Medicomp, Inc. v. Abound Sys., LLC
| Decision Date | 07 February 2019 |
| Docket Number | Case No: 6:18-cv-1515-Orl-40TBS |
| Parties | MEDICOMP, INC., Plaintiff, v. ABOUND SYSTEMS, LLC, Defendant. |
| Court | U.S. District Court — Middle District of Florida |
Pending before the Court is Plaintiff's Motion for Final Default Judgment (Doc. 21). No opposition brief has been filed. Upon due consideration, I respectfully recommend that the motion be granted in part and otherwise denied.
Plaintiff, Medicomp, Inc. ("Medicomp"), sued "Abound Systems, Inc., a North Carolina Profit Corporation" (Doc. 1). The Court dismissed the complaint without prejudice for failure to adequately allege a basis for the assertion of diversity jurisdiction (Doc. 5). Following dismissal, Plaintiff filed its amended complaint, again styled: "Medicomp, Inc., a Florida Profit Corporation, v. Abound Systems, Inc., a North Carolina Profit Corporation" (Doc. 6). Contrary to the case style, the amended pleading alleged that Plaintiff "sues Defendant, Abound Systems, LLC," a Texas limited liability company (Doc. 6 at 1). And, the prayer for relief sought judgment against Abound Systems, Inc. (Doc. 6 at 14, and 15). Medicomp purported to serve a summons on "Abound Systems, Inc." in Texas and, following no response, moved for entry of clerk's default (Docs. 8, 10). That motion was denied, as the Court "[could not] tell who the Defendant is, let alone whether it was properly served." (Doc. 11 at 2).
Medicomp's motion for leave to file a second amended complaint and to amend the case caption was granted (Docs. 12, 13) and the operative complaint against Defendant, "Abound Systems, LLC, a Texas limited liability company" ("Abound") was filed (Doc. 14). Following appropriate service and no response to the second amended complaint, Medicomp obtained a clerk's default on December 6, 2018 (Doc. 19). On January 14, 2019, the Court issued an Order to Show Cause why this case should not be dismissed for failure to promptly seek a default judgment (Doc. 20). This motion, accompanied by the Declaration of Anthony "Tony" Balda, CEO and custodian of records for Medicomp (Doc. 21-2), followed. The motion was served on Abound (Doc. 21 at 6), and the time for response has expired.
A district court may enter a default judgment against a properly served defendant who fails to defend or otherwise appear pursuant to Federal Rule of Civil Procedure 55(b)(2). In defaulting, a defendant "admit[s] the plaintiff's well-pleaded allegations of fact" for purposes of liability. Buchanan v. Bowman, 820 F.2d 359, 361 (11th Cir.1987). Nonetheless, the court may enter a default judgment only if the factual allegations of the complaint, which are assumed to be true, provide a sufficient legal basis for entry of a default judgment. Nishimatsu Constr. Co. v. Houston Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975) ( ).
The United States Supreme Court has noted the difference between well-pleaded facts and conclusory allegations. In Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009), our Supreme Court explained that a complaint need not contain detailed factual allegations, but it demands more than Id. at 678 (internal citations omitted). "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not 'show[n]'-'that the plaintiff is entitled to relief.'" Id. at 679 (quoting FED. R. CIV. P. 8(a)(2)). This analysis is equally applicable to a motion for default judgment. See De Lotta v. Dezenzo's Italian Restaurant, Inc., No. 6:08-cv-2033-Orl-22KRS, 2009 WL 4349806, *5 (M.D. Fla. November 24, 2009).
Once liability is established, the Court turns to the terms of the judgment. Pursuant to Federal Rule of Civil Procedure 54(c), "[a] default judgment must not differ in kind from, or exceed in amount, what is demanded in the pleadings." If unspecified monetary damages are sought, the party moving for default judgment has the burden to prove the unliquidated sums in a hearing on damages or otherwise. FED. R. CIV. P. 55(b)(1)-(2). Pursuant to Rule 55(b)(2), the Court "may conduct hearings or make referrals-preserving any federal statutory right to a jury trial-when, to enter or effectuate judgment, it needs to: A) conduct an accounting; B) determine the amount of damages; C) establish the truth of any allegation by evidence; or D) investigate any other matter." So, in order to enter adefault judgment, the Court must find that an adequate showing has been made as to liability and the kind or amount of damages or other relief.
