TIAA COMMERCIAL FINANCE, INC. v. GALUSHA

Not for Publication

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

TIAA COMMERCIAL FINANCE,

INC.,

Plaintiff,

Civ. No. 19-14809 (ES) (CLW)

v.

OPINION

JAMES GALUSHA, et al.,

Defendants.

MCNULTY, DISTRICT JUDGE

Before the Court is the motion (DE 9) of plaintiff TIAA Commercial

Finance, Inc.1 for default judgment against defendants James and Sharron

Galusha. (DE 9). The matter has been reassigned from Judge Salas to me for

purposes of this motion. Having considered TIAA’s submissions, I decide this

matter without oral argument. See Fed. R. Civ. P. 78(b); L. Civ. R. 78.1(b).

To summarize, I have found that a default judgment should be granted

as to the claim regarding the Notes, but denied as to the claim regarding the

Michelangelo Lease. Within 14 days, plaintiff shall file a submission stating

whether it wishes to opt to abandon the Michelangelo Lease Claim and have

the Court enter judgment on the Notes claim (thus ending the case), or whether

it wishes to continue to pursue the claim regarding the Michelangelo Lease via

service of an amended complaint and a new motion for default judgment.

1 Formerly known as EverBank Commercial Finance, Inc. (“ECF”).

I. BACKGROUND2

TIAA is a financial services corporation. (Complaint ¶ 1). James and

Sharron Galusha are the vice president and president (respectively) of Silverado

Stages, Inc., a service-oriented passenger transportation business. (Id. ¶¶ 4 &

7). TIAA entered into two master security agreements with Silverado in 2013

and 2015. (Id. ¶¶ 7–8). Pursuant to these master security agreements,

“Silverado acknowledged that [TIAA] would, from time to time, enter into

certain credit agreements with Silverado for the purchase of certain property

and/or equipment as further described in each individual Note and Schedule

executed by Silverado.” (Id. ¶ 9). TIAA and Silverado executed three relevant

notes and schedules from 2013 to 20153 (“Notes”). (Id. ¶¶ 10–12).

In or around December 2016, Silverado acquired another service-

oriented passenger transportation business called Michelangelo Leasing, Inc.

(Id. ¶ 13). Before Silverado acquired Michelangelo, on February 29, 2016,

“Michelangelo entered into a 36-month equipment lease with Imagine

2 Citation to record documents will be abbreviated as follows:

Complaint = TIAA’s complaint, DE 1

Guarantees = The December 12, 2013 and March 11, 2015 personal guaranty

agreements signed by the Galushas and attached as exhibits H and I to TIAA’s

motion for default judgment, DE 9-12 and 9-13.

Mov. Br. = TIAA’s brief in support of its motion for default judgment, DE 9-1

3 The first note and schedule, dated on or about December 12, 2013, was in the

amount of $481,428.00 for the purchase of one 2014 Setra S407 Motorcoach.

(Complaint ¶ 10). A second note and schedule, also dated on or about December 12,

2013, was in the amount of $1,444,284.00 for the purchase of three 2014 Setra S407

Motorcoaches. (Id. ¶ 11). On March 11, 2015, Plaintiff and Silverado executed a third

note and schedule for two 2013 Van Hool/T2145 busses and one 2011 Van

Hool/T2145 bus in exchange for $1,125,000.00. (Id. ¶ 12).

Technology [Group LLC]” (the “Michelangelo Lease”). (Id. ¶ 14). At the time the

Michelangelo Lease was formed, Imagine was already in business with TIAA; in

October 2014, TIAA and Imagine entered into a “Master Agreement and

Assignment of Leases – Notification Assignment, [ ] whereby [TIAA] acquired

certain leases from Imagine.” (Id. ¶ 15). Through this agreement with Imagine,

TIAA acquired the Michelangelo Lease; and as a result of Silverado’s acquisition

of Michelangelo in 2016, “Silverado became obligated to Plaintiff under the

Michelangelo Lease.” (Id. ¶¶ 16–17).

