McPherson et al v. Resolute Real Estate Investments, LLC

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
David M. McPherson and
Gail L. Gugel
v. Civil No. 18-cv-1221-JL
Resolute Real Estate Investments, Inc.
REPORT AND RECOMMENDATION
Plaintiffs David M. McPherson and Gail M. Gugel, holders of
a promissory note in the principal amount of $200,000, filed
this action in December 2018 to collect the unpaid note balance
from the borrower, defendant Resolute Real Estate Investments,
Inc. (“Resolute”). See Complaint (Doc. No. 1). The defendant
has defaulted. Doc. No. 5. Plaintiff’s unopposed motions for
default judgment (Doc. No. 8) 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
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
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Cir. 2003). “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. During
the fall of 2015, plaintiffs loaned $200,000 to Resolute, whose
principal, Philip LoChiatto, was a long-time acquaintance. The
purpose of the loan was to help LoChiatto, a construction
manager, complete a Resolute project. The loan was evidenced by
a written promissory note. The note provided for an annual
interest rate of the lesser of five percent, compounded
quarterly, or the maximum legal rate of interest. The note
permitted Resolute to prepay all outstanding principal and
interest at any time without penalty. In the absence of
prepayment, the full principal amount and all accrued interest
would be due and payable on November 21, 2015. Failure to pay
all amounts due at that time would result in a default which, if
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uncured within five days following the due date, would result in
an increase in the applicable annual interest rate to the lesser
of twelve percent, compounded annually, or the maximum legal
rate of interest. The default interest rate would accrue from
the date of the default forward. In addition to these terms,
the note also provided that the defaulting borrower would be
responsible for collections costs, including attorneys’ fees.
At LoChiatto’s request the payment deadline was extended by one
year, to November 21, 2016.
Resolute failed to pay the principal and accrued interest
by the extended due date. LoChiatto ignored plaintiff’s demands
for payment. This suit timely followed.
I. Discussion
A. Liability
The foregoing facts and the plain language of the note,
supported by plaintiffs’ affidavit (Doc. No. 8-2), establishes
Resolute’s liability for default on the note.
B. Damages
Plaintiff seeks to recover principal and interest totaling
$306,528,56 through May 1, 2019, plus interest through the date
of judgment. Affidavit (Doc. No. 8-2) ¶ 8. The supporting
documentation supports such an award. Id.
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C. Costs and Attorneys’ Fees
As previously noted, the terms of note allow the lender to
recoup its costs and fees from the borrower in the event of a
default. Plaintiffs seek $6,890.68 in fees and costs. Warecki
Decl. (Doc. No. 8-3). This represents roughly 10.5 hours of
billed time between December 17, 2018 and March 31, 2019, plus
approximately 3.5 hours of unbilled time accrued during April
2018.
“In determining the amount of fees that should be awarded
the court will consider, among other things, counsel's time and
labor, the complexity of the case, the amount recovered, and the
reasonableness of the time spent by counsel.” Sailor Music v.
Mai Kai of Concord, Inc., 640 F. Supp. 629, 636. (D.N.H. 1986).
Defendants have not objected to the reasonableness of the fees
and costs, and considering the factors listed above, the court
finds that the requested amounts are reasonable. Therefore, the
district judge should grant plaintiffs’ request for costs and
attorney's fees in the amount of $6,890.68.
II. Conclusion
For the reasons set forth herein, the district judge should
grant plaintiff’s motion for default judgment (Doc. No. 8) as
follows:
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1) the plaintiff shall recover from the defendant
$306,528.56, reflecting the note principal and interest through
May 1, 2019;
2) the plaintiff shall recover $6,890.68 in attorneys’ fees
and costs.
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
October 24, 2019
cc: Counsel of record
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