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Bank of the West v. Mayan Construction, Inc.

United States District Court, D. New Mexico

August 6, 2018

BANK OF THE WEST, Plaintiff,


         THIS MATTER comes before the Court upon Plaintiff's Renewed Motion for Default Judgment, filed July 16, 2018 (Doc. 14).[1] Having reviewed the parties' briefs and applicable law, the Court grants Defendant's motion with regard to liability, but the motion is denied at this time as to damages, subject to Plaintiff's providing supplemental information to the Court in a manner that allows the Court to determine damages.


         This case began as an effort by Plaintiff (or the “Bank”) to collect a debt owed on a commercial credit card extended by the Bank to Defendant Mayan Construction, Inc. (“Debtor”). Plaintiff filed a Complaint for Judgment on Commercial Credit Agreement (“Agreement”) on November 21, 2017 under this Court's diversity jurisdiction, alleging that it had extended to Defendant (“Debtor” in the complaint) a commercial credit card with a maximum credit limit of $100, 000. The Agreement between the parties required regular monthly payments to the Bank for all charges made on that card; however, the Bank did not receive a payment under the Agreement for payment due on July 20, 2017 or thereafter. At that time, the Bank gave notice to Defendant for all outstanding balances under the Agreement to be paid in full by September 20, 2017. Ex. 2 to Compl. As of January 31, 2018, the balance of the Agreement was $104, 354.88, including accrued interest through January 31, 2018, plus interest thereafter at the rate of 18% per annum, plus late fees, attorney fees, taxes, and expenses.

         Defendant Mayan Construction, Inc. was served on December 26, 2017, according to the summons that was returned as executed. A summons was issued on Mayan Construction and returned as Executed on December 26, 2017, and the proof of service indicates that service was accepted by Defendant's designated agent and owner. See Doc. 4 at 2 (summons served and accepted by “Carlos Chavez, Registered Agent”). However, after Defendant was served, there was no activity in this case for almost four months served because of Mr. Chavez' passing in early 2018. See Doc. 6. In response to the Court's Order to Show Cause regarding this inactivity, the Bank explained that it had entered an appearance in the state court probate case for Mr. Chavez' estate, and was now prepared to move ahead with its request for default judgment. Id. at 2.

         I. Liability

         Plaintiff now seeks a default judgment from Defendant on a Complaint for Judgment on Commercial Credit Agreement for the amount of $104, 354.88, including accrued interest and late fees. Fed.R.Civ.P. 55 sets out a two-step process for a party seeking a default judgment. First, a party must obtain the clerk's entry of default against the opposing party. Second, the party must move the Court to enter a default judgment. Fed.R.Civ.P. 55(a). The trial court is given broad discretion in deciding whether to enter a default judgment. See Grandbouche v. Clancy, 825 F.2d 1463, 1468 (10th Cir. 1987).

         A Clerk's Entry of Default was entered on June 5, 2018 (Doc. 11). Service on Defendant has also been effected, as required under Rule 55. See Rogers v. Hartford Life and Acc. Ins. Co., 167 F.3d 933, 936 (5th Cir. 1999) (Until the plaintiff serves the defendant, the defendant has no duty to answer the complaint and the plaintiff cannot obtain a default judgment); Omni Capital Int'l, Ltd. v. Rudolf Wolff & Co., Ltd., 484 U.S. 97, 104 (1987) (“Before a federal court may exercise personal jurisdiction over a defendant, the procedural requirement of service of summons must be satisfied.”).

         There has been no entry of appearance on behalf of Defendant, or any other activity which could constitute a response to the Complaint. Once a defendant is found to be in default, a court must “t[ake] as true all factual allegations in the complaint, except those pertaining to the amount of damages.” Archer v. Eiland, 64 Fed.Appx. 676, 679 (10th Cir. 2003). Plaintiff offers the following documented information:

         1. The Commercial Card Agreement, Ex. B, describing the parties' Agreement consistent with the allegations in the complaint;

         2. An Affidavit of Sum Certain by Joel Spencer, Vice President of the Bank. Ex. A, stating:

a. Defendant is a corporation organized and operated under the laws of the State of New Mexico with its principal place of business in New Mexico;
b. For consideration received, the Bank and Defendant executed a Commercial Card Agreement (see #1);
c. In the Agreement, the Bank agreed to extend a commercial credit card, or cards, to the Defendant for use in its business in exchange for the Defendant's Agreement to abide by all terms in the Agreement, including timely repayment;
d. The Bank agreed to a maximum credit limit of $100, 000 for the Defendant's commercial credit card use ...

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