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Elliott v. Thompson Nat'l Props., LLC

United States District Court, D. Colorado

November 14, 2014

DARRELL S. ELLIOTT, DIANE ELLIOTT, and DARRELL S. ELLIOTT PSP, Plaintiffs,
v.
THOMPSON NATIONAL PROPERTIES, LLC, a Delaware limited liability company, TNP 12% NOTES PROGRAM, LLC, and TNP STRATEGIC RETAIL TRUST, INC., Defendants

For Darrell S. Elliott, Diane Elliott, Darrell S. Elliott PSP, Plaintiffs: Darrell S. Elliott, Nicole Caroline Daniels, Darrell S. Elliott, P.C., Denver, CO.

Thompson National Properties, LLC, a Delaware limited liability company, Defendant, Pro se, Costa Mesa, CA.

TNP 12% Notes Program, LLC, Defendant, Pro se, Costa Mesa, CA.

TNP Strategic Retail Trust, Inc., Defendant, Pro se, Costa Mesa, CA.

ORDER DISMISSING CLAIMS AND GRANTING PLAINTIFFS' MOTION FOR ENTRY OF DEFAULT JUDGMENT

William J. Martínez, United States District Judge.

Plaintiffs Darrell S. Elliott, Diane Elliott, and Darrell S. Elliott PSP (collectively " Plaintiffs") bring this action against Defendants Thompson National Properties, LLC (" Thompson"), TNP 12% Notes Program, LLC (" TNP 12%"), and TNP Strategic Retail Trust, Inc. (the " Trust") (collectively " Defendants") alleging breach of guaranty and unjust enrichment. (ECF No. 54.) Before the Court is Plaintiffs' Motion for Entry of Default Judgment Against All Defendants (" Motion"). (ECF No. 71.) For the following reasons, default is entered, certain claims are dismissed and the Motion is otherwise granted.

I. BACKGROUND

Plaintiffs filed their Complaint in this action on January 23, 2013 (ECF No. 1), and an Amended Complaint on January 30, 2013 (ECF No. 9). Defendants responded to the Amended Complaint on March 14, 2013 with an Answer and a Motion to Dismiss (ECF Nos. 21 & 22), but the filing of Plaintiffs' Second Amended Complaint (" SAC") (ECF Nos. 42-1 & 54) rendered moot the Motion to Dismiss. (ECF No. 53.)

The SAC alleges that, in 2008, Plaintiffs Darrell S. Elliott and Diane Elliott purchased a promissory note from TNP 12% in the amount of $100, 000, and Plaintiff Darrell S. Elliott PSP purchased two more notes from TNP 12% in the amounts of $100, 000 and $50, 000 (collectively the " Notes"). (SAC ¶ ¶ 17-19.) Pursuant to the terms of the Confidential Private Placement Memorandum and Subscription Agreement (" Subscription Agreement") (ECF No. 42-3), TNP 12% was obligated to pay 12% interest on the Notes, accruing and payable quarterly, and to repay the principal of the Notes in a lump sum on June 10, 2011, subject to any extension. (ECF No. 42-3 at 1.) TNP 12% was permitted to extend the terms of the Notes for up to two additional one-year terms, the first year of which would yield interest of 12.25%, and the second year 12.50%. (Id. at 10.) TNP 12%'s obligations to pay principal and interest under the Subscription Agreement were unconditionally guaranteed by Thompson pursuant to a Guaranty attached to the Subscription Agreement, which was provided " [i]n order to induce each prospective purchaser . . . to purchase the Notes." (ECF Nos. 42-2 & 42-3 at 40.)

Plaintiffs allege that TNP 12% made the required interest payments to Plaintiffs from 2008 to 2011, and subsequently exercised its option to extend the terms of the Notes to June 10, 2013. (SAC ¶ 23.) However, TNP 12% stopped making interest payments in 2012. (Id. ¶ 24.) On October 25, 2012, Plaintiffs sent a letter to Defendants asserting that the failure to make interest payments constituted a default, and requesting redemption of the Notes pursuant to the terms of the Subscription Agreement. (Id. ¶ 26; see ECF No. 42-3 at 21.) Defendants refused to redeem the Notes. (SAC ¶ 26.)

Plaintiffs filed this action bringing claims for breach of the guaranty against Thompson and TNP 12%, and unjust enrichment against all three Defendants.[1] (SAC ¶ ¶ 34-50.) Plaintiffs seek actual damages, costs, attorneys' fees, and pre- and post-judgment interest. (Id. p. 8.)

After the SAC was filed, Defendants filed an Amended Answer on November 25, 2013. (ECF No. 55.) However, Defendants' counsel moved to withdraw as attorney of record on April 4, 2014 (ECF No. 63), which was granted after a hearing on April 17, 2014. (ECF No. 68.) Defendants have since failed to obtain new counsel or otherwise participate in this action, including responding to discovery requests. (ECF No. 71 at 2-3.)

Plaintiffs filed a Motion for Summary Judgment on May 7, 2014. (ECF No. 70.) Plaintiffs attempted to confer with Defendants regarding the Motion for Summary Judgment but were unable to reach them, and Defendants filed no Response. (Id. at 1.) As a result of Defendants' failure to defend this action, Plaintiffs filed the instant Motion seeking a default judgment. (ECF No. 71.)

II. LEGAL STANDARD

Default must enter against a party who fails to " plead or otherwise defend" a lawsuit. Fed.R.Civ.P. 55(a). Pursuant to Rule 55(b)(1), default judgment must be entered by the clerk of court if the claim is for " a sum certain"; in all other cases, " the party must apply to the court for a default judgment." Fed.R.Civ.P. 55(b)(2). " [D]efault judgment must normally be viewed as available only when the adversary process has been halted because of an essentially unresponsive party. In that instance, the diligent party must be protected lest he be faced with interminable delay and continued uncertainty as to his rights. The default judgment remedy serves as such a protection." In re Rains, 946 F.2d 731, 732-33 (10th Cir. 1991) (internal quotation marks and citation omitted). " [A] party is not entitled to a default judgment as of right; rather the entry of a default judgment is ...


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