Opinion
Civil Action No. SA-05-CA-0717-XR.
December 12, 2005
ORDER
On this date, the Court considered Plaintiff's Request for Default Judgment against Defendant Ramon's Precision Service, Inc. (docket no. 4-2). After careful consideration, the Court will DENY the motion without prejudice to refiling.
I. Procedural Background
Plaintiff filed its Complaint in the above numbered and styled cause on July 28, 2005. Personal service was executed on Defendant Ramon's Precision Service, Inc. by service on its registered agent Ramon Tellez on October 21, 2005. See docket no. 3. Defendant did not timely answer or otherwise respond, and has not answered, responded, or otherwise appeared as of this date. Plaintiff moved for entry of default on November 15, 2005, and the Clerk entered default against Ramon's Precision Service, Inc. on December 7, 2005. See docket no. 5. Pursuant to Federal Rule of Civil Procedure 55, Plaintiff now moves for default judgment.
II. Analysis
Plaintiff brought this case alleging Defendant failed to comply with an Administrative Wage Garnishment Order issued pursuant to the Higher Education Act of 1965, 20 U.S.C. § 1095a. John Raines ("Raines"), an employee of Defendant, allegedly defaulted on certain student loans totaling $13,529.82. Plaintiff, a federal student loan guaranty agency, is authorized by the Department of Education to initiate collection proceedings on defaulted student loans. The Higher Education Act of 1965 expressly authorizes Plaintiff to issue wage garnishment orders to the employers of borrowers who default on their student loans. See 20 U.S.C. § 1095a.
Title 20 U.S.C., section 1095a provides, in relevant part:
Notwithstanding any provision of State law, a guaranty agency . . . may garnish the disposable pay of an individual to collect the amount owed by the individual, if he or she is not currently making required repayment under a repayment agreement with the [Department of Education], or, in the case of a loan guaranteed under part B of this subchapter on which the guaranty agency received reimbursement from the Secretary under section 1078(c) of this title, with the guaranty agency holding the loan, as appropriate, provided that —
(1) the amount deducted for any pay period may not exceed 10 percent of disposable pay, except that a greater percentage may be deducted with the written consent of the individual involved;
. . .
(6) the employer shall pay to the . . . guaranty agency as directed in the withholding order issued in this action, and shall be liable for, and . . . the guaranty agency . . . may sue the employer is a State or Federal court of competent jurisdiction to recover, any amount that such employer fails to withhold from wages due an employee following receipt of such employer of notice of the withholding order, plus attorneys' fees, costs, and, in the court's discretion, punitive damages, but such employer shall not be required to vary the normal pay and disbursement cycles in order to comply with this paragraph . . .20 U.S.C. § 1095a(a) (emphasis added).
Plaintiff alleges Raines was employed by Defendant at all times relevant to this action. On August 17, 2004, Plaintiff issued to Defendant an Order of Withholding from Earnings. Defendant was ordered to "DEDUCT . . . from [Raines'] wages an amount not to exceed ten percent (10%) of [Raines'] disposable pay for each pay period, or the amount permitted by 15 U.S.C. § 1673. . . . This amount shall be deducted until the amount set forth above as the Total Amount Currently Due [($13,529.82)], plus all further accrued interest, is fully paid." Mot., at Ex. D-1 (emphasis in original). Defendant was further ordered to initiate withholding on the first pay period following the issuance of the withholding order. Id. Defendant allegedly did not withhold any of Raines' disposable pay as required by the withholding order. On September 20, 2004, Plaintiff issued to Defendant a Second Notice of Order of Withholding from Earnings. Plaintiff warned Defendant that it "MAY SUE ANY EMPLOYER WHO FAILS TO WITHHOLD WAGES AFTER RECEIPT OF AN ORDER OF WITHHOLDING. If [Defendant] is forced to file suit, it is entitled to seek not just the amount an employer fails to withhold, but also attorney's fees, court costs, and punitive damages." Mot., at Ex. D-2 (emphasis in original). Despite the second notice, Plaintiff alleges Defendant never initiated the required withholding from Raines' pay.
