4221 Monaco St. L.L.L.P. v. Frankle

• Decision Date: 02 November 2022
• Docket Number: Civil Action 22-cv-01813-RM-KLM
• Parties: 4221 MONOCO STREET, L.L.L.P., a Colorado limited liability limited partnership, Plaintiff, v. CHASKEL FRANKLE, an individual, Defendant.
• Court: U.S. District Court — District of Colorado

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4221 MONOCO STREET, L.L.L.P., a Colorado limited liability limited partnership, Plaintiff, v. CHASKEL FRANKLE, an individual, Defendant.

Civil Action No. 22-cv-01813-RM-KLM

United States District Court, D. Colorado

November 2, 2022

ORDER

RAYMOND P. MOORE, DISTRICT JUDGE

This matter is before the Court on Plaintiff's Motion for Default Judgment (“Motion”) against Defendant filed pursuant to Fed.R.Civ.P. 55(b)(2). (ECF No. 14.) The Motion was filed after the Clerk entered default. (ECF No 11.) For the reasons stated below, the Motion is granted.

I. LEGAL STANDARD

Default judgments are not the favored manner for resolving litigation, as they are a harsh sanction and policy reasons favor resolution of disputes on the merits. In re Rains, 946 F.3d 731, 732 (10th Cir. 1991). Thus, a default judgment “must normally be viewed as available only when the adversary process has been halted because of an essentially unresponsive party. In that instance, the diligent party must be protected lest he be faced with interminable delay and continued uncertainty as to his rights.” Id. (quoting H. F. Livermore Corp. v. Aktiengesellschaft Gebruder Loepfe, 432 F.2d 689, 691 (D.C. Cir. 1970)).

A default judgment serves to protect a plaintiff from such a possibility. Id.

Whether to enter a default judgment is committed “to the district court's sound discretion.” Olcott v. Del. Flood Co., 327 F.3d 1115, 1124 (10th Cir. 2003) (citation omitted). Before it may grant a motion for default judgment, the Court must take two steps. First, the Court has an affirmative duty to ensure its jurisdiction over the subject matter of the action and the parties. Williams v. Life Sav. & Loan, 802 F.2d 1200, 1203 (10th Cir. 1986). Then, the Court should consider whether the well-pleaded allegations of fact-which are admitted by a defendant upon default-support a judgment on the claims against the defaulting defendant. Tripodi v. Welch, 810 F.3d 761, 764 (10th Cir. 2016) (by his default, defendant relieved plaintiff from having to prove complaint's factual allegations; the judgment, however, must be supported by sufficient basis in the pleadings); Villanueva v. Account Discovery Sys., LLC, 77 F.Supp.3d 1058, 1066 (D. Colo. 2015).

II. BACKGROUND

Plaintiff is a limited liability limited partnership, 4221 Monaco Street, LLLP, organized under the laws of Colorado, and three Colorado residents comprise its partners.^[1]Defendant, Chaskel Frankl, is an individual and resident of New York. The conflict between the parties began when Plaintiff decided to auction off its property, which is located in Denver, Colorado.

Plaintiff's suit alleges three claims for relief and presents them in the alternative. As pertinent here, the first claim is for breach of the Purchase Agreement. Plaintiff engaged a firm, Ten-X, to conduct the auction, which took place from June 20 through 22, 2022. The bidding for the property opened at approximately $8,000,000 and Defendant ultimately won the auction with a bid of $18,000,000. Ten-X confirmed that Defendant had adequate funds to qualify as a participant in the auction.

The day after the auction concluded the Parties executed a Purchase Agreement. Among the terms in that Agreement was a provision requiring Defendant, as the successful purchaser, to deposit $1,000,000 in earnest money on the day after Plaintiff, as seller, countersigned the Agreement. (ECF No. 1-1, § 2.) The Agreement also contained the following provision:

Buyer and Seller agree that it would be extremely difficult to determine Seller's actual damages resulting from a breach by Buyer. In the event of a breach by Buyer, Seller shall be entitled to an amount equal to the earnest money deposit as liquidated damages and as Seller's exclusive remedy. Buyer agrees that such amount is a reasonable pre-estimate of Seller's actual damages for breach of this Agreement and is not a penalty. If Closing Agent is in possession of the earnest money deposit, then Closing Agent shall deliver the earnest money deposit to Seller. Despite the forgoing, if applicable law limits the amount of the liquidated damages payable to Seller upon a breach by Buyer, Seller shall only be entitled to the amount permitted by law, and any excess shall be promptly returned to Buyer.

(Id., § 8.) The Parties specifically initialed this provision. (Id.) Two other provisions are important to this Motion. In Section 13 of the Agreement, which covers “Miscellaneous” matters, the Parties specified that the Agreement would be interpreted, construed, applied, and enforced in accordance with the laws of the state in which the property at issue is located-in this case, Colorado. (Id., § 13.) The Parties also specified that “[i]n any action, proceeding or arbitration arising out of this Agreement, the prevailing party (defined as the party who prevails as to a substantial part of the litigation or claim) shall be entitled to reasonable attorneys' fees and costs. (Id.)

