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United States v. Labarge

United States District Court, N.D. New York

February 27, 2017

UNITED STATES OF AMERICA, Plaintiff,
v.
CHRISTINE LABARGE, Defendant.

          OVERTON, RUSSELL, DOERR &LINDA L. DONOVAN, ESQ. DONOVAN, LLP Attorneys for Plaintiff

          MEMORANDUM-DECISION AND ORDER

          Mae A. D'Agostino, U.S. District Judge:

         I. INTRODUCTION

         On November 10, 2015, the United States of America ("Plaintiff") commenced this action alleging that Christine LaBarge ("Defendant") defaulted on two promissory notes. See Dkt. No. 1 at 2-3. On July 18, 2016, the Court granted Plaintiff's motion for default judgment with respect to liability, but denied the demanded relief with leave to reapply for damages. See Dkt. No. 10 at 6. Currently before the Court is Plaintiff's motion for entry of damages. See Dkt. No. 14.

         II. BACKGROUND

         The Court has taken the facts set forth below from Plaintiff's complaint, the Certificates of Indebtedness from the U.S. Department of Education, an affidavit submitted by Plaintiff's counsel, and attached exhibits.

         Defendant is a resident of Clinton County, New York. See Dkt. No. 1 at 1. Plaintiff's first cause of action asserts that Defendant executed a promissory note on or about October 22, 2002 to secure a Direct Consolidation loan from the U.S. Department of Education. See Dkt. No. 1 at 2; Dkt. No. 1-1 at 1; Dkt. No. 14 at 3. According to the Certificate of Indebtedness from the U.S. Department of Education related to that loan (the "First Certificate of Indebtedness"), the loan was disbursed for $697.00 on November 12, 2002 at 6.875% interest per annum. See Dkt. No. 14 at 3. Defendant defaulted on the loan on September 24, 2003. See Id. As of August 26, 2016, Defendant owed $289.51 in principal and $209.41 in interest. See id. Interest accrues on the principal at a rate of $0.05 per day. See id.

         Plaintiff's second cause of action asserts that Defendant executed a promissory note on or about February 27, 2004 to secure a Direct Consolidation loan from the U.S. Department of Education. See Dkt. No. 1 at 2; Dkt. No. 1-1 at 2; Dkt. No. 14 at 4. According to the Certificate of Indebtedness related to that loan (the "Second Certificate of Indebtedness"), the loan was disbursed for $3, 477.94 on January 26, 2005 at 7.00% interest per annum. See Dkt. No. 14 at 4. Defendant defaulted on the loan on November 25, 2005. See Id. As of August 26, 2016, Defendant owed $3, 439.33 in principal and $2, 788.86 in interest. See Id. Interest accrues on the principal at a rate of $0.66 per day. See id.

         On December 12, 2015, Plaintiff served Defendant with the complaint. See Dkt. No. 4. Plaintiff filed a request for entry of default on January 5, 2016. See Dkt. No. 5. On January 8, 2016, the Clerk of the Court entered default against Defendant pursuant to Rule 55(a) of the Federal Rules of Civil Procedure. See Dkt. No. 7; Fed.R.Civ.P. 55(a). On January 11, 2016, Plaintiff filed a motion for default judgment pursuant to Rule 55(b) of the Federal Rules of Civil Procedure. See Dkt. No. 8.

         On July 18, 2016, this Court granted Plaintiff's motion for default judgment with respect to liability, but denied Plaintiff's motion with respect to damages because Plaintiff failed to meet its burden to establish a basis for the damages claimed. See Dkt. No. 10 at 5-6. While Plaintiff submitted an attorney Affidavit of Amount of Due, setting forth the principal, the interest owed, and the per annum rate of interest, Plaintiff failed to satisfy Local Rule 55.2, which requires the interest rate submitted to be calculated at a per diem rate as well as the per annum rate. See Id. at 4-5; see also Local Rules N.D.N.Y. 55.2(a). Additionally, the Court found that Plaintiff could not recover server and travel fees for serving Defendant with the summons and complaint without proving that these costs were actually incurred. See Dkt. No. 10 at 5.

         In order to establish its entitlement to the damages claimed, Plaintiff was directed to submit a certificate of indebtedness, a full promissory note, disbursement history, demand for payment, evidence of the date of default, and evidence of the amount of the loan applied for and actually received. See Id. at 6. On August 12, 2016, Plaintiff submitted a letter request for an additional 30 days to obtain the necessary documentation to establish its claimed damages. See Dkt. No. 12. On September 7, 2016, Plaintiff submitted an attorney Affidavit of Amount Due and the Certificates of Indebtedness. See Dkt. No. 14.

         III. DISCUSSION

         "Where a default occurs, the well-pleaded factual allegations set forth in a complaint relating to liability are deemed true." Gesualdi v. Seacost Petroleum Prod., Inc., 97 F.Supp.3d 87, 95 (E.D.N.Y. 2015) (citing Greyhound Exhibitgroup, Inc. v. E.L. U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992) (other citations omitted)). "While a default judgment constitutes an admission of liability, the quantum of damages remains to be established by proof unless the amount is liquidated or susceptible [to] mathematical computation." Flaks v. Koegel, 504 F.2d 702, 707 (2d Cir. 1974) (citations omitted); see also Joseph v. HDMJ Rest., Inc., 970 F.Supp.2d 131, 149 (E.D.N.Y. 2013) (citations omitted). "[E]ven upon default, a court may not rubber-stamp the non-defaulting party's damages calculation, but rather must ensure that there is a basis for the damages that are sought." Overcash v. United Abstract Group, Inc., 549 F.Supp.2d 193, 196 (N.D.N.Y. 2008) (citing Credit Lyonnais Sec. (USA), Inc. v. Alcantara, 183 F.3d 151, 155 (2d Cir. 1999)). "The burden is on the plaintiff to establish its entitlement to recovery." Bravado Int'l Grp. Merch. Servs., Inc. v. Ninna, Inc., 655 F.Supp.2d 177, 189 (E.D.N.Y. 2009) (citation omitted). "While 'the court must ensure that there is a basis for the damages specified in a default judgment, it may, but need not, make the determination through a hearing.'" Id. at 190 (quotation omitted).

         Plaintiff was directed to submit specific documentary evidence sufficient to "ascertain the amount of damages with reasonable certainty." Alcantara, 183 F.3d at 155 (citation omitted). "[A] document containing both the borrower's signature and the amount of the loan applied for and disbursed" may serve as a basis for an award of damages. See United States v. Linn, No. 10-CV-5289, 2011 WL 2848208, *3 (E.D.N.Y. July 14, 2011). In addition, damages have been awarded "relying solely on Certificates of Indebtedness." United States v. Reeves, No. 5:12-CV-0886, 2013 WL ...


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