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Wells Fargo Bank, N.A. v. Dorman Long Technology Equipment, LLC

United States District Court, D. Maryland

April 11, 2018

Wells Fargo Bank, N.A.
v.
Dorman Long Technology Equipment, LLC et al. and EROOM CHEM AND TECH, Defendant

          GINA L. SIMMS UNITED STATES MAGISTRATE JUDGE

         Dear Counsel and Ms. Barrie:

         A copy of the “Report and Recommendations” rendered in the above-captioned case is attached. Any objections you wish to make thereto must be made in writing and within 14 days pursuant to Federal Rule of Civil Procedure 72(b)(2) and Local Rule 301.5(b).

         After the time for filing written objections has expired, Judge Theodore D. Chuang will review the “Report and Recommendations” regardless of whether you have filed written objections to it. If you should fail to file written objections within the time set forth above (or within the time of any extension specifically granted by the Court) and Judge Chuang subsequently adopts the Report and Recommendations, you will have lost your right to appeal the findings and conclusions set forth therein to the United States Court of Appeals for the Fourth Circuit, except upon grounds of plain error.

         REPORT AND RECOMMENDATIONS

         This “Report and Recommendations” addresses the “Consent Motion for Entry of Default and Default Judgment Against Claimant/Defendant Dorman Long Technology Equipment, LLC” (“Consent Motion”), see ECF No. 20, which was filed by Defendant Eroom Chem and Tech (“Eroom”). The Consent Motion also includes a request for an award of attorney's fees to Plaintiff Wells Fargo Bank, N.A. (“Wells Fargo”).

         Pursuant to 28 U.S.C. § 636, and Local Rule 301.5(b), the Honorable Theodore D. Chuang referred this matter to me to issue a report and make recommendations. I believe that the issues have been fully briefed, and do not believe that a hearing is necessary. Local Rule 105.6. As set forth more fully below, I ultimately recommend that the Court grant the Consent Motion and other relief requested.

         I. Factual and Procedural Background

         On July 19, 2017, Plaintiff Wells Fargo filed a complaint in interpleader and a motion for entry of order of interpleader, pursuant to 28 U.S.C. §§ 1335, 2361 and Federal Rule of Civil Procedure 22, against Dorman Long Technology Equipment, LLC (“Dorman Long”) and Eroom (collectively the “Defendants”). ECF Nos. 1, 5. The complaint (“Interpleader Complaint”) related to $140, 458.00 wired from an Eroom account to a Dorman Long account. In the complaint, Wells Fargo alleged that the Defendants asserted “hostile, conflicting, and mutually exclusive” claims to the funds (“disputed funds”). Thus Wells Fargo, a stakeholder, needed the Court to determine ownership of the disputed funds, as well as to discharge the bank from any liability upon their deposit into the Court's Registry ECF No. 1, ¶¶ 5-7.

         According to the complaint, Dorman Long is a Maryland limited liability company with a principal office in Laurel, Maryland, and it opened a business checking account (“Account No. ***5188”) at the bank in January 2017. ECF No. 1, ¶¶ 2, 7. Eroom is a South Korean company that, on March 10, 2017, initiated a wire transfer of $140, 458 from a Korean bank to Account No. ***5188. Id. ¶¶ 3, 6. After Wells Fargo credited the money into Dorman Long's account, Eroom notified the bank that the account information provided for the wire transfer was inaccurate, resulting in the disputed funds being disbursed to the wrong account. Eroom also provided Wells Fargo with a copy of an internet crime complaint that it filed with the Federal Bureau of Investigation in which it reported the hacking of wire transfer-related information. Id. ¶¶ 8-11. Thereafter, Wells Fargo placed a hold upon the disputed funds, and asked Dorman Long to authorize their return to Eroom. Id. On May 24, 2017, Dorman Long told Wells Fargo that the $140, 458 was properly credited to its account, and that it did not authorize their return to Eroom Id. ¶ 13.

         On July 20, 2017, Wells Fargo issued a summons and attached its interpleader complaint and motion thereto to Dorman Long, which were personally served upon Dorman Long's Resident Agent, Fatmata Barrie, on July 21, 2017. ECF Nos. 8, 9.

         On August 7, 2017, Eroom filed its answer to the interpleader complaint. In its answer, Eroom maintained that it had purchased products from a company called LDC for years, and that payment for those products had been processed through LDC's foreign bank account. ECF No. 13, ¶ 20. However, Eroom further alleged that, on or before March 8, 2017, upon information and belief, “Dorman Long through its agents or employees maliciously hacked into LDC's [email system], ” and phished Eroom and emailed it a fraudulent and forged letter purportedly from LDC directing Eroom to wire transfer future payments due to LDC to Account No. ***5188. Id. ¶¶ 20-22.

         On September 8, 2017, Eroom filed the Consent Motion and supporting memorandum thereto, including attached affidavits. ECF No. 20. In the motion, Eroom reiterated its earlier claim that it was the victim of email phishing/wire fraud perpetrated by Dorman Long. ECF Nos. 20-1, 20-2, 20-3. Eroom also requested that the Court: (a) enter default and default judgement against Dorman Long; (b) permanently discharge Wells Fargo of any and all liability as to the $140, 458 in interpleader funds; (c) restrain and enjoin Eroom, Dorman Long, and “any other potential claimant” from instituting any other action against Wells Fargo with respect to the disputed funds; (d) enter an order awarding Wells Fargo attorney's fees in the amount of $750.00, to be deducted from the funds; (e) enter an order that Wells Fargo disperse the disputed funds, minus the $750.00, to Eroom; and (f) enter a declaration that “Eroom is the 100% owner of the disputed funds held by Wells Fargo in Account 5188 and no other person or entity has any claim or interest to the funds.” ECF No. 20 ¶¶ 1-6. As a basis for its requests, Eroom argued that Wells Fargo had personally served the Interpleader Complaint upon Dorman Long's Registered Agent on July 21, 2017, and that the due date for Dorman Long's Answer was August 11, 2017. Therefore, the Court should enter the default of Dorman Long. ECF No. 20-1.

         On September 25, 2017, Eroom filed a “Notice of Non-Opposition to Consent Motion for Entry of Default and Default Judgment” against Dorman Long, in which Eroom noted that Dorman Long had not filed an opposition by ...


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