Illumipure, Inc. v. Trusted Client Solutions, LLC

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
ILLUMIPURE, INC.,
Plaintiff,
v.
TRUSTED CLIENT SOLUTIONS,
LLC,
Defendant.
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NO. 4:24-cv-3678
JUDGE PALERMO’S
REPORT AND RECOMMENDATION & ORDER
Before the Court is Defendant’s motion for default judgment. Def.’s Mot.,
ECF No. 34. 1 Defendant brought counterclaims against Plaintiff for breach of
contract, money had and received, and breach of warranty. Def.’s Counterclaims,
ECF No. 4. Plaintiff, a corporation, failed to obtain counsel despite numerous
opportunities provided by the Court. Orders to Hire Counsel, ECF Nos. 14, 19, 32.
As a result, the Court ordered entry of default against Plaintiff on Defendant’s
counterclaims, ECF No. 35. Plaintiff has not answered the motion for default
judgment. Based on a careful review of Defendant’s counterclaims, the briefing, the
evidence, and the record, the Court recommends that the motion for default judgment
be granted. Default judgment should be entered against Plaintiff and damages in the
1 The district judge to whom this case is assigned referred all pretrial proceedings. Referral Order,
ECF No. 18.
United States District Court
Southern District of Texas
ENTERED
November 17, 2025
Nathan Ochsner, Clerk
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amount of $138,015.58 in damages, pre-judgment interest at a rate of 3.65% per
annum, and post-judgment interest at a rate of 3.66% per annum.
I. 	BACKGROUND FACTS.
In December 2020, Defendant entered a business relationship with Plaintiff to
market and sell Plaintiff’s products. ECF No. 4 ¶¶ 1, 35. The ongoing business
relationship 	between 	Plaintiff 	and 	Defendant 	created 	an 	implied 	commercial
contract between the parties for the sale of goods where Plaintiff sold Defendant
products on an open account. ECF No. 4 ¶¶ 20, 25. Defendant fully performed, but
Plaintiff failed to: (1) account for correct amounts and pricing of products shipped
to Defendant, defective products returned by Defendant, Defendant’s commissions,
and Defendant’s payments; (2) track delayed backorders resulting in double billing;
and (3) sell products without defect. ECF No. 4 ¶¶ 21, 22, 26, 36. Defendant sought
$138,015.58 in overpayments to Plaintiff. ECF No. 4.
Through its motion for default judgment, Defendant summarizes that it seeks:
liquidated damages for principal and interest due and owing from
Plaintiff pursuant to the ongoing business relationship the parties
entered into in December 2020, in which Plaintiff sold goods to
Defendant on open account with the understanding that Defendant
would market and sell Plaintiff’s products. By such agreement, Plaintiff
made an implied covenant that the goods it provided were merchantable
and fit for installation in school district facilities and other commercial
buildings. But many of the goods were defective, inoperative, unsuited
for the purposes on which they were sold, or charged to [Defendant] at
the incorrect merchant rate. As of October 4, 2024, [Plaintiff] owed
[Defendant] 	$138,015.58 	in 	principal 	and 	pre-judgment 	interest
accruing at a rate of 4.26%.
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ECF No. 34 at 7.
II. 	FEDERAL RULE OF CIVIL PROCEDURE 55
Under Federal Rule of Civil Procedure 55(a), “[w]hen a party against whom
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.” F ED. R. CIV . P. 55(a). After default is entered, a party may ask the court to
enter a default judgment, and the “court may conduct hearings or make referrals—
preserving any federal statutory right to a jury trial—when, to enter or effectuate
judgment, it needs to: (A) conduct an accounting; (B) determine the amount of
damages; (C) establish the truth of any allegation by evidence; or (D) investigate any
other matter.” FED. R. CIV. P. 55(b)(2).
A plaintiff must submit evidence that the defendant has been properly served
with the summons, complaint, and the default judgment motion. See James Avery
Craftsman, Inc. v. Sam Moon Trading Enters., Ltd., No. 16-CV-463, 2018 WL
4688778, at *3 (W.D. Tex. July 5, 2018) (citing Bludworth Bond Shipyard, Inc. v.
