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Deloney v. Chase

United States District Court, W.D. Arkansas, Texarkana Division

September 11, 2017

JERRY DELONEY and PEGGY DELONEY PLAINTIFFS
v.
DENNIS CHASE and CHASEMASTER CORPORATION DEFENDANTS

          ORDER

          SUSAN O. HICKEY, UNITED STATES DISTRICT JUDGE.

         Before the Court is Plaintiffs' request for damages made in Plaintiffs' Supplemental Motion for Default Judgment as to Defendants Dennis Chase and Chasemaster Corporation (ECF No. 30). Also before the Court are Plaintiffs' Motion for Attorney's Fees and Costs (ECF No. 31) and Plaintiffs' Supplemental Motion for Attorney's Fees and Costs (ECF No. 35). The Court finds these matters ripe for consideration.

         I. BACKGROUND

         In their Complaint, Plaintiffs originally named as Defendants (1) Dennis Chase, (2) Chasemaster Corporation, (3) William Hallack, Jr., (4) Ronald Novack, Jr., and (5) Juli Anne Novack. ECF No. 1, p. 1. Plaintiffs are residents of Arkansas. ECF No. 1, ¶ 1. All of the originally named Defendants are residents of Louisiana. ECF No. 1, ¶¶ 2-6, 24. Defendant Dennis Chase was served on February 4, 2016, but failed to respond or enter an appearance. ECF No. 6. Defendant Chasemaster Corporation was served through its registered agent on February 8, 2016, but failed to respond or enter an appearance. ECF No. 7. On April 28, 2016, the Court granted Plaintiffs' motion to voluntarily dismiss Defendants Ronald Novack, Jr., and Juli Anne Novack, as Plaintiffs claimed they were unable to perfect service upon the Novacks. ECF No. 19. Likewise, on August 30, 2016, the Court dismissed Defendant William Hallack, Jr., for lack of personal jurisdiction. ECF No. 28.

         Plaintiffs subsequently moved for default judgment on their breach-of-contract claim and the Court entered default judgment on that claim against Defendants Chase and Chasemaster Corporation on February 1, 2017. ECF No. 32. However, the Court's grant of default judgment was to liability only, as the Court determined that a damages hearing was necessary because, although Plaintiffs had plead a breach of contract claim, they had not “provided the Court with evidence establishing the terms and provisions of the contract at issue” so that the Court could determine damages. ECF No. 32. The Court held an evidentiary damages hearing on May 26, 2017 (“hearing”). Plaintiffs attended that hearing and provided the Court with various exhibits they claim establish the terms of their “investment agreement” with Defendants and show the amount of damages to which they are entitled. Defendants did not appear at the hearing.

         The Court has previously outlined the factual background, as alleged in the unanswered Complaint, that gave rise to this matter:

In Plaintiffs' Complaint, they assert that they are African-American poultry farmers. ECF No. 1. They [state] that the Farm Service Agency (“FSA”), “an arm of the United States Department of Agriculture (“USDA”)” failed to timely process their loan applications and later denied their applications because they are African-American, in violation of the Equal Credit Opportunity Act, 15 U.S.C. §§ 1691, et seq. ECF No. 1, ¶ 12. “On July 24, 2008, and as a result of the FSA's discrimination, [Plaintiffs] filed a pro se civil rights complaint with the Office of Adjudication of the USDA.” ECF No. 1, ¶ 13. Defendant Dennis Chase, holding himself out as an expert on FSA procedure and protocol, subsequently contacted Plaintiffs and began “advising them regarding the FSA and how to proceed before the Office of Adjudication.” ECF No. 1, ¶ 14. Plaintiffs later hired Defendant Chase, acting both individually and through Defendant Chasemaster Corporation, to represent them before the USDA. ECF No. 1, ¶¶ 15, 16. The USDA subsequently ruled in Plaintiffs' favor and awarded them $460, 738 in damages. ECF No. 1, ¶ 17. Plaintiffs gave Defendants Chase and Chasemaster Corporation a 40% fee of $184, 295. ECF No. 1, ¶ 19.
Defendant Chase also convinced Plaintiffs to allow him to invest, on their behalf, $110, 000 of their award at 7.25% interest. ECF No. 1, ¶ 20. Defendant Chase “also indicated that he would assign [Plaintiffs] a $200, 000 mortgage as collateral to secure their investment.” ECF No. 1, ¶ 20. Plaintiffs and Defendant Chase entered an agreement in August of 2011 whereby Defendant Chase would invest Plaintiffs' $110, 000 at 7.25% interest on their behalf and would make monthly payments to Plaintiffs of $1, 000.[1] ECF No. 1, ¶ 20. From September of 2011 to August of 2012, Plaintiffs received monthly payments of $1, 000. ECF No. 1, ¶ 22. Defendant Chase held a mortgage on property owned by his daughter and son-in-law and assigned that mortgage to Plaintiffs as collateral. ECF No. 1, ¶ 24. Plaintiffs state that they have never seen the property and do not know the value of the property. ECF No. 1, ¶ 25.
After the agreed upon monthly payments stopped, Plaintiffs demanded the return of their $110, 000. ECF No. 1, ¶ 25. In lieu of returning the $110, 000, Defendant Chase offered to deed the property owned by his daughter and son-in-law to Plaintiffs. ECF No. 1, ¶ 25. A Deed in Lieu of Foreclosure was drafted and sent to Plaintiffs. ECF No. 1, ¶ 26.
Plaintiffs filed their Complaint on November 3, 2015. ECF No. 1. As to Defendants Dennis Chase and Chasemaster Corporation, Plaintiffs alleged causes of action for: (1) breach of contract; (2) promissory estoppel; (3) unjust enrichment/assumpsit; (4) conversion; (5) breach of fiduciary duty; and (6) fraud. ECF No. 1.

ECF No. 32.

         In the Court's previous order granting default judgment on the issue of liability, the Court noted that “Plaintiffs [had] not provided the Court with evidence establishing the terms and provisions of the contract at issue, ” and that a hearing to determine damages would be necessary. Accordingly, the Court instructed Plaintiffs “to provide the Court with all relevant documentation concerning the contract at issue including (1) the contract itself; (2) promissory notes assigned to Plaintiffs; (3) mortgages Plaintiffs may hold as collateral for their investment and information about the mortgaged property such as location and value; and (4) any other documentation showing the amount of Plaintiffs' damages.” In accordance with this direction, Plaintiffs introduced various exhibits in the course of the hearing on damages that Plaintiffs contend establish the terms of the “investment agreement” and otherwise show their damages.

         II. DISCUSSION

         A. ...


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