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Golden Triangle Vein Center v. Total Body Contouring Inc.

United States District Court, N.D. Mississippi, Aberdeen Division

March 23, 2017

GOLDEN TRIANGLE VEIN CENTER and DR. DARYL GUEST, PLAINTIFFS
v.
TOTAL BODY CONTOURING INCORPORATED; and KEVIN LEROY SIMONS, DEFENDANTS

          OPINION AND ORDER

          Debra M. Brown UNITED STATES DISTRICT JUDGE

         Before the Court is the motion for default judgment of Golden Triangle Vein Center and Dr. Daryl Guest. Doc. #19. For the reasons below, the motion will be granted in part and denied in part.

         I Background

         On August 10, 2015, Golden Triangle Vein Center (“Vein Center”) and Dr. Daryl Guest filed a complaint against Total Body Contouring Incorporated (“Total Body”) and Kevin Leroy Simons, claiming breach of contract, unjust enrichment, and fraud/negligent misrepresentation. Doc. #1. Plaintiffs alleged that, based on Defendants' representation to them “that they were an authorized dealer of [the Lipocontrol Osyris 980 Diode Laser Machine], ” Plaintiffs contracted with Defendants to purchase the machine and “other associated equipment” from Defendants for $96, 670.00. Id. at ¶¶ 10-12. According to Plaintiffs, despite paying Defendants, they never received the machine and later “learned that, contrary to the representations made by Simons, Defendants were not an authorized distributor for the Machine.” Id. at ¶¶ 12-35. Plaintiffs sought punitive damages, as well as damages for “the amount paid to Defendants, the costs of lost business opportunities, expenses associated with training, costs, attorneys' fees, and other damages.” Id. at ¶¶ 38-39.

         On April 8, 2016, Plaintiffs filed two proofs of service reflecting that Simons and Total Body were served the summons on March 15, 2016.[1] Doc. #14; Doc. #15. On April 7, 2016, the Clerk of the Court entered a notice advising that Defendants were in default and that entry of default should be requested. Doc. #13. On April 12, 2016, Plaintiffs filed an application to the Clerk of the Court for the entry of a default, along with a supporting affidavit averring that Defendants failed “to plead or otherwise defend as provided by the Federal Rules of Civil Procedure.” Doc. #16; Doc. #16-1. On April 13, 2016, the Clerk of the Court entered default against Total Body and Simons. Doc. # 17; Doc. #18. On April 21, 2016, Plaintiffs filed the instant motion for default judgment with a supporting memorandum. Doc. #19; Doc. #20.

         On November 21, 2016, due to deficiencies in the complaint's jurisdictional allegations, the Court issued a show cause order directing Plaintiffs to submit competent evidence identifying the citizenships of Guest, Vein Center, and Simons, along with a motion to amend their jurisdictional allegations if diversity jurisdiction could be established.[2] Doc. #21. On November 22, 2016, the Court, noting that “nothing was submitted to allow the Court to make a determination of damages on the motion [for default judgment], ” entered an order deferring Plaintiffs' motion and permitting Plaintiffs “to supplement their motion with affidavits or other evidence to determine the amount of the default judgment.”[3] Doc. #23.

         On December 6, 2016, Plaintiffs, in response to the show cause order, filed a motion for leave to amend their complaint to correct the jurisdictional allegations, attaching evidence regarding the citizenships of Guest, Vein Center, and Simons, along with a proposed amended complaint. Doc. #25. On December 13, 2016, Plaintiffs filed a supplement to their motion for default judgment, attaching affidavits from Lindsey Miller, their office manager; Charles E.

         Winfield, their attorney of record; and Austin Vollor, a managing partner at the firm of their attorney of record. Doc. #27; Doc. #27-1; Doc. #27-2; Doc. #27-3. This Court granted Plaintiffs' motion for leave to amend the complaint on December 29, 2016, and that same day, Plaintiffs filed their amended complaint.[4] Doc. #28; Doc. #29. Except for the amended jurisdictional allegations, the amended complaint contains the same allegations and demand for damages as the original complaint.

