United States District Court, D. Colorado
ORDER GRANTING PLAINTIFFS' MOTION FOR DEFAULT JUDGMENT
WILLIAM J. MARTÍNEZ, District Judge.
Plaintiffs initiated this action on September 10, 2014 and assert breach of contract and fraud claims against Defendants. (ECF No. 1.) On April 23, 2008, Plaintiffs and Defendants executed a written promissory note ("the Contract"). (Id. at 2.) The Contract provided that Plaintiffs would loan Defendants $100, 000.00 and that Defendants would repay the principal balance within six months of the contract date. (Id. ) However, Defendants defaulted on their payment obligations. (Id. ) Plaintiffs therefore initiated this action and claim that Defendants have made no payments on the Contract principal. (Id. ) Plaintiffs further allege that Defendants fraudulently misrepresented that the principal would be paid using proceeds from the sale of a diamond shipment, and that Defendants knew this representation was false. (Id. at 3.) This matter is before the Court on Plaintiffs' Motion for Default Judgment ("Motion"). (ECF No. 16.) For the reasons set forth below, the Motion is granted.
Before granting a motion for default judgment, the Court must take several steps. First, the Court must ensure that it has personal jurisdiction over the defaulting defendants and subject matter jurisdiction over the action. See Williams v. Life Sav. & Loan, 802 F.2d 1200, 1202-03 (10th Cir. 1986). Next, the Court should consider whether the well-pleaded allegations of fact, which are deemed admitted by a defendant in default, support a judgment on the claims against the defaulting defendants. See Fed. Fruit & Produce Co. v. Red Tomato, Inc., 2009 WL 765872, at *3 (D. Colo. March 20, 2009) ("Even after entry of default, however, it remains for the court to consider whether the unchallenged facts constitute a legitimate basis for the entry of a judgment.") (citations omitted). "In determining whether a claim for relief has been established, the well-pleaded facts of the complaint are deemed true." Id. (citing Dundee Cement Co. v. Howard Pipe & Concrete Prods., Inc., 722 F.2d 1319, 1323 (7th Cir. 1983)).
Once the Court is satisfied that default judgment should be entered, it has the discretion to hold a hearing to determine the amount of damages. See Fed.R.Civ.P. 55(b)(2). Generally, a damages hearing is not needed when the damages requested are for a sum certain. See United States v. Craighead, 176 F.Appx. 922, 925 (10th Cir. 2006). In this matter, the Court will therefore determine: (1) whether the Court's jurisdiction over the Defendants and claims is proper; (2) whether the well-pleaded allegations of fact support a judgment on the claims against Defendants; and (3) what damages Plaintiffs are entitled to, if any. The Court discusses each issue below.
A. The Court's Jurisdiction
The Court must first determine whether it has personal jurisdiction over the Defendants, and subject matter jurisdiction over the action. The Court finds that it has proper subject matter jurisdiction pursuant to 28 U.S.C. § 1332 because Plaintiffs and Defendants are diverse and the amount in controversy exceeds $75, 000.00. (ECF No. 1.) The Court also finds that it has personal jurisdiction over Defendants because the Contract was negotiated and entered into with Colorado residents, and Defendants' breach caused foreseeable harm to Plaintiffs in Colorado. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 479 (1985).
B. Plaintiffs' Claims
Plaintiffs assert breach of contract and fraud claims against Defendants. (ECF No. 1.) Treating all well-pled facts in the Plaintiffs' Complaint as true based on the Defendants' default, the Court finds that the Plaintiffs have alleged a sufficient basis on which to impose joint and several liability on both Defendants in this action. The Court discusses both claims below.
1. Breach of Contract
The elements of a breach of contract claim in Colorado are: (1) existence of a contract; (2) performance by plaintiff or some justification for nonperformance; (3) failure to perform the contract by defendants; and (4) damages to plaintiff. W. Distrib. Co. v. Diodosio, 841 P.2d 1053, 1058 (Colo. 1992).
The Court finds that Plaintiffs have established that Defendants breached the Contract. Plaintiffs have shown that the Contract was executed by both parties; Plaintiffs performed their obligations under the Contract; Defendants failed to pay the principal due under the Contract's terms; and Plaintiffs suffered damages as a result. (ECF No. 1.) Therefore, the Court finds that Plaintiffs are entitled to recover damages on their claim for breach of contract.
The elements of a fraud claim in Colorado are as follows: (1) the defendant made a false representation of material fact; (2) the defendant knew the representation was false; (3) the person to whom the representation was made did not know it was false; (4) the defendant made the representation intending that it be acted on; and (5) reliance on the representation resulted in damage to the plaintiff. Vinton v. Virzi, 269 P.3d 1242, 1247 (Colo. ...