United States District Court, W.D. North Carolina, Charlotte Division
J. Conrad, Jr. United States District Judge
MATTER comes before the Court on Plaintiff's
Motion for Default Judgment and memorandum in support, (Doc.
Nos. 7 and 7-1), seeking a default judgment confirming an
arbitration award. Defendant never properly responded to
Plaintiff's motion and the time for doing so has passed.
The motion is ripe for adjudication.
began this matter by filing a Motion to Confirm Arbitration
Award on September 27, 2016. (Doc. No. 1). Excluding a
consent motion for extension of time to answer filed by
Plaintiff, (Doc. No. 4), the Court has not heard from nor
received any filings from Defendant. Thus, upon
Plaintiff's Motion for Entry of Default and for Default
Judgment filed on December 5, 2016, the Court entered default
as to Defendant. (Doc. Nos. 7, 8). Then, on April 3, 2017,
before a Default Judgment was ordered, the Court received an
apparent pro se filing-Defendant's Pro Se Response in
Opposition to Plaintiff's Motion for Entry of Default and
Default Judgment- filed by Peter Schaffer, who represented
himself as out-of-state corporate counsel for Defendant.
(Doc. No. 9). Plaintiff moved for that filing to be stricken
from the record on the basis that corporate entities cannot
appear before a court pro se, but rather must have proper
counsel enter an appearance on the corporation's behalf.
See (Doc. No. 10). On July 26, 2017, this Court
granted Plaintiff's Motion to Strike and further ordered
that Defendant had ten days to respond properly- through
counsel admitted to practice in the Western District of North
Carolina. (Doc. No. 12 at 2). The Court warned Defendant that
“[f]ailure to respond with 10 days will result in the
Court proceeding with Plaintiff's motion for default
judgment.” (Id.). The Court sent the order to
Mr. Schaffer since he had made filings, albeit improperly, on
behalf of Defendant. (Id.). The United States Postal
Service website indicates that the order was delivered to Mr.
Schaffer's address and left with an individual on July
31, 2017. More than 10 days have passed since that order and
the Court has received nothing from Defendant or Mr.
Schaffer. Defendant remains in default and the Court will
proceed with Plaintiff's Motion for Default Judgment.
suit stems from an arbitration proceeding held between
Plaintiff and Defendant in Charlotte, NC on May 5-6, 2015
before The Honorable Chase B. Saunders (ret.) (the
“Arbitrator”). (Doc. No. 1-1 at ¶13). The
Parties arbitrated pursuant to a 2012 Software License and
Service Agreement (Doc. No. 1-2 at 6-15) (the “2012
Agreement”) based upon Plaintiff's allegations that
Defendant had breached the 2012 Agreement, tortiously
interfered with Plaintiff's current and future contracts
and business, and failed to share advertising revenues. (Doc.
No. 1-1 at ¶10; Doc. No. 1-2 at 21). During the
arbitration proceedings, Defendant counterclaimed that
Plaintiff breached the 2012 Agreement, overbilled Defendant,
tortiously interfered with the operation of a raffle, and
failed to provide certain advertising revenues. (Doc. No. 1-2
at 21). Ultimately, the Arbitrator issued an Interim Award
wherein he found Defendant liable for breach of contract-but
not the tortious interference or advertising revenue
claims-and Plaintiff liable for overbilling Defendant, (Doc.
No. 1-2 at 20-26). (Doc. No. 1-1 at ¶15). After
offsetting the damages, the Arbitrator awarded Plaintiff
$163, 055.00. (Id. at ¶18). In the Final
Arbitration Award, (Doc. No. 1-2 at 28-32), the Arbitrator,
in addition to the $163, 055.00 interim award, ordered
Defendant to pay $6, 043.60 for attorney-related costs and
expenses, $97, 258.75 for attorneys' fees, and $750 for
Defendant's portion of administrative fees and expenses.
(Doc. No. 1-1 at ¶21). Under the Final Arbitration
Award, Defendant owes Plaintiff a total of $267, 107.35.
(Id. at ¶22). Defendant has yet to pay any of
the sums owed to Plaintiff under the Final Arbitration Award.
(Id. at ¶23).
STANDARD OF REVIEW
Default Judgment Standard
entry of default judgment is governed by Rule 55 of the
Federal Rules of Civil Procedure which provides in relevant
part that “[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.”
the entry of default, the defaulted party is deemed to have
admitted all well-pleaded allegations of fact contained in
the complaint. Ryan v. Homecomings Fin. Network, 253
F.3d 778, 780 (4th Cir. 2001); Weft, Inc. v. GC Inv.
