The opinion
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA
MACK FINANCIAL SERVICES CIVIL ACTION
VERSUS
L3 TRUCKING LLC, ET AL. NO. 20-00693-BAJ-SDJ
RULING AND ORDER
Before the Court is Plaintiffs Motion for Default Judgment Against All
Defendants (Doc. 9). Plaintiff filed a Verified Complaint against Defendants, L3
Trucking LLC (L3 Trucking”) and Chad V. Landry, following their alleged default
on two agreements, (Doc. 1 at 11). Defendants have been served but have not
responded. (Doc. 5). The Clerk entered defaults as to both Defendants. (Doc. 7).
Plamtiff now moves for entry of default judgment against both Defendants. For the
reasons assigned, Plaintiff's Motion is GRANTED.
I. BACKGROUND
A. Alleged Facts
This is a breach of contract action, arising from a December 29, 2017 Credit
Sales Contract entered into between Plaintiff!, a limited liability company formed
under the laws of Delaware, and L3 Trucking, a limited liability company formed
under the laws of Louisiana. (Doc. 1 at 45). L3 Trucking agreed to finance the
i While the Contract was entered into between the “Seller,” Capitol Trucks, LLC, and the
“Buyer,” L3 Trucking LLC, the Contract was assigned “immediately upon execution” to
Plaintiff, Mack Financial Services. (Doc. 1-4, p. 2): (Doe. 1-4, p. 6).
purchase of a 2018 Mack GU813, with a Dump Body OX 16ft Stampede Body
attachment (the “Equipment”), subject to seventy-two monthly payments totaling
$216,050.88 (the “Contract”). (d.).
To secure the payment of the amount due under the Contract, as well as all
other debts and obligations at any time owed by L3 Trucking to Plaintiff, L3 Trucking
granted Plaintiff a security interest in the Equipment “together with all present and
future attachments, accessions, replacements, parts, repairs, additions,
substitutions, chattel paper, and proceeds, including amounts payable under any
insurance policies” (the “Collateral”). (Doc. 1-4, p. 2).
On December 29, 2017, Defendant Chad V. Landry, a citizen of Louisiana,
executed a Continuing Guaranty pursuant to which Landry guaranteed the “full,
prompt and complete payment and performance of all sums, moneys, notes, loans
[and] indebtedness” of L3 Trucking to Plaintiff and its subsidiaries and affiliates (the
“Continuing Guaranty”). (Doc. 9-1, p. 5); (Doc. 1-6, p. 1).
L3 Trucking allegedly failed to make payments due in breach of the Contract.
(Doc. 9-2 at {| 9). Subsequently, Landry failed to perform L383 Trucking’s obligations
under the Contract, in breach of the Continuing Guaranty. (Doc. 9-2 at § 10). The
Contract provides that, in the event of default, “the entire unpaid balance of the Total
Obligation will bear interest at the rate of 18% per annum.” (Doc. 1-4, p. 2). The
Contract further provides that, in the event of late payments, “[a] late charge of 5%
of any overdue amount on any Installment will be charged for each Installment not
received in full. . . within fifteen (15) days of its due date.” (d.).
B. Procedural History
On October 16, 2020, Plaintiff filed the instant Verified Complaint against
Defendants for breach of contract and breach of guaranty. (Doc. 1). On the same day,
Plaintiffs filed an ex parte Motion for Issuance of Writ of Sequestration. (Doc. 2). On
October 31, 2020, service of process was perfected upon Landry, individually and as
a registered agent of L3 Trucking. (Doc. 5); (Doc. 5-1). On December 14, 2020, Plaintiff
moved for entry of default by the Clerk against Defendants. (Doc. 6). On December 14,
2020, the Clerk entered defaults against each Defendant. (Doc. 7). Despite receiving
summons on October 31, 2020, Defendants have failed to respond to or otherwise
defend this lawsuit. On March 4, 2021, Motion for Issuance of Writ of Sequestration
was granted. (Dec. 10).
On January 12, 2021 Plaintiff moved for entry of default judgment. (Doc. 9).
Il, LEGAL STANDARD
Rule 55 of the Federal Rules of Civil Procedure sets forth certain conditions
under which default may be entered against a party, as well as the procedure by
which a party may seek the entry of default judgment. In order to obtain a default
judgment, the United States Court of Appeals for the Fifth Circuit has adopted a
three-step process. See New York Life Ins. Co. v. Brown, 84 F.3d 187, 141
(5th Cir. 1996). First, a default occurs when a party “has failed to plead or otherwise
defend” against an action. FED. R. Civ. P. 55(a). Next, an entry of default must be
entered by the clerk when the default is shown “by affidavit or otherwise.” See id.;
New York Life, 84 F.3d at 141. Third, a party may apply to the court for a default
judgment after an entry of default. Fep. R. Civ. P. 55(b); New York Life, 84 F.3d
at 141.