The Parties executed the Agreement on June 23, 2022. Defendant, however, failed to deposit the required earnest money and therefore Plaintiff declared him to have breached the Agreement. Plaintiff sent a notice of the breach to Defendant who never responded. Thus, on July 22, 2022 Plaintiff filed this action.

This Court issued a summons for Defendant (ECF No. 5), and the summons was returned executed, having been served on Defendant personally (ECF No. 7). Defendant never filed an answer or any other responsive pleading. (See docket.) Nor did Defendant respond to the efforts of Plaintiff's counsel to communicate and confer. (ECF No. 12.) Plaintiff filed a Motion for Entry of Default (ECF No. 8) and an Amended Motion for Entry of Default against Defendant (ECF No. 11) pursuant to Fed.R.Civ.P. 55(a). The Clerk entered default as to Defendant on September 2, 2022. Defendant did not respond to the entry of default and Plaintiff filed a Motion for Default Judgment pursuant to Fed.R.Civ.P. 55(b).

III. DISCUSSION

A. Jurisdiction

The Court finds that the jurisdictional prerequisites for granting default judgment are satisfied in this case. The Court has diversity subject matter jurisdiction over actions between citizens of different states where the amount in controversy exceeds $75,000. 28 U.S.C. § 1332(a).

In addition, the Court concludes that it has personal jurisdiction over Defendant in this case. “[T]he plaintiff need only make a prima facie showing [of personal jurisdiction] if the motion [for default judgment] is decided only on the basis of the parties' affidavits and other written materials.” Dennis Garberg & Assocs., Inc. v. Pack-Tech Int'l Corp., 115 F.3d 767, (10th Cir. 1997).

The “‘well pled facts' of the complaint must be accepted as true if uncontroverted by the defendant's affidavits, and factual disputes at this initial stage must be resolved in the plaintiff's favor when the parties present conflicting affidavits.” Fed. Deposit Ins. Corp. v. Oaklawn Apartments, 959 F.2d 170, 174 (10th Cir. 1992). A “plaintiff seeking to establish personal jurisdiction over an out-of-state defendant must show both that the exercise of jurisdiction is sanctioned by the state's long-arm statute and that it comports with the requirements of due process under the Fourteenth Amendment.” Eighteen Seventy, LP v. Jayson, 32 F.4th 956, 965 (10th Cir. 2022). Personal jurisdiction in a specific case (as opposed to jurisdiction for all purposes) is limited to those cases in which the out-of-state defendant has “purposefully directed its activities at residents of the forum state,” and the plaintiff's injuries arise from those forum-related activities. O'Rourke v. Dominion Voting Sys. Inc., No. 20-CV-03747-NRN, 2021 WL 3400671 (D. Colo. Aug. 3, 2021), modified on reconsideration, No. 20-CV-03747-NRN, 2021 WL 5548129 (D. Colo. Oct. 5, 2021) (quoting Old Republic Ins. Co. v. Cont'l Motors, Inc., 877 F.3d 895, 903-04 (10th Cir. 2017)).

Colorado's long-arm statute confers on its courts the maximum jurisdiction as comports with the Due Process Clause of the United States and Colorado Constitutions. State ex. Rel. Weiser v. JUUL Labs, Inc., 2022 CO 46, ¶ 33, 517 P.3d 682, 690. Thus, this Court will have personal jurisdiction over Defendant as long as such jurisdiction comports with due process. As noted, due process is satisfied in cases in which the defendant has purposefully directed his or her activities at Colorado and the plaintiff's injuries arose from those forum-related activities. In this case, the Court has no trouble concluding that Defendant purposefully directed his activities at Colorado, having decided to bid on and purchase a property located in Denver. Plaintiff's injuries, in turn, arose directly out of that contact, as Defendant was obligated to pay earnest money for that same property and failed to do so. Thus, the jurisdictional requirements for a default judgment have been met in this case.

B. Analysis

Plaintiff served Defendant on August 9, 2022, and Defendant has as yet failed to respond in any form. (ECF No. 7.) The time for such a response has now elapsed. Fed.R.Civ.P. 12(a).

The Court also finds that Plaintiff's well-pleaded factual allegations support a judgment on Plaintiff's first claim, which is for breach of contract against Defendant. Plaintiff's Complaint and attached exhibits, taken as true, establish the elements of that claim. “To prevail on a claim for breach of contract, a party must prove: (1) the existence of a contract; (2) performance by the plaintiff or some justification for nonperformance; (3) failure to perform the contract by the defendant; and (4) resulting damages to the plaintiff.” Gentry v. Kostecki No. 20-CV-1284-WJM-STV, 2022 WL 168704, at *2 (D. Colo. Jan. 19, 2022). In this case, the allegations...