Alt. Materials v. Monroe

• Decision Date: 23 January 2023
• Docket Number: 5:20-cv-239-AW/MJF
• Parties: ALTERNATIVE MATERIALS, LLC, Plaintiff, v. TIMOTHY W. MONROE, et al., Defendants.
• Court: U.S. District Court — Northern District of Florida

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ALTERNATIVE MATERIALS, LLC, Plaintiff, v. TIMOTHY W. MONROE, et al., Defendants.

No. 5:20-cv-239-AW/MJF

United States District Court, N.D. Florida, Panama City Division

January 23, 2023

REPORT AND RECOMMENDATION

MICHAEL J. FRANK, UNITED STATES MAGISTRATE JUDGE

Plaintiff Alternative Materials, LLC (“AM”), has filed a “Motion for Entry of Default” against Defendant Timothy W. Monroe. Doc. 74. The undersigned construes AM's motion as a motion for default judgment under Federal Rule of Civil Procedure 37(c).^[1]Monroe has filed a one-page letter, which the undersigned construes as a response in opposition. Doc. 77 at 1.

Because Monroe violated Rule 26(a)(3) by failing to provide certain pretrial document after being ordered to do so by the undersigned, the undersigned respectfully recommends that the District Court grant in part and deny in party AM's motion for default judgment. Specifically, the District Court should grant AM's motion as to its fraud and fraudulent-misrepresentation claims against Monroe. But because AM fails to allege plausible breach-of-contract, unjust-enrichment, and fraud-in-the-inducement claims against Monroe, the District Court should deny AM's motion as to these claims and instead dismiss these claims for failure to state a plausible claim upon which relief can be granted. The undersigned also recommends that the District Court hold an evidentiary hearing to determine the damages to which AM is entitled or that the District Court refer this matter to the undersigned for such a hearing.

I. Background

On July 6, 2022, after the District Court adopted the undersigned's report and recommendation and denied AM's summary-judgment motion, the undersigned ordered Monroe to file certain pretrial documents within 21 days of AM filing the same. Doc. 66. Monroe's pretrial documents were due, therefore, on or before August 26, 2022. See Doc. 68.

On August 15, 2022, instead of filing the specified pretrial documents, Monroe sent a letter to the undersigned requesting an indeterminate extension of time because he had “a lot of material to go over with [his] new attorney” and he, his family, and his business had been affected by COVID-19. See Doc. 70. The undersigned returned Monroe's letter because it violated the Federal Rules of Civil Procedure and the Local Rules of the United States District Court for the Northern District of Florida. Id. at 1-2. Notably, Monroe alleged in the letter that the “Nova law firm” retained counsel on Monroe's behalf. More than five months have elapsed since Monroe submitted the letter, and no attorney has entered an appearance on Monroe's behalf.^[2]

On September 2, 2022, the undersigned ordered Monroe to explain and show cause why he failed to submit the specified pretrial documents in accordance with the undersigned's order of July 6, 2022. Doc. 72. The undersigned imposed a deadline of September 19, 2022 to comply. The undersigned warned Monroe that failure to comply with the order likely would result in an imposition of sanctions, including a default judgment. Monroe did not comply with that order.

On October 11, 2022, AM filed the present motion. Doc. 74. AM asserts that sanctions under Rule 37(c)(1) are appropriate in light of Monroe's failure to produce the specified pretrial documents. Id. at 2; Doc. 74-1 at 2. On October 25, 2022, Monroe filed a one-page letter in response to AM's motion. Doc. 77. Monroe asserts that although he found “a lawyer,” he did not have sufficient funds or time. Id. at 1. More than two months have passed since Monroe filed his letter, and Monroe still has not file a substantive response in opposition to AM's motion.

II. Discussion

Below, the undersigned first discusses AM's motion for sanctions under Rule 37(c)(1). Second, the undersigned discusses whether AM's allegations satisfy the default-judgment pleading standard. Finally, the undersigned discusses whether damages can be awarded without a hearing.

A. The District Court Should Enter a Default Judgment Under Rule 37(c)(1)

“If a party fails to provide information or identify a witness as required by Rule 26(a) or (e), the party is not allowed to use that information or witness to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or is harmless.” Fed.R.Civ.P. 37(c)(1). In addition to or instead of this sanction, a court, on motion and after giving an opportunity to be heard, also “may impose other appropriate sanctions,” including “rendering a default judgment against the disobedient party.” Fed.R.Civ.P. 37(c)(1)(C). These sanctions “are necessary to compensate the court and parties, facilitate discovery and deter abuse of the discovery process.” United States v. One 1999 Forty Seven Foot Fountain Motor Vessel, 240 F.R.D. 695, 698 (S.D. Fla. 2007).

