Opinion
Civil Action 3:22-cv-171
02-22-2023
TRUIST BANK, formerly BRANCH BANKING AND TRUST COMPANY, a North Carolina banking corporation, Plaintiff, v. MARTINSBURG PEDIATRICS, INC. and DR. CAROLINE E. JOE, Defendants.
REPORT AND RECOMMENDATION RECOMMENDING THAT PLAINTIFF'S MOTION FOR DEFAULT JUDGMENT BE GRANTED
ROBERT W. TRUMBLE UNITED STATES MAGISTRATE JUDGE
This Motion for Default Judgment (the “Motion”) filed by the plaintiff, Truist Bank (“Truist”), in the above-captioned case against Martinsburg Pediatrics, Inc. (“Martinsburg Pediatrics”) and Dr. Caroline E. Joe (“Dr. Joe,” together with Martinsburg Pediatrics, “Defendants”) has been referred to the undersigned Magistrate Judge by Chief District Judge Kleeh. Pursuant to Rule 55(b)(2) of the Federal Rules of Civil Procedure, the Court is not required to have a hearing unless it needs to: “(A) conduct an accounting; (B) determine the amount of damages; (C) establish the truth of any allegation by evidence; or (D) investigate any other matter.” Id. The Court finds that it does not need to do any of the above and can enter a default judgment in this case based on the following evidence submitted in Plaintiff's Motion [ECF No. 11] for Default Judgment Against Defendants.
On or about August 10, 2018, Martinsburg Pediatrics executed a Promissory Note payable to Truist in the original principal amount of $150,000.00, with a maturity date of August 10, 2019. (ECF No. 1-1.) Under the terms of the Note, Martinsburg Pediatrics promised to pay the Note in one payment of all outstanding principal plus all accrued unpaid interest on August 10, 2019. Id. Martinsburg Pediatrics also promised to pay regular monthly payments of all accrued unpaid interest due as of each payment date, beginning September 10, 2018. Id. The Note established that interest was payable at a variable rate, with interest calculated using a rate of 2.240 percentage points over the Lender's Prime Rate. Id. Upon default, the interest rate is 15.00%. Id.
To secure repayment of the indebtedness evidenced by the Note, Martinsburg Pediatrics executed a Commercial Security Agreement dated August 10, 2018, granting Truist a security interest in, among other items, all of Martinsburg Pediatrics' accounts, equipment, inventory, and general intangibles, whether then owned or thereafter acquired. (ECF No. 1-2.)
In her role as CEO of Martinsburg Pediatrics, Dr. Joe executed a Corporate Resolution to Borrow/Grant Collateral/Subordinate Debt confirming and authorizing that she had the authority to execute and bind Martinsburg Pediatrics to the terms of the Note and related loan documents. (ECF No. 1-3.) To further secure the Note, Dr. Joe executed a Commercial Guaranty agreement dated August 10, 2018, wherein she agreed to be jointly and severally liable for all obligations due under the Note to Truist. (ECF No. 11-A.)
On July 24, 2019, Defendants executed a Change in Terms Agreement for the Note (“CIT 1”), which changed the interest rate and extended the maturity date for the Note from August 10, 2019, to August 10, 2020. (ECF No. 1-6.) Under CIT 1, events of default include failure to make any payment and failure of the borrower to perform under any agreement between Truist and the borrower. See id.
On August 14, 2020, Defendants executed a second Change in Terms Agreement for the Note (“CIT 2”), which changed the interest rate and extended the maturity date for the Note from August 10, 2020, to February 10, 2021. (ECF No. 1-7.) Under CIT 2, events of default include failure to make any payment and failure of the borrower to perform under any agreement between Truist and the borrower. See id.
On February 8, 2021, Defendants executed a third Change in Terms Agreement for the Note (“CIT 3”), which reduced the maximum principal amount available under the line of credit from $150,000 to $135,0000, and extended the maturity date for the Note from February 10, 2021, to February 10, 2022. (ECF No. 1-8.) Under CIT 3, events of default include failure to make any payment and failure of the borrower to perform under any agreement between Truist and the borrower. See id.
