Bakala v. Krupa
| Decision Date | 10 August 2021 |
| Docket Number | 9:18-cv-2590-DCN-MGB |
| Parties | ZDENEK BAKALA, Plaintiff, v. PAVOL KRUPA, ADAM SWART, and CROWDS ON DEMAND LLC, Defendants. |
| Court | U.S. District Court — District of South Carolina |
The following matter is before the court on United States Magistrate Judge Mary Gordon Baker's report and recommendation (“R&R”), ECF No. 197, that the court grant plaintiff Zdenek Bakala's (“Bakala”) motion for default judgment, ECF No 181. For the reasons set forth below, the court adopts in part the R&R, grants in part the motion for default judgment, and holds the motion in abeyance with respect to the tortious interference claim and a damages determination until the court can hold an evidentiary hearing on the matter.
The R&R ably recites the facts, and the parties did not object to the R&R's recitation thereof. Therefore the court will only briefly summarize material facts as they appear in the R&R for the purpose of aiding an understanding of its legal analysis. This matter arises out of defendants Pavol Krupa (“Krupa”), Adam Swart (“Swart”), and Crowds on Demand, LLC's (“Crowds on Demand”) (collectively, “defendants”) alleged efforts to extort Bakala and interfere with his business affairs. ECF No. 15, Amend. Compl. Bakala is a citizen of both the United States and the Czech Republic and a resident of Hilton Head, South Carolina. Krupa is a Slovakian citizen residing in the Czech Republic. Swart is a resident of California and founder and chief executive officer of Crowds on Demand. Among other things, Crowds on Demand hires actors to play the part of protestors or supporters at political rallies.
In his amended complaint, now the operative complaint, Bakala alleges that Krupa launched a “harassment campaign” intended to defame Bakala via, inter alia, social media accounts, telephone calls to his business affiliates, and fake demonstrations in front of Bakala's homes. ECF No. 15. Among other things, the harassment campaign falsely accused Bakala of being a “criminal” who “brib[ed] government officials” to “cheat[] blue[-]collar Czech miners out of their homes.” Id. at 17-18. Krupa hired Swart and Crowds on Demand (the “Swart Defendants”) to execute this supposed harassment campaign and create a façade of negative public opinion of Bakala. In exchange for ceasing the harassment campaign against Bakala, Krupa demanded that Bakala pay him 500 million crowns, approximately $23 million. Bakala refused to meet this demand. Instead, on September 21, 2018, Bakala filed the instant action against defendants, alleging violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), defamation, and tortious interference. ECF No. 1; see ECF No. 15.
Bakala filed proof of service of the amended complaint as to the Swart Defendants on October 15, 2018 and October 17, 2018. ECF Nos. 16-19. On November 13, 2018, the Swart Defendants filed a motion to dismiss Bakala's claims in their entirety. ECF No. 26. On November 30, 2018, Bakala filed a motion to stay the case until Krupa had been served and given an opportunity to respond to the amended complaint. ECF No. 32. On March 8, 2019, Bakala filed proof of service as to Krupa. ECF No. 53. On March 14, 2019, Krupa filed a motion for an extension of time to file his answer, ECF No. 56, which the court granted that same day, ECF No. 58. Despite this extension, Krupa did not timely file an answer.
On October 24, 2019, this court held a status conference. ECF No. 95. During that conference, the parties explained that Krupa had yet to make an appearance, but that Bakala and the Swart Defendants were close to reaching a settlement agreement. Accordingly, this court ordered Krupa to serve a responsive pleading to the amended complaint within 21 days of the status conference. ECF No. 96. On January 6, 2020, Bakala reached a settlement with the Swart Defendants, [1] leaving Krupa as the only remaining defendant. ECF No. 188-3.
On November 19, 2019, Krupa filed a document entitled “Answer to the Complaint/Response to the Plaintiff Action.” ECF No. 98. In that pleading, Krupa addressed some of the amended complaint's allegations, generally denied all of them, and objected to this court exercising personal jurisdiction over him. Bakala timely filed a motion to strike this pleading, asserting that it failed to comply with the requirements of the Federal Rules of Civil Procedure. ECF No. 101. The Magistrate Judge issued an R&R on March 30, 2020, recommending that the court deny Krupa's preliminary challenge to the court's exercise of personal jurisdiction over him. ECF No. 140. The court adopted that R&R on May 8, 2020. ECF No. 147. On May 11, 2020, the Magistrate Judge granted Bakala's motion to strike Krupa's pleading and, in doing so, ordered Krupa to file and serve a new answer within 21 days. ECF No. 149. Nevertheless, Krupa again failed to respond.
