United States District Court, E.D. Virginia, Alexandria Division
ROBERT HIRSCH and ROCCO J. DeLEONARDIS, Plaintiffs,
ROBERT JOHNSON and ADAM ROMNEY, Defendants.
REPORT AND RECOMMENDATION
THOMAS RAWLES JONES, Jr., Magistrate Judge.
This matter is before the court on plaintiffs' motion for default judgment (no. 22) against defendant Robert Johnson. For the reasons discussed below, the magistrate judge makes findings as follows, and conditionally recommends that default judgment be entered in plaintiffs' favor as to liability with a supplemental hearing to be held as to damages.
On March 31, 2014, plaintiffs Robert Hirsch and Rocco J. DeLeonardis filed a complaint against Robert Johnson and Adam Romney for claims arising out of an assignment of legal interests. On April 8, 2014, process was served by posting on defendant Robert Johnson by private process server. No. 6. Defendant Johnson has not answered or otherwise responded to the complaint, and the Clerk has entered default as to defendant Robert Johnson.
On September 19, 2014, plaintiffs filed the instant motion for default judgment as to defendant Johnson. On October 3, 2014, counsel for plaintiffs appeared before the undersigned and no one appeared on behalf of defendant Johnson. On October 17, 2014, plaintiffs filed their memorandum in support of default judgment (no. 26) and on January 12, 2015, plaintiffs filed a supplemental brief in support of default judgment (no. 31) as ordered by the court.
Under Federal Rule of Civil Procedure 55, default judgment is appropriate if the well-pled allegations of the complaint establish a plaintiff's entitlement to relief and defendant has failed to plead or defend within the time frames contained in the rules. Fed.R.Civ.P. 55; Music City Music v. Alfa Foods, Ltd., 616 F.Supp. 1001, 1002 (E.D. Va. 1985). By defaulting, a defendant admits plaintiff's well-pled allegations of fact, which then provide the basis for judgment. Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780 (4th Cir. 2001); Partington v. Am. Int'l Specialty Lines Ins. Co., 443 F.3d 334, 341 (4th Cir. 2006) (default has the effect of admitting factual allegations in the complaint). Here, as defendant Robert Johnson has not answered or timely responded to this suit, defendant has admitted the well-pled allegations of fact contained in the complaint.
The following facts are established by the well-pled allegations of the complaint and the exhibits attached thereto.
Plaintiff Robert Hirsch is a resident of New York and plaintiff Rocco J. DeLeonardis is a resident of Virginia. Compl. ¶¶ 1-2, No. 1. Defendant Robert Johnson resides in Arizona and is a resident of Texas and Arizona. Compl. ¶ 3.
From July 2009 to October 2013, plaintiffs provided defendant Johnson with Arizona legal counsel and plaintiff DeLeonardis, a Virginia attorney, provided legal work and assistance in the prosecution of civil action no. CV2007-009523, the " Wanckuk Litigation, " filed in Arizona. Compl. ¶¶ 10, 13. In exchange, on December 15, 2011, Johnson, individually and on behalf of Tightlines International, executed an Assignment of Claims, Defenses, and Interests before an Arizona notary, assigning Hirsch and DeLeonardis a sixty-five percent interest in the litigation, including any proceeds of recovery. Compl. ¶¶ 8, 12 & Ex. 2 ("Assignment of Claims").
In December 2012, DeLeonardis and dismissed-defendant Adam Romney signed a retainer agreement whereby Romney would act as attorney for plaintiffs in their capacity as assignees and interested parties in the Wanckuk Litigation. Compl. ¶ 14 & Ex. 1 ("Retainer Agreement").
After thirteen years of litigation in Nevada and Arizona, the Wanckuk Litigation settled during a mediation hearing in Arizona. Compl. ¶¶ 17-19. On October 24, 2013, the parties to that litigation executed a Settlement Agreement and Release for $200, 000. Compl. ¶ 19 & Ex. 4 ("Settlement Agreement"). On November 1, 2013, the Wanckuk defendants wired this amount to Romney's escrow account. Compl. ¶ 20 & Ex. 5 ("Wire Transfer").
Despite their repeated demands, Romney has refused to disburse to Hirsch and DeLeonardis their share of the settlement proceeds without first receiving approval from Johnson. Compl. ¶ 22. Johnson has instructed Romney not to disburse the funds in accordance with the terms of the Assignment of Claims, stating that he does not recall executing the agreement and that the agreement is not valid. Compl. ¶¶ 25, 32, 41. Johnson also made false "overtures" to state and federal authorities of criminal conduct on the part of Hirsch with respect to the assignment. Compl. ¶ 43. In the instant complaint, plaintiffs allege breach of contract, repudiation of contract, tortious interference with a retainer agreement, ...