Tratt Indus., LLC v. Patterson
Decision Date | 21 July 2020 |
Docket Number | Civ. No. 19-498 WJ/SCY |
Court | U.S. District Court — District of New Mexico |
Parties | TRATT INDUSTRIES, LLC; TROY BAKER; and MATTHEW SHEPARD, Plaintiffs/Counter-Defendants, v. DWIGHT L. PATTERSON and LAURIE M. PATTERSON, Individually and as Trustees of the PATTERSON REVOCABLE TRUST; SANTA FE BUSINESS BROKERS, LLC, d/b/a SAM GOLDENBERG & ASSOCIATES; SUNBELT NEW MEXICO BUSINESS BROKERAGE, LLC; and MICHAEL GREENE, Defendants/Counterclaimants, DWIGHT L. PATTERSON and LAURIE M. PATTERSON, Individually and as Trustees of the PATTERSON REVOCABLE TRUST, Third-Party Plaintiffs, v. XITECH INSTRUMENTS, INC., Third-Party Defendant. |
THIS MATTER comes before the Court upon a Motion for Entry of Judgment and Determination of Damages, filed by Counterclaimants and Third-Party Plaintiffs Dwight Patterson and Laurie Patterson ("the Pattersons") on June 2, 2020 (Doc. 81). No response to the motion has been filed. See Doc. 85 (Notice of Completion of Briefing). Having reviewed the parties' briefing and the applicable law as well as the attached documentation, the Court finds that the Pattersons' motion and request for a judgment of damages is well-taken and supported by the record, with the exception of one of the counterclaims.
This case began as a business dispute with Plaintiffs suing Defendants for breach of contract, negligent misrepresentations, fraud and other related state torts pertaining to their purchase of a company from Defendants. According to the complaint, Third-Party Defendant Xitech Instruments, Inc. ("Xitech") is in the business of selling groundwater remediation systems which are designed to treat polluted groundwater. Its primary customers are environmental consultants who purchase the systems for resale to and use by their clients.
Plaintiff Tratt Industries, LLC ("Tratt") is a Wyoming limited liability company which is in the business of identifying and acquiring small manufacturing companies like Xitech, which operate in environmental and/or safety areas, in order to operate and profitably grow the companies. Tratt's managing members are Plaintiffs Troy Baker, a citizen of Nevada and Matthew Shepard, a citizen of Kansas. In March of 2018, Plaintiffs purchased Xitech from the Patterson Revocable Trust ("Trust") which owned the stock of Xitech Instruments, Inc. ("Xitech"). Defendants and Counter-claimants Dwight and Laurie Patterson are trustees of the Trust.
Defendant Santa Fe Business Brokers, LLC, d/b/a Sam Goldenberg & Associates is a New Mexico limited liability company. Defendant Sunbelt New Mexico Business Brokerage ("Sunbelt") is a New Mexico limited liability company that is the affiliate and sister company of Santa Fe Business Brokers, LLC (collectively, "SGA"). Defendant Michael Greene ("Greene") isthe managing member and owner of both affiliated companies that constitute SGA and is a citizen of New Mexico. SGA and Green acted as the agents for the Trust in the sale.
The complaint was filed on May 30, 2019 in federal court based on diversity jurisdiction. Doc. 1, ¶4. Plaintiffs bring several claims against Defendants that arise from their general allegations that the business Defendants sold them (Xitech) was not as strong as Defendants had represented. The Patterson Defendants, in turn, have filed counterclaims against Plaintiffs that arise from their general allegations that after Plaintiffs purchased Xitech and hired Mr. Patterson, Plaintiffs failed to fulfill promises they had made to the Pattersons. These same allegations serve as the basis for the Third-Party Complaint the Pattersons have filed against Mr. Patterson's former employer, Xitech.
