Gateway One Lending & Finance, LLC v. Golden Auto Brokers Incorporated
1:15-cv-01808
N.D. Ga.Dec 14, 2017Background
- Golden Auto, an Atlanta auto dealer, and its principal/finance manager Ray Hamilton entered a Dealer Agreement with Gateway One (Plaintiff) under which Golden Auto sold installment vehicle contracts to Gateway One and warranted it would convey good title and perfect first-priority liens within 120 days.
- Between 2012 and 2014 Gateway One purchased multiple installment-sales contracts from Golden Auto; seven contracts at issue here (Wakely, Moore, Cleveland, Gordon, Howard, Carter, Mordica).
- Plaintiff alleges Golden Auto failed to perfect Plaintiff’s liens within 120 days on six of those contracts and failed to pay off trade-vehicle loans on all seven, causing unpaid balances, finance charges, and other losses; Plaintiff also asserts fraud against Golden Auto and Hamilton for knowingly making false representations to induce purchases.
- Defendants were served but did not respond; Clerk entries of default were entered and Plaintiff moved for default judgment; the Court reviewed legal sufficiency under Rule 55 and governing Eleventh Circuit standards for default judgments.
- The Court found Plaintiff’s pleadings and exhibits adequately pleaded breach of contract and fraud for purposes of default judgment, but identified material uncertainties in the damages calculations and the basis for some fee requests.
- The Court therefore denied immediate entry of final default judgment and scheduled an evidentiary hearing to establish precise damages, clarify whether fraud damages are sought jointly or individually, and substantiate attorney’s-fee claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of breach claims | Dealer Agreement existed; Golden Auto breached by failing to perfect liens and pay trade-off amounts | No answer presented (default) | Court: well-pleaded facts deemed admitted; breach claims sufficiently pleaded to proceed on default judgment basis |
| Fraud claims against Golden Auto & Hamilton | Defendants knowingly misrepresented ability/willingness to convey good title and perfect liens to induce purchase; Plaintiff relied and suffered damages | No answer presented (default) | Court: fraud elements sufficiently alleged; facts deemed admitted for default purposes |
| Amount and calculation of damages (breach & fraud) | Plaintiff provided contract balances, per-diem calculations, and an affidavit asserting totals (including $116,313.82) | No answer presented but court must verify amounts are supported, not just requested | Court: amounts not sufficiently clear or consistently supported by submitted affidavits; hearing required to prove damages math and allocation |
| Attorney's fees and costs (including O.C.G.A. §13-6-11 claim) | Seeks $11,656.38 (attorney fees) and $6,156.70 (costs); submitted billing supporting $6,156.70 but seeks additional fees | No answer presented | Court: evidentiary support for some costs exists but Plaintiff failed to plead/furnish required factual showing under O.C.G.A. §13-6-11 and did not substantiate the $11,656.38 fee request; hearing ordered to establish entitlement/calculation |
Key Cases Cited
- Cotton v. Massachusetts Mutual Life Insurance Co., 402 F.3d 1267 (11th Cir.) (defaulted defendant admits well-pleaded factual allegations but not legal conclusions)
- Surtain v. Hamlin Terrace Foundation, 789 F.3d 1239 (11th Cir.) (motion for default judgment analyzed similarly to motion to dismiss; plaintiff must plead plausible claims)
- In re Worldwide Web Systems, Inc., 328 F.3d 1291 (11th Cir.) (courts view defaults with disfavor and favor decisions on the merits)
- Hamm v. DeKalb County, 774 F.2d 1567 (11th Cir.) (entry of default judgment is within district court’s discretion)
- Adolph Coors Co. v. Movement Against Racism and the Klan, 777 F.2d 1538 (11th Cir.) (court may award damages without a hearing only where amount is a liquidated sum or mathematically determinable)
- Anheuser-Busch, Inc. v. Philpot, 317 F.3d 1264 (11th Cir.) (court must ensure damage award has adequate evidentiary basis and is not the product solely of default)