Cash Flow, LLC dba Flexent v. Whole Stones LLC
4:23-cv-02913
S.D. Tex.Jul 16, 2024Background
- Plaintiff Cash Flow, LLC (d/b/a Flexent) entered into a factoring agreement with Defendant Whole Stones LLC on January 23, 2023, whereby Flexent agreed to purchase accounts receivable from Whole Stones.
- Mehmet Ismail Kahyaoglu provided a personal guaranty for Whole Stones’ obligations under the agreement.
- Plaintiff alleges Whole Stones and related individuals engaged in fraudulent invoicing activities and failed to satisfy repayment and repurchase demands.
- Plaintiff asserts claims for breach of contract, conspiracy by fraudulent misrepresentation, unjust enrichment, conversion, and civil theft.
- Defendants were properly served and given an extension to retain counsel but failed to answer or defend the suit, leading Plaintiff to move for default judgment.
- The Court considered whether default judgment was procedurally and substantively warranted and the amount of damages and fees proven by Plaintiff’s submissions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Default Judgment Process | Defendants failed to answer after proper service | No response | Default judgment warranted against Whole Stones, Kahyaoglu II |
| Breach of Contract | Defendants failed to pay amounts due under agreement | No response | Sufficient allegations for breach, judgment granted |
| Fraudulent Misrepresentation/Conspiracy | Defendants created fraudulent invoices, induced payments | No response | Allegations sufficient for default judgment |
| Damages, Attorneys’ Fees, Costs | Specific calculation supported by affidavits/records | No response | Damages, fees, and costs granted as claimed |
Key Cases Cited
- Sun Bank of Ocala v. Pelican Homestad & Sav. Ass’n, 874 F.2d 274 (5th Cir. 1989) (default judgments are a drastic remedy used only in extreme situations)
- Ganther v. Ingle, 75 F.3d 207 (5th Cir. 1996) (default judgment is at court’s discretion, not automatic upon default)
- Mason v. Lister, 562 F.2d 343 (5th Cir. 1977) (discretionary nature of default judgment)
- Nishimatsu Constr. Co. v. Houston Nat. Bank, 515 F.2d 1200 (5th Cir. 1975) (defaulting party admits well-pleaded allegations)
- Wooten v. McDonald Transit Assocs., Inc., 788 F.3d 490 (5th Cir. 2015) (pleading standards for default judgment)
- Smith v. Acevedo, [citation="478 Fed. App'x. 116"] (5th Cir. 2012) (attorneys’ fees calculated under lodestar and Johnson factors)