According to the Complaint, as security for the repayment of Silverado’s

obligations to plaintiff, the Galushas executed two personal guarantees, dated

December 12, 2013, and March 11, 2015, “whereby Defendants, among other

things, jointly and severally and irrevocably and unconditionally guaranteed

the full and prompt performance by Silverado of all present and/or future

obligations owed by Silverado to Plaintiff.” (Id. ¶ 18). According to TIAA, under

the Guarantees, the Galushas “guaranteed that the amounts due under the

Notes and Michelangelo Lease would be paid strictly in accordance with their

terms.” (Id. ¶ 19). The Galushas further agreed that their obligations under the

Guarantees were independent of Silverado’s, “and that a separate action or

actions may be brought and prosecuted against them to enforce the

Guarantees.” (Id. ¶ 20).

These facts set the scene for Silverado’s default under the Notes and the

Michelangelo Lease. According to TIAA, “[s]ince at least January 1, 2018,

Silverado has failed to make monthly payments of principal and/or interest

due under the Notes and Michelangelo Lease.” (Id. ¶ 21). On or about October

5, 2018, Silverado and Michelangelo filed separate bankruptcy petitions in

Arizona. (Id. ¶¶ 25–26).4 As of the filing of the Complaint, TIAA alleges that it is

owed (i) at least $1,857,460.94, plus interest, late fees, and collection costs on

the Notes and (ii) at least $10,824.83 plus interest, late fees, and collection

costs on the Michelangelo Lease. (Id. ¶¶ 23–24).

TIAA filed this lawsuit seeking to recover the amounts due under the

Notes and Michelangelo Lease and pursuant to the Guarantees. TIAA alleges

claims for (i) breach of contract; (ii) unjust enrichment; and (iii) attorneys’ fees.

(Id. ¶¶ 28–37). Because the Galushas have yet to appear in this action and

respond to the Complaint, and at TIAA’s request, the Clerk of Court entered

default against them on December 11, 2019. TIAA now moves for default

judgment pursuant to Federal Rule of Civil Procedure 55.

II. LEGAL STANDARD

A district court may enter default judgment against a party who has

failed to plead or otherwise respond to the action filed against him. Fed. R. Civ.

P. 55(b)(2). “[E]ntry of a default judgment is left primarily to the discretion of

the district court.” Hritz v. Woma Corp., 732 F.2d 1178, 1180 (3d Cir. 1984).

“Before entering default judgment, the Court must address the threshold

4 Plaintiff implies that it participated in the Arizona bankruptcy proceedings. The

Complaint, however, contains an obvious omission. It fails to state that this action is

not barred by the automatic stay, see 11 U.S.C. § 362, and that the debt has not been

discharged in bankruptcy. I will require such a representation before entering

judgment. See infra.

issue of whether it has personal jurisdiction and subject matter jurisdiction

over the parties.” Prudential Ins. Co. of Am. v. Bramlett, No. 08-0119, 2010 WL

2696459, at *1 (D.N.J. July 6, 2010). Then, “the Court must determine (1)

whether there is sufficient proof of service, (2) whether a sufficient cause of

action was stated, and (3) whether default judgment is proper.” Teamsters

Health & Welfare Fund of Phila. & Vicinity v. Dubin Paper Co., No. 11-7137,

2012 WL 3018062, at *2 (D.N.J. July 24, 2012) (internal citations omitted).

To determine whether granting default judgment is proper, the Court

must consider “(1) whether the party subject to default has a meritorious

defense, (2) the prejudice suffered by the party seeking default, and (3) the

culpability of the party subject to default.” Doug Brady, Inc. v. N.J. Bldg.

Laborers Statewide Funds, 250 F.R.D. 171, 177 (D.N.J. 2008). In making these

determinations, “the factual allegations of the complaint, except those relating

to the amount of damages, will be taken as true.” DIRECTV, Inc. v. Pepe, 431

F.3d 162, 165 n.6 (3d Cir. 2005) (quoting Comdyne I, Inc. v. Corbin, 908 F.2d

1142, 1149 (3d Cir. 1990)). “While the court may conduct a hearing to

determine the damages amount, Fed. R. Civ. P. 55(b)(2), a damages

determination may be made without a hearing as long as the court ensures

that there is a basis for the damages specified in the default judgement.” Days

Inns Worldwide, Inc. v. Panchal, No. 15-1459, 2015 WL 5055318, at *2 (D.N.J.

