United States District Court, D. Maryland
REPORT AND RECOMMENDATION
Timothy J. Sullivan United States Magistrate Judge
This Report and Recommendation addresses the Motion for Entry of Default Judgment (“the Motion”) (ECF No. 11) filed by Plaintiff CGI Finance, Inc. (“CGI”) against Defendant Nathan G. Williams (“Williams”). Williams has not filed a response, and the time for doing so has passed. See Loc. R. 105.2(a). On March 8, 2016, in accordance with 28 U.S.C. § 636 and Local Rule 301, Judge Hollander referred this case to me for a report and recommendation on CGI’s Motion. (ECF No. 12.) I find that a hearing is unnecessary in this case. See Fed. R. Civ. P. 55(b)(2); Loc. R. 105.6. For the reasons set forth below, I respectfully recommend that CGI’s Motion be granted.
I. FACTUAL AND PROCEDURAL HISTORY
A. Factual Background
On April 16, 2010, CGI extended financing in the amount of $612, 000.00 (the “Loan”) to Williams pursuant to a Marine Note and Security Agreement (the “Note”) for the purpose of purchasing a vessel, the M/V Eagle One, Official No. 1187724 (the “Vessel”). (ECF No. 1 ¶ 4.) Under the terms of the Note, Williams agreed to repay the Loan, with interest, in “240 equal monthly payments in the amount of $4, 526.93, beginning on May 16, 2010.” (Id.) Williams breached the Loan Modification Agreement and defaulted on the Note by failing to make his installment payments. (Id. ¶ 7.) In accordance with its rights under the terms of the Note, CGI gave Williams notice of his default and informed him that CGI intended to repossess the Vessel. (Id. ¶ 10, 12.) Thereafter, CGI repossessed the Vessel. (Id. ¶ 13.) Williams was notified of the repossession, but did not redeem the Vessel or cure the deficiencies under the Note. (Id. ¶ 14.) CGI sold the Vessel and applied the sale proceeds to Williams’ debt to CGI. (Id. ¶¶ 17-19.)
B. Procedural History
On September 8, 2015, CGI filed a complaint against Williams, in personam, in Admiralty pursuant to 46 U.S.C. § 31325(b)(2)(A). (ECF No. 1.) CGI attached the following exhibits to its Complaint: the Note (ECF No. 1-1); the First Preferred Ship Mortgage (ECF No. 1-2); the Loan Modification Agreement (ECF No. 1-3); the August 27, 2014 Notice of Intention to Repossess Vessel (ECF No. 1-4); the October 22, 2014 Notice of Accelerated Balance Due and Intention to Repossess Vessel (ECF No. 1-5); the November 21, 2014 Notice of Completed Repossession and Intent to Sell (ECF No. 1-6); and a letter dated June 19, 2015 from CGI to Williams regarding the sale of the Vessel and the outstanding balance due under the Note (ECF No. 1-7). In its Complaint, CGI seeks judgment against Williams “in the amount of $303, 703.65, plus interest accruing since June 19, 2015 under the Note and Mortgage, together with attorneys’ fees, costs and expenses.” (ECF No. 1 at 4.)
On September 10, 2015, Williams was personally served by private process server. (ECF No. 7-4.) Williams has not filed an answer to the Complaint or a motion under Rule 12. On December 17, 2015, CGI filed a motion for entry of default. (ECF No. 7.) The Clerk of Court’s Order of Default was filed on December 18, 2015. (ECF No. 8.) On March 7, 2016, in response to Judge Hollander’s order directing CGI to file a status report or a motion for default judgment, CGI filed the instant Motion. (ECF No. 11.) Williams has not filed a response to the Motion and the time for doing so has passed.
II. LEGAL ANALYSIS
A. Standard for Entry of Default Judgment
In determining whether to award a default judgment, the Court accepts as true the well-pleaded factual allegations in the complaint as to liability. See Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780-81 (4th Cir. 2001); United States ex rel. Durrett-Sheppard Steel Co. v. SEF Stainless Steel, Inc., No. RDB-11-2410, 2012 WL 2446151, at *1 (D. Md. June 26, 2012). Nonetheless, the Court must consider whether the unchallenged facts constitute a legitimate cause of action, since a party in default does not admit mere conclusions of law. United States v. Redden, No. WDQ-09-2688, 2010 WL 2651607, at *2 (D. Md. June 30, 2012) (citing Ryan, 253 F.3d at 790). Although the Fourth Circuit has a “strong policy that cases be decided on the merits, ” United States v. Shaffer Equip. Co., 11 F.3d 450, 453 (4th Cir. 1993), default judgment “is appropriate when the adversary process has been halted because of an essentially unresponsive party.” S.E.C. v. Lawbaugh, 359 F.Supp.2d 418, 421 (D. Md. 2005). If the Court determines that liability is established, the Court must then determine the appropriate amount of damages. CGI Finance, Inc., v. Johnson, No. ELH-12-1985, 2013 WL 1192353, at *1 (D. Md. March 21, 2013). The Court does not accept factual allegations regarding damages as true, but rather must make an independent determination regarding such allegations. Durrett-Sheppard Steel Co., 2012 WL 2446151 at *1.
Rule 55 of the Federal Rules of Civil Procedure provides that “[i]f, after entry of default, the Plaintiff’s Complaint does not specify a ‘sum certain’ amount of damages, the court may enter a default judgment against the defendant pursuant to Fed.R.Civ.P. 55(b)(2).” A plaintiff’s assertion of a sum in a complaint does not make the sum “certain” unless the plaintiff claims liquidated damages; otherwise, the complaint must be supported by affidavit or documentary evidence. United States v. Redden, No. WDQ-09-2688, 2010 WL 2651607, at *2 (D. Md. June 30, 2012). Rule 55(b)(2) provides that “the court may conduct hearings or make referrals . . . when, to enter or effectuate judgment, it needs to . . . determine the amount of damages.” The Court is not required to conduct an evidentiary hearing to determine damages, however; it may rely instead on affidavits or documentary evidence in the record to determine the appropriate sum. See, e.g., Mongue v. Portofino Ristorante, 751 F.Supp.2d 789, 795 (D. Md. 2010).
CGI brings this suit under 46 U.S.C. § 31325(b)(2)(A) to enforce a claim of outstanding indebtedness on the mortgage that Williams secured for the Vessel. This Court has admiralty jurisdiction pursuant to 28 U.S.C. § 1333 and Fed. R. Civ. P 9(h). Because Williams is in default, the Court accepts the well-pleaded factual allegations of the Complaint as true. Having reviewed the Complaint, I find that Williams’ liability is readily established and that CGI has stated a legitimate cause of action based on Williams’ breach of the terms of the Note, as modified by the Loan Modification Agreement, and the terms of the First Preferred Ship Mortgage. Williams agreed to make monthly installment payments to CGI, but he failed to make the payments as required. The record shows that CGI sent Williams notice of its intention to repossess the Vessel (ECF Nos. 1-4, 1-5 & 1-6) and notice of the Vessel’s final sale and the remaining deficiency balance (ECF No. 1-7). Williams did not seek to redeem the Vessel and has not made payments to CGI to cure the default under the Note. (ECF No. 1 ¶ 15.) Accepting these factual allegations as true, I conclude that ...