United States District Court, E.D. Michigan, Southern Division
ORDER GRANTING MOTION FOR ENTRY OF DEFAULT
F. Cox United States District Court Judge
sued Defendants for breach of contract. After being properly
served, Defendants failed to answer Plaintiff's
complaint. The Clerk entered defaults against Defendants.
Plaintiff now moves for a default judgment in the amount of
$1, 043, 870.90. For the reasons below, the Court will grant
Crestmark provides loans to small and mid-size companies.
Compl. ¶ 7. On July 7, 2016, Crestmark and Defendant
Hooven-Dayton Corporation (“Hooven”) entered into
a loan and security agreement. Id. at ¶ 8.
Under the loan agreement, Crestmark agreed to advance, and
Hooven agreed to repay, the principal amount of $5, 600, 000,
plus expenses, fees, costs of collection, and interest.
Id. at ¶ 9. Defendant Che International Group,
L.L.C., (“CIG”) guarantied the loan. Id.
at ¶ 10. Hooven's debt was also secured by a
promissory note, which CIG also guarantied. Id. at
the terms of the loan, Hooven agreed to make payments to
Crestmark, to maintain a loan balance in accordance with the
terms set forth in the loan documents, and to maintain a
specific debt service ratio. Id. at ¶ 16.
Hooven breached all of these conditions. Id. at
January 13, 2017, Crestmark notified Hooven and CIG of
Hooven's breach. Id. at ¶ 22. On May 11,
2017, Crestmark, Hooven, and CIG entered into a letter
forbearance agreement. Id. at ¶ 23. In the
first forbearance agreement, Hooven admitted that it was in
default and that it owed $4, 867, 549.58, and waived all
defenses. Id. at ¶ 26, 27. CIG expressly
reaffirmed its guaranty. Id. at ¶ 25.
February 7, 2018, the parties entered into a second
forbearance agreement. Id. at ¶ 29. Hooven and
CIG reaffirmed their default and CIG's guaranty, and
waived all defenses. Id. at ¶ 30-32. Hooven
also agreed to obtain a commitment for alternate financing on
or before April 15, 2018, and that it would pay the full
amount due no later June 30, 2018. Id. at ¶ 33.
failed to obtain alternate financing or pay the debt.
Id. at ¶ 34. On April 10, 2018, the parties
entered into a surrender agreement, under which Hooven and
CIG agreed that they remained in default and that the amount
due was $3, 320, 753, not including fees and expenses.
Id. at ¶ 35. Hooven acknowledged that it had
ceased conducting business activities and agreed to assist
Crestmark in liquidating its collateral. Id. at
15, 2018, Crestmark conducted a U.C.C. foreclosure sale of
Hooven's collateral. Id. at ¶ 38. The sale
generated $1, 305, 000. Id. Crestmark acquired other
of Hooven's personal property by submitting a credit bid
for $1, 000, 000. Id. The auctioneer's fee was
$155, 000. Id.
the application of the above amounts, the amount due and
owing by Hooven to Crestmark after the U.C.C. foreclosure
sale was $1, 025, 727, not including fees and interest.
Id. at ¶ 39. Hooven and CIG have failed to pay
this amount. Id. at ¶ 40-42.
December 11, 2018, Crestmark filed a verified complaint,
alleging breach of contract against Hooven and breach of
guaranty against CIG. (ECF No. 1). On December 19, 2018,
Crestmark served the complaint and summons on the registered
agent of Hooven and CIG. (ECF Nos. 10, 11). Neither Defendant
responded and, on January 15, 2019, the Clerk of the Court
entered default against both Defendants. (ECF Nos. 15, 16).
Crestmark served the Clerk's entry of default on both
Defendants. (ECF No. 17).
January 24, 2019, Crestmark requested that the Clerk enter a
default judgment against Defendants. (ECF No. 18). The Clerk
denied this request because “[t]he sum certain amount
could not be made certain by computation by the Clerk.”
(ECF No. 20).
Crestmark filed this motion for default judgment, requesting
a judgment in the amount of $1, 043, 870.90. (ECF No. 21).
Crestmark served Defendants with notice of the Court's
intention to hear oral arguments on this motion. (ECF No.
24). The Court heard oral ...