United States District Court, D. Colorado
RECOMMENDATION OF UNITED STATES MAGISTRATE
KRISTEN L. MIX, UNITED STATES MAGISTRATE JUDGE.
matter is before the Court on Plaintiff's Renewed
Motion for Default Judgment [#14] (the
“Motion”). Pursuant to 28 U.S.C. §
636(b)(1)(B) and D.C.COLO. LCivR 72.1(c), the Motion has been
referred to the undersigned for recommendation. See
[#15]. Plaintiff seeks entry of default judgment against
Defendants In & Out Leasing, LLC, In & Out Custom
Hauling, LLC, and Matthew Frost (collectively,
“Defendants”). Pursuant to Fed.R.Civ.P. 55(a),
the Clerk of Court entered default against Defendants on
January 17, 2017. See Entry of Default [#9].
Defendants have not responded to Plaintiff's Complaint
[#1] or the present Motion [#14], and the time for doing so
has elapsed. The Court has reviewed the Motion, the entire
case file, and applicable case law, and is sufficiently
advised in the premises. Accordingly, for the reasons set
forth below, the Court respectfully
RECOMMENDS that the Motion [#14] be
BMO Harris Bank N.A. (“Plaintiff”) initiated this
breach of contract lawsuit by filing the Complaint [#1] on
October 26, 2016, against Defendants In & Out Leasing,
LLC (“Borrower”), In & Out Custom Hauling,
LLC (“Corporate Guarantor”), and Matthew Frost
(“Personal Guarantor”). Compl. [#1]
¶¶ 1-4. Defendants failed to respond to the
Complaint. On January 13, 2017, Plaintiff filed a Motion for
Entry of Default [#9], to which Defendants failed to respond.
The Clerk of Court entered default against Defendants on
January 17, 2017. See [#10]. On February 1, 2017,
Plaintiff filed an initial Motion for Default Judgment [#11],
to which Defendants again failed to respond. On July 14,
2017, the Court ordered Plaintiff to file a supplement that
“directs the Court's attention to sufficient proof
to support default judgment for money damages.”
Minute Order [#13]. On July 26, 2017, in lieu of
filing a supplement, Plaintiff filed the present Motion [#14]
and attached to it an affidavit and a declaration that
provide details with respect to the alleged amount owed. The
affiant is Barbi Martin (“Martin”), who is
employed by Plaintiff as a litigation specialist, Martin
Aff. [#14-2], and the declarant is Aaron Chapin
(“Chapin”), who is one of the principal attorneys
representing Plaintiff in the present matter. Chapin
Decl. [#14-1]. Based on the filing of the Motion [#14],
the original Motion for Default Judgment was denied as moot.
Minute Order [#16].
to the Complaint,  on June 23, 2015, Borrower entered into a
loan agreement (“First Agreement”) with GE
Capital Commercial, Inc. (“GECCI”), in which
GECCI agreed to finance the purchase of equipment for
Borrower's business and Borrower agreed to pay GECCI $90,
835.68 pursuant to the terms of the First Agreement.
Compl. ¶ 10; Agreement [#1-1]. That
same day, Corporate Guarantor and Personal Guarantor also
entered into personal guaranties with GECCI, which guaranteed
full and timely performance of the First Agreement by
Borrower. Compl. [#1] ¶¶ 11-12;
Exhs. [#1-2, #1-3]. Under these guaranties, a
default of the Borrower under the First Agreement is a
default of the Corporate Guarantor and Personal Guarantor.
Compl. [#1] ¶ 22; Exhs. [#1-2, #1-3].
On October 30, 2015, Borrower entered into a loan agreement
(“Second Agreement”) with Transportation Truck
and Trailer Solutions, LLC (“TTTS”), in which
TTTS agreed to finance the purchase of equipment for
Borrower's business, and Borrower agreed to pay TTTS $82,
274.40 pursuant to the terms of the Second Agreement.
Compl. [#1] ¶ 13; Agreement [#1-4].
That same day, Corporate Guarantor and Personal Guarantor
entered into personal guaranties with TTTS, which guaranteed
full and timely performance of the Second Agreement by
Borrower. Compl. [#1] ¶¶ 14-15;
Exhs. [#1-5, #1-6]. Under these guaranties, a
default of the Borrower under the Second Agreement is a
default of the Corporate Guarantor and Personal Guarantor.