Bakala requested an entry of default against Krupa on June 5, 2020, ECF No. 157, which the clerk of court entered on June 8, 2020, ECF No. 159. On January 5, 2021, Bakala filed the instant motion for default judgment. ECF No. 181. Krupa failed to timely respond. On March 5, 2021, the Magistrate Judge issued an R&R, recommending that the court grant Bakala's motion for default judgment, schedule an evidentiary hearing to determine the appropriate amount of damages, and order Bakala to show cause as to why injunctive relief is an appropriate remedy under 18 U.S.C. § 1964. ECF No. 197. On March 19, 2021, Bakala responded to the R&R. ECF No. 198. Krupa did not file any objections or a response to the R&R. As such, the motion for default judgment is now ripe for review.
The magistrate judge only makes a recommendation to the court. Mathews v. Weber, 423 U.S. 261, 270 (1976). The recommendation carries no presumptive weight, and the responsibility to make a final determination remains with the court. Id. at 270- 71. The court may “accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge . . . or recommit the matter to the magistrate judge with instructions.” 28 U.S.C. § 636(b)(1). The court is charged with making a de novo determination of any portion of the R&R to which a specific objection is made. Id. However, de novo review is unnecessary when a party makes general and conclusory objections without directing a court's attention to a specific error in the magistrate judge's proposed findings. Orpiano v. Johnson, 687 F.2d 44, 47 (4th Cir. 1982). In the absence of a specific objection, the court reviews the R&R only for clear error. Diamond v. Colonial Life & Accident Ins. Co., 416 F.3d 310, 315 (4th Cir. 2005) (citation omitted). “A finding is ‘clearly erroneous' when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.” United States v. U.S. Gypsum Co., 333 U.S. 364, 395 (1948).
Securing a default judgment is a two-step process. First, upon a defendant's failure to plead or otherwise defend within the permissible period for response, a plaintiff must file a motion requesting an entry of default from the clerk of court. Fed.R.Civ.P. 55(a). Second, where the plaintiff's claim is not for a sum certain, she must “apply to the court for a default judgment.” Fed.R.Civ.P. 55(b)(2). After a court has received an application, Rule 55 gives it great discretion in determining whether to enter or effectuate judgment, including the power to: “[ ]conduct an accounting; [ ]determine the amount of damages; [ ]establish the truth of any allegation by evidence; or [ ]investigate any other matter.” Id.; see also United States v. Ragin, 113 F.3d 1233 (4th Cir. 1997).
Once the clerk has entered default against a defendant, the court, in considering the plaintiff's application for default judgment, accepts a plaintiff's well-pleaded factual allegations as true. See DIRECTV, Inc. v. Rawlins, 523 F.3d 318, 322 n.2 (4th Cir. 2008) () (citing Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780 (4th Cir. 2001)). However, the defendant is not held to have admitted conclusions of law, Ryan, 253 F.3d at 780 (citing Nishimatsu Constr. Co., Ltd. v. Houston Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975)), or allegations that concern only damages, Dundee Cement Co. v. Howard Pipe & Concrete Prod., Inc., 722 F.2d 1319, 1323 (7th Cir. 1983) (citing Pope v. United States, 323 U.S. 1 (1944)).
Thus, a court considering default judgment must still determine if the established factual allegations constitute a legitimate cause of action and provide a sufficient basis the relief sought. See Ryan, 253 F.3d at 780 (); see also Silvers v Iredell Cty. Dep't of Soc. Servs., 2016 WL 427953, at *4 (W.D. N.C. Feb. 3, 2016), aff'd, 669 Fed.Appx. 182 (4th Cir. 2016). “The party moving for default judgment has the burden to show that the defaulted party was properly served and that the unchallenged factual allegations constitute a legitimate cause of action.” Harris v. Blue Ridge Health Servs., Inc., 388 F.Supp.3d 633, 638 (M.D. N.C. 2019) (internal citations and quotation marks omitted). If the court determines that the allegations entitle the plaintiff to relief, it must then determine the appropriate amount of damages. Id. In determining the appropriate damages, the court may conduct an evidentiary hearing. Fed.R.Civ.P. 55(b) (2); CT & T EV...
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