United States District Court, D. Colorado
FERNANDO LEONARD, and MOANA LEONARD f/k/a MOANA SYLVESTER, Plaintiffs,
EDWARD D. FITZHUGH, Defendants.
ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS’ MOTION FOR DEFAULT JUDGMENT
WILLIAM J.-MARTÍNEZ UNITED STATES DISTRICT JUDGE
Plaintiffs Fernando and Moana Leonard filed this action on August 20, 2014 against Defendants William Babich and Edward Fitzhugh, alleging negligence and unfair and deceptive business practices in connection with Defendants’ alleged legal malpractice. (ECF No. 2.) On November 3, 2014, Plaintiffs filed a stipulated Motion to Dismiss Defendant Babich from this suit, which the Court granted. (ECF Nos. 19 & 20.) On November 5, 2014, the Clerk of the Court entered default against Defendant Fitzhugh based on his failure to file an answer or otherwise defend this matter. (ECF No. 23.) Plaintiffs filed a Motion for Default Judgment against Fitzhugh on November 21, 2014, and a Motion for Hearing on May 6, 2015. (ECF Nos. 24 & 27.)
The Court held an evidentiary hearing on the Motion for Default Judgment on May 15, 2015, after which the Court ordered Plaintiffs to submit proposed findings of fact and conclusions of law and supplemental briefing on or before June 15, 2015. (ECF Nos. 28, 29, & 30.) Plaintiffs submitted the requested documents on May 27, 2015. (ECF Nos. 31 & 32.) The Court further ordered Plaintiffs to provide supplemental briefing on Defendant Fitzhugh’s bankruptcy petition, which was filed on June 15, 2015. (ECF Nos. 33 & 34.) The following are the Court’s final findings of fact and conclusions of law with respect to Plaintiffs’ award of damages against Defendant Fitzhugh.
I. LEGAL STANDARD
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 a default judgment should be entered, the moving party must supply proof as to the amount of damages. See Klapprott v. United States, 335 U.S. 601, 611-12 (1949).
II. FINDINGS OF FACT
A. The Events Giving Rise to Plaintiffs’ Lawsuit
1. Plaintiffs, a married couple, were tenants of a rental property located at 6837 Highway 140, Hesperus, Colorado in 2011. (Compl. (ECF No. 2) at 1.)
2. In the early morning hours of July 9, 2011, a propane gas explosion occurred, causing the upstairs kitchen to fall to the room below where Plaintiffs were sleeping. (Id. at 2.)
3. The gas explosion also caused a fire. (Id. at 2-3.)
4. As a result of the gas explosion, Plaintiffs suffered injuries, including but not limited to burns. (Id.) Ms. Leonard testified that she suffered from a burn on her heel and other “minor burns.” (Test. of Moana Leonard.) Plaintiffs’ Complaint states that Mr. Leonard received severe burns over 25% of his body. (Compl. at 2.) Mr. Leonard testified that the burns on his legs and other areas of his body required extensive medical treatment, including skin grafts. (Test. of Fernando Leonard.) According to Mr. Leonard, those portions of his body that received skin grafts cause him intense pain when exposed to sunlight. (Id.) Mr. Leonard further testified that he continues to experience muscle spasms and other lasting damage due to his injuries. (Id.)
5. Plaintiffs retained the services of Defendant Edward Fitzhugh, an Arizona attorney, by written fee agreement, to represent them in a Colorado state district court action against Amerigas and Plaintiffs’ landlord to seek compensation for their injuries. (Compl. at 3; Test. of Moana Leonard.)
6. Fitzhugh subsequently affiliated with Colorado attorney William Babich as local counsel for the Colorado state court action. (Id.)
7. Babich agreed to act as local counsel pursuant to a co-counsel fee agreement. (Compl. at 4.)
8. Babich’s involvement in the case was contingent upon Fitzhugh seeking admission pro hac vice, handling all discovery, attending depositions, and advancing costs. (Id.)
9. During the course of the state court litigation, Fitzhugh failed to enter his appearance pro hac vice, failed to participate in the litigation, and failed to front costs as agreed. (Id.)
10. After attempts by Babich to persuade Fitzhugh to enter his appearance pro hac vice, and to enlist Fitzhugh’s help in preparing for trial of the state court action, Babich withdrew from representation of the Plaintiffs in November 2013. (Id. at 3-4.)
11. Plaintiffs’ state court action proceeded to the pretrial conference where Plaintiffs, acting under the assumption that Fitzhugh had done everything necessary to pursue their case, went unrepresented. (Id. at 4; Test. of Moana Leonard.)
12. Fitzhugh was provided a copy of the motion to withdraw, but continued to take no action on behalf of Plaintiffs, other than to maintain that he continued to represent them. (Compl. at 4.)
13. Based on the disclosure and other procedural violations, the state district judge held at the pretrial conference that no further continuances of the April 2014 trial would be granted, and all witnesses and exhibits not disclosed within one week would be excluded at trial. (Id.)
14. More than a week passed without such disclosures, precluding Plaintiffs from introducing any exhibits or witnesses at trial. (Id.)
15. On March 20, 2014, the state court defendants took Plaintiffs’ depositions, at which point it became clear that Plaintiffs could not establish liability against the defendants. (Id. at 4-5.) The claims against both defendants were therefore dismissed in exchange for payment by Amerigas of $5, 000.00, and an agreement by Plaintiffs’ landlord not to seek attorney’s fees and costs. (Id.)
16. Up to and including the date of depositions, one month before the scheduled trial date, Fitzhugh was in telephonic contact with Plaintiffs, maintaining that he continued to represent them. (Id.; Test. of Moana Leonard.)
17. Fitzhugh appears to have largely ignored expert reports asserting zero liability in the two state court defendants. (Compl. at 5.)
18. During the time of Fitzhugh’s purported representation of Plaintiffs, Fitzhugh was suspended from the practice of law in Arizona-his only state of admission-from March 29, 2013 through December 16, 2013; this information was provided to Plaintiffs in correspondence from Fitzhugh, which Plaintiffs relayed to Babich who ...