Aug. 25, 2015) (internal quotation marks and alterations omitted).

III. DISCUSSION

A. Jurisdiction

I am satisfied that that the Court has both subject matter and personal

jurisdiction. The Court has subject matter jurisdiction based on diversity of

state citizenship pursuant to 28 U.S.C. § 1332(a). TIAA, as a corporation, is

deemed to be a citizen of any state by which it has been incorporated (here,

Delaware) and of the state where it has its principal place of business (here,

New Jersey). 28 U.S.C. § 1332(c)(1); (Complaint ¶ 1). The Galushas are alleged

to be citizens of Texas (Mov. Br. at 5).5 TIAA plausibly alleges an amount in

controversy exceeding $75,000. (See Complaint ¶ 33).

As to personal jurisdiction, “a [d]istrict [c]ourt typically exercises

personal jurisdiction according to the law of the state where it sits.” O’Connor v.

Sandy Lane Hotel Co. Ltd., 496 F.3d 312, 316 (3d Cir. 2007). New Jersey

exercises long-arm jurisdiction over non-resident defendants to the extent

consistent with due process of law. HV Assocs LLC v. PNC Bank, N.A., No. 17-

8128, 2018 WL 1731346, at *2 (D.N.J. Apr. 10, 2018) (citing Avdel Corp. v.

Mecure, 277 A.2d 207, 209 (N.J. 1971)). In New Jersey, contractual consents to

5 Actually, the Complaint itself alleges that the Galushas have “an address” in

Arizona. (Complaint ¶¶ 2–3). Such an allegation is insufficient to establish domicile or

citizenship for jurisdictional purposes. See Guerrino v. Ohio Cas. Ins. Co., 423 F.2d

419, 421 (3d Cir. 1970). However, it appears that, through efforts to serve the

Galushas, TIAA learned that the Galushas are domiciled in Texas. (Mov. Br. at 5; see

infra Section IIIB). I am satisfied based on the factual record that diversity jurisdiction

exists (and obviously the distinction between Arizona and Texas makes no difference).

Particularly in light of the defaulting defendants’ possession of the relevant facts, I will

excuse the pleading deficiency. Any amended complaint filed in response to this

Opinion and corresponding Order shall adequately allege citizenship for purposes of

diversity jurisdiction.

personal jurisdiction “do not offend due process so long as the agreement is

‘freely negotiated’ and the provision is not ‘unreasonable and unjust.’” YA

Global Investments, L.P. v. Cliff, 15 A.3d 857, 861–62 (N.J. Super. Ct. App. Div.

2011) (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 n.14 (1985));

see also Park Inn Int’l, LLC v. Mody Enterprises, Inc., 105 F. Supp. 2d 370, 373

(D.N.J. 2000).

Here, the Galushas expressly consented to personal jurisdiction in this

Court by signing the Guarantees, which contain a contractual consent to

personal jurisdiction clause:

“Guarantor hereby irrevocably submits to the jurisdiction of

any New Jersey state or federal court sitting in New Jersey . .

. in any action or proceeding arising out of or relating to this

Guaranty, and the Guarantor hereby irrevocably agrees that

all claims in respect of such action or proceeding may be

heard and determined in such New Jersey state or federal

court.”

(Guarantees § 6). In the limited submissions before the Court, there is nothing

to suggest that the personal jurisdiction clause was not “freely negotiated.” I

am thus satisfied that the parties’ agreement satisfies the personal jurisdiction

inquiry.

