Silver Bow Trust U/T/A v. Verde Mobility, Inc.

Background

Silver Bow Trust U/T/A asserted breach-of-contract and alternative unjust-enrichment claims against Verde Mobility, Inc. and Michael Luther. The claims arose from a promissory note that required Verde to pay $85,000 in principal and a $10,000 one-time fee by December 31, 2022. The note provided for interest on unpaid principal, increasing from 14% per year to 18% per year after default, and allowed recovery of reasonable attorneys’ fees and court costs incurred to enforce the note.

Luther signed the note for Verde and separately signed a personal guaranty. The guaranty made him jointly and severally responsible with Verde for the amount due after Verde’s default. The defendants made no payments by the maturity date. Silver Bow sent a written default notice and made additional demands, but the defendants did not pay.

Procedural History

Default Judgment

The court held that the motion was procedurally proper under Federal Rule of Civil Procedure 55. Although default generally admits the complaint’s factual allegations, the court still had to determine whether those facts established valid claims and supported the requested damages.

The court found that Silver Bow established breach-of-contract claims against Verde and Luther. It concluded that Verde breached the note by failing to pay and that Luther breached the guaranty by failing to satisfy Verde’s obligation. The court awarded $129,661.37 in actual damages, consisting of the $85,000 principal, the $10,000 one-time fee, and $34,661.37 in accrued interest. Verde and Luther are jointly and severally liable for that amount.

The court denied default judgment on Silver Bow’s alternative unjust-enrichment claim. It reasoned that unjust enrichment is an equitable claim and cannot provide relief when valid contracts govern the parties’ rights and obligations.

Attorneys’ Fees and Costs

The note required the defendants to pay reasonable attorneys’ fees and court costs associated with collection and enforcement. Silver Bow requested $14,213.50 in attorneys’ fees and $513.86 in costs. The court found the costs reasonable and awarded the full $513.86.

The court found the requested attorneys’ fees generally reasonable but reduced them by $2,988. That reduction covered work on amended complaints filed to address jurisdictional pleading defects, rather than work collecting the debt under the note. The court therefore awarded $11,225.50 in attorneys’ fees. Verde and Luther are jointly and severally liable for both the fees and costs.

Order

The court expressly granted in part and denied in part Silver Bow’s motion for default judgment and award of attorneys’ fees and costs. It granted default judgment on the breach-of-contract claims, denied it on the alternative unjust-enrichment claim, awarded $129,661.37 in damages, $11,225.50 in attorneys’ fees, and $513.86 in costs, and directed that judgment be entered.