United States District Court, E.D. Michigan, Northern Division
Patricia T. Morris, Magistrate Judge
ORDER GRANTING PLAINTIFF'S MOTION FOR ATTORNEY
FEES IN PART, GRANTING PLAINTIFF'S MOTION FOR DEFAULT
JUDGMENT IN PART, DENYING PLAINTIFF'S MOTION TO STRIKE
AND DENYING DEFENDANT BASH'S REQUEST TO STRIKE
THOMAS
L. LUDINGTON UNITED STATES DISTRICT JUDGE
Plaintiff's
amended complaint (ECF No. 22) contains the following counts:
Count I (Breach of Guaranty against Dr. Bash only); Count II
(Breach of Equipment Finance Agreement against Perfect Health
only); Count III (Breach of Deferral Agreement); Count IV
(Breach of Contract Implied in Law); Count IV[1] (Breach of
Contract Implied in Fact); Count V (Promissory Estoppel);
Count VI (Fraud/Misrepresentation); Count VII (Statutory
Conversion); Count VIII (Common Law Conversion); Violation of
RICO (Count IX); and Count X (Claim & Delivery against
Perfect Health only).
On
January 24, 2019, the Court granted Plaintiff's motion
for partial summary judgment against Dr. Bash as to Count I
(Breach of Guaranty) and Count III (Breach of Deferral
Agreement). ECF No. 46. On May 24, 2019, the Court granted
Defendant Bash's motion for summary judgment in part, and
dismissed Count IV (Breach of Contract Implied in Law), Count
IV (Breach of Contract Implied in Fact), and Count V
(Promissory Estoppel). ECF No. 60. On June 24, 2019, the
Court entered a stipulated order to dismiss Counts VI, VII,
VIII, and IX without prejudice against Dr. Bash only. Thus,
there are no claims pending against Dr. Bash. However,
judgment has not yet been entered against Dr. Bash on Counts
I and III of the amended complaint.
A
default was entered against Perfect Health on March 5, 2019.
ECF No. 54. Plaintiff now seeks a default judgment against
Perfect Health. ECF No. 67. Also pending is Plaintiff's
motion for attorney fees (ECF No. 65), and motions to strike
(ECF Nos. 70, 72), which will be addressed in turn.
I.
Plaintiff
moves for default judgment against Perfect Health, requesting
the following relief:
(1) enter a default judgment for breach of contract on Counts
II and III of the Amended Complaint against Perfect Health in
the amount of $318, 532.50, plus interest as allowed by law
and future costs of collection and attorney fees as Bank OZK
may request on motion; (2) enter a default judgment for
conversion pursuant to MCL 600.2919(a) on Count VII of the
Amended Complaint against Perfect Health in the amount of
$590, 079.43, plus interest as allowed by law; (3) enter a
default judgment for fraud on Count VI of the Amended
Complaint against Perfect Health in the amount of $147,
920.21, plus interest as allowed by law; and (4) enter a
default judgment for RICO on Count IX of the Amended
Complaint against Perfect Health in the amount of $614,
372.29, plus interest as allowed by law. 5 Bank OZK also
requests such other or additional relief as this Court deems
appropriate under the circumstances.
ECF No. 67, PageID.1089.
A.
Before
a default judgment may be entered, a party first must obtain
a default. Fed.R.Civ.P. 55(a). “Once a default is
entered, the defendants are considered to have admitted the
well pleaded allegations in the complaint, including
jurisdiction.” Ford Motor Company v. Cross,
441 F.Supp.2d 837, 845 (E. D. Mich. 2006) (citing
Visioneering Construction v. U.S. Fidelity and
Guaranty, 661 F.2d 119, 124 (6th Cir. 1981)) (emphasis
added).
Here,
Plaintiff properly obtained a default against Defendant
Perfect Health. Federal Rule of Civil Procedure 55(b)(2)
provides that upon application of the party, the court may
enter a default judgment. Rule 55(b)(2) further provides that
a court “may conduct hearings . . . to determine the
[applicable] amount of damages” or “establish the
truth of any allegation by evidence.” The rule further
provides, in relevant part, “[i]f the party against
whom a default judgment is sought has appeared personally or
by a representative, that party or its representative must be
served with written notice of the application at least 7 days
before the hearing.” Fed.R.Civ.P.
55(b)(2).[2]
While
the well-pleaded factual allegations in the complaint are
taken as true when a defendant is in default, damages are
not. Ford Motor Company, 441 F.Supp.2d at 848
(citing Thomson v. Wooster, 114 U.S. 104 (1885)).
“Ordinarily, the District Court must hold an
evidentiary proceeding in which the defendant has the
opportunity to contest the amount [of damages].”
Antoine v. Atlas Turner, Inc., 66 F.3d 105, 110 (6th
Cir. 1995) (internal quotation and citation omitted).
However, Rule 55 gives the court the discretion to determine
whether an evidentiary hearing is necessary, or whether to
rely on detailed affidavits or documentary evidence to
determine damages. Stephenson v. El Batrawi, 524
F.3d 907, 916 (8th Cir. 2008); Federal Rules of Civil
Procedure, Rules and Commentary Rule 55;
B.
Despite
the number of claims advanced by the Plaintiff, the facts are
not particularly complicated, at least from the
Plaintiff's perspective. It entered into an Equipment
Finance Agreement requiring Perfect Health to make 63 partial
monthly payments of $2, 922.47 to Plaintiff Bank of the
Ozarks. In return, Perfect Health granted Bank of the Ozarks
a security interest in a Aspen Laser System with accessories
and five QANS assessment systems with accessories.
Ultimately, Bank of the Ozarks contends that Perfect Health
defaulted for a number of reasons not the least of which was
their failure to make payments. The key provisions of the
Equipment Finance Agreement are as follows:
3. Terms and Payments: You [Perfect Health] promise to pay us
the total of all the payments that are indicated above, which
can be determined by multiplying the number of monthly
payments times the monthly payment amount and the other
payments, all as indicated above.
4. Security Interest: To secure your obligations to us
described in this Agreement, you hereby grant us a
security interest in the Equipment and all accessions
thereto, and replacements thereof, and all proceeds of all
the foregoing.
5. Equipment: You represent and warrant that you are the
sole owner of the Equipment and hold good title therein
free of any liens, encumbrances, or interests of any kind
except for the security interest we hold pursuant to this
Agreement. You agree not to sell, transfer or dispose of
Equipment or any interest therein or to allow the Equipment
to become subject to any liens, encumbrances, or security
interests of an kind, except for our security interest, until
all amounts payable by you under this Agreement have been
paid in full.
11. Default and Remedies: . . . [in the event of a default]
we may exercise any one or more of the following
remedies: (i) accelerate, declare due, sue for and receive
from you the sum of (x) all payments and other amounts then
due and owing under this agreement . . .
ECF No. 75-2, PageID.1283-85 (emphasis ...