B. Proof of Service

I am also satisfied that there is sufficient proof of service. TIAA explains

that it served the Galushas pursuant to Federal Rule of Civil Procedure 4(e)(1)

and New Jersey Court Rule 4:4-4(b)(1)(C). Federal Rule 4(e)(1) provides that an

individual may be served in accordance with the law of the state where the

district court is located or where service is made. In turn, New Jersey Court

Rule 4:4–4(b) provides the following:

(1) By Mail or Personal Service Outside the State. If it appears

by affidavit satisfying the requirements of R. 4:4-5(b) that

despite diligent effort and inquiry personal service cannot be

made in accordance with paragraph (a) of this rule, then,

consistent with due process of law, in personam jurisdiction

may be obtained over any defendant as follows:

[. . . ]

(C) mailing a copy of the summons and complaint by

registered or certified mail, return receipt requested, and,

simultaneously, by ordinary mail to: (1) a competent

individual of the age of 14 or over, addressed to the

individual’s dwelling house or usual place of abode . . . .

“There is no fixed standard for determining whether a party has exercised

diligence. . . . Rather, the Court must conduct a fact sensitive inquiry to

determine if diligence has been exercised.” Prudential Ins. Co. of Am. v.

Holladay, No. 07-5471, 2008 WL 1925293, at *2 (D.N.J. Apr. 30, 2008)

(internal citation omitted). And it is the requesting party who bears the burden

of establishing diligence was exercised. Id.

TIAA states that it “attempted to personally serve Defendants at their

residence in accordance with Fed. R. Civ. P. 4(e)(2)(A)” (Mov. Br. at 5).

Specifically, as documented in the Affidavit of Diligent Inquiry (DE 5) and

Affidavit of Service of Summonses and Complaint (DE 6), TIAA used a process

server and the Bexar County Sherriff’s Office to try to effectuate service, and

each made several attempts at doing so at the Galushas’ last known address.6

6 Counsel for TIAA explains that his firm conducted a comprehensive public

records search, which revealed the Galushas’ last known address to be 11503

Toponga, Boerne Texas 78006-8488, which is located in Bexar County. (DE 6 ¶ 3). The

firm then checked the Tax Assessor’s records for Bexar County, which showed that the

Galushas owned property at that same address. (Id. ¶ 4; see also DE 6-1, Ex. A).

(DE 5 ¶¶ 3–11; DE 6 ¶¶ 3–11). The attempted service forms for both James and

Sharron Galusha indicate that on September 13, 2019, a security guard at the

entrance of the subdivision indicated that the subject did indeed reside at the

location. (DE 6-4 at 4; DE 6-5 at 4). In addition, the attempted service form for

Sharron Galusha indicates that, on August 20, 2019, a subject matching the

description of the subject came to the door, saw the officer (who identified

himself and called out the name on the documents) but turned away and did

not open the door. (DE 6-5 at 4). Unable to comply with Federal Rule 4(e)(2)(A),

TIAA enacted service pursuant to Federal Rule of Civil Procedure 4(e)(1) and

New Jersey Court Rule 4:4–4(b)(1)(C) by “mailing the Summonses and

Complaint to Defendants via certified mail,” and “simultaneously, by ordinary

U.S. mail to their residence” located in Boerne, Texas. (Mov. Br. at 5; DE 6 ¶

14).

Based on the foregoing, I am satisfied that TIAA’s detailed efforts “were

sufficiently diligent to warrant alternative service,” Knights Franchise Sys., Inc.

v. Imperial Lodgings, LLC, No. 14-6121, 2017 WL 1535090, at *3 (D.N.J. Apr.

26, 2017), and that TIAA properly effectuated service by mail.

Having considered the threshold issues of jurisdiction and service of

process, I next consider whether TIAA has stated a sufficient cause of action

and whether default judgment is proper.

C. Sufficient Cause of Action/Meritorious Defense

Granting default judgment is improper where the plaintiff has failed to

state a sufficient cause of action. See Wallace v. Fed. Employees of U.S. Dist.

Court, EDPA, 325 F. App’x 96, 101 (3d Cir. 2009) (“Even if service had been

timely, a default judgment still would not have been proper because, as

explained below, the complaint fails to state a claim upon which relief can be

granted.”).

Courts in this district turn to the familiar Federal Rule 12(b)(6) standard

in determining whether a sufficient cause of action has been stated. See Mineo

v. McEachern, No. 12-01950, 2014 WL 2197032, at *2 (D.N.J. May 27, 2014)

(“A court will deny a default judgment if the complaint fails to state a claim

under Federal Rule of Civil Procedure 12(b)(6).”). “Because a defaulting party

does not admit conclusions of law, a court must make an independent inquiry

into whether the unchallenged facts constitute a legitimate cause of action.”

