Zucaro v. Anand Patel, Raman Patel, & Gulf Coast Mgmt. Co.

Decision Date06 September 2016
Docket NumberCIVIL ACTION NO. 16-00089-N
CourtU.S. District Court — Southern District of Alabama

COMPANY, LLC, Defendants.



September 6, 2016


This action is before the Court on the Motion for Default Judgment under Federal Rule of Civil Procedure 55(b) (Doc. 14) filed by Plaintiff Michael Zucaro. Upon consideration, the Court finds that the motion is due to be GRANTED in part and DENIED in part.1

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I. General Legal Standards

"When a defendant has failed to plead or defend, a district court may enter judgment by default. Fed. R. Civ. P. 55(b)(2). Because of [this Circuit's] strong policy of determining cases on their merits, however, default judgments are generally disfavored. While a defaulted defendant is deemed to admit the plaintiff's well-pleaded allegations of fact, he is not held to admit facts that are not well-pleaded or to admit conclusions of law. Entry of default judgment is only warranted when there is a sufficient basis in the pleadings for the judgment entered." Surtain v. Hamlin Terrace Found., 789 F.3d 1239, 1244-45 (11th Cir. 2015) (per curiam) (quotations, footnote, and some citations omitted). See also Eagle Hosp. Physicians, LLC v. SRG Consulting, Inc., 561 F.3d 1298, 1307 (11th Cir. 2009) (" 'A default judgment is unassailable on the merits, but only so far as it is supported by well-pleaded allegations.' " (quoting Nishimatsu Const. Co. v. Houston Nat. Bank, 515 F.2d 1200, 1206 (5th Cir. 1975))).

Conceptually, ... a motion for default judgment is like a reverse motion to dismiss for failure to state a claim. See Wooten v. McDonald Transit Assocs., Inc., 775 F.3d 689, 695 (5th Cir. 2015) (stating in the context of a motion for default judgment, "whether a factual allegation is well-pleaded arguably follows the familiar analysis used to evaluate motions to dismiss under Rule 12(b)(6)").

When evaluating a motion to dismiss, a court looks to see whether the complaint "contain[s] sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.' " Ashcroft v. Iqbal,

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556 U.S. 662, 678, 129 S. Ct. 1937, 1949, 173 L. Ed. 2d 868 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 1974, 167 L. Ed. 2d 929 (2007)). This plausibility standard is met "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. (citing Twombly, 550 U.S. at 556, 127 S. Ct. at 1965).

Surtain, 789 F.3d at 1245.

Moreover, in cases involving a default judgment, "there must be strict compliance with the legal prerequisites establishing the court's power to render the judgment." Varnes v. Local 91, Glass Bottle Blowers Ass'n of U.S. & Canada, 674 F.2d 1365, 1369 (11th Cir. 1982).

II. Procedural History

On February 29, 2016, Zucaro commenced this civil action by filing a Complaint (Doc. 1) against Defendants Anand Patel, Raman Patel, and Gulf Coast Management Company, LLC ("GCMC") (collectively, "the Defendants"). In response to an order of the Court finding deficient certain allegations in the initial Complaint supporting subject matter jurisdiction (see Doc. 4), Zucaro subsequently filed his two-count First Amended Complaint ("FAC"), the operative pleading in this action.2 (Doc. 6). Count I alleges a state law claim of breach of personal guaranty against the Patels, while Count II alleges a state law claim of breach of contract

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against GCMC. (See id.).

On March 5, 2016, the Patels were each personally served with a summons and the FAC by private process server. (See Docs. 7, 8). On March 8, 2016, the process server also delivered a summons and the FAC to GCMC at its Saraland, Alabama address, leaving a copy of those documents with "Zakiah (last name not given), Hotel Clerk." (Doc. 9). To date, none of the Defendants has filed a responsive pleading or otherwise appeared in this action.

Upon Zucaro's application (Doc. 10), the Clerk of Court entered default against the Defendants under Federal Rule of Civil Procedure 55(a) on April 5, 2016. (Doc. 11). Notice of entry of default was sent to the Defendants by certified mail. The notice sent to GCMC was accepted at GCMC's primary address by "Sherri Jacobi" on April 7, 2016. (Doc. 12). The notices sent to the Patels were returned to the Court as "unclaimed." (Docs. 14, 15).3 On May 3, 2016, Zucaro filed the

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present motion for default judgment against the Defendants. (Doc. 13).

III. Analysis

A. Subject Matter Jurisdiction

"It is . . . axiomatic that the inferior federal courts are courts of limited jurisdiction. They are 'empowered to hear only those cases within the judicial power of the United States as defined by Article III of the Constitution,' and which have been entrusted to them by a jurisdictional grant authorized by Congress." Univ. of S. Ala. v. Am. Tobacco Co., 168 F.3d 405, 409 (11th Cir. 1999) (quoting Taylor v. Appleton, 30 F.3d 1365, 1367 (11th Cir. 1994)). Accordingly, "it is well settled that a federal court is obligated to inquire into subject matter jurisdiction sua sponte whenever it may be lacking." Id.

