650 F. App'x 729
11th Cir.2016Background
- Annon Consulting, Inc. (incorporated and headquartered in Ontario, Canada) loaned $845,000 to BioNitrogen Holdings Corp., guaranteed by several related defendants and partially secured by pledged securities. BioNitrogen defaulted on repayment.
- Annon sued on January 26, 2015; defendants were properly served but failed to answer. Clerks’ entries of default were entered on February 24 (most defendants) and March 19 (4A Technologies).
- Defendants moved to set aside the clerk’s entries of default on May 8, 2015; the district court denied the motion and later entered final default judgment for Annon totaling over $1,188,000.
- Defendants appealed, challenging (1) subject-matter jurisdiction via Annon’s citizenship, (2) denial of the motion to set aside defaults under Fed. R. Civ. P. 55(c), (3) entry of default judgment and need for a hearing on damages, and (4) post-judgment interest rate (raised only on appeal).
- The Eleventh Circuit affirmed: it found substantial evidence that Annon’s principal place of business is Ontario (supporting diversity), no abuse of discretion in refusing to set aside defaults (defaults were effectively willful and no meritorious defenses), and affirmed default judgment and denial of an evidentiary hearing because damages were calculable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Subject-matter jurisdiction (diversity/citizenship) | Annon is incorporated and has principal place of business in Ontario, Canada | Annon’s citizenship not proven; insufficient evidence of principal place of business | Court: substantial evidence supports Ontario citizenship; complete diversity exists; jurisdiction proper |
| Motion to set aside clerk’s defaults (Fed. R. Civ. P. 55(c)) | Defaults were proper; defendants knew of suit and failed to respond; setting aside would prejudice plaintiff | Failure to answer caused by mismanagement; not willful; should be set aside | Court: abuse of discretion not shown; defaults deemed willful (strategy to settle); no meritorious defenses; denial affirmed |
| Entry of default judgment and need for damages hearing | Complaint establishes liability; damages are mathematically calculable; no hearing needed | Defendants implicitly argued procedural defects/need for hearing | Court: default judgment appropriate; damages liquidated so no evidentiary hearing required |
| Post-judgment interest rate | N/A (Annon sought applicable rate) | District court applied rate allegedly higher than 28 U.S.C. § 1961; objected on appeal | Court: argument waived for failure to raise below; not considered on appeal |
Key Cases Cited
- Travaglio v. Am. Express Co., 735 F.3d 1266 (11th Cir.) (standard for reviewing jurisdictional factfindings)
- Hertz Corp. v. Friend, 130 S. Ct. 1181 (U.S.) (definition of corporation’s principal place of business)
- Jones v. Harrell, 858 F.2d 667 (11th Cir.) (abuse-of-discretion review for setting aside defaults)
- Sanderford v. Prudential Ins. Co. of Am., 902 F.2d 897 (11th Cir.) (abuse-of-discretion standard for default judgment)
- Compania Interamericana Export-Import, S.A. v. Compania Dominicana de Aviacon, 88 F.3d 948 (11th Cir.) (factors for "good cause" to set aside default)
- Nishimatsu Constr. Co. v. Houston Nat’l Bank, 515 F.2d 1200 (5th Cir.) (pleadings as basis for default judgment)
- SEC v. Smyth, 420 F.3d 1225 (11th Cir.) (no hearing required when damages are liquidated)
- Cotton v. Mass. Mut. Life Ins. Co., 402 F.3d 1267 (11th Cir.) (defaulted defendants admit well-pleaded factual allegations)
- Cont’l Mortg. Inv’rs v. Sailboat Key, Inc., 395 So. 2d 507 (Fla. 1981) (factors for determining a jurisdiction as governing law via a "normal relationship")