Panda Rest. Grp., Inc. v. Panda Chinese & Japanese Rest., LLC, No. 12-11718,

2018 WL 5294568, at *1 (D.N.J. Oct. 25, 2018). In the ordinary case, the issue

of whether plaintiff has a legitimate cause of action will often overlap with the

issue of whether the defendant has a meritorious defense. See Ramirez v.

Nacerima Indus., No. 10-01204, 2012 WL 3262466, at *1 (D.N.J. Aug. 8, 2012)

(“[T]he Court finds that Defendants have a meritorious defense: namely,

Plaintiff has failed to state a claim upon which relief can be granted.”).

1. The Guarantees

TIAA alleges that the Galushas signed two personal guaranty

agreements, which obligated them to pay the outstanding amounts due under

the Notes and Michelangelo Lease. (Complaint ¶¶ 19 & 31). In support of this

motion, TIAA provided the Court with copies of the Guarantees as well as

copies of, inter alia, the relevant Notes, master security agreements, and the

Michelangelo Lease. Upon my review of the Complaint, TIAA’s motion, and the

relevant agreements, I conclude that TIAA has sufficiently stated a claim for

breach of contract for amounts due under the Notes, but not for amounts due

under the Michelangelo Lease.

To establish a cause of action for breach of contract, a plaintiff must

plead three elements: (i) that a valid contract exists, (ii) that there was a breach

of that contract, and (iii) resulting damages. See Howard Johnson Int’l v. Jay

Shree Ganesh, No. 17-4658, 2018 WL 4005744, at *3 (D.N.J. Aug. 22, 2018).7

New Jersey courts have typically understood a personal guaranty to be a

contract which “must be interpreted according to its clear terms so as to effect

the objective expectations of the parties.” See, e.g., Housatonic Bank and Trust

Co. v. Fleming, 560 A.2d 97, 99 (N.J. Super. Ct. App. Div. 1989). Guaranty

agreements are to be strictly construed, and “[a] guarantor cannot be held

liable beyond the strict terms of the agreement.” Modern Techs. Grp., Inc. v.

Danzi, No. A-5287-08T3, 2010 WL 4107747, at *6 (N.J. Super. Ct. App. Div.

Aug. 12, 2010).

Pursuant to the Guarantees, the Galushas “jointly and severally . . .

irrevocably and unconditionally guarantee[d] the full and prompt performance

by Obligor [(Silverado)] of all obligations which Obligor may presently or

hereafter have to ECF [(now known as TIAA)] under the Credit Agreements. . . .”

7 I apply New Jersey law pursuant to the choice of law provision in the

Guarantees. (Guarantees § 13).

(Guarantees § 1). There are two preliminary statements to the Guarantees,

which state the following:

(1) ECF has entered into, or may from time to time enter into,

various equipment leases, conditional sale contracts,

security agreements, or other agreements with and/or accept

notes from SILVERADO STAGES, INC. (“Obligor”) a

company organized and existing under the laws of California

(such agreements, as amended from time to time, being the

“Credit Agreements,” and each a “Credit Agreement;” the

terms defined therein and not otherwise defined herein being

used herein as therein defined).

(2) It is a condition precedent to the execution of a “Credit

Agreement” that the Guarantor shall have executed and

delivered this Guaranty.

(Guarantees at 1, Preliminary Statement). In sum, the Galushas personally

guaranteed Silverado’s obligations with respect to “Credit Agreements” entered

into between Silverado and TIAA (then ECF), whether those obligations existed

at the time of the Guarantees or sometime thereafter.

2. The Notes Claim

Based on the foregoing, I am satisfied that TIAA has adequately pled a

breach of contract claim with respect to the amounts due under the Notes (the

“Notes Claim”), and that no meritorious defense appears.

The first element of any contract claim is the existence of a valid

contract, and it is satisfied by these allegations. The Notes fit squarely within

the definition of a “Credit Agreement” between TIAA and Silverado. No issue

arises as to guarantees of future obligations, because the Notes are dated the

same dates as the Guarantees: December 12, 2013, and March 11, 2015.

