First Southern National Bank, N.A. v. Catsam et al

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
First Southern National Bank, N.A.
v. 	Case No. 19-cv-139-PB
Nick A. Catsam,
John A. Catsam, and
Joseph Catsam
REPORT AND RECOMMENDATION
Plaintiff First Southern National Bank, N.A. (“First
Southern”) holds a promissory note on which the borrower
defaulted. 	Defendants Nick A. Catsam, John A. Catsam and Joseph
Catsam (“the Catsams”), executed a personal Guarantees to help
secure the debt underlying the note. 	In February 2019, First
Southern filed suit to collect the amount due on the note,
asserting claims of breach of contract, breach of the covenant
of good faith and fair dealing, and unjust enrichment. 	See
Complaint (Doc. No. 1). 	The defendants have defaulted. 	Doc.
no. 8. 	Plaintiff’s unopposed motion for default judgment (Doc.
No. 10) is before the undersigned magistrate judge for a report
and recommendation. 	For the reasons that follow, the district
judge should grant plaintiff’s motion for default judgment.
I. 	Standard of Review
After default is entered and when, as here, the amount at
issue is not a sum certain, “the party must apply to the court
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for a default judgment.” 	Fed. R. Civ. P. 55(b)(2); see also KPS
& Assocs., Inc. v. Designs by FMC, Inc., 318 F.3d 1, 18-19 (1st
Cir. 2003).1 	“Although a defaulting party admits the factual
basis of the claims asserted against it, the defaulting party
does not admit the legal sufficiency of those claims.” 	10 James
Wm. Moore, Moore's Federal Practice § 55.32[1][b] (3d ed. 2013).
Before entering default judgment, the court must determine
whether “[t]he claimant [has] state[d] a legally valid claim for
relief.” 	Id.; see also Ramos–Falcon v. Autoridad de Energia
Electrica, 301 F.3d 1, 2 (1st Cir. 2002).
II. 	Background
By virtue of their default, defendants have admitted the
following facts, as set forth in plaintiff’s Complaint. 	The
defendants are members of Raintree Recreational Ventures, LLC
(“RRV”). 	In 2003 RRV purchased the Newport Golf Club, forming
Newport Golf Club, Inc. (“NGCI”) to operate the club.
On January 30, 2009, RRV and NGCI entered into a loan
agreement with Mascoma Savings Bank (“Mascoma”), for Loan No.
2038090 in the principal amount of $1,549,765.00. 	In return,
RRV and NGC (collectively “Borrower”) gave Mascoma a promissory
note, whereby Borrower promised to repay the principal, plus
1 Although the amount of the debt is a sum certain, plaintiff’s
request for costs and fees is not.
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interest calculated pursuant to an “Interest Calculation
Method,” in ten (10) years, with a final payment due November
28, 2019. 	The note is secured by a mortgage, an assignment of
rents and a fixture filing on real estate located at 112 Unity
Road, Newport, NH (the club’s location), and a security interest
in all the business assets of NGCI. 	The mortgage and related
UCC filings were recorded in the Sullivan County New Hampshire
Registry of Deeds and the New Hampshire Secretary of State’s
office.
The note is also secured by a “Continuing Guarantee of
Payment and Performance” (the “Guaranty”), which each of the
Defendants executed. The Guaranty provides:
For good and valuable consideration, Guarantor
absolutely and unconditionally guarantees full and
punctual payment and satisfaction of the Indebtedness
of Borrower, or any one or more of them, to Lender,
and the performance and discharge of all Borrower’s
obligations under the Note and related Documents. This
is a guaranty of payment and performance and not of
collection, so Lender can enforce this Guaranty even
when Lender has not exhausted Lender’s remedies
against anyone else obligated to pay the Indebtedness
or against any collateral securing the Indebtedness .
. . . Guarantor will make any payment to Lender or its
order, on demand . . . . Under this Guaranty,
Guarantor’s liability is unlimited and Guarantor’s
obligations are continuing.
The Guaranty binds the Guarantor to current and future
“Indebtedness,” which is defined in relevant part as:
[A]ll of the principal amount outstanding from time to
time and at any one or more times, accrued unpaid
interest thereon and all collection costs and legal
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expenses related thereto permitted by law …
‘Indebtedness’ includes … future advances, loans or
transactions that renew, extend, modify, refinance,
consolidate or substitute these debts, liabilities and
obligations . . . .
