Opinion
No. 3-01-CV-1659-BD
March 18, 2002
FINDINGS AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE
Plaintiff Primerica Life Insurance Company has filed a motion for default judgment against Defendant Donna Kohl. For the reasons stated herein, the motion should be granted.
By order dated January 3, 2002, this case was transferred to the docket of United States Magistrate Judge Jeff Kaplan with the consent of all parties then before the court. However, Defendant Donna Kohl has never entered an appearance in the case and has not consented to the authority of the magistrate judge. Therefore, plaintiff's motion for default judgment must be determined by a district judge.
I.
This lawsuit arises out of a $100,000 life insurance policy issued to James Twyman by Massachusetts Indemnity Life Insurance Company, now known as Primerica Life Insurance Company ("Primerica"). When James died in 1999, Primerica paid $94,609.30 to his former spouse, Donna Kohl, for the benefit of his two children, Lauren Twyman and Jonathan Twyman. (Plf. Compl. ¶ 13). However, none of the money was remitted to the Twyman children. After Lauren and Jonathan complained that the life insurance proceeds were wrongfully paid to Kohl, Primerica filed this declaratory judgment action in federal court. Primerica also sues Kohl for "money had and received." ( Id. ¶ 16).Kohl was served with a summons and copy of the complaint on November 6, 2001. To date, she has not filed an answer or otherwise appeared in the case. (Plt. App. at 2, ¶¶ 3-4). On December 17, 2001, the district clerk entered a default against Kohl. Primerica now seeks a default judgment pursuant to Rule 55(b) of the Federal Rules of Civil Procedure.
II.
Under Texas law, a cause of action for money had and received "belongs conceptually to the doctrine of unjust enrichment." Burlington Northern Railroad Co. v. Southwestern Electric Power Co., 925 S.W.2d 92, 97 n. 5 (Tex.App.-Texarkana 1997), aff'd, 966 S.W.2d 467 (Tex. 1998); see also City of Harker Heights, Texas v. Sun Meadows Land, Ltd., 830 S.W.2d 313, 317 (Tex.App.-Austin 1992, no writ) (describing development of cause of action for money had and received). Such a claim is based on the equitable notion that a person who has received benefits should make restitution when it would be unjust for him to retain the benefits. See Bransom v. Standard Hardware, Inc., 874 S.W.2d 919, 927 (Tex.App. — Ft. Worth 1994, writ denied); City of Corpus Christi v. S.S. Smith Sons Masonry, Inc., 736 S.W.2d 247, 250 (Tex.App. — Corpus Christi 1987, writ denied); see also Watson v. Limited Partners of WCKT Ltd., 570 S.W.2d 179, 182 (Tex.Civ.App.-Austin 1978, writ ref'd n.r.e.) (claim for restitution "is not one for damages as such, but to recover money had and received"). Recovery is based on an implied or quasi-contract and may be ordered even when the defendant has committed no wrong. Bransom, 874 S.W.2d at 927. All a plaintiff need show is that "the defendant holds money which . . . belongs to the plaintiff." Staats v. Miller, 243 S.W.2d 686, 687-88 (Tex. 1951).
Primerica alleges that it sent two checks totaling $94,609.30 to Donna Kohl for the benefit of Lauren Twyman and Jonathan Twyman. Another $5,477.00 was paid to a funeral home under an assignment executed by Kohl. (Plf. Compl. ¶ 13). In the event that the court or jury determines that these proceeds were not properly paid to Kohl, Primerica seeks a return of all monies "which in equity and good conscience belong to Primerica." ( Id. ¶ 16). These allegations are sufficient to state a claim under Texas law for money had and received.
III.
The only other issue is whether a hearing is necessary on the issue of damages. See 10 A C. WRIGHT, A. MILLER M. KANE, FEDERAL PRACTICE AND PROCEDURE § 2688 at 58-59 (1998) (defendant who defaults admits the factual allegations of the complaint except those relating to the amount of damages). A district court has great latitude in determining whether a hearing is necessary. See FED. R. Civ. P. 55(b)(2). Ordinarily, a hearing should be held unless the amount of damages is a liquidated sum or one capable of mathematical calculation. James v. Frame, 6 F.3d 307, 310 (5th Cir. 1993), citing United Artists Corp. v. Freeman, 605 F.2d 854, 857 (5th Cir. 1979).
Rule 55(b) provides, in relevant part:
If, in order to enable the court to enter judgment or to carry it into effect, it is necessary to take an account or to determine the amount of damages or to establish the truth of any averment by evidence or to make an investigation of any other matter, the court may conduct such hearings or order such references as it deems necessary and proper and shall accord a right to trial by jury to the parties when and as required by any statute of the United States.
FED. R. Civ. P. 55(b)(2).
Primerica's claim against Kohl for money had and received is basically a request for restitution. As such, Primerica is entitled to recover only that amount by which Kohl was unjustly enriched. See City of Harker Heights, 830 S.W.2d at 317 ("Unlike other contractual damages, restitution focuses on forcing the defendant to disgorge benefits that it would be unjust to keep, rather than on compensating the plaintiff.") That amount is alleged to be $94,609.30, the proceeds paid directly to Donna Kohl, plus $5,477.00 paid to a funeral home by virtue of her assignment. Consequently, a hearing on the issue of damages is not necessary.
Primerica clearly is not entitled to the relief requested in its proposed default judgment, which seeks to recover from Kohl "the total sum, if any, Primerica is required to pay Lauren Twyman and/or Luana Francine Thomas (in any capacity) as a result of Primerica's payment of the insurance proceeds." Such relief is tantamount to a judgment of indemnity, not for money had and received.
RECOMMENDATION
Primerica's motion for default judgment should be granted. The court should enter judgment against Donna Kohl in the amount of $100,086.30, should it be determined that Primerica wrongfully paid these proceeds to Kohl. The court also should find that there is no just reason for delay and direct the district clerk to enter a final judgment against Kohl pursuant to Rule 54(b) of the Federal Rules of Civil Procedure.