Huntington National Bank v. McFarlin LLP

Background

Huntington National Bank alleged that it entered an Installment Payment Agreement with McFarlin LLP on July 8, 2021. Huntington allegedly financed $199,561.57 for McFarlin LLP’s purchase of software and equipment. The agreement required 60 monthly payments of $3,918.63 and allowed Huntington to seek fees, costs, and expenses connected with enforcing its rights.

Timothy G. McFarlin provided a continuing guaranty. The guaranty required him to make full payment of McFarlin LLP’s obligations and to pay costs, fees, and expenses connected with enforcement.

The complaint also asserted unjust enrichment and promissory or equitable estoppel claims and sought to assert rights involving collateral and priority liens. At the default-judgment hearing, Huntington stated that it would not object to judgment only on the breach-of-contract claims and dismissal of the remaining claims.

Court’s analysis

A default judgment requires two steps: entry of default by the clerk and an application to the court for judgment. After default, the complaint’s factual allegations are treated as admitted, except allegations about damages. The court must still determine whether those facts establish a valid legal claim.

Breach-of-contract claims

Under Minnesota law, a breach-of-contract claim requires a contract, the plaintiff’s performance of conditions required before demanding performance, and the defendant’s breach.

For Count I, Huntington alleged that McFarlin LLP entered the payment agreement, that Huntington performed its obligations, that McFarlin LLP failed to make required payments, and that Huntington notified the defendants of the default and accelerated the debt. Huntington alleged that McFarlin LLP owed $181,394.69 as of July 15, 2022. The court held that these unchallenged allegations established a valid breach-of-contract claim against McFarlin LLP.

For Count II, Huntington alleged that McFarlin guaranteed McFarlin LLP’s obligations and failed to pay the amounts owed after McFarlin LLP’s default. The court held that these unchallenged allegations established a valid breach-of-contract claim against McFarlin.

Damages

The court found that Huntington proved its damages to a reasonable degree of certainty. It awarded:

- $27,430.41 for seven past-due monthly payments; - $149,627.77 for the present value of 43 future or accelerated monthly payments, calculated at an implicit interest rate of 6.65 percent; - $7,481.39 for the five-percent default penalty on the future monthly payments; and - $2,743.04 in late fees, calculated as 10 percent of each of seven missed monthly payments.

These amounts totaled $187,282.61. The court noted that Huntington had requested $2,351.16 in late fees, but the agreement and the calculation supported $2,743.04 instead.

Attorneys’ fees, costs, and interest

The court awarded Huntington $7,279.95 in attorneys’ fees and costs because the agreement allowed such recovery and Huntington supported the request with sworn declarations, invoices, and billing records.

The court also awarded post-judgment interest at the rate specified by 28 U.S.C. § 1961(a), beginning when judgment was entered and applying to the total award, including fees and costs.

Disposition

The court granted Huntington’s motion for default judgment as to Counts I and II. It dismissed Counts III, IV, V, and VI without prejudice. The clerk was ordered to enter judgment against McFarlin LLP and Timothy G. McFarlin in favor of Huntington for $194,562.56, plus post-judgment interest under 28 U.S.C. § 1961(a).