United States District Court, M.D. Florida, Orlando Division
REPORT AND RECOMMENDATION
C. IRICK UNITES STATES MAGISTRATE JUDGE
cause comes before the Court for consideration without oral
argument on the following motion:
RENEWED MOTION FOR ENTRY OF DEFAULT JUDGMENT (Doc.
February 1, 2018
it is RECOMMENDED that the motion be
GRANTED in part and DENIED in
case stems from the following business loans that plaintiff
Transportation Alliance Bank, Inc. (TAB) extended to
defendant Trax Air, LLC (Trax):
February 13, 2015
February 13, 2015
April 9, 2015
Docs. 1 at ¶¶ 8-9, 11; 1-2; 1-4; 1-8 (collectively,
the Notes). The Loans and Notes (collectively, the Loan
Agreements) state, in relevant part, that failure to make a
scheduled payment constitutes default. Docs. 1 at
¶¶ 15-16; 1-1 at 4; 1-2 at 1; 1-3 at 4; 1-4 at 1;
1-7 at 4; 1-8 at 2. The Notes also provide that in the event
of default the interest rate would increase to 18% per annum
and, at TAB's discretion, TAB may add any unpaid accrued
interest to the principal and require immediate payment of
the unpaid principal and interest. Docs. 1 at ¶ 20, 22;
1-2 at 1-2; 1-4 at 1-2; 1-8 at 1-2.
Loan Agreements are backed by absolute and unconditional
guarantees executed by defendants Brian L. Brewer, in his
individual capacity, and The Bryan Brewer Revocable Trust
(the Brewer Trust) (collectively, the Guarantors). Docs. 1 at
¶ 13; 1-12; 1-13; 1-14; 1-15; 1-16; 1-17. The Loan
Agreements are also secured by a commercial security
executed by Trax and three aircraft security agreements
executed by Trax and defendant Trax Aircraft, LLC (Trax
Aircraft). Docs. 1 at ¶¶ 10, 12; 1-5 (the
Commercial Security Agreement); 1-9 (the Piper Security
Agreement); 1-10 (the Beechcraft Security Agreement); 1-11
(the Cessna Security Agreement).
alleges that Trax breached the Loan Agreements in late 2015
by failing to make monthly payments on the Loan Agreements.
Doc. 1 at ¶ 32. Thus, in November 2015, TAB sent Trax
and the Guarantors a letter notifying them that Trax
defaulted on the Loan Agreements. Doc. 1 at ¶ 33; 1-18.
In that same letter, TAB demanded that Trax and the
Guarantors cure the defaults within 10 days of the date of
the letter, and informed them that TAB would increase the
interest rate to 18% per annum until the defaults were cured.
alleges that Trax and the Guarantors failed to cure the
defaults. Doc. 1 at ¶ 34. Thus, on December 1, 2015, TAB
sent Trax and the Guarantors a letter notifying them that TAB
was exercising its right to accelerate the Loan Agreements
and, as a result, demanded immediate payment of all amounts
due and owing under the Loan Agreements. Docs. 1 at ¶
February 2016, the parties attempted to rectify the defaults
by entering into two separate agreements. First, TAB and the
Brewer Trust entered into a pledge agreement, in which the
Brewer Trust pledged 100% of its equity interest in Trax as
security for the prompt payment and performance of Trax's
secured obligations to TAB. Docs. 1 at ¶ 37-38; 1-21
(the Pledge Agreement). Second, TAB, Trax, and the Guarantors
entered into an agreement, in which Trax agreed to perform
certain obligations, such as making scheduled payments, in
exchange for TAB forbearing from exercising its rights and
remedies under the Loan Agreements. Docs. 1 at ¶ 35;
1-20 (the Forbearance Agreement). The Forbearance Agreement
provided that TAB could terminate the same and exercise any
and all of its rights and remedies under the Loan Agreements
in the event Trax failed to comply with any of its
obligations under the Forbearance Agreement. Docs. 1 at
¶ 36; 1-20 at 3.
alleges that Trax breached the Forbearance Agreement by,
among other things, failing to make scheduled payments. Doc.
1 at ¶ 40. Thus, TAB alleges that the Brewer Trust
defaulted on the Pledge Agreement, and that TAB elected to
terminate the Forbearance Agreement. Id. at ¶
October 2016, TAB filed a Complaint against Trax, Mr. Brewer,
in his individual capacity, and Mr. Brewer and Katherine A.
Brewer (collectively, the Brewers) in their capacities as
trustees of the Brewer Trust (collectively, Defendants) in
relation to defaulted Loan Agreements. Doc. 1. TAB asserted the following
claims against Defendants: Count I - breach of contract for
the amounts due under the Loan Agreements and related
guarantees; Count II - foreclosure of the security interests;
and, Count III - fees and expenses for enforcement of the
Piper and Beechcraft Security Agreements. Id. at
17-19. TAB requested various forms of relief, including, but
not limited to, an award of damages resulting from the breach
of the Loan Agreements. Id. at 19-21.
was served on October 20, 2016. Doc. 21. The Brewers and the
Brewer Trust were served on January 24, 2017. Docs. 31; 32;
33. Defendants did not timely respond to the Complaint. Thus,
TAB moved for default against Defendants, and the Clerk
entered default against Defendants pursuant to Federal Rule
of Civil Procedure 55(a). Docs. 25; 37; 38; 39; 40.
