Opinion
6:24-CV-00020
06-18-2024
SIMPLOT AB RETAIL, INC., doing business as SIMPLOT GROWER SOLUTIONS, Plaintiff, v. LAZY S B AG SERVICES, LLC, Defendant.
TO: THE HONORABLE ALAN D ALBRIGHT, UNITED STATES DISTRICT JUDGE
REPORT AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE
JEFFREY C. MANSKE UNITED STATES MAGISTRATE JUDGE
This Report and Recommendation is submitted to the Court pursuant to 28 U.S.C. § 636(b)(1)(C), FED. R. CIV. P. 72(b), and Rules 1(f) and 4(b) of Appendix C of the Local Rules of the United States District Court for the Western District of Texas, Local Rules for the Assignment of Duties to United States Magistrate Judges. Before the Court is Plaintiff's Motion for Default Judgment against Defendant Simplot AB Retail, Inc. (ECF No. 8). For the following reasons, the Court recommends Plaintiff's Motion be GRANTED.
I. BACKGROUND
Simplot AB Retail, Inc., doing business as Simplot Grower Solutions, files this Motion for Default Judgment against Defendant Lazy S B Ag Services, LLC. Plaintiff sued Defendant on January 12, 2024, seeking a judgment to recover an unpaid debt. Pl.'s Compl. (ECF No. 1) at ¶ 14. On January 23, 2024, Brian Sulak, owner of Lazy SB Ag Services, LLC, was personally served with process. Proof of Service (ECF No. 5).
Plaintiff is a Delaware corporation with its principal place of business in Boise, Idaho. Pl.'s Compl. at ¶ 4. Defendant is a Texas limited liability company. Id. at ¶ 2. Defendant entered into a credit agreement to purchase agricultural goods and services from Plaintiff. Id. at ¶ 8. Defendant failed to make payments on the agreement, and the parties renegotiated the terms in a Workout Agreement on April 5th, 2022. Id. at ¶ 9; Pl.'s Compl, Ex. A-2. Under the new terms, Defendant agreed to repay $206,000, with 6% interest per year. Pl.'s Compl, Ex A-2. Upon default, interest would begin accruing at 18% per year. Id. Defendant failed to make payments and defaulted. Pl.'s Compl. at ¶ 14. As of December 30, 2023, Defendant owed $135,070. Id. at ¶ 15.
Plaintiff seeks to recover principle on the debt, pre-judgment interest, post-judgment interest from when judgment is rendered to when judgment is paid in full, and reasonable attorney's fees. Pl.'s Mot. Default J. at ¶ 11. Defendant was served with summons on January 23, 2024. ECF No. 5. His answer or response was due February 13, 2024. Id. Defendant has not appeared or otherwise defended the suit. Pl.'s Mot. for Clerk's Entry of Default (ECF No. 6) at 1. Plaintiff filed a Motion for Clerk's Entry of Default against Defendant on February 15, 2024. Id. The Clerk entered default the same day. ECF No. 7. Plaintiff filed this Motion for Default Judgment on February 16, 2024. ECF No. 8. Defendant has not responded.
II. RELEVANT LAW
Default may be entered against a party when it fails to answer or otherwise defend a suit. FED. R. CIV. P. 55. The following three steps must be followed to obtain a default judgment: (1) default by the defendant; (2) entry of default by the Clerk; and (3) entry of default judgment by the court. N.Y. Life Ins. Co. v. Brown, 84 F.3d 137, 141 (5th Cir. 1996). To enter default judgment, courts typically determine whether default judgment is appropriate by considering the Lindsey v. Prive Corp., 161 F.3d 886 (5th Cir. 1998) factors and whether the pleadings have a sufficient basis for judgment. Nautilus Ins. Co. v. A Best American Roofing, LLC, EP-18-CV-320-PRM, 2019 WL 1473140, at *2 (W.D. Tex. Apr. 3, 2019) (citing Lindsey, 161 F.3d at 893 and Nishimatsu Constr. Co. v. Houston Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975)); Yeti Coolers, LLC v. Zhejiang Zhuosheng Indus. & Trade Co., Ltd., 1:17-CV-821-RP, 2019 WL 2568748, at *2 (W.D. Tex. June 21, 2019).
Plaintiff's well-pleaded factual allegations are taken as true after default, and default functions as an admission of those allegations. Jackson v. FIE Corp., 302 F.3d 515, 524-25 (5th Cir. 2002). Failure to answer or otherwise defend is admission of liability but not agreement with proposed damages. Id. An evidentiary hearing is not necessary to determine damages if damages are liquidated or mathematically calculable. United Artists Corp. v. Freeman, 605 F.2d 854, 857 (5th Cir. 1979).
III. ANALYSIS
The Court must determine first whether default judgment is appropriate, and second what relief, if any, should be awarded. To obtain default judgment, the following must occur: (1) default by the defendant; (2) entry of default by the Clerk; and (3) entry of default judgment by the court. N.Y. Life Ins. Co., 84 F.3d at 141. Defendant defaulted by failing to answer or otherwise defend this suit. FED. R. CIV. P. 55. Service was properly executed on Defendant, yet it has not appeared, answered, or otherwise defended this suit. Pl.'s Mot. for Clerk's Entry of Default at 1. The Court Clerk entered default against Defendant on January 23, 2024. ECF No. 7. Therefore, default judgment may be entered by the Court, and the Court must now determine whether default judgment is appropriate.
