Fleming v. Sims

          REPORT AND RECOMMENDATION ON ENTRY OF DEFAULT JUDGMENT AND PLAINTIFF'S REQUEST FOR DAMAGES (DKT. #219)

          N. Reid Neureiter, United States Magistrate Judge.

         This case is before the Court pursuant to Orders (Dkt. ##217, 220) issued by Judge William J. Martinez referring this matter for recommendation on the scope and content of the default judgment to be entered against Defendants Larry D. Sims, Jeffrey Sims, LDS Financial Charter Services Co. ("LDS"), and Blactino Entertainment ("Blactino") (collectively "Defendants"), as well as on Plaintiff Dr. Richard Max Fleming's Request for Damages. (Dkt. #219.) The Court has carefully considered the motion (Dkt. #219) and supporting exhibits. (Dkt. ##224, 226, & 228.) The Court heard argument on the entry of default judgment on September 26, 2018. (Dkt. #233.) The Court has taken judicial notice of the Court's file and has considered the applicable Federal Rules of Civil Procedure and case law. The Court, now being fully informed, makes the following recommendation.

         I. BACKGROUND

         a. Procedural History

         The procedural history of this case is not easily summarized, but a brief recitation of events will be helpful. On July 27, 2017, Dr. Fleming, proceeding pro se, filed suit against several defendants for breach of contract, promissory estoppel, fraud, and assault. (Dkt. #1.) After being ordered to cure certain pleading deficiencies (Dkt. #5), Dr. Fleming filed an Amended Complaint (Dkt. #26) that alleged that the defendants guaranteed him a grant of $250, 000 for the licensing and promotion of a patent associated with breast cancer and heart disease research, and agreed to make a $3, 800 rent payment for him, but failed to make either payment. (Dkt. #26 at 3-5.) An avalanche of filings ensued, including at least 15 motions by Dr. Fleming for entry of default, default judgment, and related relief. (Dkt. ##66, 67, 70, 72, 78-80, 82, 84, 89, 92, 94 and 115.) He was eventually given leave to file a Second Amended Complaint (Dkt. #144), which he did on January 25, 2018. (Dkt. # 146.) The Second Amended Complaint asserted claims against Defendants Blactino, LDS, and Larry and Jeffery Sims.

         Judge Watanabe held a Scheduling Conference on May 3, 2018, at which Defendants were given until June 4, 2018 to answer the Second Amended Complaint and to retain counsel for the corporate defendants, Blactino and LDS. (Dkt. #191.) An Order to Show Cause was entered, and a Show Cause Hearing and Status Conference was set for June 11, 2018. (Dkt. #193.) Defendants were ordered to show cause why default judgment should not enter against them pursuant to Rule 55 for their failure to answer or otherwise respond to Plaintiff's Second Amended Complaint, and for LDS and Blactino's failure to retain counsel. (Id.)

         Defendants did not appear on June 11, 2018 for the Show Cause Hearing, nor did they answer or otherwise respond to Dr. Fleming's Second Amended Complaint. (Dkt. #202.) Accordingly, that day, the Court recommended that judgment be entered against Defendants Larry and Jeffrey Sims, LDS, and Blactino as a sanction for their failure to comply with the Court's orders and the federal and local rules of civil procedure. (Dkt. #203.)

         On August 21, 2018, Judge Martinez adopted Judge Watanabe's Recommendation in its entirety, and referred the matter to the undersigned Magistrate Judge, who was assigned the case after Judge Watanabe's retirement, for a recommendation as to the scope and content of the default judgment to be entered against the Defendants. (Dkt. #217.) The Clerk of Court then entered a Rule 55(a) Default against the Defendants (Dkt. #218), and Dr. Fleming filed the subject motion. (Dkt. #219.)

         The Court held a hearing on the entry of default judgment on September 26, 2018. Dr. Fleming and Larry Sims appeared at the hearing by telephone, and the Court heard argument and testimony by both. (Dkt. #233.) The Court took the matter under advisement. (Id.)

         b. The Allegations of the Second Amended Complaint

         Judge Martinez concisely described the nature of Dr. Fleming's claims as follows:

In his Complaint, Plaintiff states that "Defendants contractually guaranteed $250, 000 to Plaintiff for licensing and promotion of a breast cancer and heart disease patent and a $3800 rental payment on June 29, 2017 (contractual document signed and faxed back to LDS on Wednesday 28th) and confirmed in email to Plaintiff on July 1st." According to Plaintiff, Defendant Larry Sims presented himself as "someone who wanted to help people, including members of the LGBTQ community who could be affected by breast cancer. Mr. Larry D. Sims stated he wanted to make a difference and present a positive face for the LGBTQ community and especially help with the increased risk of African American women and minorities who might have breast cancer." Plaintiff provided his banking information to Defendants because the funds for both the patent and the rent were to be electronically wired to Plaintiff's account.

Defendant Larry Sims did not make the wire transfer, and instead "reported that there were power outages, which set them behind several days." Defendants then posted on their website that Jeffrey Sims, Larry Sims's brother, was hospitalized. According to Plaintiff, Jeffrey Sims was taken to the emergency room on July 7, 2017, but was never hospitalized. Plaintiff claims to have "sent several faxes and emails to confirm the guarantee of the contractually agreed to monies and on each occasion Plaintiff was assured that the error was on the Defendant's end and not the Plaintiffs [sic] and that the funds were guaranteed to come to Plaintiff." According to Plaintiff, Defendant Larry Sims also repeatedly promised to submit the rental check directly to Plaintiff's property manager. On Wednesday, July 12, 2017, Plaintiff and his property manager both spoke to Larry Sims. Plaintiff claims that in those phone calls, Larry Sims promised them that "he was overnighting a check for $3800 for rent payment including late fees and would send the rest of the $250, 000 electronically the following week, but wanted to make certain the rent would be taken care of without delay to avoid eviction of Plaintiff."

When the rent check was not received, Plaintiff's property manager sent another fax to Larry Sims on July 13, inquiring about it. According to Plaintiff, Defendant LDS Financial Charter Services (LDS) sent two faxes in response. The first guaranteed overnight payment of the rent check if it had not been sent, again via overnight delivery. The second fax stated, "Defendants were unhappy with the property manager wanting the rent payment and not caring about the Defendants." The second fax also stated that all agreements were being cancelled because Mr. Larry Sims had been in a coma for several days (despite the property manager and Plaintiff having spoken with Mr. Sims by telephone on the 12th). Plaintiff's property manager was instructed by Defendants to not inform the Plaintiff of this." That fax also stated that Defendant Jeffrey Sims would serve as the acting CEO of LDS while his brother was in the hospital. Moreover, Plaintiff claims that "pursuant to the Medical Records departments and the E.R.s of Parkview and St. Mary Cowin Hospitals Mr. Larry D. Sims was not and had not been hospitalized for a coma or anything else." They let Plaintiff know that they were not going to honor the contract for the grant and the rent payment by e-mail three day later, on July 16, 2017.

Plaintiff and his son have now been evicted for failure to pay rent "after detrimentally, reasonably, and foreseeably relying upon the guaranteed rental payment and grant." Plaintiff claims that since then, he has had to "sell his car to make rental payments and pay other costs of living." Plaintiff notified the Colorado Attorney General's office, the Pueblo County District Attorney's office, the FBI, and the website, Ripoff Report. According to Plaintiff, "Defendants sent a fax to the rental office threatening Plaintiff for posting the complaint" on Ripoff Report.

In his Complaint, Plaintiff raises three claims for relief: (1) Breach of Contract and Promissory Estoppel, (2) Fraud, and (3) Assault. Defendants failed to answer or otherwise ...