Medicomp sues Abound in two counts, alleging breach of two different but related software contracts.
On July 28, 2017, Medicomp and Abound entered into the "Android Rewrite Statement of Work for Medicomp" (the "Rewrite Agreement") (Doc. 14, ¶ 7, Doc. 14-1). Section 1.2 of the Rewrite Agreement states that the purpose of the Rewrite Agreement was to "[c]omplete the new Medicomp Android application as per the requirements of Medicomp", including "complete the backlog list (57 tasks) provided by Medicomp", "[a] minimum of 3 QADev cycles are needed before the final release", and "[i]nclude QA before all releases to Medicomp", with several "key areas of focus" also identified in the Rewrite Agreement (collectively, the "Rewrite Project", a/k/a PO 2408) (Id., ¶ 8). Section 2.2 of the Rewrite Agreement defines the "deliverables" Abound promised to deliver to Medicomp. Section 1.1 of the Rewrite Agreement provides that before Medicomp hired Abound, Medicomp had already completed a minimum of 50% of the Rewrite Project. Abound's task was to complete the Rewrite Project and build the product "for the new generation Android devices to be provided by Abound." Section 3.1 of the Rewrite Agreement required Abound to "[c]omplete coding/dev[elopment] of backlog items" within four (4) weeks of executing the Rewrite Agreement (Id., ¶¶ 9-11).
By August 28, 2017, Medicomp had paid Abound $109,012 (the "Rewrite Payment"), which was the entire sum due from Medicomp to Abound for the Rewrite Project. Medicomp alleges:
Unfortunately, by then, Abound had already defaulted under the Rewrite Agreement by failing to meet two milestones under the Rewrite Agreement. Based on these failures, which showed that Abound had fallen behind on each step of the Rewrite Project, Medicomp determined that Abound would be unable to timely complete the Rewrite Project by delivering the deliverables by the Rewrite Agreement.
(Id., ¶ 12, emphasis added).
On October 9, 2017, Abound again defaulted on the Rewrite Agreement by failing to meet the new deadline to deliver the deliverables for the Rewrite Project. Despite its repeated defaults, Abound continued to claim that it could perform under the Rewrite Agreement. On November 11, 2017, Abound defaulted yet again by failing to deliver functional software, specifically by having 102 open items. The Rewrite Agreement required Abound to complete the Rewrite Project without using Medicomp's internal resources; indeed, this was a material inducement for Medicomp to enter into the Rewrite Agreement, as Medicomp did not want to incur the burden, expense, and disruption of using Medicomp's employees and technical assets for the Rewrite Project. By outsourcing the work, Medicomp's employees could continue to work on other projects for which they were better suited. Abound's "demonstrated ineffectiveness and incompetence forced Medicomp to devote significant internal resources, including employee time, to the Rewrite Project." (Id., ¶¶ 13-15).
Abound never delivered the functional deliverables required by the Rewrite Agreement (Id., ¶17). The Rewrite Agreement provides: (emphasis original) (Id., ¶ 18).
Medicomp was not satisfied with Abound's final delivery, "which Abound never delivered." Medicomp demanded that Abound refund the full project cost but Abound failed to do so. (Id., ¶ 19). Medicomp did not terminate the Rewrite Agreement or excuse Abound from its obligations under the Rewrite Agreement, because Medicomp had already paid Abound in full (Id., ¶ 20).
Once Medicomp determined that Abound was unable to perform the Rewrite Agreement, "Medicomp attempted to mitigate its damages by redirecting Abound from the Rewrite Project to a stopgap measure, the Legacy Development Project (the "Legacy Project"), a much smaller project which was only necessary because of Abound's failure to deliver the Rewrite Agreement's deliverables." (Id., ¶ 21).
After Abound had already completed work on the Legacy Project it sent Medicomp a document titled "Android Legacy App Statement of Work for Medicomp" (the "Legacy Proposal") (Id., ¶ 22, Doc. 14-2). Medicomp never executed the Legacy Proposal. Ultimately, Medicomp and Abound agreed that Abound was entitled to a credit for its work on the Legacy Project, the amount of which was later stated in the Legacy Proposal to be $16,680. The parties agreed that Abound would receive credit of $16,680 against the $109,012 Abound owed Medicomp for its failure to perform as required by the Rewrite Agreement. Abound...
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