1. Monroe Violated Rule 26(a)(3)

Under Rule 26(a)(3), a party must provide, among other things, the name of each witness the party expects to present at trial and an identification of each document the party expects to offer at trial. Fed.R.Civ.P. 26(a)(3)(A). These pretrial disclosures must be made as ordered by the court or at least 30 days before trial. Fed.R.Civ.P. 26(a)(3)(B). Complying with Rule 26(a)(1)'s and (a)(2)'s disclosure requirements does not excuse a party's failure to comply with Rule 26(a)(3)'s disclosure requirements. Outley v. City of Chicago, No. 17 C 8633, 2022 WL 4448739, at *3 (N.D. Ill. Sept. 23, 2022); Ader v. SimonMed Imaging Inc., No. CV-17-02085-PHX-JJT, 2020 WL 13442907, at *2 (D. Ariz. Sept. 22, 2020).

On July 6, 2022, the undersigned ordered Monroe to file specified pretrial documents-including an exhibit list and a witness list-within 21 days of AM filing the same. Doc. 66. Monroe's pretrial documents were due, therefore, on or before August 26, 2022. See Doc. 68. On September 2, 2022, after Monroe failed to file the pretrial documents, the undersigned ordered Monroe to explain and show cause why he failed to submit the specified pretrial documents. Doc. 72. Monroe did not comply with that order. Additionally, as of the date of this report and recommendation, Monroe has not filed the specified pretrial documents. Thus, Monroe failed to comply with Rule 26(a)(3)'s disclosure requirements and the undersigned's order.

2. Monroe's Violation Was Not Substantially Justified or Harmless

As noted above, Rule 37(c)(1) sanctions may not be appropriate if a party's failure to comply with Rule 26(a)(3) “was substantially justified or is harmless.” Fed.R.Civ.P. 37(c)(1). A violation is “substantially justified” when “reasonable people could differ as to the appropriateness of the contested action.” Knight through Kerr v. Miami-Dade Cnty., 856 F.3d 795, 812 (11th Cir. 2017) (quoting Maddow v. Procter & Gamble Co., 107 F.3d 846, 853 (11th Cir. 1997)); Hewitt v. Liberty Mut. Grp., 268 F.R.D. 681, 682 (M.D. Fla. 2010). A violation is “harmless” “when there is no prejudice to the party entitled to receive disclosure.” Hewitt, 268 F.R.D. at 683. “The burden of establishing that a failure to disclose was substantially justified or harmless rests on the nondisclosing party.” Mitchell v. Ford Motor Co., 318 Fed.Appx. 821, 824 (11th Cir. 2009) (quotation omitted); Salgado by Salgado v. Gen. Motors Corp., 150 F.3d 735, 742 (7th Cir. 1998).

When exercising its discretion to determine whether a Rule 26 violation was substantially justified or is harmless, a court may consider the following factors:

1. the importance of the materials that were not disclosed;

2. the party's explanation for its failure to disclose the materials^[3];

3. the degree of prejudice to the opposing party; and

4. whether it appears that the failure to disclose the materials was the result of negligence or willful delay.

See Howe v. City of Akron, 801 F.3d 718, 747 (6th Cir. 2015); CQ, Inc. v. TXU Min. Co., 565 F.3d 268, 280 (5th Cir. 2009); Romero v. Drummond Co., 552 F.3d 1303, 1321

(11th Cir. 2008); OFS Fitel, LLC v. Epstein, 549 F.3d 1344, 1363-65 (11th Cir. 2008); S. States Rack & Fixture, Inc. v. Sherwin-Williams Co., 318 F.3d 592, 596-97 (4th Cir. 2003); Abdulla v. Klosinski, 898 F.Supp.2d 1348, 1359 (S.D. Ga. 2012); Tom v. S.B., Inc., 280 F.R.D. 603, 610-11 (D.N.M. 2012); Bryant v. City of Marianna, 532 F.Supp. 133, 137 (N.D. Fla. 1982).

(a). The Importance of the Materials Not Disclosed

By failing to file the specified pretrial documents-including a witness list and an exhibit list-Monroe effectively has halted this litigation. That is, AM and the District Court cannot prepare adequately for, or proceed to, trial without the pretrial documents. See Harris v. ATS Servs., LLC, No. 1:13-CV-2500-ODE-ECS, 2014 WL 12863144, at *2 (N.D.Ga. Nov. 4, 2014) (recommending default judgment as an appropriate sanction because a business entity's failure to obtain counsel halted the litigation), recommendation adopted, 2015 WL 13778343, at *1 (N.D.Ga. Jan. 6, 2015). Furthermore, Monroe's previous disclosures under Rule 26(a)(1) and (a)(2) do not mitigate the need for him to make disclosures required by Rule 26(a)(3) and the undersigned's order. See Outley, 2022 WL 4448739, at *3; Ader, 2020 WL 13442907, at *2. Thus, this factor weighs in AM's favor.

(b). Monroe's Feeble Explanation for His Failure

Monroe essentially offers no explanation for his failure to provide the specific pretrial documents. Monroe states, without elaboration, that he had insufficient “funds” and time. Doc. 77 at 1. Monroe presumably means that he did not have sufficient funds to hire an attorney and time to respond to AM's motion, but Monroe did not specify this. This purported explanation lacks merit for at least two reasons. First, on August 15, 2022, Monroe represented that he had retained counsel. See Doc. 70. ...