Fin. Pac. Leasing, Inc. v. Total Wellness Med. Ctr. LLC
| Decision Date | 26 August 2020 |
| Docket Number | Case No. TDC-19-0981 |
| Parties | FINANCIAL PACIFIC LEASING, INC., Plaintiff, v. TOTAL WELLNESS MEDICAL CENTER LLC, et al., Defendants. |
| Court | U.S. District Court — District of Maryland |
This Report and Recommendation addresses Plaintiff Financial Pacific Leasing, Inc.'s ("Financial Pacific") "Motion to Enter Default Judgment Against Defendant Total Wellness Medical Center LLC" ("Motion") (ECF No. 10). Defendants Total Wellness Medical Center LLC ("Total Wellness") and Miriam Martin ("Martin") (collectively, "Defendants") did not respond to the Motion and the time for doing so has expired.1 See Loc. R. 105.2. On March 5, 2020, in accordance with 28 U.S.C. § 636 and Local Rule 301, Judge Chuang referred this case to me for a report and recommendation on Plaintiff's Motion. (ECF No. 11.) I find that a hearing is unnecessary. See Fed. R. Civ. P. 55(b)(2); Loc. R. 105.6. For the reasons set forth below, I respectfully recommend that Plaintiff's Motion be granted in part and denied in part.
On April 1, 2019, Plaintiff filed its Complaint against Defendants. (ECF No. 1.) The Complaint contains three counts: Count 1, Breach of Contract (against Total Wellness); Count 2, Breach of Contract (against Martin); and Count 3, Replevin (against Total Wellness).
Plaintiff served its Complaint on Defendants (see ECF Nos. 5 & 6) but Defendants did not file an answer or responsive pleading within the requisite time period. Plaintiff moved for entry of default on July 18, 2019. (ECF No. 7.) The Clerk's Entry of Default was entered the same day. (ECF No. 8.) Notice of Default was mailed to Defendants. (ECF No. 9.) Plaintiff filed the Motion on January 7, 2020.2
In determining whether to award a default judgment, the Court accepts as true the well-pleaded factual allegations in the complaint as to liability. See Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780-81 (4th Cir. 2001); United States ex rel. Durrett-Sheppard Steel Co. v. SEF Stainless Steel, Inc., No. RDB-11-2410, 2012 WL 2446151, at *1 (D. Md. June 26, 2012). Nonetheless, the Court must consider whether the unchallenged facts constitute a legitimate cause of action, since a party in default does not admit mere conclusions of law. United States v. Redden, No. WDQ-09-2688, 2010 WL 2651607, at *2 (D. Md. June 30, 2012) (citing Ryan, 253 F.3d at 790). Although the Fourth Circuit has a "strong policy that cases be decided on the merits," United States v. Shaffer Equip. Co., 11 F.3d 450, 453 (4th Cir. 1993), default judgment "is appropriate when the adversary process has been halted because of an essentially unresponsive party." S.E.C.v. Lawbaugh, 359 F. Supp. 2d 418, 421 (D. Md. 2005). If the Court determines that liability is established, the Court must then determine the appropriate amount of damages. CGI Finance, Inc., v. Johnson, No. ELH-12-1985, 2013 WL 1192353, at *1 (D. Md. March 21, 2013). The Court does not accept factual allegations regarding damages as true, but rather must make an independent determination regarding such allegations. Durrett-Sheppard Steel Co., 2012 WL 2446151, at *1.
Rule 55 of the Federal Rules of Civil Procedure provides that "[i]f, after entry of default, the Plaintiff's Complaint does not specify a 'sum certain' amount of damages, the court may enter a default judgment against the defendant pursuant to Fed. R. Civ. P. 55(b)(2)." A plaintiff's assertion of a sum in a complaint does not make the sum "certain" unless the plaintiff claims liquidated damages; otherwise, the complaint must be supported by affidavit or documentary evidence. United States v. Redden, No. WDQ-09-2688, 2010 WL 2651607, at *2 (D. Md. June 30, 2012). Rule 55(b)(2) provides that "the court may conduct hearings or make referrals . . . when, to enter or effectuate judgment, it needs to . . . determine the amount of damages." The Court is not required to conduct an evidentiary hearing to determine damages, however; it may rely instead on affidavits or documentary evidence in the record to determine the appropriate sum. See, e.g., Mongue v. Portofino Ristorante, 751 F. Supp. 2d 789, 795 (D. Md. 2010).