Defendant's default concedes the truth of the allegations of the Complaint as to Defendant's liability, but not damages. Jackson v. FIE Corp., 302 F.3d 515, 521, 524-25 (5th Cir. 2002). Federal Rule of Civil Procedure 54(c) states that "a judgment by default shall not be different in kind from or exceed in amount that prayed for in the demand for judgment. Except as to a party against whom a judgment is entered by default, every final judgment shall grant the relief to which the party in whose favor it is rendered is entitled, even if the party has not demanded such relief in the party's pleadings." FED. R. CIV. P. 54(c). As a general rule, damages will not be awarded without a hearing or a demonstration by detailed affidavits establishing the necessary facts. United Artists Corp. v. Freeman, 605 F.2d 854, 857 (5th Cir. 1979). When the amount of damages and/or costs can be determined with certainty by reference to the pleadings and supporting documents and when a hearing would not be beneficial, a hearing is unnecessary. James v. Frame, 6 F.3d 307, 310 (5th Cir. 1993). Plaintiff seeks to recover actual damages, attorney's fees, expenses, and court costs. Plaintiff alleges that the amount of damages is liquidated and sum certain, thus no hearing is required.
Plaintiff requests the entry of default judgment against Defendant in the amount of $13,529.82 for actual damages, $3,250.00 for attorney's fees, $59.51 for expenses, plus costs and and post-judgment interest. In total, Plaintiff requests default judgment in the amount of $16,839.33. Although the Court finds that Defendant is in default, it will not grant Plaintiff's motion for default judgment at this time. Plaintiff has misstated the amount of damages it is owed to Defendant's detriment and failed to provide sufficient evidence from which the Court can determine damages.
Section 1095a only entitles Plaintiff to recover the amount of wages Defendant failed to withhold from Raines' disposable pay following receipt of the August 17, 2004 Order of Withholding. See 20 U.S.C. § 1095a(a)(6). Plaintiff's Original Complaint tracks section 1095a: "Defendant is liable for any and all amounts it failed to withhold following receipt of the first Order in this case." Complaint, at ¶ 17. Plaintiff's current motion, however, requests damages equal to the full amount of Raines' defaulted student loans, not just the amount Defendant failed to withhold. Plaintiff's entitlement to that amount of damages is brought into question by Plaintiff's request for a mandatory permanent injunction:
Based upon Defendant's continuing refusal and failure to comply with the terms of the withholding order, [Plaintiff] seeks a mandatory injunction requiring Defendant to prospectively withhold and remit ten percent (10%) of [Raines'] disposable pay (or the amount required under 15 U.S.C. § 1673, if less), until [Raines'] student loan indebtedness is paid in full, or [Raines] ends his employment with Defendant, whichever occurs earlier.Complaint, at ¶ 19. It is highly unlikely that Plaintiff would have sought a mandatory injunction securing its rights under section 1095a if Defendant's past due withholdings would cover the full amount of Raines' student loan debt. Likewise, the Court is unconvinced that withholding 10% of Raines' disposable pay over the course of one year would have been sufficient to satisfy a $13,529.82 debt. Because Plaintiff has produced absolutely no evidence establishing Raines' disposable pay during the relevant time period or the amount of pay Defendant failed to withhold, default judgment is not proper at this time. That being said, the Court believes Plaintiff's damages are subject to documentary proof. Plaintiff has simply failed to provide the necessary evidentiary support.
For the withholding to satisfy Raines' student loan debt in one-year, Raines' disposable pay would have needed to exceed $135,000. See 20 U.S.C. § 1095a(e) ("[T]he term `disposable pay' means that part of the compensation of any individual from an employer remaining after the deduction of any amounts required by law to be withheld.").
III. Conclusion
For the reasons herein, Plaintiff's Motion for Default Judgment is DENIED without prejudice to refiling with proper evidentiary support for its claimed damages (docket no. 4-2).