After a party files for a default judgment, courts must apply a two-part process
to determine whether a default judgment should be entered. First, the Court must
ascertain if the entry of default judgment is procedurally justified. Lindsey v. Prive
Corp., 161 F.3d 886, 893 (5th Cir. 1998). Several factors are relevant to this inquiry,
including: (1) whether there are material issues of fact; (2) whether there has been
substantial prejudice; (8) whether the grounds for default have been clearly
established; (4) whether the default was caused by excusable neglect or good faith
mistake; (5) the harshness of the default judgment; and (6) whether the court would
think itself obliged to set aside the default on a motion by defendant. Jd. Default
judgments are disfavored due to a strong policy in favor of decisions on the merits
and against resolution of cases through default judgments. Jd. Default judgments are
“available only when the adversary process has been halted because of an essentially
unresponsive party.” Sun Bank of Ocala v. Pelican Homestead & Sav. Ass'n,
874 F.2d 274, 276 (6th Cir. 1989) (citation omitted).
Second, the Court must determine whether the plaintiffs complaint
sufficiently sets forth facts establishing that it is entitled to relief. Nishimatsu Constr.
Co. v. Houston Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975); Hamdan v. Tiger
Bros. Food Mart, Inc., No. CV 15-00412, 2016 WL 1192679, at *2 (M.D. La.
Mar. 22, 2016). A default judgment may be supported by “well-pleaded allegations,
assumed to be true.” Jd. (citing Thomson v. Wooster, 114 U.S. 104, 5 (1885)). The
Defendant, however, is “not held to admit facts that are not well-pleaded or admit to
conclusions of law.” Jd.
Once the above process is complete, the Court must determine what form of
relief Plaintiff should receive. United States v. 1998 Freightliner
Vin #: IFUYCZYB3WP886986, 548 F.Supp.2d 381, 384 (W.D. Tex. 2008). A
defaulting defendant “concedes the truth of the allegations of the Complaint
concerning defendant's lability, but not damages.” Ins. Co. of the W. v. WH & G
Contractors, Inc., 2011 WL 4738197, *4 (S.D. Tex., Oct. 5, 2011). Generally, “damages
are not to be awarded without a hearing or a demonstration by detailed affidavits
establishing the necessary facts.” J & J Sports Prods. v. Morelia Mexican Rest., Inc.,
126 F, Supp. 3d 809, 814; See also United Artists Corp. v. Freeman, 605 F.2d 854, 857
(5th Cir. 1979). However, no hearing is required when “the amount claimed is a
liquidated sum or one capable of mathematical calculation.” James v. Frame,
6 F.3d 307, 310 (5th Cir, 1993).
III. Analysis
A. Whether Default Judgment is Procedurally Justified
Pursuant to the Lindsey factors, the Court finds that the entry of default
judgment is procedurally justified here.
First, there are no issues of material fact here. L3 Trucking was obligated to
make seventy-two monthly payments totaling $216,050.88, while Landry acted as a
guarantor for those payments. Defendants failed to adhere to the terms of the
Contract and the Continuing Guaranty by failing to make payments. Second,
substantial prejudice has resulted to the Plaintiff due to the breach. As of
December 28, 2020, a balance of $166,991.54 remains on the contract, representing a
principal balance of $140,800.44 and interest in the amount of $26,191.10. (Doc. 9-1,
p. 6). In addition, Defendants are responsible for late fees in the amount of $3,325.56,
charged pursuant to the Contract. Ud.). Plaintiff has also incurred attorneys’ fees and
legal expenses as a result of its efforts to collect the amounts due. (d. at p. 7). Third,
the grounds for default are clearly established because, despite receipt of summons,
notice of suit, and a writ of sequestration ordering the collection of the Equipment,
Defendants have failed to respond or otherwise appear. Fourth, nothing before the
Court suggests that the default was caused by good-faith mistake or excusable
neglect. Fifth, default judgment is not overly harsh in this case, as the terms of the
Contract and Continuing Guaranty Defendants signed were clear and unambiguous.
Further, Defendants’ failure to appear or otherwise defend their nonpayment
mitigates the harshness of the default judgment. Sixth, and finally, nothing before
the Court demonstrates that it would be obliged to set aside default on motion by
Defendants.
