MONTE C. RICHARDSON, District Judge.
On June 6, 2016, Plaintiff filed a Verified Complaint in Admiralty to Foreclose Preferred Ship Mortgage
In January 2016, the parties amended the Note, increasing the principal sum owing to $2,000,000 in consideration of an extension of time in which to repay the Note and Mortgage to February 15, 2016.
Plaintiff alleges that Defendants are in default for failing to pay the installment payment due on or before February 15, 2016. (Id. at ¶¶ 16, 24, 28.) Plaintiff also alleges that as a result of the default, Plaintiff may demand full payment of the indebtedness, obtain a judgment, and foreclose on the Vessel, in accordance with the terms of the amended Note and Mortgage. (Id. at ¶¶ 17, 26.) Plaintiff further alleges that as of June 3, 2016, Defendants owed the principal amount of $2,000,000, exclusive of interest, costs, and attorney's fees. (Id. at ¶¶ 18, 25, 29.)
On June 8, 2016, the Clerk issued a warrant of arrest for the Vessel, which was executed by the U.S. Marshal on June 13, 2016, and the Vessel was placed in the possession of a substitute custodian. (Docs. 5, 6, 7, 9, 10.) On June 15, 2016, Plaintiff filed a Notice of Action In Rem and Arrest of Vessel, advising any person having a claim against the Vessel and/or property that has been arrested to file a claim with the Court no later than 14 days after process has been effected and to file an answer within 21 days from the date of filing their claim. (Doc. 12.) On June 24, 2016, Plaintiff filed a Notice of Filing Proof of Publication, indicating that a Notice of Action In Rem and Arrest of Vessel was published in the Jacksonville Edition of the Financial News and Daily Record on June 20, 2016, in compliance with Local Admiralty Rule 7.03(d). (Doc. 13.)
On June 28, 2016, Plaintiff filed an Affidavit of Service, indicating that on June 20, 2016, ACCL was served with process pursuant to Fla. Stat. § 48.031(2)(a), by serving Dina Peterson, as member of the household and wife of the owner Kurt Peterson, at 228 Stellar, Ponte Vedra Beach, FL 32082.
On July 13, 2016, Plaintiff moved for entry of a Clerk's default against ACCL for failure to appear, answer, or otherwise plead to the Complaint. (Doc. 15.) Plaintiff's motion for default was served on ACCL on July 13, 2016. (Id. at 3.) On July 14, 2016, the Clerk entered a default against ACCL, a copy of which was furnished to ACCL. (Doc. 16.)
On July 19, 2016, Plaintiff moved for entry of a Clerk's default against the Vessel M/Y Cloud Ten. (Doc. 17.) The motion provided that a response on behalf of the Vessel was due on July 18, 2016, but there had been no claim of owner or other response on behalf of the Vessel. (Id. at ¶¶ 8-9.) The motion also provided that Amkin Hill Street, LLC had not filed a claim or lien or otherwise appeared in this action. (Id. at 4.) On July 26, 2016, the Clerk entered a default against the Vessel M/Y Cloud Ten. (Doc. 18.)
On August 3, 2016, Plaintiff filed the present Motion for Default Judgment and for Sale, attaching the Declaration of Scott Ferguson, President of Property Concepts, which is the Managing Member of Millennial Capital Management, LLC. (Docs. 19, 19-1; see also Doc. 1-3 at 4.) Plaintiff seeks entry of a default judgment against Defendants, jointly and severally, and states that as of August 2, 2016, Defendants owe the principal amount of $2,000,000, plus interest at 25% per annum from the date of default February 17, 2016
Rule 55 of the Federal Rules of Civil Procedure establishes a two-step process for obtaining a default judgment. First, when a defendant fails to plead or otherwise defend the lawsuit, the clerk of court is authorized to enter a clerk's default against the defendant. See Fed.R.Civ.P. 55(a). Second, after receiving the clerk's default, the plaintiff must apply to the court for a default judgment, except in limited circumstances when application may be made to the clerk. See Fed.R.Civ.P. 55(b). A default judgment may be entered "against a defendant who never appears or answers a complaint, for in such circumstances the case never has been placed at issue." Solaroll Shade & Shutter Corp. v. Bio-Energy Sys., Inc., 803 F.2d 1130, 1134 (11th Cir. 1986).