The Guaranty is binding on the Guarantor unless and until
the Guarantor revokes it in writing. 	Any revocation applies
only to new indebtedness created after actual receipt by the
Lender of the Guarantor’s written revocation.
The defendants each executed a Guaranty, personally
guaranteeing payment of the Indebtedness (“Guarantor” or
collectively the “Guarantors”). 	Under the Guaranty, the
Guarantors are jointly or severally or jointly and severally
liable for payment of the Promissory Note and all Indebtedness.
On July 19, 2012, Mascoma sold the Note to First Southern.
As part of that transaction, Mascoma assigned to First Southern
the mortgage, the rents, and the security interests referenced
in its UCC financing statements. 	The assigned mortgage and UCC
financing statements were filed with the Sullivan County
Registry of Deeds and the New Hampshire Secretary of State.
Mascoma also assigned to First Southern the Guaranty agreements
executed by the defendants.
After making timely payments through April 2018, the
Borrower failed to make its monthly payment due in May 2018 and
all payments thereafter. 	Under the terms of the Note, the
missed payment constitutes a default, which entitles the lender
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to accelerate the debt and demand payment of the entire unpaid
principal and all accrued interest. 	Between May and November
2018, First Southern unsuccessfully attempted to make
arrangements with the Borrower to cure the default. The Borrower
did not respond to First Southern’s efforts.
On December 21, 2018, after seven months of non-payment,
First Southern sent the Borrower a Notice of Default and Demand
for Payment (the “Notice of Default”), to accelerate the balance
on the Note and demand immediate payment in full of all
outstanding obligations. 	The Notice of Default was sent to, and
received by, all three defendants. 	First Southern demanded
immediate payment of $1,364,293.05, which included the principal
balance and unpaid interest due, plus late charges and
miscellaneous fees. 	To date, none of the principals of the
Borrower has contacted First Southern to make the demanded
payment or to seek to negotiate a repayment schedule.
After getting no response to the Notice of Default, First
Southern demanded payment under the Guaranty. 	On January 23,
2018, First Southern demanded, in writing, immediate payment in
full of all obligations due under the Promissory Note, for a
total amount due of $1,370,460.14. 	First Southern advised the
Guarantors that it would pursue all legal remedies to enforce
the Guaranty if payment was not made by February 6, 2019. 	None
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of the Guarantors responded. 	Neither did any of them revoke the
Guaranty.
First Southern commenced this lawsuit shortly thereafter.
All three defendants waived service of process. Doc. No. 7.
None of them, however, answered or otherwise appeared. 	The
Clerk of Court entered default against the defendant on April
25, 2019. 	See Fed. R. Civ. P. 55(a); LR 55.1.
III. 	Discussion
A. 	Breach of Contract
First Southern’s motion for default judgment seeks damages
for the defendants’ breach of their guaranty agreements. 	“A
breach of contract occurs when there is a failure without legal
excuse to perform any promise which forms the whole or part of a
contract.” 	Lassonde v. Stanton, 157 N.H. 582, 588, 956 A.2d 332
(2008) (quotation omitted). 	Given the admissions inherent in
defendants’ default, the court finds that the plaintiff has
successfully established its breach of contract claim.
B. Damages
First Southern seeks $667,708.63 in damages for defendants’
failure to honor their guaranty agreements. 	This amount
includes the remaining principal, interest, and late fees on the
note, and the costs of selling the subject property at
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foreclosure, less the $800,000 foreclosure sale price.
Pendygraft Decl. (Doc. No. 10-4) at 4-6. 	As plaintiff’s
submissions support this damage figure, the district judge
should award plaintiff this amount, plus any interest accruing
from July 3, 2019 (the date plaintiff filed its motion for
default judgment) through the date of judgment.
C. Attorney’s Fees and Costs
As previously noted, the terms of the guaranty agreements
obligate the defendants to pay First Southern’s collection costs
and legal expenses. 	Plaintiff requests $33,962.50 in attorney’s
fees and $594.20 in costs. Id. at 5; Pltff. Mot. (Doc. No. 10)
at 1. 	The defendants have not objected.
“The lodestar approach is the method of choice for
calculating fee awards.” 	Matalon v. Hynnes, 806 F.3d 627, 638
(1st Cir. 2015). 	Under this lodestar approach, a district court
first “calculate[s] the number of hours reasonably expended by
the attorneys for the prevailing party, excluding those hours
that are ‘excessive, redundant, or otherwise unnecessary.’”