M/V Caribbean Wind, 841 F.2d 646, 649-51 (5th Cir. 1988)); Hazim v. Schiel &
Denver Book Grp., No. H-12-1286, 2013 WL 2152109, at *1 (S.D. Tex. May 16,
2013); S.D. TEX. L OCAL R. 5.5 (a default judgment motion “must be served on the
defendant-respondent by certified mail (return receipt requested)”). Without proper
service, a court does not have personal jurisdiction over the defendant, and as a
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result, any default judgment is void. See Recreational Props., Inc. v. Sw. Mortg.
Serv. Corp., 804 F.2d 311, 314 (5th Cir. 1986).
A motion for default judgment requires the court to determine: “(1) if default
judgment is procedurally appropriate; (2) if plaintiff has presented a colorable claim;
and (3) how to calculate damages.” Vela v. M&G USA Corp., No. 2:17-CV-13, 2020
WL 421188, at *1 (S.D. Tex. Jan. 27, 2020). The court must consider whether:
(1) material issues of fact are at issue; (2) there has been substantial prejudice; (3) the
grounds for default are clearly established; (4) the default was caused by a good faith
mistake or excusable neglect; (5) the harshness of a default judgment; and (6) the
court would think itself obliged to set aside the default on the defendant’s motion.
Lindsey v. Prive Corp., 161 F.3d 886, 893 (5th Cir. 1998).
Default judgments are a drastic remedy and are disfavored by the courts.
Charlton L. Davis & Co., P. C. v. Fedder Data Ctr., Inc., 556 F.2d 308, 309 (5th
Cir. 1977). “A default judgment is unassailable on the merits but only so far as it is
supported by the well-pleaded allegations, assumed to be true.” Wooten v. McDonald
Transit Assocs, Inc., 788 F.3d 490, 496 (5th Cir. 2015) (quoting Nishimatsu Constr.
Co., Ltd. v. Hous. Nat’l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975)). “There must be
a sufficient basis in the pleadings for the judgment entered.” Nishimatsu Constr. Co.,
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515 F.2d at 1206. For the court to enter default judgment, the complaint must satisfy
Rule 8 of the Federal Rules of Civil Procedure. See Wooten, 788 F.3d at 497-98. 2
III. 	DEFAULT JUDGMENT SHOULD BE GRANTED.
A. 	Default Judgment Is Procedurally Appropriate.
Plaintiff’s counsel, different attorneys, have withdrawn from representation
twice. Orders, ECF Nos. 14, 32. Most recently, on September 3, 2025, the Court
ordered Plaintiff to hire counsel by October 3, 2025. Order, ECF No. 32. In that
order, the Court again advised Plaintiff that a corporation cannot appear in federal
court unless represented by a licensed attorney and cautioned Plaintiff for the second
time that, if Plaintiff fails to obtain counsel, the Court may recommend that
Plaintiff’s case be dismissed for failure to prosecute and that default be entered
against Plaintiff on Defendant’s counterclaims. Id. (citing Healix Infusion Therapy,
Inc. v. Craig E. Smith, M.D., P.C., No. 4:09CV2776, 2010 WL 11668307, at *1
(S.D. Tex. July 16, 2010), adopted, No. CV H-09-2776, 2010 WL 11668309 (S.D.
2 Rule 8(a) requires “a short and plain statement of the claim showing that the pleader is entitled
to relief.” FED. R. CIV. P. 8(a)(2). A complaint must state a claim to relief that is plausible on its
face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 573 (2007). “A claim has facial plausibility when
the plaintiff pleads factual content that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing
Twombly, 550 U.S. at 556). “The plausibility standard is not akin to a ‘probability requirement,’
but it asks for more than a sheer possibility than a defendant has acted unlawfully.” Id. (citing
Twombly, 550 U.S. at 556). The well-pleaded allegations in the complaint are assumed to be true,
except regarding damages. Nishimatsu, 515 F.2d at 1206; see also United States v. Shipco Gen.,
Inc., 814 F.2d 1011, 1014 (5th Cir. 1987).