(Complaint ¶¶ 7–12 & 18–20). These allegations, which are substantiated by

the record documents, are sufficient to allege an existing contractual obligation

for amounts due under the Notes and pursuant to the Guarantees.

The second element of the Notes Claim, a breach of that contractual

obligation, has also been adequately pled. The Complaint alleges that since

January 1, 2018, Silverado has failed to make payments of principal and/or

interest due under the Notes, and that, notwithstanding their obligations as

guarantors, the Galushas failed to make payment of the amounts owed by

Silverado. (Complaint ¶¶ 21 & 32).

As for the third element, damages, TIAA alleges that as a result of the

breach it is left with an outstanding balance of at least $1,857,460.94 (plus

accrued interest, fees, and costs). (Complaint ¶¶ 23 & 33).

Assessment of a claim is inevitably hampered by the lack of an

adversarial presentation of issues. Based on the record before me, however, I

do not discern any meritorious defense that the Galushas may have to this

breach of contract claim with respect to the Notes.

3. The Michelangelo Lease Claim

As to the claim of breach of contract with respect to the Michelangelo

Lease (the “Michelangelo Lease Claim”), however, my conclusion is different. To

start, there are important differences between the Notes and the Michelangelo

Lease which suggest that the Lease may not be covered by the Guarantees.

First, unlike the Notes, which are dated the same day as the Guarantees, the

Michelangelo Lease was entered into on February 29, 2016, well after the

Guarantees were executed. (Complaint ¶ 14). In addition, the Michelangelo

Lease was not “entered into” between Silverado and TIAA. Instead, Silverado

became obligated to TIAA under the Michelangelo Lease following Silverado’s

acquisition of Michelangelo in December 2016 and as a result of TIAA’s

agreement with Imagine. (Complaint ¶¶ 13–17). This fact pulls the

Michelangelo Lease outside of the scope of defined “Credit Agreements” for

which the Galushas executed the Guarantees. (See Guarantees at 1,

Preliminary Statement).

Finally, as described supra, a condition precedent to Silverado and TIAA

entering into a “Credit Agreement” as defined in the Guarantees was that the

parties would execute the form guaranty. (Id.). It appears that the parties

intended that an executed form guaranty agreement would accompany any

future qualifying “Credit Agreement” between TIAA and Silverado. In

connection with the Notes, the Galushas did execute and deliver the

Guarantees; as to the Michelangelo Lease, however, the Complaint is silent as

to that issue.

TIAA relies on certain broad language in the Guarantees whereby the

Galushas agreed to jointly and severally guaranty the full and prompt

performance “of all present and/or future obligations owed by Silverado to

Plaintiff.” (Complaint ¶18). While I agree that this language is broad, guaranty

agreements must be strictly construed, and “a guarantor’s promise cannot be

extended by implication.” Modern Techs. Grp., 2010 WL 4107747, at *6. I am

particularly wary, moreover, of catchall commitments regarding obligations to

be incurred in the future. Without more specific allegations tying the

Guarantees to the Michelangelo Lease, “[t]here is no reason to believe that the

parties intended to extend the obligations of guarantee beyond those of the

[Notes].” Gen. Elec. Credit Corp. v. Castiglione, 360 A.2d 418, 424–25 (N.J.

Super. Ct. Law. Div. 1976). As a result, TIAA has failed to state a sufficient

cause of action as to the breach of contract claim stemming from the

Michelangelo Lease. See Kiss Elec., LLC v. Waterworld Fiberglass Pools, N.E.,

Inc., No. 14-3281, 2015 WL 1346240, at *4 (D.N.J. Mar. 25, 2015) (rejecting in-

part a breach of contract claim on a default judgment motion finding no

enforceable contract).