The factual allegations pleaded in Plaintiff's Complaint are common to each count. In early 2018, Plaintiff and Defendants executed an Equipment Finance Agreement ("Agreement").3 (ECF No. 1 ¶ 7.) The Agreement (ECF No. 1-1) provided secured financing for Total Wellness's purchase of one 105-7027-000 Tempsure System (the "Equipment"). (Id.) Under the Agreement,Total Wellness granted Plaintiff a first priority security interest in the Equipment to secure Total Wellness's obligations under the Agreement. (ECF Nos. 1 ¶ 8 & 1-1 at 2, § 2.) Plaintiff perfected its security interest in the Equipment by filing a UCC Financing Statement with the Maryland Department of Assessments and Taxation on February 1, 2018. (ECF Nos. 1 ¶ 8 & 13-2 at 2.) Plaintiff filed a UCC Financing Statement Amendment on March 21, 2019. (ECF No. 13-2 at 3-4.)
The Agreement required Total Wellness to make monthly payments to Plaintiff for the financing of the Equipment according to a payment schedule. (ECF No. 1-1 at 2, 6.) The payment schedule required Total Wellness to make an advance payment of $50.00, two consecutive monthly payments of $50.00, and 60 consecutive monthly payments of $2,732.64. (Id. at 6.) The Agreement contains a Personal Guaranty executed by Martin, Total Wellness's sole member, whereby she "unconditionally and irrevocably guarantee [Total Wellness's] timely payment and performance of all obligations" under the Agreement. (ECF No. 1-1 at 2.)
The Agreement provides that the failure of Total Wellness "to pay any amount due under [the Agreement] when due" would cause it to be in default. (ECF No. 1-1 at 3, § 11.) The failure of a guarantor to perform its obligations would also cause Total Wellness to be in default. (Id.) If Total Wellness was in default, Plaintiff could elect to pursue "one or more" enumerated remedies:
(1) retain your deposit and all payments made by you; (2) terminate this Agreement and any other agreements we have with you; (3) require you to immediately pay us a sum equal to all unpaid payments for the remainder of this Agreement, plus all other amounts due or to become due during the term of this Agreement; (4) require you to promptly return the Equipment to us at your expense . . . .
(ECF No. 1-1 at 3, § 11.)
The Agreement also provides that if Total Wellness was in default, it would be responsible for covering Plaintiff's attorney's fees and costs:
Plaintiff alleges that Total Wellness breached the Agreement by "among other things, failing to make payments to [Plaintiff] when and as due." (ECF No. 1 ¶ 11.) In addition, Plaintiff alleges that Martin "failed to pay or perform any obligations owed by [Total Wellness] under the Agreement" and failed to comply with her obligations under the Personal Guaranty. (Id. ¶ 12.) As such, Plaintiff asserts that Defendants are in default. Because of Defendants' default, Plaintiff "accelerated the balance due under the Agreement and demanded payment thereof." (Id. ¶ 13.) Plaintiff notified Total Wellness in writing "of its default, acceleration of the obligations and [Plaintiff's] intention to enforce the Finance Agreement." (Id. ¶ 14; see also ECF No. 1-3.) Defendants did not make the required payment and Martin failed to perform her obligations as the guarantor under the Agreement. (Id. at ¶¶ 15-16.) In addition, Total Wellness failed to surrender the Equipment to Plaintiff when demanded to do so. As a result of Defendants' default and breach of the Agreement, Plaintiff sustained financial losses. (Id. ¶ 19.)
In Count 1, Plaintiff asserts a breach of contract claim against Total Wellness.4 (ECF No. 1 ¶¶ 20-23.) In Washington, "[i]n a breach of contract action, the plaintiff must prove that a valid agreement existed between the parties, the agreement was breached, and the plaintiff wasdamaged." Univ. of Washington v. Gov't Employees Ins. Co., 200 Wash. App. 455, 467, 404 P.3d 559, 566 (2017). Accepting as true the well-pleaded allegations of the Complaint, Plaintiff has established Total Wellness's liability for breach of contract.
The Agreement is a valid contract between Plaintiff and Total Wellness. Total Wellness had an obligation to make monthly payments to Plaintiff, and it failed to make these payments. This put Total Wellness in default. Plaintiff exercised the remedies available to it under the Agreement, including an acceleration of the balance due and a demand for the return of the Equipment. In breach of its obligations under the Agreement, Total Wellness did not comply with Plaintiff's demands for payment or return of the Equipment. As a result, Plaintiff sustained financial losses. Accordingly, Plaintiff has demonstrated that Total Wellness is liable for its breach of contract claim in Count 1. I recommend that the Motion be granted as to liability for this count.
In Count 3, Plaintiff asserts a claim for replevin against Total Wellness. (ECF No. 1 ¶¶ 27-30.) In Washington, "[r]eplevin is a special statutory proceeding 'to determine title to, or right of possession of, personal property.'" SEIU Healthcare Nw. Training P'ship v. Evergreen Freedom Found., 5 Wash. App. 2d 496, 500, 427 P.3d 688, 691 (2018) (quoting Apgar v. Great Am. Indem. Co., 171 Wash. 494, 498, 18 P.2d 46 (1933)). The elements of...
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