Tratt Indus., LLC v. Patterson

Decision Date21 July 2020
Docket NumberCiv. No. 19-498 WJ/SCY
CourtU.S. District Court — District of New Mexico
PartiesTRATT 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.
MEMORANDUM OPINION AND ORDER GRANTING MOTION FOR ENTRY OF JUDGMENT AND DETERMINATION OF DAMAGES IN PART and ALLOWING SUPPLEMENTATION OF RECORD FOR FOURTEEN DAYS

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.

BACKGROUND

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:

The Court finds and concludes that the relevant parties have received the due process to which they are entitled—and then some, and that the sanctions that are imposed satisfy the Ehrenhaus factors.
The Court agrees with and HEREBY ADOPTS Judge Yarbrough's findings on each of these parties and finds (except for Mr. Shepard, on which this Court's adoption of findings and recommendation must be deferred in light of his filing for bankruptcy under Chapter 7) that their actions were willful and intentional rather than the result of an inability to comply with Court orders or with their obligations as litigants. Here, even when given the chance to justify their non-compliance, they opted to completely ignore several opportunities to avoid the Court's sanctions. As just one example, the Court is still waiting for Mr. Baker to present documents in camera that demonstrate his children's medical issues which prevented him from timely calling in to two court hearings and from timely meeting his initial disclosure deadline.
All of the parties affected by this Order have been given considerable leeway by this Court based on their pro se status. They have had numerous extensions affording them ample time in which meet Court deadlines and in which comply with Court orders; and they have been warned repeatedly about the specific consequences of failing to take their litigation responsibilities seriously. Their failure to do so exhibits a lack of interest in pursuing the very case they initiated. Their conduct has prejudiced Defendants in being able to defend against Plaintiffs' claims or being able to prosecute their counterclaims and stymied the course of litigation and prevented the Court from being able to efficiently manage this case. See Chambers v. NASCO, Inc., 501 U.S. 32 (1991) (district courts have the inherent right to manage their own affairs so as to achieve the orderly and expeditious disposition of cases); Braley v. Campbell et al

., 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).

DISCUSSION

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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