My overall conclusion as to the merits of these causes of action is that,

although the documents clearly cover the Galushas’ guaranty of the Notes, they

do not cover the Michelangelo Lease. See MII Exports, Inc. v. Feingold, No.90-

3224, 1990 WL 149298, at *6 (E.D. Pa. Sept. 18, 1990) (dismissing

counterclaim based on a guaranty where the alleged obligation was not

contemplated in the documents); see also Ctr. 48 Ltd. P’ship v. May Dep’t Stores

Co., 810 A.2d 610, 619 (N.J. Super. Ct. App. Div. 2002) (“[A]n agreement

guaranteeing the particular debt of another does not extend to any other

indebtedness not within the intention of the parties.”).

D. Culpability and Prejudice

The remaining considerations for granting a default judgment, culpability

and prejudice, require no extended discussion. The defendants have been

served, and no good excuse is proffered for their failure to respond. The

resulting prejudice is that the plaintiff is impaired from pursuing at least one

meritorious claim and recovering amounts owed.

E. Options as to Entry of Judgment

As I say, however, TIAA has adequately pled only the claim on the Notes,

not on the Michelangelo Lease. Unless I dismiss the claims based on the

Michelangelo Lease, or they are withdrawn, I cannot enter final judgment,

which must dispose of all claims as to all parties.8 See Garcia-Martinez v. V.

Puzino Dairy, Inc., No. 11-6829, 2014 WL 956123, at *1 (D.N.J. Mar. 12, 2014).

U.S. Golf Ass’n v. ISaAC Scoring Sys., LLC, No. 09-1848, 2010 WL 323203, at *3

(D.N.J. Jan. 20, 2010) (“Until these claims have been either resolved or

withdrawn, the Court cannot enter final judgment.”).

There is the option of a partial judgment under Federal Rule of Civil

Procedure 54. “A default judgment that does not dispose of all of the claims

among all parties is not a final judgment unless the court directs entry of final

judgment under Rule 54(b).” Fed. R. Civ. P. 55(c) advisory committee’s note to

2015 amendment; see Fed. R. Civ. P. 54(b) (explaining that the court may

direct entry of final judgment as to fewer than all claims “only if the court

expressly determines that there is no just reason for delay”).

I will not exercise my discretion in that manner. This is a case in which

8 The same is true of TIAA’s claim for unjust enrichment, which is asserted in the

Complaint (Compl. ¶¶ 34–35) but not raised in the motion for default judgment. (See

Mov. Br. at 6). To the extent I have found an enforceable agreement between the

parties, there is no need to invoke quasi-contractual liability. See MK Strategies, LLC v.

Ann Taylor Stores Corp., 567 F. Supp. 2d 729, 734 (D.N.J. 2008). And even as to the

Michelangelo Lease, the claim seems to stand or fall with the existence, or not, of a

binding contract; absent such an agreement, TIAA does not adequately allege how the

Galushas may be held personally liable for Silverado’s debt based on an unjust

enrichment theory.

defendants have not appeared. It should be disposed of, or not disposed of, but

there is no point in simply leaving open indefinitely a claim that I have already

found inadequate. I will therefore give the plaintiff two options:

Option 1: Plaintiff may opt to abandon the deficient Michelangelo Lease

claims. If so, the Court will enter final judgment on the remaining, Notes

Claim in an appropriate dollar amount, for the reasons stated in this

Opinion, and close the case.

Option 2: Plaintiff may, if it wishes, amend the Complaint to remedy the

deficiencies in the Michelangelo Lease Claim. The amended complaint

must be re-served on the defendants. Should the defendants again

default, the plaintiff may move for entry of a default judgment on the

amended Michelangelo Lease claims. Should the defendants respond,

and/or move to reopen the default, one claim or both may be litigated.

Plaintiff shall make a submission electing for either Option 1 or Option 2

within 14 days. In either case, however, the plaintiff’s submission shall contain

a representation that the debt has not been discharged in bankruptcy and that

this action is not barred by the automatic stay, see 11 U.S.C. § 362.

IV. CONCLUSION

For the foregoing reasons, the motion for default judgment is denied as

presented, but relief is granted in part, subject to the plaintiff’s exercise of

Option 1 or Option 2 and its representation that the bankruptcy proceedings

do not bar such relief, within 14 days, as set forth in more detail above. An

appropriate Order accompanies this Opinion.

/s/ Kevin McNulty

Kevin McNulty, U.S.D.J.