United States District Court, E.D. Michigan, Northern Division
ORDER DENYING PLAINTIFF'S MOTION FOR DEFAULT
JUDGMENT, GRANTING DEFENDANT CHARLES FITZGERALD'S MOTION
TO SET ASIDE DEFAULT, VACATING CLERK'S ENTRY OF DEFAULT
AS TO CHARLES FITZGERALD, AND SETTING DEADLINE FOR CHARLES
FITZGERALD TO ANSWER OR OTHERWISE RESPOND TO THE
L. LUDINGTON, United States District Judge.
case was removed from the Circuit Court for Saginaw County on
July 12, 2018. ECF No. 1. The complaint arises out of several
auto loans allegedly obtained by fraudulent or other improper
means, and the alleged non-payment thereof. The complaint
names the individual borrower on these loans as well as the
retailers, Jones Pre-Owned Auto Sales, LLC, Xclusive Auto
Group LLC, and their agents Vernell and Nicole Phipps.
complaint asserts claims for fraudulent misrepresentation,
silent fraud, breach of contract, and violations of the
Racketeer Influenced and Corrupt Organizations Act (RICO).
Specifically, the complaint alleges (among other things): 1)
that Defendants intentionally made false representations of
material facts to Plaintiff regarding the condition of the
vehicles they sold; 2) that Defendants intentionally sold
those vehicles at prices that grossly exceeded their value;
and 3) that Plaintiff relied on those false representations
to their detriment when Plaintiff agreed to finance the
purchase of these vehicles from Jones Pre-Owned Auto.
Id. ¶¶ 77, 78, 82.
Jones Pre-Owned Auto, Vernell Phipps, and Nicole Phipps
answered the complaint and filed crossclaims against the
remaining Defendants. ECF No. 3. Plaintiff moved for
alternative service as to Defendants Coleman, Anderson,
Ingram, Fitzgerald, Walker, Thornton, and Xclusive Auto
Group, LLC, after Plaintiff's initial efforts at personal
service were unsuccessful. The Court granted the motion. ECF
No. 12. Plaintiff effectuated alternative service and filed
certificates of service. ECF Nos. 19-23. After they did not
answer the complaint, the Clerk entered default against
Defendants Coleman, Anderson, Ingram, Fitzgerald, Walker,
Thornton, and Xclusive Auto Group, LLC on Plaintiff's
complaint and on the cross claims of Defendants Jones
Pre-Owned Auto, Vernell Phipps, and Nicole Phipps. ECF Nos.
25, 27, 29, 38, 41-45, 52-56.
12, 2019, Plaintiff requested the Clerk's Entry of
Default Judgment, which the Clerk denied the same day
explaining that the request sought attorney fees which is not
a sum certain. ECF Nos. 65-78. On June 13, 2019,
Plaintiff moved for entry of default judgment by the Court
(on its RICO claim only) against the defaulting Defendants
for the sum of $303, 204.75. Plaintiff reached this figure by
taking the amount still owed (they have allegedly recovered
all but $96, 329.89 of the original $232, 419.63 owed),
tripling it pursuant to RICO's treble damages provision,
and then adding costs of $1, 628.08 and attorneys' fees
of $12, 590.00. Plaintiff's moves for default judgment
solely on the RICO claim.
13, 2019 Defendant Fitzgerald moved the court to set aside
the entry of default against him, explaining that he never
received the complaint by personal service, mail, posting, or
otherwise. Plaintiff did not respond to Defendant
Fitzgerald's motion to set aside default, nor did
Defendants Jones Pre-Owned Auto, Vernell Phipps, or Nicole
Phipps (as to the entry of default on their cross-claim).
Defendant Fitzgerald's motion will be granted as
moves the court to enter a default judgment on the RICO claim
against the defaulted Defendants pursuant to Fed.R.Civ.P.
Rule 55(a)(2). 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 several Defendants.
Rule of Civil Procedure 55(b)(2) provides that upon
application of the party, the court may enter a default
judgment. A plaintiff seeking a default judgment from the
court is “not entitled to a default judgment as of
right” and a judge is “required to exercise sound
judicial discretion” in deciding if default judgment is
proper. 10A Charles Alan Wright & Arthur R. Miller, Fed.
Prac. & Proc. Civ. § 2685 (4d ed.). 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.” 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.
there are additional requirements to consider in cases where
some defendants, but not all defendants, have defaulted. In
the seminal case Frow v. De La Vega, 82 U.S. 552
(1872), the United States Supreme Court held that in cases
involving joint liability it is improper to enter a default
judgment against some defendants when other defendants are
still contesting the case on the merits. Frow does
not preclude a plaintiff from seeking default judgment from
defaulted defendants when a judgment has been awarded against
the non-defaulting defendants. Id.
Plaintiff alleges that the Defendants, defaulted and
non-defaulted, worked in concert to conspire against
Plaintiff to commit RICO predicate acts, namely fraud by mail
and/or wire (including submitting false pay stubs to obtain
credit, and representing that the vehicles were in saleable
condition). Plaintiff's motion for default judgment seeks
judgment solely on the RICO claim, requesting the following:
Plaintiff respectfully requests this Court enter a Judgment
in its favor and against Defendants Laron Thornton, Randall
Anderson, Rashaud L. Coleman, Mark Ingram, Charles R.
Fitzgerald, Nicholas Austin Walker, and Xclusive Auto Group,
LLC for compensatory damages, together with treble damages,
in the amount of $288, 986.66, costs through November 1, 2018
in the amount of $1, 628.08, and attorneys' fees through
November 1, 2018 in ...