Irina Giovanno v. Louis Fabec
804 F.3d 1361
| 11th Cir. | 2015Background
- In April 2010 plaintiffs in Spain wired $34,000 to Georgia resident Louis Fabec for a car; Fabec never delivered the vehicle and refused to return the money.
- Plaintiffs sued in federal court (diversity) in October 2010 for breach of contract, conversion, unjust enrichment, and related claims.
- The case stalled; by early 2015 the court set a pretrial conference and explicitly ordered Fabec to appear, warning that failure to appear could result in default judgment.
- Fabec did not appear; his attorney stated Fabec was unavailable due to work but offered no proof. The clerk entered default and the district court granted default judgment.
- The district court awarded $34,000 in damages (plus interest) and $43,500 in attorney’s fees under Ga. Code § 13-6-11; Fabec appealed jurisdiction, the entry of default, and the absence of a hearing on damages/fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Subject-matter jurisdiction (amount in controversy) | Complaint alleged aggregate damages > $75,000 | Only $34,000 was asserted as actual loss, so diversity threshold not met | Plaintiffs satisfied §1332 by alleging > $75,000 in the operative complaint; jurisdiction exists |
| Entry of default judgment under Local Rule 16.5 | Sanction appropriate for noncompliance with pretrial order | Default improper; court abused discretion | Entry of default judgment was within the court’s discretion given prolonged nonparticipation, explicit warning, and failure to excuse absence |
| Need for hearing to determine damages | No hearing needed where well-pleaded facts and records show $34,000 conversion | Hearing required to determine amount/offsets and setoff issues | No hearing required for the $34,000 damages award because default admits well-pleaded facts; defendant’s setoff argument was forfeited on appeal |
| Attorney’s fees award and need for hearing | Fees supported by affidavits and billing statements; hearing unnecessary | Georgia law requires a hearing and opportunity to cross-examine on fee reasonableness | Fee award vacated; under Georgia law defendant must be afforded a hearing/opportunity to challenge fees — remanded for a fee hearing |
Key Cases Cited
- Yunker v. Allianceone Receivables Mgmt., Inc., 701 F.3d 369 (11th Cir.) (standard for reviewing subject-matter jurisdiction statements)
- Federated Mut. Ins. Co. v. McKinnon Motors, LLC, 329 F.3d 805 (11th Cir.) (amount-in-controversy satisfied by good-faith allegation)
- Sanderford v. Prudential Ins. Co. of Am., 902 F.2d 897 (11th Cir.) (standard of review for default judgment)
- Surtain v. Hamlin Terrace Found., 789 F.3d 1239 (11th Cir.) (abuse-of-discretion framework)
- United States v. Samaniego, 345 F.3d 1280 (11th Cir.) (discretion to impose sanctions for noncompliance)
- Anheuser-Busch, Inc. v. Philpot, 317 F.3d 1264 (11th Cir.) (discretionary nature of hearings on damages)
- Lary v. Trinity Physician Fin. & Ins. Servs., 780 F.3d 1101 (11th Cir.) (default admits well-pleaded factual allegations)
- Chambers v. NASCO, Inc., 501 U.S. 32 (U.S.) (courts’ inherent sanctioning power)
- SEC v. Smyth, 420 F.3d 1225 (11th Cir.) (Rule 55(b)(2) does not always require a damages hearing)
- Eways v. Ga. R.R. Bank, 806 F.2d 991 (11th Cir.) (Georgia law requires fees be supported by evidence of reasonableness)