Assocs., 630 F.Supp. 1138, 1141 (E.D. N.C. 1986)
(citations omitted); see also Fed.R.Civ.P. 8(b)(6)
(“An allegation-other than one relating to the amount
of damages-is admitted if a responsive pleading is required
and the allegation is not denied.”). Nevertheless, the
defendant is not deemed to have admitted conclusions of law
and the entry of “default is not treated as an absolute
confession by the defendant of his liability and of the
plaintiff's right to recover.” Ryan, 253
F.3d at 780 (citations omitted); see also E.E.O.C. v.
Carter Behavior Health Servs., Inc., No. 4:09-cv-122-F,
2011 WL 5325485, at *3 (E.D. N.C. Oct. 7, 2011). Rather, in
determining whether to enter judgment on the default, the
court must determine whether the well-pleaded allegations in
the complaint support the relief sought. See Ryan,
253 F.3d at 780 (citing Weft, 630 F.Supp. at 1141);
DIRECTV, Inc. v. Pernites, 200 F. App'x 257, 258
(4th Cir. 2006) (“‘[A] defendant is not held to
admit facts that are not well-pleaded or to admit conclusions
of law'”) (quoting Nishimatsu Constr. Co. v.
Houston Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir.
1975)); Arista Records, LLC v. Gaines, 635 F.Supp.2d
414, 416 (E.D. N.C. 2009); 10A Wright, Miller & Kane,
Federal Practice and Procedure § 2688 (3d ed. Supp.
2010) (“[L]iability is not deemed established simply
because of the default ... and the court, in its discretion,
may require some proof of the facts that must be established
in order to determine liability.”).
end, the Fourth Circuit has “repeatedly expressed a
strong preference that, as a general matter, defaults be
avoided and that claims and defenses be disposed of on their
merits.” Colleton Preparatory Acad., Inc. v. Hoover
Univ., Inc., 616 F.3d 413, 417 (4th Cir. 2010)
(citations omitted). Nonetheless, default judgment “may
be appropriate when the adversary process has been halted
because of an essentially unresponsive party.” SEC
v. Lawbaugh, 359 F.Supp.2d 418, 421 (D. Md. 2005). Entry
of default judgment is left to the sound discretion of the
trial court. Duke Energy Carolinas, LLC v. BlackRock
Coal, LLC, No. 3:11-cv-616-RJC-DSC, 2012 WL 1067695
(W.D. N.C. Mar. 29, 2012) (granting default judgment in
plaintiffs favor after finding that service of the complaint
and summons on defendant was sufficient yet defendant failed
to defend); CF Cloninger Trucking IL Inc. v. SourceOne
Group, Inc., No. 3:08-cv-00320-FDW, 2009 WL 35191 (W.D.
N.C. Jan. 5, 2009) (granting default judgment when defendant
failed to defend complaint). Accord Lawbaugh, 359
F.Supp.2d at 421 (granting default judgment for permanent
injunction, disgorgement and a civil monetary penalty where
defendant failed to answer complaint alleging securities
fraud and misappropriation). Although the clear policy of the
Rules is to encourage dispositions of claims on their merits,
see Reizakis v. Loy, 490 F.2d 1132, 1135 (4th
Cir.1974), trial judges are vested with discretion, which
must be liberally exercised, in entering [default] judgments
and in providing relief therefrom." United States v.
Moradi, 673 F.2d 725, 727 (4th Cir.1982).
court finds that liability is established, it must then
determine damages. Carter Behavior Health, 2011 WL
5325485, at *4 (citing Ryan, 253 F.3d at 780-81;
Gaines, 635 F.Supp.2d at 416-17). The court must
make an independent determination regarding damages, and
cannot accept as true factual allegations of damages.
Id. (citing Lawbaugh, 359 F.Supp.2d at
422). While the court may conduct an evidentiary hearing to
determine damages, it is not required to do so, but may rely
instead on affidavits or documentary evidence in the record
to determine the appropriate sum. See EEOC v. CDG Mgmt.,
LLC, No. RDB-08-2562, 2010 WL 4904440, at *2 (D. Md.
Nov. 24, 2010) (citations omitted); EEOC v. North Am.
Land Corp., No. 1:08-cv-501, 2010 WL 2723727, at *2
(W.D. N.C. Jul. 8, 2010).
Confirmation of ...