510 F.3d 157 (2nd Cir. 2007), 06-0629, Silge v. Merz

Docket Nº:06-0629-cv.
Citation:510 F.3d 157
Party Name:Christian B. SILGE., Plaintiff-Appellant, v. Anna B. MERZ, Kevin J. Merz, and Enterprise Technology, Defendants-Appellees. [*]
Case Date:December 06, 2007
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit
 
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Page 157

510 F.3d 157 (2nd Cir. 2007)

Christian B. SILGE., Plaintiff-Appellant,

v.

Anna B. MERZ, Kevin J. Merz, and Enterprise Technology, Defendants-Appellees. [*]

No. 06-0629-cv.

United States Court of Appeals, Second Circuit.

Dec. 6, 2007

Argued: Sept. 26, 2007.

Appeal from a judgment of the United States District Court for the Southern District of New York (Daniels, J.) granting plaintiff's motion for a default judgment. Affirmed.

Page 158

Robert J.A. Zito, Carter Ledyard & Milburn, LLP, New York, NY, for Plaintiff-Appellant.

Before: LEVAL, SOTOMAYOR, and KATZMANN, Circuit Judges.

KATZMANN, Circuit Judge:

This case calls upon us to decide whether the appellant, after securing a default judgment, should have been permitted to recover on a claim for prejudgment interest that was not pleaded in the complaint or reflected in its demand clause. Notwithstanding that the appellant notified the defaulted defendants of this additional claim before damages were calculated, we hold that the district court correctly applied Rule 54(c) of the Federal Rules of Civil Procedure in not allowing such recovery to the extent it would result in an award exceeding the amount prayed for in the demand clause. The judgment of the district court is therefore affirmed.

I.

Plaintiff-appellant Christian B. Silge ("Silge") contends that beginning on January 30, 1992, "and from time to time thereafter," he lent money to defendants Anna1 and Kevin Merz, his sister and her husband, to benefit an entity called Enterprise Technology Corp., which is also a defendant in this action. Compl. ¶ 7. To make these loans, Silge borrowed against assets at an interest rate ranging from 3.25% to 10%. Compl. ¶ 8. Silge alleges that the defendants had initially agreed to reimburse him for the interest that accrued on such borrowing as well as the principal of the loan, but that they stopped making regular payments in August 1997 and made no payments whatsoever after January 2002. Compl. ¶ ¶ 8-9.

On April 8, 2005, Silge filed this diversity action in the Southern District of New York, where it was assigned to the Hon. George B. Daniels. The complaint alleged that the defendants had repaid only "portions of the Loan, the outstanding balance of which is $1,153,545, as of March 31, 2005." While pleading two counts--breach of contract and quantum meruit--the demand clause of the complaint sought judgment "in the sum of $1,153,545, on either the first or second counts, together with costs and disbursements and such other and further relief which this Court deems just and proper."2

The district court entered the defendants' default, and on August 18, 2005, referred the case to a magistrate judge to determine the proper amount of damages. Whereas the demand made in the complaint reflected interest through March 31, 2005, Silge filed a declaration and exhibit with the magistrate judge seeking prejudgment

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interest through August 2005, either calculated in accordance with the statutory prejudgment interest rate under New York law, or, alternatively, the actual rate of interest that Silge had paid to finance the loan. Copies of his damages submission were sent to the defendants and to their putative counsel, but the defendants did not respond or otherwise appear.

II.

Magistrate Judge Andrew Peck issued his Report & Recommendation ("R&R") on September 29, 2005, recommending that the district court grant judgment only for the amount sought in the complaint, $1,153,545 (inclusive of prejudgment interest up to March 31, 2005) plus $290 in costs.3 The R&R determined, based on Silge's affidavit, that the outstanding balance of the loan when the defendants stopped making payments was $751,510.41. As for the appropriate interest on that amount, the R&R concluded that because both of Silge's proposed methods of calculating interest would result in an award that "exceed[ed] the ad damnum clause in the complaint,' and because the complaint did not include any demand for interest past March 31, 2005, the damages should be capped at $1,153,545, the figure specified in the ad damnum clause," pursuant to Rule 54(c) of the Federal Rules of Civil...

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