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Walker v. Brooke Corp.

March 30, 2010

CLARENCE WALKER AND WALKER INSURANCE AGENCY L.L.C., A MICHIGAN LIMITED LIABILITY COMPANY, PLAINTIFFS,
v.
BROOKE CORPORATION, A KANSAS CORPORATION, ALERITAS CAPITAL CORPORATION, A DELAWARE CORPORATION, AND BROOKE CAPITAL CORPORATION, A KANSAS CORPORATION, DEFENDANTS.



The opinion of the court was delivered by: Honorable Stephen J. Murphy, III

ORDER GRANTING PLAINTIFFS' MOTION FOR DEFAULT JUDGMENT (docket 15)

The plaintiffs in this matter, Clarence Walker and the Walker Insurance Agency LLC, have moved the Court for a default judgment against defendant Aleritas Capital Corporation. On November 11, 2009, the Court held a hearing on plaintiffs' motion for a default judgment pursuant to Rule 55 of the Federal Rules of Civil Procedure. For the reasons stated below, the Court grants the plaintiffs' motion for default judgment and will enter judgment in favor of plaintiffs and against defendant Aleritas in the sum of $182,770.01.

BACKGROUND

This is a suit by Clarence Walker and the Walker Insurance Agency, LLC against several corporations that Walker alleges defrauded him into quitting his job and purchasing an insurance agency and breached various contracts. Defendants Brooke Corporation and Brooke Capital Corporation are Kansas corporations with their principal place of business in Overland Park, Kansas, and defendant Aleritas Capital Corporation ("Aleritas") is a Delaware Corporation with its principal place of business in Overland Kansas. Walker alleges that agents and representatives of Brooke and Aleritas falsely represented the value of the agency Walker was purchasing and that financing would be available through Aleritas, which was formerly known as Brooke Credit Corporation. Walker alleges that Aleritas failed to comply with its contractual obligation to fund the purchase after he had begun selling insurance for Brooke, signed the franchise agreement and the agreement to purchase the agency and published the plaintiffs names as Brooke's agent of record. Walker has sued for misrepresentation, fraud, privacy torts of false light and misappropriation, breach of contract, unjust enrichment, and violation of the Michigan Franchise Investment Law. Walker seeks an injunction prohibiting the defendants from issuing insurance policies under Walker's license or holding out Walker as their agent, damages and attorneys fees.

PROCEDURAL POSTURE

This suit was filed on October 28, 2008. On November 13, 2008, plaintiff filed certificates of service for all defendants. Two weeks later, on November 26, 2008, plaintiffs requested a clerk's entry of default, which default was entered that day.

On December 9, 2008, the plaintiffs moved for a default judgment as to Aleritas Capital Corp. (Docket entry 8). Plaintiffs moved for default only as to Aleritas apparently because the other defendants, Brooke Corporation and Brooke Capital Corp., are in bankruptcy. Following a telephonic hearing, the Court denied plaintiffs' initial motion for a default judgment on the grounds that service on Aleritas was not properly effected under either Rule 4 of the Federal Rules of Civil Procedure or MCR 2.105. The Court ordered the plaintiff to make alternate service consistent with the Federal Rules of Civil Procedure. The plaintiffs have done so, and now moved again for a default judgment. Aleritas has failed to respond to the motion for default judgment and the time for response has lapsed.

The Court held a hearing on plaintiff's motion for a default judgment on November 11, 2009. At the hearing, the Court expressed concern that the plaintiff had failed to support his motion with adequate evidence as to damages. The plaintiff filed a supplemental brief in support of his motion for default judgment on December 1, 2009.

ANALYSIS

Aleritas did not plead or otherwise defend in this action after being served, so the Clerk properly entered default as to Aleritas. See Fed. R. Civ. P. 55(a).

Rule 55(b)(2) provides that where the plaintiff's claim is not for a sum certain, the party must apply to the Court for a default judgment. The rule provides that the Court may conduct hearings or make referrals--preserving any federal statutory right to a jury trial--when, to enter or effectuate judgment, it needs to:

(A) conduct an accounting;

(B) determine the amount of damages;

(C) establish the truth of any allegation by ...


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