1:20-cv-00010
S.D. Ala.May 26, 2020Background
- Hancock Whitney Bank sued 7 General Contracting, Inc. and its principals Charlie Heath Mason and Toni Scott Mason to collect on a $3,425,000 promissory note and related loan documents dated December 13, 2018; the corporate defendant later filed Chapter 11 and is stayed.
- C. Mason and T. Mason each executed unconditional commercial guaranties covering 7 General’s obligations; Hancock Whitney accelerated the debt after default.
- The individual Masons were served, failed to answer, and the Clerk entered default; Hancock Whitney moved for default judgment.
- Bank evidence (loan documents, transaction history, and affidavits) established unpaid principal, accrued interest, per-diem default interest, late fees, and attorneys’ fees.
- As of April 15, 2020 the bank asserted outstanding balances of $3,244,529.80 (principal $3,161,414.10; accrued interest $81,115.77; $2,000 late fees) plus continuing per-diem interest of $483 and attorneys’ fees/costs.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Personal jurisdiction / service | Defendants are Alabama residents; they were personally served in Mobile County | No response (default) | Service was proper; court has personal jurisdiction over the individual Masons (default entered) |
| Entitlement to default judgment | Loan documents and affidavits establish a prima facie breach and guaranty liability | No response (default) | Default judgment appropriate; well-pleaded facts admitted and claim stated |
| Damages (principal, interest, late fees) | Seek principal $3,161,414.10, accrued interest $81,115.77 (as of 4/15/20), per-diem $483, and $2,000 late fees | No response | Awarded principal $3,161,414.10; accrued interest $81,115.77 to 4/15/20; per-diem $483 from 4/15/20 to judgment; $2,000 late fees |
| Attorneys’ fees and costs | Contractual fee-shifting; $20,354.28 billed; requests partner $275/hr, associate $230/hr, paralegals $95/hr | No response | Fees awarded $17,843.90 (rates: Mixon & Hartley $275; Mahoney $230; Sigler reduced to $150; paralegals $95) plus $592.40 costs |
| Evidentiary hearing for damages | Not necessary; amounts are liquidated or computable from records | No response | No hearing required; affidavits and records suffice to compute damages |
Key Cases Cited
- Pardazi v. Cullman Med. Ctr., 896 F.2d 1313 (11th Cir. 1990) (service of process is a jurisdictional prerequisite)
- Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487 (U.S. 1941) (federal diversity courts apply state substantive law and choice-of-law rules)
- Manuel v. Convergys Corp., 430 F.3d 1132 (11th Cir. 2005) (federal diversity court must apply state law)
- Nishimatsu Constr. Co. v. Houston Nat'l Bank, 515 F.2d 1200 (5th Cir. 1975) (court must ensure sufficient factual basis for damages in default judgment)
- Anheuser Busch, Inc. v. Philpot, 317 F.3d 1264 (11th Cir. 2003) (obligation to assure a legitimate basis for any damage award)
- Merchants Bank v. Head, 161 So.3d 1151 (Ala. 2014) (a promissory note is a contract; general principles of contract construction apply)
- Eagerton v. Vision Bank, 99 So.3d 299 (Ala. 2012) (guaranty contracts are enforced according to their terms absent fraud)
- Shaffer v. Regions Financial Corp., 29 So.3d 872 (Ala. 2009) (elements of breach-of-contract under Alabama law)