The Barter House, Inc. v. Infinity Spirits LLC

Background

The Barter House, Inc. and Brian DiMarco sued Infinity Spirits LLC, Don Good Tequila Company, LLC, European Infinity Group Inc. (EIG), and Brian Hopkins. Plaintiffs alleged that defendants fraudulently induced them to enter a partnership to sell and market Blue Hour Tequila, also called La Hora Azul. Plaintiffs also alleged that defendants breached a Stake Hold Agreement under which DiMarco was to receive an ownership interest in Infinity Spirits. The claims included fraud, breach of contract, and unjust enrichment.

EIG asserted counterclaims alleging that The Barter House and DiMarco breached a Distribution Agreement by failing to order enough tequila and promote the product. EIG also alleged that DiMarco tortiously interfered with existing contractual relationships by forging Hopkins’s signature on documents authorizing the importation of Blue Hour Tequila into Florida.

The court previously denied both sides’ motions for summary judgment. It found factual disputes concerning plaintiffs’ breach-of-contract, unjust-enrichment, and fraud claims, as well as EIG’s breach-of-contract counterclaim. The court also stated that DiMarco had contributed at least $66,156.93 under the Stake Hold Agreement and would ultimately be entitled to recover at least that amount under the agreement, but it did not enter judgment for that amount in the prior ruling.

Events Leading to Default

After the case was set to proceed toward trial, defendants failed to complete required settlement and pretrial steps. They did not provide documents required for a settlement conference, did not file their portions of the pretrial materials, and did not appear at a pretrial conference. The court then barred defendants from presenting evidence in their own case-in-chief at trial.

Plaintiffs later moved for partial summary judgment on EIG’s counterclaims and all defendants’ affirmative defenses. Defendants did not oppose that motion. After defense counsel died, the court instructed Hopkins to obtain replacement counsel for Infinity Spirits and EIG, explaining that the corporate defendants had to appear through licensed counsel. No replacement counsel appeared by the court’s deadline.

Plaintiffs moved for default judgment against Infinity Spirits and EIG under Federal Rule of Civil Procedure 55(b)(2). The plaintiffs served the motion and the court’s orders requiring the defendants to respond. Neither Infinity Spirits nor EIG filed an opposition, and no counsel appeared for either entity.

Ruling

The court found that service had been shown, that Infinity Spirits and EIG had failed to defend the case, and that plaintiffs had presented enough evidence to support their claims. The court therefore entered default judgment for plaintiffs against Infinity Spirits and EIG.

Specifically, the court granted a default judgment dismissing with prejudice each counterclaim asserted by EIG. It granted summary judgment dismissing with prejudice each affirmative defense asserted by Infinity Spirits and EIG. It also granted a default judgment in plaintiffs’ favor as to liability on each claim asserted against Infinity Spirits and EIG in the First Amended Complaint.

The court did not determine the amount of damages in this order. Instead, it stated that a separate order would begin a proceeding to determine damages. The court directed the Clerk to terminate the pending motion and directed plaintiffs to serve the judgment on Infinity Spirits, EIG, and Hopkins and file proof of service.