The Court therefore finds that the six Lindsey factors weigh in favor of default.
B. Whether Plaintiffs Complaint Establishes a Viable Claim for
Relief
A default judgment “must be supported by well-pleaded allegations and must
have a sufficient basis in the pleadings.” Wooten v. McDonald Transit Assocs., Inc.,
788 F.3d 490, 498 (5th Cir. 2015) (citing Nishimatsu, 515 F.2d at 1206). Pleading
requirements for a default judgment are similar to those governed by Rule 8 of the
Federal Rules of Civil Procedure. Wooten, 788 F.3d at 498. Rule 8 requires “a short
and plain statement of the claim showing that the pleader is entitled to relief.” FED.
R. Civ. P. 8(a)(2). The primary purpose of Rule 8(a)(2) is to “give the defendant fair
notice of what the plaintiffs claim is and the grounds upon which it rests.” Conley v.
Gibson, 355 U.S. 41, 47 (1957).
Plaintiff sued for breach of contract. Jurisdiction is based on diversity, so the
Court applies the substantive law of the forum, Louisiana. See Boyett v. Redland Ins.
Co,, 741 F.8d 604, 607 th Cir. 2014) (citing Erie Co. v. Tompkins, 304 U.S. 64
(1938)). Louisiana’s choice-of-law rules require the Court to honor a contractual
choice-of-law provision, except to the extent the law chosen “contravenes the public
policy of the state” whose law would otherwise apply. LA. Civ. CODE art. 3540.
Although Plaintiffs Motion relies on Louisiana law, see (Doc. 9-1, p. 4-7), both the
Contract and the Continuing Guaranty are governed by North Carolina law.
(Doc. 1-4, p. 3) Governing Law: This Contract... shall be governed by and
construed in accordance with the internal laws of the State of North Carolina.”);
(Doc. 1-6, p. 1) (“This Guaranty shall be governed by the internal laws of the State of
North Carolina.”). Under North Carolina law, “[t]he elements of a claim for breach of
contract are (1) existence of a valid contract and (2) breach of the terms of that
contract.” Supplee v. Miller-Motte Bus. Coll., Inc., 768 S.H.2d 582, 590 (N.C. Ct.
App. 2015) (internal quotation marks and citation omitted).
Plaintiff argued in its Complaint that the parties entered into a valid contract,
in the form of the Contract and the Continuing Guaranty, that L3 Trucking was
obligated under the Contract to make payments, that L3 Trucking failed to make
those payments, and that Landry failed to pay and perform L3 Trucking’s obligations
under the Contract. (Doc. 1, at {] 11-14). By defaulting on their payment obligations,
Defendants caused Plaintiff damages. These facts are unopposed, as Defendants have
not filed an opposition, Thus, Plaintiffs complaint establishes a valid claim for relief.
C. Calculation of Damages
Plaintiff requested that judgment be entered against the Defendants for:
(1)the $140,800.44 principal balance; (2) contractual interest in the amount of
$26,191.10; (8) late fees in the amount of $3,325.56, and; (4) post judgment interest
and the contractual or legal rate. (Doc. 9, p. 2).
The calculation of the amount owed is a simple one. Defendants are liable to
Plaintiff for $170,317.10, the sum of the aforementioned amounts. “Federal law
governs post-judgment interest.” Meaux Surface Protection, Inc. v. Fogleman,
607 F.3d 161, 173 (5th Cir. 2010). Plaintiff may recover post-judgment interest
pursuant to 28 U.S.C. § 1961, which provides that post-judgment interest “shall be
calculated from the date of the entry of the judgment, at a rate equal to the weekly
average l-year constant maturity Treasury yield, as published by the Board of
Governors of the Federal Reserve System, for the calendar week preceding... the
date of the judgment.”
D. Attorneys’ Fees
Plaintiff also requests attorneys’ fees, as provided for in the Contract. (Doc. 1-4,
p. 3) “Buyer agrees to pay on demand, all reasonable attorneys’ fees and all other
costs and expenses which may be incurred by Lender in the enforcement of this
Contract.”). North Carolina “traditionally has frowned upon contractual obligations
for attorney’s fees as part of the costs of an action... unless such a recovery is
expressly authorized by statute.” Stillwell Enterprises, Inc. uv. Interstate Equipment
Co., 200 N.C. 286, 289, 266 S.E.2d 812, 814 (1980). Under North Carolina law:
Obligations to pay attorneys’ fees upon any note, conditional sale contract or
other evidence of indebtedness... shall be valid and enforceable, and
collectible as part of such debt, if such note, contract or other evidence of
indebtedness be collected by or through an attorney at law after maturity,
subject to the following provisions:
(2) If such note, conditional sale contract or other evidence of indebtedness
provides for the payment of reasonable attorneys’ fees by the debtor, without
specifying any specific percentage, such provision shall be construed to mean
fifteen percent (15%) of the “outstanding balance” owing on said note, contract
or other evidence of indebtedness.”
