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Jeffers v. Houpt

United States District Court, N.D. Indiana, South Bend Division

September 20, 2018




         Before the Court is plaintiff Janice Jeffers' Verified Motion for Default Judgment. [DE 23.] Jeffers seeks a judgment by default against defendants Steven Houpt and David Houpt. In support, she has filed a verified motion that supports her claims for damages and costs. [DE 23.] She has also submitted an affidavit supporting her claim for attorney's fees. [DE 22-1.] She represents that her damages are $780, 409.26 as of August 15, 2018, with per diem interest of $96.53 after that date until the date of judgment. [DE 23.] For the reasons that follow, I will grant Jeffers' motion for a default judgment as to her breach of contract claim, but I will deny her motion as to the other counts.


         On January 27, 2010, Jeffers and the Houpts executed a promissory note totaling $500, 000 in which the Houpts agreed to make payments to Jeffers commencing on April 1, 2010 and each month thereafter, until the debt was paid in full, at an interest rate of 7.42%. [DE 10-2 at 1; DE 1-1 at 1.] In the event that the Houpts failed to make any required installment payment due under the note within 30 days of its due date, the promissory note provided that the entire amount of unpaid principal would become immediately due and payable at the option of Jeffers without prior notice to the Houpts. [Id.] The promissory note also called for the Houpts to pay Jeffers' attorney's fees should she prevail in a lawsuit to collect on the note. [Id.] The Houpts also agreed that, because there was more than one borrower, they would be jointly and severally liable. [Id.] The promissory note was signed by the Houpts, and notarized, in Florida. [DE 1-1 at 1-2.]

         Jeffers lent the money to the Houpts, providing them with $100, 000 on February 1, 2010 and $400, 000 on February 4, 2010. [DE 10-2 at 1.] The Houpts made a few payments on the loan; $10, 0000 was paid on five separate dates: May 3, 2010; June 1, 2010; July 6, 2010; August 2, 2010; and October 4, 2010. [Id. at 2.] However, after making these payments, the Houpts defaulted, failing to make payments as outlined in the promissory note. [Id.] Notwithstanding their failure to make payments, the Houpts continued to make oral promises to Jeffers that they would make good on the promissory note, and they promised to repay the loan with interest. [Id.] Jeffers is the holder of the note, as she has not assigned it to anyone. [Id. at 1.]

         The procedural background of this case is messy. On September 22, 2017, Jeffers filed suit alleging four causes of action: (1) breach of contract, (2) account stated, (3) fraud, and (4) constructive fraud. [DE 1.] The Houpts responded with a motion to dismiss for lack of personal jurisdiction. [DE 6.] Before I ruled on the motion to dismiss, Jeffers filed a motion for summary judgment. I asked the Houpts to supplement their motion to dismiss with evidence, but they never responded. [DE 14.] I then held a hearing on the personal jurisdiction issue raised in the motion to dismiss, but the Houpts did not appear. [DE 19.] I subsequently denied the Houpts' motion to dismiss, finding that there was personal jurisdiction. [DE 20.]

         I also set deadlines for the Houpts to answer Jeffers' complaint and respond to Jeffers' motion for summary judgment. The deadline to answer Jeffers' complaint was July 3, 2018. The Houpts' response to Jeffers' motion for summary judgment was due on July 31, 2018. Those dates have come and gone, and the Houpts have neither answered the complaint or otherwise responded. Jeffers now seeks a default judgment on all four of her causes of actions. Her motion for summary judgment also remains pending, and both motions are now ripe for my decision.


         Federal Rule of Civil Procedure 55(a) governs the entry of default and default judgment. When a defendant fails to answer a complaint or otherwise defend himself, the clerk can make an entry of default. Fed.R.Civ.P. 55(a). “Entry of default must precede an entry of default judgment.” Wolf Lake Terminals, Inc. v. Mutual Marine Ins. Co., 433 F.Supp.2d 933, 941 (N.D. Ind. 2005). “Although Rule 55(a) refers to the entry of default by the clerk, ‘it is well-established that a default judgment may also be entered by the court.'” Id. (quoting Breuer Elec. Mfg. Co. v. Tornado Sys. Of Am., Inc., 687 F.2d 182, 185 (7th Cir. 1982)).

         Here, the clerk has not made an entry of default. When deciding a motion for entry of a default judgment, if there is no entry of default by the clerk, the Court can treat such motions as a request for both an order to the clerk to enter default and entry of default judgment. Id. I will therefore consider Jeffers' motion as requesting both an entry of default and a default judgment.

         A default judgment establishes, as a matter of law, that the defendant is liable to the plaintiff for each cause of action in the complaint. e360 Insight v. The Spamhaus Project, 500 F.3d 594, 602 (7th Cir. 2007). I am to consider a number of factors when deciding a motion for default judgment, including “whether there is a material issue of fact, whether the default is largely technical, whether the plaintiffs were substantially prejudiced, and how harsh an effect a default judgment might have.” Wolf Lake, 433 F.Supp.2d at 941; see Wright & Miller 10A Federal Prac. & Proc. § 2683 (3d ed.). All well-pleaded facts are taken as true for purposes of liability. Black v. Lane, 22 F.3d 1395, 1399 (7th Cir. 1994); Cameron v. Myers, 569 F.Supp.2d 762, 764 (N.D. Ind. 2008).

         Jeffers has moved for a default judgment on all four of her claims, so I will address these factors for each claim in turn.

         Count One - Breach of Contract

         Under Indiana law, in order to establish a breach of contract, a plaintiff must demonstrate “the existence of a contract, the defendant's breach thereof, and damages.” Am. Family Mut. Ins. Co. v. Matusiak, 878 N.E.2d 529, 533 (Ind.Ct.App. 2007) (quotation omitted). “A party who fails to make payments as required by a contract is guilty of a breach thereof.” Henthorne v. Legacy Healthcare, Inc., 764 N.E.2d 751, 758 (Ind.Ct.App. 2002). “The party asserting ...

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