Bank of Ozarks v. Perfect Health Skin and Body Center PLLC

          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 ...