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Tex. Aug. 5, 2010) (citing Memon v. Allied Domecq QSR, 385 F.3d 871, 873 (5th
Cir. 2004))). To date, Plaintiff has not hired counsel.
In response to Plaintiff’s failure, Defendant filed a motion to dismiss
Plaintiff’s 	claims 	and 	motion 	for 	entry 	of 	default 	and 	default 	judgment 	on
Defendant’s counterclaims. ECF Nos. 33, 34. Courts use Rule 41(b) to dismiss
unrepresented 	corporations’ 	claims 	and 	enter 	default 	against 	unrepresented
corporations on counterclaims. See Transatlantica Commodities Pte Ltd. v. Hanwin
Shipping Ltd., No. 4:22-CV-1983, 2023 WL 8007125, at *2 (S.D. Tex. Oct. 24,
2023), adopted sub nom. Translantica Commodities PTE LTD v. Hanwin Shipping
Ltd., No. CV H:22-1983, 2023 WL 8007996 (S.D. Tex. Nov. 16, 2023) (dismissing
unrepresented corporation’s claims after court warning); K3 Logistics, LLC v.
Cryptotherm Mfg., Inc. v. Clayton Bush & NGL Water Sols., No. 24-CV-00001-DC-
RCG, 2024 WL 3050388, at *2 (W.D. Tex. May 28, 2024), adopted sub nom. K3
Logistics, LLC v. Cryptotherm Mfg., Inc., No. MO:24-CV-00001-DC, 2024 WL
3050365 (W.D. Tex. June 18, 2024) (“Other courts have found default judgment to
be the appropriate remedy when a corporation fails, after court warning, to appoint
counsel.”) (citing Henderson v. Fenwick Protective Inc., No. 3:14-CV-505-M-BN,
2015 WL 3439166, at *2 (N.D. Tex. May 28, 2015) (citing PalWeb Corp. v. Vimonta
AG, No. 3:00-cv-1388-P, 2003 WL 21992488, at *1 (N.D. Tex. Aug. 19, 2003);
Mount Vernon Fire Ins. Co. v. Obodoechina, Civ. A. No. 08-3258, 2009 WL
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424326, at *1 (S.D. Tex. Feb.19, 2009))). Because Plaintiff failed to prosecute this
action and comply with the Court’s orders, the Court recommended that Plaintiff’s
claims be dismissed and default be entered against Plaintiff on Defendant’s
counterclaims under Federal Rule of Civil Procedure 41(b). R&R, ECF No. 35. The
Court now takes up the motion for default judgment. ECF No. 34.
The Court entered default against Plaintiff for its failure to timely retain
counsel, and therefore, disregards its answer—no material facts are in dispute. ECF
No. 13, 35. Further, Plaintiff’s continued failure to retain counsel despite numerous
opportunities to do so has brought the adversarial process to a halt and prejudiced
Defendant’s interests. The grounds for default are clearly established in that Plaintiff
has been given numerous opportunities and numerous weeks to retain counsel with
Court’s admonishment that failure to obtain counsel may result in default judgment
on Defendant’s counterclaims. The record shows that Plaintiff’s many failures are
not the result of a good faith mistake or excusable neglect—instead, the motions to
withdraw note Plaintiff’s failure to cooperate in the litigation and failure to pay. ECF
Nos. 13, 31. Given Plaintiff’s repeated failure to retain counsel despite the Court’s
admonishments, default judgment is not overly harsh in these circumstances. Default
judgment is procedurally warranted under these circumstances. See K3 Logistics,
2025 WL 365798, at *3; see also Sweeney v. Hoy Health LLC, No. SA-22-CV-
00323, 2023 WL 11904104, at *3 (W.D. Tex. Nov. 3, 2023) (“When a corporate
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defendant fails to obey orders to obtain counsel after being warned of the
consequences of failing to do so, the district court may properly strike its defenses
or enter default.”).
