The opinion of the court was delivered by: Deborah K. Chasanow United States District Judge
Plaintiffs claim they are the victims of an alleged "ponzi scheme" implemented by Defendants Linda Sadr, Forrest Walpole, Maximum Impact Title ("M.I. Title"), and Maximum Impact Financial Services ("M.I. Financial"). The background facts are set out in further detail in the Memorandum Opinion of July 6, 2011, resolving Defendant Walpole's motion to dismiss. (ECF No. 22).
In their original and amended complaints, Plaintiffs Melvin and Renee Hamilton, Marcia and Willie Fields, and Carlton Powell brought six claims against Defendants Linda Sadr, M.I. Title, and M.I. Financial. (ECF Nos. 2 & 47). When M.I. Title and M.I. Financial failed to respond to the original complaint within the requisite time period, Plaintiffs moved for entry of default. (ECF Nos. 17 & 18). The clerk entered default against those Defendants as to the original complaint on June 28, 2011.
(ECF No. 19). Plaintiffs filed an amended complaint that included Linda Sadr as a Defendant. When Ms. Sadr failed to respond, default was entered against her on March 6, 2012. (ECF No. 60).
In a Memorandum Opinion filed September 12, 2012, the viability of the claims against the defaulted defendants were discussed and all claims against Defendant Sadr remain: negligence (Count I), violation of the Maryland Consumer Protection Act ("MCPA") (Count II), unjust enrichment (Count III), negligent misrepresentation (Count IV), fraud (Count V), and violation of the Maryland Finder's Fee Act (Count VI). Against the entities, only claims of unjust enrichment and violation of the MCPA remain.*fn1 All claims against Mr. Walpole were ultimately dismissed by agreement. (ECF Nos. 88 & 89).
During a teleconference on November 27, 2012, Plaintiffs requested a bench trial to enter judgment against the defaulted Defendants. On April 22, 2013, Plaintiffs filed a proposed pretrial order memorializing this request and outlining the damages they sought and the evidence they intended to introduce to support those claims. (ECF No. 90). A bench trial on damages was held on May 13, 2013.
Under Federal Rule of Civil Procedure 55(a), "[w]hen a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise, the clerk must enter the party's default." Where a default has been previously entered by the clerk and the complaint does not specify a certain amount of damages, the court may enter a default judgment upon the plaintiff's application and notice to the defaulting party, pursuant to Fed. R.Civ.P. 55(b)(2). A defendant's default does not automatically entitle the plaintiff to entry of a default judgment; rather, that decision is left to the discretion of the court. See Lewis v. Lynn, 236 F.3d 766, 767 (5th Cir. 2001).
"Upon [entry of] default, the well-pled allegations in a complaint as to liability are taken as true, but the allegations as to damages are not." Lawbaugh, 359 F.Supp.2d at 422. Federal Rule of Civil Procedure 54(c) limits the type of judgment that may be entered based on a party's default: "A default judgment must not differ in kind from, or exceed in amount, what is demanded in the pleadings." Thus, where a complaint specifies the amount of damages sought, the plaintiff is limited to entry of a default judgment in that amount. "[C]courts have generally held that a default judgment cannot award additional damages . . . because the defendant could not reasonably have expected that his damages would exceed that amount." In re Genesys Data Techs., Inc., 204 F.3d 124, 132 (4th Cir. 2000). Where a complaint does not specify an amount, "the court is required to make an independent determination of the sum to be awarded." Adkins v. Teseo, 180 F.Supp.2d 15, 17 (D.D.C. 2001) (citing S.E.C. v. Mgmt. Dynamics, Inc., 515 F.2d 801, 814 (2d Cir. 1975); Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61, 65 (2d Cir. 1981)).
The finding of liability on Plaintiffs' claims of negligence, negligent misrepresentation, fraud, unjust enrichment, and violations of the MCPA allow them to recover the equity that they lost in the refinancing of their mortgages as compensatory economic damages. Plaintiffs also seeks to recover non-economic pain and suffering damages from Ms. Sadr on their tort claims. Plaintiffs presented no evidence of fees charged by Ms. Sadr to act as their mortgage broker. Therefore they cannot recover damages for violations of the Finder's Fee Act. Ms. Sadr, M.I. Title, and M.I. Financial are jointly and severally liable for damages resulting from Plaintiffs' claims of unjust enrichment and violations of the MCPA.
Compensatory economic damages sought under the various claims largely overlap, seeking recovery for the equity lost by participating in Defendants' scheme. The "one wrong, one recovery" rule precludes a party from recovering twice for one ...