To further secure the Note, Dr. Joe executed a second Commercial Guaranty agreement, dated February 8, 2021, wherein she agreed to be jointly and severally liable for all obligations due under the Note to Truist. (ECF No. 1-9.)
Truist alleges that the Note and the Commercial Guaranties are in default for nonpayment. (ECF No. 11-B, Affidavit of Kendra McLemore, an Asset Manager for Truist Bank ¶¶ 1-3.) Truist further alleges that it has incurred attorneys' fees and costs of at least $7,786.62. (ECF. No. 11-C, Affidavit of Tai Shadrick Kluemper, counsel for Truist ¶ 3.)
On October 6, 2022, Truist filed a Verified Complaint against the Defendants for breach of contract. (ECF No. 1.) The Verified Complaint seeks a money judgment on the Note in a sum certain amount, plus fees and charges, pre- and post-judgment interest, and reasonable attorneys' fees and costs incurred in collection of the indebtedness.
On October 31, 2022, a private process server personally served summonses and copies of the Complaint on defendant Dr. Joe in her individual capacity; and on defendant Martinsburg Pediatrics, through its CEO, Dr. Joe. (ECF Nos. 5 and 6.) Defendants' deadline to respond to the Verified Complaint was November 21, 2023. See Fed.R.Civ.P. 12(a).
Defendants have not filed a response or otherwise appeared in this civil action. On January 6, 2023, counsel for Truist filed a motion for entry of default against defendants. (ECF No. 7.) The Clerk entered default on January 9, 2023. (ECF No. 8.) Defendants did not object to the entry of default. On February 3, 2023, Plaintiff filed a Motion [ECF No. 11] for Default Judgment against Defendants, which was referred to the undersigned. Plaintiff served that Motion [ECF No. 11] on the Defendants at their last known address by mail on February 3, 2023, and as of this date, still no responsive pleading has been filed.
The undersigned Magistrate Judge therefore RECOMMENDS Plaintiff's Motion [ECF No. 11] for Default Judgment Against Defendants Martinsburg Pediatrics, Inc., and Dr. Caroline E. Joe be GRANTED as follows: a Default Judgment in the principal amount of $112,135.66, accrued, and unpaid interest through September 19, 2022, in the amount of $5,762.70, and late charges in the amount of $0, together with interest on the principal balance at the Default Rate of Interest from October 6, 2022, through the date of judgment; and attorney's fees and costs incurred in the amount of $7,786.62; and post-judgment interest on the above judgment at the maximum judgment rate until paid in full.
Any party shall have fourteen days from the date of filing this Report and Recommendation within which to file with the Clerk of this Court, specific written objections, identifying the portions of the Report and Recommendation to which objection is made, and the basis of such objection. A copy of such objections should also be submitted to the United States District Judge. Objections shall not exceed ten (10) typewritten pages or twenty (20) handwritten pages, including exhibits, unless accompanied by a motion for leave to exceed the page limitations, consistent with LR PL P 12.
Failure to file written objections as set forth above shall constitute a waiver of de novo review by the District Court and a waiver of appellate review by the Circuit Court of Appeals. Snyder v. Ridenour, 889 F.2d 1363 (4th Cir. 1989); Thomas v. Arn, 474 U.S. 140 (1985); Wright v. Collins, 766 F.2d 841 (4th Cir. 1985); United States v. Schronce, 727 F.2d 91 (4th Cir. 1984).
The Clerk of the Court is directed to send a copy of this Report and Recommendation to counsel of record, as applicable, as provided in the Administrative Procedures for Electronic Case Filing in the United States District Court for the Northern District of West Virginia and to the Defendants by certified mail return receipt requested at their last known address of 128 Health Care Lane, Martinsburg, WV 25401.