B. 	Defendant Presented Colorable Claims.
Due to the entry of default, Plaintiff is deemed to have admitted the allegations
outlined in Defendant’s counterclaims. See K3 Logistics, 2025 WL 365798, at *4
(citing 	Nishimatsu Constru., 515 F.2d at 1206). Even so, the Court reviews
Defendant’s pleadings to determine whether it pleads a sufficient basis for its
counterclaims. See id. To guide this analysis, the Court considers Rule 8, which is
less rigorous than Rule 12(b)(6). Id. (quoting Wooten v. McDonald Transit Assocs.,
Inc., 788 F.3d 490, 498 (5th Cir. 2015) (internal citations and footnote omitted)
(alteration in original)). Defendant alleged counterclaims for breach of contract,
money had and received, and breach of warranty. ECF No. 4.
1. 	Defendant Established a Breach of Contract Claim.
“In Texas, a breach of contract claim requires: (1) the existence of a valid
contract; (2) performance or tendered performance by the plaintiff; (3) breach of the
contract by the defendant; and (4) damages sustained by the plaintiff as a result of
the breach.” K3 Logistics, 2025 WL 365798, at *4 (citing Smith Intern., Inc. v. Egle
Grp., LLC, 490 F.3d 380, 387 (5th Cir. 2007) (quoting Valero Mktg. & Supply Co.
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v. Kalama Int’l, LLC, 51 S.W.3d 345, 351 (Tex. Ct. App.—Houston [1st. Dist.]
2001, reh’g overruled))).
Here, Defendant alleges that it entered into an agreement with Plaintiff where:
[Plaintiff] sold product to [Defendant] on open account with the
understanding that [Defendant] would market and sell [Plaintiff]’s
products to [Defendant] customers. Once a sale was made, [Plaintiff]
was responsible for pulling, packing, shipping, and delivering the
products to [Defendant] at its jobsites, as well as accurately invoicing
TCS for all [Plaintiff] Products shipped. [Defendant] was responsible
for receiving and logging all [Plaintiff] Products into inventory upon
delivery 	at 	the 	[Defendant] 	jobsites 	and 	remitting 	payments 	to
[Plaintiff].
ECF No. 4 ¶ 19. Defendant alleges that it fulfilled its contractual obligations, but
Plaintiff “repeatedly failed to properly account for:” (1) the correct amount and price
of the products shipped to Defendant; (2) the defective and inoperative products that
Defendant returned to Plaintiff; (3) commissions due to Defendant; and (4) the
proper application of payments made by Defendant in satisfaction of its open
invoices. ECF No. 4 ¶ 21. Defendant also alleges that Plaintiff “failed to track
backorders for []Product and subsequently billed [Defendant] more than once for the
same product once the backorder was fulfilled.” ECF No. 4 ¶ 22. Plaintiff’s errors
directly and proximately caused Defendant to suffer damages in the amount of
$138,015.58. ECF No. 4 ¶ 23. Defendant established a breach of contract claim
against Plaintiff. See K3 Logistics, 2025 WL 365798, at *4.
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2. 	Defendant 	Established 	a 	Claim 	for 	Money 	Had 	and
Received.
“A cause of action for money had and received is equitable in nature.” MS
Int’l, Inc. v. EDCO Express Logistics, LLC, No. 5:23-CV-00088, 2024 WL 5036660,
at *3 (S.D. Tex. May 20, 2024) (quoting Edwards v. Mid-Continent Office Distribs.,
L.P., 252 S.W.3d 833, 837 (Tex. App. 2008)). A finding in Defendant’s favor may
lead to equitable relief as opposed to damages, which here would be the restitution
of the funds. See id. (citing Friberg-Cooper Water Supply Corp. v. Elledge, 197
S.W.3d 826, 832 (Tex. App. 2006), rev’d on other grounds, 240 S.W.3d 869 (Tex.
2007)).
In Texas, “[t]he question, in an action for money had and received, is to which
party does the money, in equity, justice, and law, belong. All [Defendant] need show
is that [Plaintiff] holds money which in equity and good conscience belongs to him.”
