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Headwaters BD, LLC v. LFG Participacoes Societarias LTDA

United States District Court, D. Colorado

February 14, 2019

HEADWATERS BD, LLC, a Delaware limited liability company, Plaintiff,
v.
LFG PARTICIPACOES SOCIETARIAS LTDA, a/k/a LFG PARTICIPACOES SOCIETARIAS EIRELI, a Brazilian limited liability company, Defendant.

          REPORT AND RECOMMENDATION ON PLAINTIFF HEADWATERS BD, LLC'S MOTION FOR DEFAULT JUDGMENT UNDER RULE 55(B)(2) OF THE FEDERAL RULES OF CIVIL PROCEDURE (DKT. #39)

         This matter is before the Court on Plaintiff Headwaters BD, LLC's (“Headwaters”) Motion for Default Judgment Under Rule 55(b)(2) of the Federal Rules of Civil Procedure against Defendant LFG Participacoes Societarias LTDA a/k/a LFG Participacoes Societarias EIRELLI (“LFG”). [Dkt. #39]. Headwaters has moved for entry of judgment by default against LFG, alleging that it breached the June 1, 2015 contract between the parties, and ordering damages with statutory interest. In support of its motion, Headwaters submitted the Declaration of Philip W. Seefried, Jr. [Dkt. #39-2] which supports Headwaters' damages calculations. LFG has not appeared and has not responded to the instant motion. The Court held a hearing on this matter on February 6, 2019 at 1:30 p.m. [See Dkt. #42.] During the hearing, the Court heard the testimony of Philip Seefried, received documentary evidence, and heard argument of counsel for the Plaintiff.

         The Court has reviewed all the adjudicative facts and considered the evidence presented at the February 6, 2019 hearing, and in all forms in Headwaters' motion, including the Amended Complaint [Dkt. #14], and the declaration and exhibits submitted with the motion. [Dkt. ##39-1-39-6.] Based on this evidence, the Court enters this Recommended Disposition pursuant to Fed.R.Civ.P. 72(b)(1).

         Having considered the record as a whole, the Court recommends the following findings of fact and conclusions of law:

         1. On August 30, 2017, Headwaters filed its Complaint, and subsequently filed its Amended Complaint (“Compl.”) on November 14, 2017. [Dkt. #14]. The Summons was issued on November 15, 2017. [Dkt. #16].

         2. In late November 2017, Headwaters initiated the process to serve LFG, a Brazilian entity, pursuant to the Inter-American Convention on Letters Rogatory (“the Convention”), which is the applicable service convention between the United States and Brazil. The required Court-executed forms for service of process under the Convention were issued by the Court on November 27, 2017. [Dkt. #19].

         3. On November 1, 2018, Headwaters filed its Notice of Completed Service of Process Under the Inter-American Service Convention on Letters Rogatory (the “Notice”). [Dkt. #36].

         4. As set forth in the Notice, Defendant LFG was served with the Summons and Amended Complaint under the Convention on March 13, 2018, and the Ministry of Justice in Brazil transmitted the completed proof of service package to the Department of Justice's agent in the United States on September 11, 2018. [Dkt. #36].

         5. LFG has failed to file an answer and it has not otherwise entered an appearance in this action.

         6. On November 19, 2018, the Clerk of the Court properly entered default against LFG. [Dkt. #38].

         7. Therefore, LFG is in default. Fed.R.Civ.P. 12(a)(1)(A)(i). Upon entry of default, the well-pleaded allegations of the Amended Complaint related to liability are taken as true. See e.g., Olcott v. Del. Flood Co., 327 F.3d 1115, 1125 (10th Cir. 2003) (“defendant, by his default, admits the plaintiff's well-pleaded allegations of fact”); see also Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61, 65 (2d Cir. 1981) (holding that district court erred by not accepting as true all factual allegations of complaint except those relating to damages); United States v. Di Mucci, 879 F.2d 1488, 1497 (7th Cir. 1989) (noting that on default, well-pleaded allegations of complaint relating to liability are taken as true, although allegations relating to amount of damages are not); Geddes v. United Fin. Group, 559 F.2d 557, 560 (9th Cir. 1977) (noting that the general rule is that default by defendants established their liability, but not extent of damages).

         8. The Court has subject matter jurisdiction over this matter under 28 U.S.C. § 1332 because the matter involves an action between a U.S. plaintiff and a foreign defendant and the amount in controversy exceeds $75, 000. [Compl. ¶ 3; 28 U.S.C. § 1332]. Under the terms of the contract at issue, LFG explicitly consented to personal jurisdiction and venue in the District of Colorado for disputes arising out of the contract. [Compl. ¶ 5]. The contract is to be interpreted under Delaware law and the parties waived trial by jury. [Compl. ¶ 6].

         9. Under Delaware law, to prevail on a breach of contract claim, a plaintiff must demonstrate (i) the existence of the contract, whether express or implied, (ii) the breach of an obligation imposed by that contract; and (iii) the resulting damages. VLIW Tech., LLC v. Hewlett-Packard Co., 840 A.2d 606, 612 (Del. 2003).

         10. On June 1, 2015, LFG and Headwaters entered into a valid contract. [Compl. ¶ 9, 10; Dkt. #42-2]. Under the terms of the contract, Headwaters was to provide investment banking services to LFG and its affiliates and subsidiaries, and to act as LFG's exclusive financial adviser. [Compl. ¶ 11].

         11. As part of its services under the contract, Headwaters was asked by LFG to locate potential investors who were willing to purchase Altus Sistemas de Automacao S.A. ...


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