all Defendants and a petition in detinue against Blackwater Transport. ECF No. 1 at 5-8. To establish the Defendants' liability and resulting damages, Financial Pacific proffered the Lease Agreement between Financial Pacific and the Defendants, ECF No. 1, attach. 1, along with the affidavit of Jessica Bailey, a Loss Recovery Agent at Financial Pacific, who averred to the outstanding agreement, the payment history of the Defendants, and proffered supporting documentation. ECF No. 14. Moreover, Financial Pacific proffered the affidavit of Jeremy S. Friedberg ("Mr. Friedberg") of Leitess Friedberg PC ("LFPC"), the firm representing Financial Pacific, who proffered the attorneys' billing records. ECF No. 15.

1. Breach of Contract Claim

To succeed on a claim for breach of contract under Virginia law, Financial Pacific must prove (1) a legal obligation of each Defendant to Financial Pacific; (2) a violation or breach of that obligation; and (3) resulting damage to Financial Pacific. See Caudill v. Wise Rambler, 168 S.E.2d 257, 259 (Va. 1969). Under Virginia Code § 8.01-27, a civil action may be maintained "upon any note or writing by which there is a promise, undertaking, or obligation to pay money, " so long as the writing is signed by the party to be charged or its agent. Va. Code Ann. § 8.01-27. Moreover, a Virginia cause of action for breach of contract is subject to a five-year statute of limitations period, which begins to run from the date the breach occurs. Id. § 8.01-246(2).

Financial Pacific sufficiently established the Defendants' liability on the breach of contract claim in its evidentiary submissions. In support of the first element of a breach of contract claim, Financial Pacific submitted the Lease Agreement, which clearly specified the terms and conditions of the agreement. ECF No. 1, attach. 1. The Lease Agreement was originally executed between Capital Funding, Inc. and the Defendants; thereafter, the Lease Agreement was assigned to Financial Pacific from Capital Funding, id., attach. 2, and Financial Pacific preserved its interest in the Lease Agreement by filing the appropriate Financing Statement with the Virginia State Corporation Commission, id., attach. 3. Although the Lease Agreement is primarily between Financial Pacific and Defendant Blackwater Transport, Inc., Mr. and Mrs. White agreed to serve as guarantors for the agreement, and signed and dated the Lease Agreement on June 28, 2012. Id., attach. 1 at 2. To support the second element for its breach of contract claim, Financial Pacific proffered the Payment History on the Lease Agreement, which indicated that the last payment was made on December 15, 2013, ECF No. 14, attach. 1 at 3, and that Financial Pacific notified the Defendants on February 28, 2014 by certified mail of the delinquent status of the Lease Agreement, ECF No. 1, attach. 4. Finally, to substantiate its resulting damages from the Defendants' failure to pay on the Lease Agreement, Financial Pacific submitted a Buyout Quote that specifies the remaining balance on the lease ...


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