See id. (quoting Bank of Saipan v. CNG Fin. Corp., 380 F.3d 836, 840 (5th Cir.
2004)). “[I]n some circumstances, overpayments under a valid contract may give
rise to a claim for restitution or unjust enrichment.” Id. (quoting Sw. Elec. Power
Co. v. Burlington N. R.R., 966 S.W.2d 467, 470 (Tex. 1998) (collecting cases)).
“[O]verpayment typically falls outside a contract’s terms and, in that event, the
contract would not ‘cover the subject matter of the parties’ dispute.” Id. (quoting
Villarreal v. First Presidio Bank, 744 F. App’x 204, 207 (5th Cir. 2018) (citing
Fortune Prod. Co. v. Conoco, Inc., 52 S.W.3d 671, 684 (Tex. 2000))).
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Here, Plaintiff alleged that there is a valid agreement controlling payments
between the parties, but due to Plaintiff’s improper accounting, Defendant overpaid
Plaintiff in the amount of $138,015.58. ECF No. 4 ¶¶ 25–28. Defendant established
a claim for money had and received against Plaintiff.
3. 	Defendant Established a Breach of Warranty Claim.
To establish a claim for breach of the implied warranty of merchantability
under Texas law Defendant must prove: “(1) that the merchant sold goods to the
plaintiff; (2) that the goods were unmerchantable; (3) that the plaintiff notified the
defendant of the breach; and (4) that the plaintiff suffered injury proximately caused
by the breach.” Decker v. Milwaukee Elec. Tool Corp., No. 2:21-CV-00181, 2024
WL 5203035, at *2 (S.D. Tex. Apr. 25, 2024) (quoting Andrews v. Dial Corp., 143
F. Supp. 3d 522, 527 (W.D. Tex. 2015) (citing Coppock v. Nat’l Seating & Mobility,
Inc., 121 F. Supp. 3d 661, 668 (W.D. Tex. 2015); Hyundai Motor Co. v. Rodriguez
ex rel. Rodriguez, 995 S.W.2d 661, 667 (Tex. 1999)); citing Williams v. Hyster-Yale
Grp., No. 4:21-CV-1442, 2024 WL 1144889, at *11 (S.D. Tex. Feb. 9, 2024),
adopted, No. 4:21-CV-01442, 2024 WL 1144267 (S.D. Tex. Mar. 13, 2024)).
“Under Texas law, goods are merchantable if the goods ‘are fit for the
ordinary purposes for which such goods are used[.]’” Decker, 2024 WL 5203035, at
*2 (quoting Tex. Bus. & Com. Code § 2.314(b)(3); citing Andrews, 143 F. Supp. 3d
at 527). “Proof of a defect is required in an action for breach of implied warranty of
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merchantability under § 2.314(b)(3).” Id. (quoting Andrews, 143 F. Supp. 3d at 527-
28 (quoting Plas–Tex, Inc. v. U.S. Steel Corp., 772 S.W.2d 442, 444 (Tex. 1989));
citing Moreno v. Allison Med., Inc., No. 3:20-CV-00300, 2022 WL 3702061, at *7
(S.D. Tex. Aug. 9, 2022), adopted, No. 3:20-CV-00300, 2022 WL 3703858 (S.D.
Tex. Aug. 26, 2022); Moncibaiz v. Pfizer Inc., 532 F. Supp. 3d 452, 462 (S.D. Tex.
2021)).
Defendant alleges that Plaintiff was aware of Defendant’s customers intended
use of the products, Plaintiff sold products to Defendant and made an implied
covenant of merchantability that the product was “fit for installation into ceilings for
school district facilities and other commercial buildings.” ECF No. 4 ¶¶ 33, 34.
