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BMO Harris Bank N.A. v. Alton Bean Trucking, Inc.

United States District Court, W.D. Arkansas, Hot Springs Division

April 11, 2017

BMO HARRIS BANK N.A. PLAINTIFF
v.
ALTON BEAN TRUCKING, INC. and GARY BEAN DEFENDANTS

          JUDGMENT

          Susan O. Hickey, United States District Judge

         Before the Court is Plaintiff BMO Harris Bank N.A. (“Plaintiff”)'s Motion for Default Judgment. (ECF No. 12). Defendants Alton Bean Trucking, Inc. (“ABT”) and Gary Bean (“Bean”) have not responded to the motion, and the time to do so has passed. On April 6, 2017, the Court held a hearing on Plaintiff's motion. (ECF No. 17). The Court finds the matter ripe for consideration.

         I. BACKGROUND

         On November 23, 2016, Plaintiff filed this lawsuit against ABT and Bean, alleging that ABT and Bean are in default under certain loan agreements and guaranties for failure to pay the amounts due thereunder, and seeking replevin, specific performance, injunctive relief, and breach-of-contract damages. Despite valid service of the complaint, ABT and Bean failed to file an answer or other responsive pleading. On April 4, 2017, the Clerk of Court entered default against ABT and Bean. (ECF No. 16). Plaintiff now asks the Court to render default judgment against ABT and Bean. (ECF No. 12).

         II. DEFAULT JUDGMENT

         A district court may enter a default judgment when a party fails to appropriately respond in a timely manner. See, e.g., Inman v. Am. Home Furniture Placement, Inc., 120 F.3d 117, 119 (8th Cir. 1997). If the court determines that a defendant is in default, the factual allegations of the complaint, except those relating to the amount of damages, will be taken as true. Everyday Learning Corp. v. Larson, 242 F.3d 815, 818 (8th Cir. 2001). However, the court must ensure that “the unchallenged facts constitute a legitimate cause of action” prior to entering final judgment. See Murray v. Lene, 595 F.3d 868, 871 (8th Cir. 2010).

         ABT entered into loan agreements (the “Agreements”) with General Electric Capital Corporation (“GECC”) in 2011, 2012, and 2013, and with GE Capital Commercial, Inc. in 2012 (“GE Commercial, ” and together with GECC, “GE Capital”) for the purchase of certain tractors and trailers. The tractors and trailers identified in the Agreements served as collateral (collectively, the “Collateral”). ABT granted GE Capital a first-priority security interest in the Collateral, which GE Capital properly perfected by possessing the Certificates of Title. Bean guaranteed the past, present, and future performance of ABT under the Agreements, including the payment of all amounts owed (the “Guaranties”).

         Effective December 1, 2015, GE Capital transferred and assigned to Plaintiff all of their rights, titles, and interests in and to their accounts with ABT, including without limitation, the Agreements, the Guaranties, and GE Capital's security interest in the Collateral. Plaintiff is GE Capital's successor-in-interest with respect to all rights, claims, and interests related to ABT and Bean in this action. Thus, the Agreements are valid and fully enforceable contracts between Plaintiff and ABT.

         Plaintiff performed all terms and conditions to be performed under the Agreements. ABT defaulted under the Agreements for its failure to pay the amounts due thereunder. Bean defaulted under the Guarantees for his failure to pay the amounts due under the Agreements and the Guarantees. The Agreements provide that, upon default, ABT is obligated to immediately turn over possession of the Collateral to Plaintiff. Plaintiff has recovered some, but not all, of the Collateral. The Agreements also provide that, upon default, Plaintiff is entitled to recover interest on all unpaid amounts; late charges and other fees; costs of retaking, holding, and disposing of the Collateral; and reasonable attorneys' fees and costs incurred in enforcing Plaintiff's rights.

         The Court has read the pleadings and the papers on file and accordingly finds that Plaintiff has demonstrated sufficient facts to support legitimate causes of action against ABT and Bean.

         III. DAMAGES

         After determining that a judgment by default should be entered, the Court should determine the amount and character of the recovery. Fed.R.Civ.P. 55(b)(2)(B); see also Am. Red Cross v. Cmty. Blood Ctr., 257 F.3d 859, 864 (8th Cir. 2001) (“[W]hen a default judgment is entered on a claim for an indefinite or uncertain amount of damages, facts alleged in the complaint are taken as true, except facts relating to the amount of damages, which must be proved in a supplemental hearing or proceeding.”) (internal quotation marks omitted). Because the damages in this case were uncertain, the Court held a hearing to determine the appropriate recovery. At the hearing, Plaintiff's counsel presented the Court with an Affidavit of Indebtedness, as well as affidavits regarding attorneys' fees and costs.

         A. Collateral

         The Agreements provide that, upon default, ABT is obligated to immediately turn over to Plaintiff possession of the Collateral. Pursuant to the Agreements, upon default, Plaintiff has the right to “enter any premises where the [Collateral] may be without judicial process and take possession thereof.” Certain Collateral has been returned to or repossessed by Plaintiff. The items have been liquidated and the net proceeds applied to the indebtedness owed. ABT ...


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