Opinion
1:21-CV-708-DAE
02-28-2024
MONOCOQUE DIVERSIFIED INTERESTS, LLC, 80C2 PARTNERS LLC, and DAVID COREY, Plaintiffs, v. TVPX AIRCRAFT SOLUTIONS, INC., as Owner Trustee of the TVPX 2019 MSN 29791 BUSINESS TRUST, TBN AVIATION A.V.V., and CAROLINA CORPORATE JETS, INC., Defendants.
THE HONORABLE DAVID EZRA, UNITED STATES DISTRICT JUDGE:
REPORT AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE
MARK LANE, UNITED STATES MAGISTRATE JUDGE
Before the court is Plaintiff Intervenor David Corey's Motion for Default Against TBN Aviation A.V.V. (Dkt. 80) and Plaintiff Intervenor David Corey's Motion for Default Against TVPX Aircraft Solutions, Inc. as Owner Trustee of the TVPX 2019 MSN 29791 Business Trust (Dkt. 81). Defendants did not respond to either motion. After reviewing the pleadings, the relevant case law, as well as the entire case file, the undersigned recommends the District Court GRANT the motion.
Senior United States District Judge David Ezra referred the Motions to the undersigned for a Report and Recommendation as to the merits pursuant to 28 U.S.C. § 636(b), Rule 72 of the Federal Rules of Civil Procedure, and Rule 1 of Appendix C of the Local Rules of the United States District Court for the Western District of Texas. Text orders, Dec. 20, 2023.
I. Background
The Complaint summarizes the nature of this action well. “A complicated series of transactions give rise to the claims in this lawsuit. Ultimately, Plaintiffs are seeking repayment of moneys advanced for repairs and specific performance of the sale contract for [an] Aircraft.” Dkt. 1 ¶9. Plaintiff Intervenor now seeks repayment of moneys advanced for repairs. See Dkts. 42 ¶17; 80 ¶8; 81 ¶7.
II. STANDARD FOR DEFAULT JUDGMENT
Federal Rule of Civil Procedure 55(b)(2) governs the entry of a default judgment by a court. See FED. R. CIV. P. 55(b)(2). In the Fifth Circuit, three steps are required when obtaining a default judgment: (1) default by the defendant, FED. R. CIV. P. 55(a); (2) entry of default by the Clerk's Office, FED. R. CIV. P. 55(a); and (3) entry of a default judgment by the district court, FED. R. CIV. P. 55(b); New York Life Ins. Co. v. Brown, 84 F.3d 137, 141 (5th Cir. 1996). Additionally, in order to obtain a default judgment, the movant must establish that the defendant is neither a minor nor an incompetent person, and that the defendant is not in military service. 50 U.S.C. § 3931; Bank of New York Mellon Tr. Co., N.A. v. Hancock, 5:19-CV-270-H-BQ, 2020 WL 2989023, at *2 (N.D. Tex. June 4, 2020). Where a defendant has defaulted, the factual allegations in the complaint are taken as true, except regarding damages. See Jackson v. FIE Corp., 302 F.3d 515, 525 n.29 (5th Cir. 2002).
“Default judgments are a drastic remedy” and thus are “resorted to by courts only in extreme situations.” Sun Bank of Ocala v. Pelican Homestead & Sav. Ass'n, 874 F.2d 274, 276 (5th Cir. 1989). Accordingly, “[a] party is not entitled to a default judgment as a matter of right, even where the defendant is technically in default.” Ganther v. Ingle, 75 F.3d 207, 212 (5th Cir. 1996). Rather, “[t]here must be a sufficient basis in the pleadings for the judgment entered.” Nishimatsu Constr. Co. v. Houston Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975) (default is not treated as an absolute confession by defendant of liability and of plaintiff's right to recover). A court must accept pleaded facts as true, but must also determine whether those facts state a claim upon which relief may be granted. See Lewis v. Lynn, 236 F.3d 766, 767 (5th Cir. 2001) (affirming district court's denial of entry of default judgment because, even if true, plaintiff's allegations would not support imposing liability against defendants).
Courts use a three-part test to determine when to enter a default judgment. The court first considers whether the entry of default judgment is procedurally warranted. United States v. Rod Riordan Inc., No. MO:17-CV-071-DC, 2018 WL 2392559, at *2 (W.D. Tex. May 25, 2018); Nasufi v. King Cable Inc., No. 3:15-CV-3273-B, 2017 WL 6497762, at *1 (N.D. Tex. Dec. 19, 2017) (citing Lindsey v. Prive Corp., 161 F.3d 886, 893 (5th Cir. 1998)). The Fifth Circuit has set forth six factors for a court to consider in determining whether a default judgment is procedurally proper: “(1) whether material issues of fact are at issue; (2) whether there has been substantial prejudice; (3) whether grounds for default are clearly established; (4) whether default was caused by good faith mistake or excusable neglect; (5) harshness of default judgment; and (6) whether the court would feel obligated to set aside a default on the defendant's motion.” United States v. Padron, 7:17-CV-00009, 2017 WL 2060308, at *2 (S.D. Tex. May 12, 2017); see Lindsey v. Prive Corp., 161 F.3d 886, 893 (5th Cir. 1998).
