United States District Court, D. New Hampshire
Direct Capital Corp.
American Tank Co., Inc. and Lawrence Romero
REPORT AND RECOMMENDATION
K. Johnstone United States Magistrate Judge.
Direct Capital Corp. ("DCC") brought suit against
American Tank Co., Inc. ("ATC") and Lawrence Romero
("Romero") for an award of money damages to satisfy
a debt. On June 28, 2017, the Clerk of Court entered default
against ATC and Romero for failure to respond to service. See
doc. no. 13. DCCs motion for default judgment (doc. no. 14)
is now before the court for Report and Recommendation
pursuant to Federal Rule of Civil Procedure 55(b)(2). For the
reasons that follow, the court recommends that DCC s motion
be granted in part and denied without prejudice in part.
default is entered and when 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 EMC, Inc., 318
F.3d 1, 19 (1st Cir. 2003). Before entering a default
judgment, the court "may examine a plaintiff's
complaint, taking all well-pleaded factual allegations as
true, to determine whether it alleges a cause of
action." Ramos-Falcon v. Autoridad de Energia
Electrica, 301 F.3d 1, 2 (1st Cir. 2002) (quoting
Quirindongo Pacheco v. Rolon Morales, 953 F.2d 15, 16
(1st Cir. 1992)). The defaulted party is "taken to have
conceded the truth of the factual allegations in the
complaint . . . ." Ortiz-Gonzalez v.
Fonovisa, 277 F.3d 59, 62-63 (1st Cir. 2002)
(quoting Franco v. Selective Ins. Co., 184 F.3d 4, 9
n. 3 (1st Cir. 1999)). The defaulted party does not, however,
"admit the legal sufficiency of those claims." 10
James Wm. Moore, Moore's Federal Practice §
55.32[b] (3d ed. 2013). In other words, before entering
default judgment, the court must determine whether the
admitted facts state actionable claims. See Hop Hing
Procedures Inc. v. X & L Supermarket, Inc., No. CV
2012-1401 (ARR) (MDG), 2013 WL 1232919, at *2 (E.D.N.Y. Mar.
4, 2013); E. Armata, Inc. v. 27 Farmers Market,
Inc., No. 08-5212 (KSH), 2009 WL 2386074, at *2 (D.N.J.
July 31, 2009).
virtue of its default, defendants concede the following facts
alleged in DCC's complaint:
a New Hampshire corporation with a principal place of
business at 155 Commerce Way, Portsmouth, New Hampshire. See
doc. no. 1 ¶ 2. On or about April 23, 2015, DCC financed
ATC's purchase of various equipment as set forth in the
Master EFA Agreement No. ME00028654 (the
"Agreement"). See doc. no. 1 ¶ 5; doc. no.
1-2. Romero executed a personal guaranty of ATC's
obligations as guarantor of the Agreement. See doc. no. 1
¶ 6; doc. no. 1-2. The purchase involved over forty
pieces of equipment, including forklifts, welding machines,
air compressors and other equipment (the
"Equipment"). Doc. no. 1 ¶ 7. Pursuant to the
Agreement, ATC granted DCC a first priority, continuing
security interest in the Equipment as collateral for an
installment payment plan. See doc. nos. 1 ¶ 8, 1-1. The
installment payment plan required ATC to remit monthly
payments of $4, 231.01 to DCC for a term of 72 months.
about April 29, 2015, the parties amended the terms of the
payment schedule pursuant to an addendum. See doc. no. 1
¶ 9; doc. no. 1-4. On or about April 30, 2015, DCC,
through Corporation Service Company as its representative,
perfected its security interest in the Equipment by filing a
UCC Financing Statement with the Clerk of Court for Iberia
Parish, Louisiana. See doc. no. 1 ¶ 10; doc. no. 1-5. On
or about May 1, 2015, ATC took delivery of the Equipment at
2804 W. Admiral Doyle Drive, New Iberia, Louisiana 70562. See
doc. no. 1 ¶ 11. Beginning on or about May 25, 2015, ATC
made the monthly payments due under the Agreement, including
additional fees as appropriate. See doc. no. ¶¶
12-13; doc. no. 1-6. ATC made ten timely monthly payments
under the Agreement. See doc. no. 1-6.
failed to make monthly payments due under the Agreement
beginning on or about December 25, 2015. See doc. no. 1
¶ 13; doc. no. 1-6. On or about February 6, 2016, DCC
sent ATC and Romero a letter, which advised ATC of its
default under the Agreement. See doc. no. ¶ 14; doc. no.
1-1; doc. no. 1-7. In response, ATC made one full payment and
one partial payment, but failed to cure the default. See doc.
no. 1 ¶ 15. ATC remained in default as of March 25,
2016, see id., and at the time of the complaint, had
defaulted on four monthly payments, see doc. no. 1-6. Romero
has taken no action to cure ATCs default, notwithstanding the
guaranty he executed on ATCs behalf. See doc. no. 1 ¶
brings separate counts against ATC and Romero for breach of
contract. DCC seeks $225, 011.97 in damages for the
outstanding amount owed to it by defendants under the
Agreement, plus an additional award of $11, 340.00 in
attorney's fees and $552.51 in costs. The court considers
each count in turn before turning to the requests for
damages, fees, and costs.
Breach of Contract (ATC)
New Hampshire law, "a breach of contract occurs when
there is a failure without legal excuse to perform any
promise which forms the whole or party of a contract."
Axenics, Inc. v. Turner Constr., Co., 164 N.H. 659,
668 (2013). More specifically, the necessary elements of a
breach of contract claim are: "(1) A valid contract; (2)
material breach of its terms; and (3) resultant damages to
the party having the right to complain that the contract has
been broken." Campbell v.CGM, LLC,
No. 15-cv-088-JD, 2017 WL 78474, *1 at *6 (D.N.H. Jan. 9,
2017) (internal quotations and citations omitted). Upon