         II Analysis

         Pursuant to “Rule 55 of the Federal Rules of Civil Procedure, federal courts have the authority to enter a default judgment against a defendant who has failed to plead or otherwise defend upon motion of the plaintiff.” J & J Sports Prods., Inc. v. Morelia Mexican Rest., Inc., 126 F.Supp.3d 809, 813 (N.D. Tex. 2015). “Under Fifth Circuit law, there are three steps to obtaining a default judgment: first, default by the defendant; second, clerk's entry of default; and third, entry of a default judgment.” Gray v. MYRM Holdings, L.L.C., No. A-11-cv-180, 2012 WL 2562369, at *3 (W.D. Tex. June 28, 2012) (citing N.Y. Life. Ins. Co. v. Brown, 84 F.3d 137, 141 (5th Cir. 1996)) (emphases omitted). The first two steps have been satisfied here. Thus, the only issue left to consider is whether default judgment should be entered.[5] In making this determination, the Court considers a three-question analysis: (1) “whether the entry of default judgment is procedurally warranted;” (2) “whether there is a sufficient basis in the pleadings for the judgment;” and (3) “what form of relief, if any, the plaintiff should receive.” J & J Sports, 126 F.Supp.3d at 813-14.

         A. Procedural Justification

         In determining whether a default judgment is procedurally warranted, a court should consider: (1) “whether material issues of fact are at issue;” (2) “whether there has been substantial prejudice;” (3) “whether the grounds for default are clearly established;” (4) “whether the default was caused by a good faith mistake or excusable neglect;” (5) “the harshness of a default judgment;” and (6) “whether the court would think itself obliged to set aside the default on the defendant's motion.” Lindsey v. Prive Corp., 161 F.3d 886, 893 (5th Cir. 1998).

         First, where as here, a party fails to respond to or answer the complaint, there are no material issues of fact at issue. See John Perez Graphics & Design, LLC v. Green Tree Inv. Grp., Inc., No. 3:12-cv-4194, 2013 WL 1828671, at *3 (N.D. Tex. May 1, 2013) (“Green Tree has not filed a responsive pleading or otherwise appeared in this case, and thus has not contested any facts presented in Plaintiff's Complaint.”). Second, Defendants' failure to respond has caused prejudice to Plaintiffs because “failure to respond … threatens to bring the adversary process to a halt, effectively prejudicing Plaintiff's interests in pursuing its rights afforded by law.” Id. Third, as mentioned above, the grounds for default have been clearly established. Fourth, there is no evidence before the Court that “the default was caused by a good faith mistake or excusable neglect.” Fifth, Defendants have had over a year to respond to the complaint; thus, “while default judgment is a harsh remedy, any harshness is mitigated [when Defendants have] had substantial time to correct the default.” Helena Chem. Co. v. Aylward, No. 4:15-cv-96, 2016 WL 1611121, at *2 (N.D. Miss. Apr. 21, 2016). Finally, in the event Defendants later seek to challenge the default, the Court is aware of no facts that would make it “obliged to set aside the default.” Considering these factors, the Court finds they all weigh in favor of default judgment being procedurally warranted in this case.

         B. Sufficient Basis in Pleadings

         “In light of the entry of default, Defendants are deemed to have admitted the allegations set forth in Plaintiff's Complaint.” J & J Sports., 126 F.Supp.3d at 815. “However, [a] defendant is not held to admit facts that are not … well pleaded or to admit conclusions of law.” Id. at 814 (internal quotation marks omitted); see Nishimatsu Const. Co. v. Houston Nat. Bank, 515 F.2d 1200, 1206 (5th Cir. 1975) (“a defendant's default does not in itself warrant the court in entering a default judgment. There must be a sufficient basis in the pleadings for the judgment entered.”). Addressing the “sufficient basis in the pleadings” requirement, the Fifth Circuit has stated:

Despite announcing that a default judgment must be “supported by well-pleaded allegations” and must have “a sufficient basis in the pleadings, ” the Nishimatsu court did not elaborate on these requirements … [and] we have found no guidance in our own cases. Nevertheless, we draw meaning from the case law on Rule 8 which sets forth the standards governing the sufficiency of a complaint. Rule 8(a)(2) requires a pleading to contain a short and plain statement of the claim showing that the pleader is entitled to relief. The purpose of this requirement is to give the defendant fair notice of what the claim is and the grounds upon which it rests. The factual allegations in the complaint need only be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact). Detailed factual allegations are not required, but the pleading must present more than an unadorned, the-defendant-unlawfully-harmed-me accusation.

Wooten v. McDonald Transit Assocs., Inc., 788 F.3d 490, 498 (5th Cir. 2015) (internal quotation marks, citations, and alterations omitted).

         Plaintiffs' amended complaint asserts against Defendants claims for breach of contract, unjust enrichment, and fraud/negligent misrepresentation. Doc. #29 at ¶¶ 40-56.

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