moves for default judgment against Trax, Mr. Brewer, in his
individual capacity, and the Brewers, in their capacities as
trustees of the Brewer Trust. Doc. 55 (the Motion). TAB
argues that the allegations in the Complaint and the evidence
presented in support of the Motion demonstrate that it is
entitled to default judgment against Defendants. Docs. 55 at
2; 55-1 at 4-11. TAB requests the following relief: 1) an
award of $553, 883.34 in unpaid principal, $297, 877.61 in
unpaid, accrued interest, and an interest rate of 18% per
annum on the amounts due and owing; 2) an award of attorney
fees, costs, and expenses incurred in connection with
bringing this case; 3) an award of attorney fees, costs, and
expenses incurred in connection with the enforcement and
execution of the judgment rendered by the Court; 4)
recognition that TAB is the holder and owner of the Loan
Agreements and related financial instruments (e.g.,
guarantees and security agreements); and 5) reserving all
rights, claims, and causes of action TAB may bring to enforce
TAB's interest in the collateral described in the
Commercial Security Agreement and the Pledge Agreement. Doc.
55-1 at 18-19.
Standard of Review
Federal Rules of Civil Procedure establish a two-step process
for obtaining default judgment. First, when a party against
whom a judgment for affirmative relief is sought fails to
plead or otherwise defend as provided by the Federal Rules of
Civil Procedure, and that fact is made to appear by affidavit
or otherwise, the Clerk enters default. Fed.R.Civ.P. 55(a).
Second, after obtaining clerk's default, the plaintiff
must move for default judgment. Fed.R.Civ.P. 55(b). Before
entering default judgment, the court must ensure that it has
jurisdiction over the claims and parties, and that the
well-pled factual allegations of the complaint, which are
assumed to be true, adequately state a claim for which relief
may be granted. See Nishimatsu Constr. Co. v. Houston
Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir.
complaint must contain “a short and plain statement of
the claim showing that the pleader is entitled to
relief.” Fed.R.Civ.P. 8(a)(2). This standard does not
require detailed factual allegations, but does demand
“more than an unadorned,
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555
(2007)). Thus, the “complaint must contain sufficient
factual matter, accepted as true, to ‘state a claim to
relief that is plausible on its face.'”
Id. (quoting Twombly, 550 U.S. at 570). To
state a plausible claim for relief, a plaintiff must go
beyond merely pleading the “sheer possibility” of
unlawful activity by a defendant and offer “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). If a plaintiff fails to meet this pleading
standard, then the plaintiff will not be entitled to default
plaintiff is entitled to default judgment, then the court
must consider whether the plaintiff is entitled to the relief
requested in their motion for default judgment. If the
plaintiff seeks damages, the plaintiff bears the burden of
demonstrating entitlement to recover the amount of damages
sought in the motion for default judgment. Wallace v. The
Kiwi Grp., Inc., 247 F.R.D. 679, 681 (M.D. Fla. 2008).
Unlike well-pled allegations of fact, 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. (citing Miller v.
Paradise of Port Richey, Inc., 75 F.Supp.2d 1342, 1346
(M.D. Fla. 1999)). Therefore, 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[.]” Anheuser Busch, Inc. v. Philpot,
317 F.3d 1264, 1266 (11th Cir. 2003); see Adolph Coors
Co. v. Movement Against Racism and the Klan, 777 F.2d
1538, 1544 (11th Cir. 1985) (explaining that damages may be
awarded on default judgment only if the record adequately
reflects a basis for an award of damages). Ordinarily, unless
a plaintiff's claim against a defaulting defendant is for
a liquidated sum or one capable of mathematical calculation,
the law requires the district court to hold an evidentiary
hearing to fix the amount of damages. See Adolph
Coors, 777 F.2d at 1543-44. However, no hearing is
needed “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.” See S.E.C. v.
Smyth, 420 F.3d 1225, 1232 n.13 (11th Cir. 2005);
see also Wallace, 247 F.R.D. at 681 (“a
hearing is not necessary if sufficient evidence is submitted
to support the request for damages”).
alleges that the Court has diversity jurisdiction over this
case. Doc. 1 at ¶ 5. A federal court has diversity
jurisdiction over civil actions where there is complete
diversity of citizenship among the opposing parties and the
amount in controversy exceeds $75, 000.00, exclusive of
interest and costs. 28 U.S.C. § 1332(a).
a Utah corporation with its principle place of business in
Utah. Doc. 1 at ¶ 5. The Brewers are citizens of
Florida. Docs. 1 at ¶¶ 2-3; 55-21 at ¶ 8. The
Brewers are also the sole trustees of the Brewer Trust, Docs.
1 at ¶ 3; 55-21 at ¶ 9; 55-22 at 1, and, as a
result, the Brewer Trust is a citizen of Florida.
Hemenway v. Peabody Coal Co., 159 F.3d 255, 257 (7th
Cir. 1998) (explaining that the citizenship of a trust is
determined by the citizenship of its trustees) (citing
Navarro Sav. Ass'n v. Lee, 446 U.S. 458 (1980)).
The Brewer Trust is the sole member of Trax. Docs. 1 at
¶ 5(a); 55-21 at ¶¶ 10-11. Thus, Trax is a
citizen of Florida. Rolling Greens MHP, L.P. v. Comcast
SCH Holdings L.L.C., 374 F.3d 1020, 1022 (11th Cir.
2004) (“[A] limited liability company is a citizen of
any state of which a member of the company is a
citizen.”). Therefore, in light of the ...