Next, courts assess the substantive merits of the plaintiff's claims and determine whether there is a sufficient basis in the pleadings for the judgment. J & J Sports Prods., Inc. v. Morelia Mexican Rest., Inc., 126 F.Supp.3d 809, 814 (N.D. Tex. 2015) (citing Nishimatsu, 515 F.2d at 1206). In doing so, courts assume that, due to its default, the defendant admits all well-pleaded facts in the plaintiff's complaint. See Rod Riordan Inc., 2018 WL 2392559, at *3.
Finally, the court determines what form of relief, if any, the plaintiff should receive. Id. While damages are normally not to be awarded without a hearing or a demonstration by detailed affidavits establishing the necessary facts, if the amount of damages can be determined with mathematical calculation by reference to the pleadings and supporting documents, a hearing is unnecessary. Id. (citing United Artists Corp. v. Freeman, 605 F.2d 854, 857 (5th Cir. 1979); James v. Frame, 6 F.3d 307, 310 (5th Cir. 1993)).
III. Analysis
The substance of the Motions and the procedural history of this case warrant analyzing the Motions together.
Defendant TBN is an Aruba corporation and Defendant TVPX Aircraft Solutions, Inc. is a Utah corporation. Dkt. 1 ¶ 4. Therefore neither Defendant is a minor, incompetent person, or in military service. The Clerk of Court has entered default against Defendants. Dkts. 13 & 54.
Default judgment is procedurally warranted. First, Defendants failed to file proper Answers after they were ordered to do so. Second, Defendants' failure to respond or appear threatens to cause substantial prejudice because it threatens to bring the adversarial process to a halt, effectively prejudicing the Plaintiff Intervenor's interests. Third, the grounds for default judgment are clearly established because Defendants have failed to answer or defend. Fourth, there is no indication that default was caused by a good faith mistake or excusable neglect. Defendants have simply chosen not to participate in this litigation. Fifth, default judgement would not be harsh in this situation because the judgment would be for nothing more than Defendants owe under the law. Sixth, given the circumstances, this court has no reason to set aside any default judgment it may enter. In sum, default judgment is procedurally proper.
The Plaintiff Intervenor's claims are meritorious, and there is sufficient basis in the pleadings for the judgment. As described in the Complaint and the Motion to Intervene (Dkt. 42) Defendants, Plaintiffs, and Plaintiff Intervenor were parties to a contract. See Dkt. 42 ¶11. Under the contract, Plaintiffs and Plaintiff Intervenor were each responsible for approximately half of more than $1 million in vendor payments related to the Aircraft. Id. ¶¶10-11.
On January 12, 2022, then-presiding U.S. District Judge Lee Yeakel entered a final judgment in favor of Plaintiffs Monocoque Diversified Interests, LLC and 80C2 Partner's, LLC. Dkt. 21. Judge Yeakel awarded Plaintiffs liquidated damages and interest. Id. Thus, Judge Yeakel granted Plaintiffs relief for their half of the contract with Defendants.
Now, Plaintiff Intervenor seeks relief for his half of the contract. For the same reasons Judge Yeakel concluded relief was appropriate for Plaintiffs, the monetary relief Plaintiff Intervenor seeks is appropriate. He has established the amount owed is $575,729.91. See Dkts. 80-1 & 81-1 (Declarations of Plaintiff Intervenor's counsel). Plaintiff Intervenor is entitled to an award of $575,729.91, post-judgment interest as permitted by 28 U.S.C. § 1961, and reasonable expenses under Federal Rule of Civil Procedure 4(d)(2)(B).
IV. Recommendation
For these reasons, the undersigned RECOMMENDS that Plaintiff Intervenor's Motions for Default Judgment (Dkt. 80 & Dkt. 81) be GRANTED.
V. Objections
The parties may file objections to this Report and Recommendation. A party filing objections must specifically identify those findings or recommendations to which objections are being made. The District Court need not consider frivolous, conclusive, or general objections. See Battles v. United States 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 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. See 28 U.S.C. § 636(b)(1)(C); Thomas v. Arn, 474 U.S. 140, 150-53 (1985); Douglass v. United Services Auto. Ass'n, 79 F.3d 1415 (5th Cir. 1996) (en banc).