The substantive litigation of this case veered off course after counsel for Plaintiffs Tratt, Baker and Shepard were granted leave to withdraw from the case. Doc. 22. At that time, the Court made it clear to Tratt that as a business entity, it was required to be represented by counsel to proceed with the litigation. The Court also allowed the first of numerous extensions of time for Plaintiffs Baker and Shepard to obtain legal representation. Since then, no counsel has entered an appearance for either Tratt, Baker or Shepard.
Much of the Court's focus in this case related to Plaintiffs' failure to comply with this Court's rules and procedures rather than the normal course of civil litigation, the history of which is described in detail in the Court's Order Affirming Magistrate Judge's Proposed Findings and Recommended Disposition on Pending Motions and Other Matters Except for Matters Related to Plaintiff Shepard Based on Chapter 7 Bankruptcy Filing (Doc. 79) ("Final Order"). In that Final Order, the Court considered the recommended findings and disposition of United States Magistrate Judge Steven C. Yarbrough concerning the imposition of sanctions that were dispositive of certainclaims and issues based on Ehrenhaus v. Reynolds, 965 F.2d 916, 921 (10th Cir. 1992). The Court adopted those findings:
., 832 F.2d 1504, 1509 (10th Cir. 1987).
Doc. 79 at 14-15. The practical outcome of the Final Order is as follows:
Tratt Industries: Tratt's claims were dismissed with prejudice; and default judgment was entered against Tratt on the counterclaims asserted by the Pattersons in the Counterclaim for Damages and Accounting. Doc. 79 at 6, 16; see Doc. 17 (Ans. & Counterclaim); Xitech Instruments: Default judgment entered against Xitech on claims asserted in the Patterson's Amended Third-Party Complaint. Doc. 79 at 6, 16; see Doc. 62 (Am. Third Party Complaint);
Troy Baker: Baker's claims were dismissed with prejudice; and default judgment entered against him on the counterclaims asserted by the Pattersons in the Counterclaim for Damages and Accounting. Doc. 79 at 16; see Doc. 17 (Ans. & Counterclaim);
Matthew Shepard: Judge Yarbrough recommended that Shepard's claims be dismissed and that default judgment be entered against him on the counterclaims he faces. Doc 76 at 3, 20. At the time the Final Order was entered, Mr. Shepard filed for Chapter 7 Bankruptcy, resulting in an automatic stay of all proceedings against him under 11 U.S.C. §362. Doc. 79 at 14. At the time, the Court noted that "were it not for the automatic stay, the Court would be adopting [Judge Yarbrough's] findings and recommendation . . . ." Id.
However, the Automatic Stay associated with Shepard's filing of bankruptcy has been lifted. On June 1, 2020, the Pattersons obtained an order from the Bankruptcy Court for the District of Kansas granting them relief from the Automatic Stay "for the limited purpose of obtaining an entry of judgment" against Mr. Shepard in the instant lawsuit. Doc. 81-1. Based on that Order, the Court may now—and hereby does—adopt Judge Yarbrough's findings and recommendations regarding Plaintiff Shepard, dismissing all of his claims with prejudice and in addition, entering default judgment against him on the claims asserted by the Pattersons in their Counterclaim for Damages and Accounting. See Doc. 17 (Ans. & Counterclaim).
The sole issue remaining in this case is the issue of damages on the default judgments entered against Tratt Industries, LLC, Xitech Instruments, Troy Baker and Matthew Shepard. Doc.79 at 16. The Court initially intended to hold a hearing on the issue of damages. Doc. 79 at 16. However, a court may enter a default judgment for a damage award without a hearing if the amount claimed is "one capable of mathematical calculation." Applied Capital, Inc. v. Gibson, 558 F.Supp.2d 1189, 1202 (D.N.M.2007) (Browning, J.)(quoting H.B. Hunt v. Inter-Globe Energy, Inc., 770 F.2d 145, 148 (10th Cir.1985)). After reviewing the material and supporting documentation submitted by the Pattersons on which they base their damages calculations (exclusive of attorney's fees), the Court now finds that a hearing is unnecessary and would only invite further delay in the...
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