Under Lindsey, the Court must consider the following:
whether material issues of fact are at issue, whether there has been substantial prejudice, whether the grounds for default are clearly established, whether the default was caused by a good faith mistake or excusable neglect, the harshness of a default judgment, and whether the court would think itself obliged to set aside the default on the defendant's motion.Lindsey, 161 F.3d at 893. There are no issues of material fact as Defendant failed to respond to Plaintiff's allegations in any manner. Pl.'s Mot. for Default J. at ¶ 4. Defendant does not face prejudice as they have admitted to the allegations through their default. Jackson, 302 F.3d at 524. Grounds for default are “clearly established” as Plaintiff properly served Defendant, and Defendant has not defended the suit. Defendant has not claimed any good faith mistake or excusable neglect. Id. Defendant failed to respond though they had time to do so, mitigating the harshness of default judgment. Id. While default judgment is not a favored remedy of the courts, no good cause is apparent which would oblige the Court to set aside default judgment. Id.; Lewis v. Lynn, 236 F.3d 766, 767 (5th Cir. 2001) (per curiam). Therefore, the Lindsey factors weigh in favor of default judgment.
A. Plaintiff is entitled to recover principal on the debt and prejudgment interest.
Under Texas law, contractual agreements govern the pre-judgment interest rate. Adams v. H & H Meat Prods., 41 S.W.3d 762, 780 (Tex. App. Corpus Christi 2001, no pet.). Plaintiff and Defendant contracted at ¶ 6% interest rate, with an escalation to 18% on default. Pl.'s Compl, Ex. A-2. Plaintiff provides a customer statement that depicts the outstanding principal and interest on the debt. Pl.'s Compl, Ex. A-3. As of January 27, 2024, Defendant owes $104,101.21 in principal and $31,489.73 in interest. Pl.'s Mot. for Default J at ¶ 9. Interest continues to accrue at 18% per year until judgment is rendered. Id. at 10.
B. Plaintiff is entitled to post-judgment interest.
Plaintiff seeks to recover post-judgment interest at 18% per year, which is the rate of interest that Defendant agreed to in the contract should default occur. Pl.'s Compl, Ex A-2. In diversity cases, however, federal law controls the post-judgment interest rate. Art Midwest, Inc. v. Clapper, 805 F.3d 611, 615 (5th Cir. 2015) (citing Nissho-Iwai Co v. Occidental Crude Sales, Inc., 848 F.2d 613, 622-24 (5th Cir. 1988)). Under 28 USC § 1961(a), the post-judgment interest rate is set at the one-year weekly average constant maturity Treasury yield for the calendar week preceding the date of judgment. Meaux Surface Prot., Inc. v. Fogleman, 607 F.3d 161, 173 (5th Cir. 2010). Plaintiff is entitled to post-judgment interest in an amount calculable once the District Court renders judgment.
C. Plaintiff is entitled to attorney's fees.
Under Texas law, plaintiffs in a breach of contract claim may recover reasonable attorney's fees if they (1) prevail on a breach of contract claim and (2) recover damages. MBM Fin. Corp. v. Woodlands Operating Co., 292 S.W.3d 660, 666 (Tex. 2009). Plaintiff prevails on the breach of contract claim by default judgment and is entitled to damages. Boissier v. Katsur, 676 Fed.Appx. 260, 263 (5th Cir. 2017). Plaintiff is therefore entitled to reasonable attorney's fees as well. See MBM Fin. Corp., 292 S.W.3d at 666.
Texas law requires courts to hold evidentiary hearings on attorney's fees when issuing default judgments unless there is sufficient evidence of the fees in the pleadings. Rouhana v. Ramirez, 556 S.W.3d 472, 478 (Tex. App. El Paso 2018, no pet.) (citations omitted). Plaintiff has provided a detailed list of counsel's billable hours, along with an affidavit from counsel detailing the work done and the basis for the amount of fees. Aff. of John Mark Stephens in Supp. of Pl.'s Att'y Fees and Costs. Plaintiff seeks $6,239.02 in attorney's fees for 14 billable hours, filing fees, and other expenses. Id. at ¶¶ 18-21. Plaintiff has provided ample evidence of the attorney's fees to overcome the need for an evidentiary hearing, and it is the opinion of this Court that the amount is reasonable.
IV. CONCLUSION
It is therefore RECOMMENDED Plaintiff's Motion for Default Judgment (ECF No. 8) be GRANTED. It is FURTHER RECOMMENDED that the Plaintiff be awarded $104,101.21 in principal, $31,489.73 in prejudgment interest, $6,239.02 in attorneys fees, and post-judgment interest in an amount calculable once the District Court renders judgment.
V. OBJECTIONS
The parties may wish to file objections to this Report and Recommendation. A party filing objections must specifically identify those findings or recommendations to which objections are made. The District Court need not consider frivolous, conclusive, or general objections. Battle v. U.S. Parole Comm'n, 834 F.2d 419, 421 (5th Cir. 1987).
A party's failure to file written objections to the proposed findings and recommendations contained in this Report within fourteen (14) days after the party is served with a copy of the Report shall bar that party from de novo review by the District Court of the proposed findings and recommendations in the Report and, except upon grounds of plain error, shall bar the party from appellate review of unobjected-to proposed factual findings and legal conclusions accepted by the District Court. 28 U.S.C. § 636(b)(1)(C); Thomas v. Arn, 474 U.S. 140, 150-53 (1985); Douglass v. United Servs. Auto. Ass 'n, 79 F.3d 1415 (5th Cir. 1996) (en banc).