Relying 	on 	Plaintiff’s 	representations, 	Defendant 	sold 	the 	products 	to 	their
customers “with a lifetime warranty on its fabricated container and a limited
warranty on its individual components,” but later learned that many of the product’s
components were “were defective, inoperative, or unsuited for [Defendant]’s
purposes.” ECF No. 4 ¶¶ 35, 36. 	Upon discovering the defective products,
Defendant notified Plaintiff of Plaintiff’s breach of merchantability and Defendant
had to replace the defective products from its own inventory. ECF No. 4 ¶¶ 36, 37.
Defendant alleges that cost of the goods necessary to replace the defective products
was no less than $50,394.18, which is included in its requested $138,015.558. ECF
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No. 4 ¶ 37. 3 Defendant established a breach of implied warranty claim against
Plaintiff.
III. 	DEFENDANT IS ENTITLED TO DAMAGES.
After finding default judgment can be entered, the Court must determine what
form of relief, if any, Defendant is entitled to. Hancock Whitney Bank v. ECS
Executive Corp Services, No. 4:21-CV-00932, 2022 WL 1211375, at *4 (S.D. Tex.
Apr. 25, 2022) (citing Nasufi v. King Cable Inc., No. 3:15-CV-3273-B, 2017 WL
6497762, at *2 (N.D. Tex. Dec. 19, 2017)). Defendant bears the burden of proving
the amount of damages and “must establish the necessary facts, either through
detailed affidavits or an evidentiary hearing, to show its damages are ‘capable of
mathematical calculation.’” See id. (citing U.S. for Use of M-CO Constr., Inc. v.
Shipco Gen., Inc., 814 F.2d 1011, 1014 (5th Cir. 1987); United Artists Corp. v.
Freeman, 605 F.2d 854, 857 (5th Cir. 1979)). “If a calculation can be made ‘with
certainty by reference to the pleadings and supporting documents,’ a hearing to
determine damages is unnecessary.” Id. (quoting James v. Frame, 6 F.3d 307, 311
3 Actions for breach of the implied warranty of merchantability permit recovery of actual damages.
Advon Corp. v. Coopwood's Air Conditioning Inc., 517 F. Supp. 3d 656, 668 (S.D. Tex. 2021)
(citing Polaris Indus., Inc. v. McDonald, 119 S.W.3d 331, 336 (Tex. App.—Tyler 2003, no pet.)
(citations omitted)). “Actual damages include direct damages, which are measured by the
difference between the value of the goods accepted and the value of the goods if they had been as
warranted.” Id. (quoting Polaris Indus., Inc. v. McDonald, 119 S.W.3d at 336). “Actual damages
also include incidental and consequential damages, such as foreseeable lost profits, personal injury,
and property damage caused by the breach.” Id. (quoting Polaris Indus., Inc. v. McDonald, 119
S.W.3d at 336–37 (citations omitted)).
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(5th Cir. 1993) (quoting Frame v. S-H, Inc., 967 F.2d 194, 204 (5th Cir. 1992))).
Defendant requests $138,015.58 in principal, prejudgment interest accruing at
a rate of 4.26% until the entry of default judgment and 4.26% post-judgment interest.
ECF No. 34 at 8. In support of its request, Defendant provides: (1) the affidavit of
Emory C. Powers, Defendant’s attorney, ECF No. 34-1; (2) Declaration of Lee
Thomas, Defendant’s Chief Operating Officer, ECF No. 34-2; and (3) a copy of
relevant invoice details, corrections, and explanations, ECF No. 34-3.
Because the amount sought can be calculated from review the pleadings and
supporting documents on file, there is no need for an evidentiary hearing. See United
Cmty. Bank, Inc. v. Loven Bf, Inc., No. 3:20-CV-00076, 2020 WL 5045310, at *3
(S.D. Tex. July 22, 2020), adopted, No. 3:20-CV-00076, 2020 WL 5039496 (S.D.
Tex. Aug. 26, 2020); Hancock Whitney Bank v. ECS Executive Corp Services, No.
4:21-CV-00932, 2022 WL 1211375, at *4 (S.D. Tex. Apr. 25, 2022).