All well-pleaded allegations of fact are deemed admitted upon entry of default, but before entering a default judgment, the court must ensure that it has jurisdiction over the claims and that the complaint adequately states a claim for which relief may be granted. See Nishimatsu Costr. Co. v. Houston Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975); see also GMAC Commercial Mortg. Corp. v. Maitland Hotel Assocs, Ltd., 218 F.Supp.2d 1355, 1359 (M.D. Fla. 2002) ("A default judgment cannot stand on a complaint that fails to state a claim.") (citations omitted). A sufficient basis must exist in the pleadings for the judgment entered. See Nishimatsu, 515 F.2d at 1206. A defendant "is not held to admit facts that are not well-pleaded or to admit conclusions of law." See id.; see also Danning v. Lavine, 572 F.2d 1386, 1388 (9th Cir. 1978) (stating that "facts which are not established by the pleadings of the prevailing party, or claims which are not well-pleaded, are not binding and cannot support the judgment").
Rule 8 provides that a complaint must include (1) a short and plain statement of the grounds upon which the court's jurisdiction depends, (2) a short and plain statement of the claim showing that the pleader is entitled to relief, and (3) a demand for judgment for relief. See Fed.R.Civ.P. 8(a). A complaint meets the requirements of Rule 8, if in light of the nature of the action, the complaint provides factual allegations, which are assumed to be true, sufficient to "raise a right to relief above the speculative level." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007); see also Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) ("[A] complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.").
Upon review of the Complaint, the undersigned finds that a sufficient factual basis exists for a default judgment to be entered. As an initial matter, the Complaint adequately alleges that the Court has original jurisdiction over this action for foreclosure of a ship mortgage pursuant to 46 U.S.C. § 31325(c) and Rule 9(h) of the Federal Rules of Civil Procedure.
Further, Plaintiff has complied with the requirements of Local Admiralty Rule 7.03(h)-(I) and the Complaint adequately states a claim for relief against the Vessel and its owner. Under 46 U.S.C. § 31325(b), "[o]n default of any term of the preferred mortgage," a mortgagee may bring a civil action in rem to enforce the preferred mortgage lien and a civil action in personam against the mortgagor to enforce a claim for the outstanding indebtedness secured by the mortgaged vessel. Here, the well-pleaded allegations of the Complaint, which are deemed admitted, identify in sufficient detail the Promissory Note in both its original and amended versions, Defendants' default of the same, Plaintiff's security interest in the Vessel pursuant to the First Preferred Ship Mortgage (also in original and amended form), Defendants' breach of their obligations thereunder, and Plaintiff's right to recover against Defendants pursuant to the terms of the Note and the Mortgage, as amended.
More specifically, the Complaint alleges that on April 14, 2015, ACCL became indebted to Plaintiff in the principal sum of $936,000 pursuant to a Promissory Note. (Doc. 1, ¶ 7; Doc. 1-1 at 2.) The Note included interest in the amount of $150,000 and was due to be paid in one balloon payment on or before August 14, 2015. (Doc. 1, ¶ 8; Doc. 1-1 at 2.) On April 14, 2015, in order to secure payment of the indebtedness and interest thereon, ACCL also executed and delivered to Plaintiff a First Preferred Ship Mortgage encumbering the Vessel, which was recorded with the United States Coast Guard Vessel Documentation Center on May 4, 2015. (Doc. 1, ¶¶ 9-10; see also Doc. 1-2; Doc. 1-4 at 2.)
In January 2016, the parties amended the Note, increasing the principal sum owing to $2,000,000 in consideration of an extension of time in which to repay the Note and Mortgage to February 15, 2016.
Paragraphs 25 and 26 of the Mortgage provide in relevant part:
(Doc. 1-2 at 12-15; see also Doc. 1-1 at 3, 5 (listing events of default under the Note to include "failure to pay, when and as due, any principal, interest or other amounts payable hereunder or under any Related Document" and listing default remedies).)
In light of the above-cited provisions, Plaintiff adequately alleges that Defendants are in default for failing to pay the installment payment due on or before February 15, 2016. (Doc. 1, ¶¶ 16, 24, 28.) Mr. Ferguson's Declaration, attached to Plaintiff's Motion for Default Judgment, indicates that as of the date of the Motion, Defendants have failed to make any payments whatsoever. (Doc. 19 at 4; Doc. 19-1, ¶ 11.) As a result of the default, Plaintiff is entitled to demand full payment of the indebtedness in accordance with the terms of the amended Note and Mortgage, including foreclosing on the Vessel. (Doc. 1, ¶¶ 17, 26.)
Based on Plaintiff's well-pleaded factual allegations, which are deemed admitted, as well as the exhibits to the Complaint and the Motion, Plaintiff has stated a claim against Defendants. Therefore, entry of default judgment is appropriate under Rule 55. The Court now turns to the question of damages.