Compl. [#1] ¶ 22; Exhs. [#1-5, #1-6].
Borrower granted both GECCI and TTTS security interests in
the equipment, which is referred to collectively as the
“Collateral.” Compl. [#1] ¶ 16. On
December 1, 2015, GECCI and TTTS transferred and assigned to
Plaintiff all of their rights, titles, and interests created
under the First and Second Agreements and guaranties.
Compl. [#1] ¶¶ 17-18; Exhs.
April 10, 2016, Borrower failed to make payments due to
Plaintiff. Compl. [#1] ¶¶ 21, 24. He has
failed to make all subsequent payments due under the First
and Second Agreements. Id. Corporate Guarantor and
Personal Guarantor have also failed to make payments despite
demand by Plaintiff. Id. ¶ 25. After Defendants
defaulted on their loans and guaranties, Plaintiff
repossessed the Collateral. Compl. [#1] ¶¶
32-33. On August 25, 2016, Plaintiff received the net
proceeds from the sale of the Collateral. Martin
Aff. [#14-2] ¶ 18. Pursuant to the First and Second
Agreements, Borrower must pay: the principal amount due and
owing, minus the net proceeds of the sale of the Collateral;
interest on unpaid amounts at a default rate of eighteen
percent per annum; late fees and other costs; all costs
related to retaking, holding, preparing for sale, and selling
the Collateral; and attorney's fees and costs. Martin
Aff. [#14-2] ¶¶ 26, 27-29.
to Fed.R.Civ.P. 55, default may enter against a party who has
failed to appear or otherwise defend the case brought against
him. Default was entered against Defendants on January 17,
2017, because Defendants failed to respond to the Complaint
and all subsequent documents filed by Plaintiff. See
[#10]; see also Fed. R. Civ. P. 55(a); Mrs.
Condies Salad Co., Inc. v. Colorado Blue Ribbon Foods,
LLC, 858 F.Supp.2d 1212, 1218 (D. Colo. 2012). However,
before proceeding with the entry of judgment, the Court must
determine whether it has jurisdiction, whether the
allegations of the Complaint constitute a legitimate claim
for relief, and whether damages can be ascertained.
Reg'l Dist. Council v. Mile High Rodbusters,
Inc., 82 F.Supp.3d 1235, 1241 (D. Colo. 2015).
plaintiff seeks default judgment against a defendant who has
failed to appear or otherwise defend, the Court must first
determine whether it has jurisdiction over the subject matter
and the parties. Dennis Garberg & Assocs., Inc. v.
Pack-Tech Int'l Corp., 115 F.3d 767, 771 (10th Cir.
1997). “Whether jurisdiction exists must be determined
from the facts alleged in the Complaint, without regard to
conclusory allegations of jurisdiction.” Procom
Supply, LLC v. Langner, No. 12-cv-00391-MSK-KMT, 2012 WL
4856724, at *2 (D. Colo. Oct. 11, 2012) (citing Groundhog
v. Keeler, 442 F.2d 674, 677 (10th Cir. 1971)).
“The party seeking the exercise of jurisdiction in his
favor ‘must allege in his pleading the facts essential
to show jurisdiction.'” Penteco Corp. Ltd.
P'ship-1985A v. Union Gas Sys., Inc., 929 F.2d 1519,
1521 (10th Cir. 1991) (quoting McNutt v. General Motors
Acceptance Corp., 298 U.S. 178, 189 (1936)).
Subject Matter Jurisdiction
asserts that subject matter jurisdiction in this case is
based on diversity of citizenship of the parties.
Compl. [#1] ¶¶ 1-4. Federal courts have
diversity jurisdiction over civil matters where the amount in
controversy exceeds $75, 000 and the parties are citizens of
different states. 28 U.S.C. § 1332(a). The Complaint
[#1] alleges that the amount due and owing as of October 5,
2016, not including attorney's fees and expenses or costs
of collection, was $88, 463.81. Compl. [#1] ¶
34. Accordingly, the amount satisfies the jurisdictional
asserts that the parties are of diverse citizenship.
Compl. [#1] ¶ 5. Plaintiff alleges that it is a
“national banking association with its main office, as
set forth in its articles of association, located in Chicago,
Illinois.” Compl. [#1] ¶ 1. For the
purposes of diversity jurisdiction, a national bank is a
citizen of the state designated in its articles of
association as the location of its main office. Wachovia