Cent. Pension Fund of the Int'l Union of Operating Eng'rs &
Participating Emp'rs v. Ray Haluch Gravel Co., 745 F.3d 1, 5
(1st Cir. 2014) (quoting Hensley v. Eckerhart, 461 U.S. 424, 434
(1983)). 	The court then determines “a reasonable hourly rate or
rates — a determination that is often benchmarked to the
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prevailing rates in the community for lawyers of like
qualifications, experience, and competence.” 	Id. 	Multiplying
the results of these two inquiries yields the lodestar amount.
The court may then adjust the potential award based on factors
not captured in the lodestar calculation. 	See Hensley, 461 U.S.
at 434 & n.9; Coutin v. Young & Rubicam P.R., Inc., 124 F.3d
331, 337 (1st Cir. 1997).
Here, while the court finds that plaintiff counsel’s $275
hourly fee is reasonable, the court also notes several instances
of block billing, the “industry term used to describe the time-
keeping method by which an attorney lumps together the total
daily time spent working on a case, rather than itemizing the
time expended on specific tasks.” 	E.E.O.C. v. AutoZone, Inc.,
934 F. Supp. 2d 342, 354 (D. Mass. 2013) (citations and internal
quotes omitted).
Courts “disfavor[] block-billing, as it requires
“’decipher[ing].’” Conservation Law Found. v. Patrick, 767 F.
Supp. 2d 244, 253 (D. Mass. 2011) (quoting Marrotta v. Suffolk
Cty., 726 F. Supp. 2d 1, 7 n.7 (D. Mass. 2010)); see Lincoln-
Sudbury Reg’l Sch. Dist. v. W., Civ. No. 16-10724-FDS, 2018 WL
2023517, at *4 (D. Mass. May 1, 2018) (“The use of block billing
somewhat hinders the Court’s analysis of the reasonableness of
the time spent on each task.”). 	Such a practice warrants a
reduction in the number of compensable hours. 	See, e.g.,
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Torres-Rivera v. O’Neill-Cancel, 524 F.3d 331, 340 (1st Cir.
2008) (finding no error in district court’s 15% global reduction
of fee award as a sanction for block billing); Frost v. Town of
Hampton, Civ. No. 09-cv-339-JL, 2010 WL 1667290, at *4 (D.N.H.
(Apr. 23, 2010 (reducing claimed billable hours by “about 15%
due to block billing).
Here, roughly one-quarter of plaintiff’s counsel’s time is
block billed. Connolly Decl. (Doc. No. 10-5) at 4-11.2 	Rather
than globally reducing the fee award, the court applies a 15%
reduction only to thirty hours, a conservative calculation of
the block-billed time. 	A greater reduction is not warranted
because this plaintiff’s counsel provided “sufficiently detailed
explanations of its bills and the significant majority of
entries were not block billed.” 	Lincoln-Sudbury Reg’l Sch.
Dist., 2018 WL 2023517, at *4.
At the rate of $275 per hour, the block-billed amount
totals $8250. 	The court recommends a deduction of $1237.50 (15%
of $8250). 	The court finds that counsel’s itemization of costs
is reasonable. 	The district judge should therefore award
plaintiff’s counsel $32,725 in fees and $594.20 in costs.
2 Counsel’s invoices contain block-billed entries for: 12/7/18
(4.4 hrs); 12/20/18 (2.9); 1/22/19 (3.6); 2/8/19 (5.3); 2/25/19
(4.9); 3/28/19 (4.1); and 4/11/19 (4.9)
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IV. 	Conclusion
For the reasons set forth herein, the district judge should
grant plaintiff’s motion for default judgment against defendants
Nick A. Catsam, John A. Catsam, and Joseph Catsam, in the amount
of $667,708.63, plus interest accruing since July 3, 2019. 	The
district judge should also grant plaintiff’s request for
attorney’s fees and costs in the amount of $33,319.20.
Any objections to this Report and Recommendation must be
filed within fourteen days of receipt of this notice. 	See Fed.
R. Civ. P. 72(b)(2). 	The fourteen-day period may be extended
upon motion. 	Failure to file objections within the specified
time waives the right to appeal the district court’s order. 	See
Santos-Santos v. Torres-Centeno, 842 F.3d 163, 168 (1st Cir.
2016).
__________________________
Andrea K. Johnstone
United States Magistrate Judge
September 19, 2019
cc: 	counsel of record
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