Notwithstanding the propriety of a default judgment, it is Plaintiff's burden to prove its damages. Fun Charters, Inc. v. Vessel Shady Lady, Official No. 681969, Civil Action No. 14-0263-WS-M, 2015 WL 789751, *3 (S.D. Ala. Feb. 25, 2015). "While well-pleaded facts in the complaint are deemed admitted, plaintiffs' allegations relating to the amount of damages are not admitted by virtue of default; rather, the court must determine both the amount and character of damages." Id. (internal citations and quotation marks omitted). "Even in the default judgment context, `[a] court has an obligation to assure that there is a legitimate basis for any damage award it enters.'" Id. (quoting Anheuser Busch, Inc. v. Philpot, 317 F.3d 1264, 1266 (11th Cir. 2003)).
Further, "a judgment by default may not be entered without a hearing [on damages] unless the amount claimed is a liquidated sum or one capable of mathematical calculation." United Artists Corp. v. Freeman, 605 F.2d 854, 857 (5th Cir. 1979) (per curiam); see also SEC v. Smyth, 420 F.3d 1225, 1231 (11th Cir. 2005). However, courts have wide discretion in determining whether a hearing on damages is necessary. Diversified Fin. Sys., Inc. v. Tomich Corp., 1997 WL 177873, *3 (E.D.N.Y. Mar. 18, 1997). No hearing is necessary "when the district court already has a wealth of evidence from the party requesting the hearing, such that any additional evidence would be truly unnecessary to a fully informed determination of damages." Smyth, 420 F.3d at 1232 n.13.
The undersigned finds that an evidentiary hearing is not necessary in this case because the record is sufficient to calculate the amount of damages. The Motion for Default Judgment, Mr. Ferguson's Declaration, the Complaint, and the attachments thereto establish that Defendants owe Plaintiff the principal amount of $2,000,000, plus interest at 25% per annum until the debt is satisfied in full.
Plaintiff calculates the total amount due as follows: $2,000,000 in principal; a per diem amount of interest of $1,369.86 for 168 days from February 17, 2016 (the date of default) through August 2, 2016 (the day before the Motion for Default Judgment was filed), which equals 230,136.48; plus pre-judgment interest (a per diem amount of $1,369.86) through the date of judgment; plus costs, post-judgment interest, and attorney's fees to be taxed at a later date. (Doc. 19, ¶ 18; Doc. 19-1, ¶ 12.)
The undersigned agrees that Plaintiff is entitled to $2,000,000 in principal and a per diem interest in the amount of $1,369.80 from February 17, 2016 (the date of default) through the entry of final judgment.
Finally, Plaintiff requests that the Vessel be sold via U.S. Marshal sale in accordance with the Local Admiralty Rules of the Court and that Plaintiff be permitted to credit bid its judgment, or any portion thereof, in lieu of paying cash. The undersigned finds this is appropriate. See Schleef v. Sailing Vessel "Clueless," Case No. 3:11-cv-650-J-32JBT, 2012 WL 2589237, *7 (M.D. Fla. Apr. 26, 2012) (report and recommendation adopted by 2012 WL 2586221 (M.D. Fla. July 3, 2012)) (citing, inter alia, Bank of Am. v. Hoy, 2010 WL 5463103, *3 (M.D. Fla. Dec. 29, 2010)). Therefore, in lieu of cash, Plaintiff should be permitted to credit bid the recommended judgment at the public sale of the Vessel.
Accordingly, it is respectfully
1. The Motion for Default Judgment and for Sale (
2. The Motion for Hearing (
3. The Clerk of Court be
4. The U.S. Marshal be directed to conduct a sale of the Vessel, M/Y Cloud Ten, a 2002 123' Nichols Brothers SWATH Vessel, Official No. 1130416, her engines, apparel, tackle, boats, appurtenances, etc., in accordance with Rule E(9) of the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions and Local Admiralty Rule 7.05(q)-(r). Plaintiff be allowed to credit bid its judgment at the public sale of the Vessel and Plaintiff not be required to pay any cash or other payment unless and until its successful bid exceeds the total of its judgment against the Vessel. After the sale of the Vessel, Plaintiff be directed to appropriately move for confirmation of the sale pursuant to Local Admiralty Rule 7.05(r)(6). Any proceeds of the sale conducted by the U.S. Marshal be paid into the registry of the Court so that the Court may dispose of the proceeds according to the law. Upon confirmation of the sale, Plaintiff be allowed to apply to the Court for an amendment of its judgment to include attorney's fees, costs, and/or post-judgment interest.
