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General Electric Capital Corporation v. Oilfield Cnh MacHining, LLC

United States District Court, N.D. Iowa, Cedar Rapids Division

September 29, 2014

GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware Corporation, Plaintiff,
v.
OILFIELD CNH MACHINING, L.L.C., and THOMAS CLEMENTS, Defendants.

MEMORANDUM OPINION AND ORDER REGARDING PLAINTIFF'S MOTION FOR DEFAULT JUDGMENT

MARK W. BENNETT, District Judge.

I. INTRODUCTION AND BACKGROUND

A lease agreement was formed on September 7, 2013, between defendant Oilfield CNH Machining, LLC (Oilfield) and plaintiff General Electric Capital Corporation (GECC). The agreement provides that GECC will lease equipment to Oilfield. According to GECC's complaint, "The terms and conditions of the Lease Agreement provide that Oilfield was to pay fifty-nine (59) monthly payments in the amount of $5, 589.00 after an initial payment of $17, 481.00, as set forth in the Lease Agreement." Complaint (docket no. 2), 2. On the same day the lease agreement was formed, defendant Thomas Clements (Clements), in his individual capacity, guaranteed the repayment of any obligations owed to GECC by Oilfield. Complaint, Exhibit A (Lease Agreement) (docket no. 2-1), 3. GECC relied upon Clements's personal guaranty in entering into the lease agreement.

After the lease agreement was formed, Oilfield allegedly failed to make payments to GECC. Despite sending a demand letter to Oilfield on May 30, 2014, to pay the past due amounts, GECC has not received payments in accordance with the lease agreement. As a consequence, GECC argues, Oilfield "is in default of its obligations under the Lease Agreement, " and "Oilfield breached the Lease Agreement." Complaint at 3-4. GECC also alleges, "Clements is liable, in solido, with Oilfield for all sums due under the Lease Agreement." Complaint at 6.

On July 16, 2014, GECC filed its Complaint requesting that I enter a judgment in its favor and against defendants Oilfield and Clements for $128, 647.59, plus interest and late fees, attorney's fees, and other charges owed under the agreement. Oilfield and Clements were served with copies of the Summons and Complaint on July 24, 2014, and had until August 25, 2014, to move or plead, but have failed to do either.

On August 28, 2014, GECC requested an entry of default by the clerk of court in its favor. The next day, the clerk of court entered a default (docket no. 8), pursuant to Rule 55(a) of the Federal Rules of Civil Procedure. On September 3, 2014, GECC filed a motion requesting that this Court enter a default judgment (docket no. 9), which reflects that it was served upon the defendants. Yet again, neither Oilfield nor Clements filed a response to GECC's requested default judgment.

II. ANALYSIS

I must confront the issue of whether to enter a default judgment award for GECC, pursuant to Rule 55(b)(2), after the Clerk Of Court has entered a default against the defendants under Rule 55(a). See Fraserside IP L.L.C. v. Faragalla , No. C11-3032, 2012 WL 124391, *2 (N.D. Iowa Jan. 17, 2012).

A. Standard For Entry Of Default And Default Judgment

I have previously summarized the procedure under Rule 55 for obtaining the entry of a default and a default judgment. See Hayek v. Big Bros./Big Sisters of Am. , 198 F.R.D. 518, 520 (N.D. Iowa 2011). Thus, my statement of the standards here will be brief.

If a defendant "has failed to plead or otherwise defend' against a pleading listed in Rule 7(a), " the entry of a default under Rule 55(a) "must precede" the grant of a default judgment under Rule 55(b). Id . (citations omitted). In other words, Rule 55 requires two sequential steps before entry of a default judgment: "first, pursuant to [Rule] 55(a), the party seeking a default judgment must have the clerk enter the default by submitting the required proof that the opposing party has failed to plead or otherwise defend; second, pursuant to [Rule] 55(b), the moving party may seek entry of judgment on the default under either subdivision (b)(1) or (b)(2) of the rule." Id . (internal quotation marks and citation omitted).

B. Application Of The Standards

1. Entry of default and liability

As alluded to above, an entry of default is a prerequisite to a default judgment. See Panda Investments, Inc. v. Jabez Enterprises Ltd. , No. 07-CV-114, 2007 WL 4556785, *3 (N.D. Iowa Dec. 20, 2007) (citing to Rule 55(a)). If a default is entered, it "is an interlocutory action; it is not itself a judgment." Id . (citing to Johnson v. Dayton Elec. Mfg. Co. , 140 F.3d 781, 783 (8th Cir. 1998)). When a defendant fails to answer or otherwise defend an action, the defendant "is deemed to have admitted the well-pleaded allegations of the Complaint." Cedar Rapids Elec. Apprenticeship Training & Educ. Trust v. Roth , No. 12-CV-2038, 2012 WL 5269188, *2 (N.D. Iowa Oct. 24, 2012) (citation omitted). As a consequence, the defendant's liability is established. See Brown v. Kenron Aluminum & Glass Corp. , 477 F.2d ...


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