The FAC alleges diversity of citizenship under 28 U.S.C. § 1332(a) as the sole basis for subject matter jurisdiction. Section 1332(a)(1) grants district courts "original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between citizens of different States." Zucaro, a natural person, is alleged to be a citizen of the state of Nevada, while natural person Defendants Raman and Anand Patel are both alleged to be citizens of the state of Alabama. (See Doc. 6 at 3, ¶¶ 10 - 12).

However, the FAC is inconsistent regarding the citizenship of GCMC, a limited liability company. In the "Jurisdiction and Venue" section, Raman Patel is

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alleged to be the sole member of GCMC, a limited liability company. See (id., ¶ 13); Rolling Greens, MHP, L.P. v. Comcast SCH Holdings, L.L.C., 374 F.3d 1020, 1021 (11th Cir. 2004) (per curiam) (for purposes of diversity jurisdiction, "a limited liability company is a citizen of any state of which a member of the company is a citizen").4 Later, though, the FAC identifies Anand Patel as "Managing Member" of GCMC; Anand also signed the loan documents at issue on behalf of GCMC as "Owner/Member and President." (See Doc. 6 at 7, ¶ 13; Doc. 6-1).

Generally, "if a complaint's factual allegations do not assure the court it has subject matter jurisdiction, then the court is without power to do anything in the case." Travaglio v. Am. Exp. Co., 735 F.3d 1266, 1269 (11th Cir. 2013). However, a district court may proceed "if the evidence submitted during the course of the proceedings cures any jurisdictional pleading deficiency by convincing [it] of the parties' citizenship." Id. Considering the allegations in the FAC together with the attached exhibits,5 the record supports the conclusion that GCMC has no other members but the Patels, both of whom are Alabama citizens. Thus, GCMC is also a citizen of Alabama for purposes of diversity.

Because no Defendant is a citizen of the same state as Zucaro, complete diversity exists among the parties. Moreover, § 1332(a)(1)'s requisite amount in

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controversy is satisfied because Zucaro expressly seeks damages of "$650,000 in principal, plus interest, costs, and fees." (See Doc. 6). Thus, the Court is satisfied that subject matter jurisdiction exists in this action.

B. Service of Process, Personal Jurisdiction, and Venue

"Service of process is a jurisdictional requirement: a court lacks jurisdiction over the person of a defendant when that defendant has not been served." Pardazi v. Cullman Med. Ctr., 896 F.2d 1313, 1317 (11th Cir. 1990). The record reflects that the Patels were each personally served with the summons and First Amended Complaint on March 5, 2016. See (Docs. 7, 8); Fed. R. Civ. P. 4(e)(2)(A) & (l)(1). Zucaro does not explain how "Zakiah (last name not given), Hotel Clerk," is an agent "designated by law to accept service of process on behalf of" GCMC. (Doc. 9). However, records from the Alabama Secretary of State, accessed through its online "Business Entity Search" system,6 list Defendant Raman Patel as GCMC's registered agent. Accordingly, the Court finds that all Defendants have been sufficiently served with process in this action.

The Amended Complaint (Doc. 6) also alleges sufficient facts, deemed admitted by the Defendants' default, establishing that personal jurisdiction and venue in this Court are proper.7

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C. Admitted Factual Allegations

"An allegation - other than one relating to the amount of damages - is admitted if a responsive pleading is required and the allegation is not denied." Fed. R. Civ. P. 8(b)(6).8 Per the well-pleaded allegations of fact in the FAC (Doc. 6), and the documents attached as exhibits thereto (Docs. 6-1, 6-2), the Defendants executed several Promissory Notes and Security Agreements (the "Loans") in favor of Zucaro over a period of several years. Through the Loans, the Defendants promised to pay Zucaro the principal amounts set forth in each Note, together with interest at the rates provided in the Notes, along with all other fees, charges and amounts as provided or disclosed in the Notes' terms (the "Indebtedness"). (See Doc. 6 at 1 - 2, ¶¶ 1 - 2).

On July 11, 2014, the Defendants each executed a Promissory Note (hereinafter the "July 11, 2014 Note") with Zucaro in the principal amount of $200,000. A "true and correct copy of" the July 11, 2014 Note is attached to the FAC as "Exhibit A" (Doc. 6-1). (See Doc. 6 at 4, ¶ 18). It is signed by GCMC as "Borrower" and by each of the Patels as "Borrower and Personal Guarantor" and

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states, in relevant part:

1. Principal; Maturity Date. In consideration of the total sum of Two Hundred Thousand and 00/100 Dollars

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