(3)... the “outstanding balance” shall mean the principal and interest owing
at the time suit is instituted to enforce any security agreement securing
payment of the debt and/or to collect said debt.
N.C. GEN. STAT. ANN. § 6-21.2 (West 2009).
“An award of attorneys’ fees under G.S. 6-21.2 must be supported by evidence
and findings of fact showing the reasonableness of the award.” Barker v. Agee, 93 N.C.
App. 587, 878 S.H.2d 566, review allowed 381 S.E.2d 784, affirmed in part, reversed
in part 389 8.H.2d 803, 326 N.C. 470 (1989).
In the case sub judice the parties agreed that Defendants would be liable for
“reasonable attorney’s fees” incurred by Plaintiff in its efforts to enforce the Contract.
(Doc. 1-4, p. 3). However, Plaintiffs counsel has not articulated why attorneys’ fees
should be awarded in this case pursuant to North Carolina law. There have also been
additional filings in this matter since the instant motion was filed. See, e.g. (Doc. 13).
Therefore, the Court is not in a position to determine whether attorneys’ fees are
warranted without further information. Plaintiffs counsel shall submit
documentation outlining with specificity the attorney's fees incurred, as well as
briefing on whether attorneys’ fees are warranted and in what specific sums,
pursuant to North Carolina law within fourteen days of the Court’s order.
E. Possession of the Equipment
Plaintiff asserts that, because it has a security interest in the Equipment, it is
entitled to take possession of the Collateral pursuant to the Contract and the
Continuing Guaranty. (Doc. 9-1, p. 7). Plaintiff requests that this Court order
Defendants to return the Equipment to Plaintiff. (/d.). Plaintiff also requests that the
Court affirmatively authorize Plaintiff to sell the Equipment “in partial satisfaction
of the amounts owed under the Contract, reserving unto [Plaintiff] all other collection
rights it may be entitled under the law in order to execute fully on the default
judgment rendered in favor of [Plaintiff].” Ud.).
On. October 16, 2020, Plaintiff moved for a Writ of Sequestration pursuant to
Article 3571 of the Louisiana Code of Civil Procedure and Rule 64 of the Federal Rules
of Civil Procedure. (Doc. 2, p. 1). Plaintiffs Motion was granted on March 4, 2021.
(Doc. 10). The writ of sequestration was issued on March 4, 2021, (Doe. 11). Plaintiff
is now the keeper of the Collateral. (Doc. 14). Therefore, Plaintiffs request to be put
in possession of the property is moot.
Pursuant to Louisiana Code of Civil Procedure Article 3510, “a final judgment
must be obtained in an action where a writ of attachment or of sequestration has
issued before the property seized can be sold to satisfy the claim.” Following the
issuance of a final judgment in this matter, Plaintiff may sell the property to satisfy
its claim.
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IV. CONCLUSION
Because the Plaintiff has demonstrated that Defendants have defaulted on
their obligations, and because Defendants have failed to appear or otherwise defend
this action, default judgment is warranted.
Accordingly,
IT IS ORDERED that Plaintiffs Motion (Doc. 9) is GRANTED.
IT IS FURTHER ORDERED that Defendants L3 Trucking LLC and Chad
V. Landry are jointly and severally liable for and shall pay to Plaintiff $170,317.10,
representing the principal balance in the amount of $140,800.44, contractual interest
in the amount of $26,191.10, and late fees in the amount of $3,325.56.
IT IS FURTHER ORDERED that Defendants L3 Trucking LLC and Chad
V. Landry are jointly and severally liable for and shall pay to Plaintiff postjudgment
interest at the rate provided by 28 U.S.C. § 1961, which shall be computed daily and
compounded annually until this Judgment has been paid in full.
IT IS FURTHER ORDERED that Plaintiff shall submit supporting
documentation regarding attorney's fees and court costs consistent with this Order
no later than fourteen days after the filing of this order.
A separate judgment will be issued.
Baton Rouge, Louisiana, this 23h day of July, 2021
□ e =
JUDGE BRIAN A. JAQKSON
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA
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