A. 	Defendant is Entitled to Monetary Damages.
In support of its claim for monetary damages, Defendant’s counterclaim
allegations and Defendant’s COO’s declaration establish that Plaintiff required
$138,015.58 overpayment from Defendant, which Defendant overpaid. Plaintiff
now owes Defendant this overpayment. ECF Nos. 4 ¶¶ 23, 28, 30; 34-2. The
$138,015.58 figure has not been disputed by Plaintiff. Defendant’s COO declared
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that he reviewed invoices and audits and based on his review, Plaintiff owes
Defendant $138,015.58 in overpayments. ECF No. 34-2.
Entering default judgment with respect to damages is appropriate. Plaintiff
owes Defendant $138,015.58. See VASS Pipe & Steel Co., Inc. v. KN Equip., Inc.,
No. 4:23-CV-0708, 2023 WL 5534197, at *1 (S.D. Tex. July 28, 2023), adopted,
No. 4:23-CV-00708, 2023 WL 5532803 (S.D. Tex. Aug. 25, 2023) (accepting
uncontested pled allegations and declaration as sufficient evidence of damages for
unpaid invoices).
B. 	Defendant is Entitled to Pre- and Post-Judgment Interest.
Defendant also asks for pre- and post-judgment interest. “In a diversity case
such as this, prejudgment interest is governed by state law and postjudgment interest
is governed by federal law, specifically 28 U.S.C. § 1961(a).” VASS Pipe & Steel
Co., 2023 WL 5534197, at *1 (citing Craig v. GACP II, L.P., No. 3:19-CV-0058-G,
2022 WL 1778392, at *5 (N.D. Tex. June 1, 2022) (citing Bos. Old Colony Ins. Co.
v. Tiner Assocs. Inc., 288 F.3d 222, 234 (5th Cir. 2002))). “Under Texas law, unless
a contract specifies the rate of prejudgment interest, ‘[p]rejudgment interest accrues
at the rate for postjudgment interest and it shall be computed as simple interest.’” Id.
(citing Oden v. Wellfirst Techs., Inc., No. 2:20-CV-00034, 2022 WL 2375707, at *6
(S.D. Tex. June 3, 2022) (internal citation omitted)).
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The postjudgment interest rate in Texas as of Defendant’s filing of its motion
for default judgment is 3.65%. ECF No. 34. Therefore, prejudgment interest should
be awarded on $138,015.58 from the date of the counterclaim filing, October 4,
2024, through the date of entry of final judgment at the rate of 3.65%, as provided
by Texas law. See VASS Pipe & Steel Co., Inc., 2023 WL 5534197, at *1.
Pursuant to 28 U.S.C. § 1961(a), postjudgment interest on a federal judgment
should be awarded “at the rate equal to the weekly average 1-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.” This rate is
currently 	3.66%. 	See 	https://www.txs.uscourts.gov/page/post-judgment-interest-
rates (last visited November 5, 2025).
IV. 	CONCLUSION
The Court recommends that Defendant’s Motion for Default Judgment, ECF
No. 34, be GRANTED. Defendant should have judgment against Plaintiff in the
following amounts:
x 	$138,015.58 in damages,
x 	pre-judgment interest at a rate of 3.65% per annum, and
x 	post-judgment interest at a rate of 3.66% per annum.
In addition, the Court ORDERS that the Joint Pretrial Order deadline and
Docket Call date contained int eh Amended Scheduling Order< ECF No. 30, are
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VACATED.
The 	Parties 	have 	fourteen 	days 	from 	service 	of 	this 	Report 	and
Recommendation to file written objections. 28 U.S.C. § 636(b)(1)(C); FED . R.
CIV . P. 72(b). Failure to file timely objections will preclude review of factual
findings or legal conclusions, except for plain error. Quinn v. Guerrero, 863 F.3d
353, 358 (5th Cir. 2017).
Signed at Houston, Texas, on November 17, 2025.
______________________________
Dena Hanovice Palermo
United States Magistrate Judge
7, 2025.
_______	________	_____________________
Dena Hanovice Palermo
United States Magistrate Judge
Case 4:24-cv-03678 Document 38 Filed on 11/17/25 in TXSD Page 17 of 17