Macquarie Mexico Real Estate Management S.A. de C.V. v. Hoiston International…

Background

Macquarie México Real Estate Management S.A. de C.V., acting as attorney-in-fact for CIBanco, S.A. Institución de Banca Múltiple, as trustee of trust F/1636, sued Hoiston International Enterprises, Inc. The claims sought a declaration concerning Hoiston’s obligations and damages for breach of contract. The dispute involved a lease between the landlord and non-party H&H Recursos Internacionales, S. de R.L. de C.V. for a building in Mexicali, Mexico, and a guaranty under which Hoiston guaranteed the tenant’s lease obligations.

Hoiston did not answer or otherwise respond. Judge Koeltl entered a default judgment against Hoiston and referred the matter to Magistrate Judge Kevin Nathaniel Fox for an inquest—an examination of the evidence to determine the amount of damages, if any. The plaintiff’s inquest submissions were not opposed.

Liability and damages

Because Hoiston defaulted, the well-pleaded allegations about liability were treated as admitted, but the plaintiff still had to prove its damages with reasonable certainty. The guaranty was governed by New York law. The recommendation concluded that the allegations established Hoiston’s liability for breaching the guaranty.

The plaintiff sought $1,088,984.01 in damages. The recommendation limited recovery to amounts sought in the complaint, as required for a default judgment, and excluded amounts that were not adequately pleaded or supported. It recommended:

- $257,358.81 for unpaid rent, including value-added tax. The recommendation excluded January 2019 rent because the inquest submissions did not include evidence that it remained unpaid. - $1,909.80 for the tenant’s unpaid share of 2020 insurance expenses. - $2,423.21 for the tenant’s unpaid share of 2020 property taxes. - $7,712.97 for the tenant’s unpaid share of specified property operating expenses.

These amounts totaled $269,404.79. The recommendation rejected the requested late fees because the plaintiff’s submissions did not explain how the fees were calculated or establish that they followed the lease’s formulas. It also rejected amounts for 2021 insurance and property taxes, expenses outside the periods pleaded, and roof maintenance because those claims were not adequately requested in the complaint.

Interest, fees, and costs

The recommendation found that nine-percent annual prejudgment interest was warranted on $269,404.79 from March 25, 2020, when Hoiston was notified of the tenant’s payment failures, through the date of judgment.

The guaranty contained a fee-shifting provision requiring the unsuccessful party to pay the prevailing party’s reasonable litigation costs and attorney fees. The recommendation reduced the requested hourly rates and deducted 0.7 hours for an entry referring to a motion to dismiss that had not been filed. It recommended $46,180 in attorney fees, based on approved rates of $1,300 for Edward G. Kehoe, $1,250 for Brian A. White, $800 for Evan C. Ennis, and $200 for John C. McCullough. It also recommended $793.34 in costs.

Declaratory relief and recommendation

Because the lease was stated to continue through March 31, 2022, the recommendation found that declaratory relief would clarify the parties’ rights and obligations. It recommended a declaration that Hoiston’s guaranty requires it to satisfy the tenant’s current and future obligations to pay amounts due under the lease.

The recommendation, signed by Magistrate Judge Kevin Nathaniel Fox and submitted to Judge John G. Koeltl, recommended: (1) $269,404.79 in damages, with nine-percent annual interest from March 25, 2020, through judgment; (2) $46,180 in attorney fees; (3) $793.34 in costs; and (4) the stated declaratory judgment. The parties were given 14 days after service to file objections, and the opinion states that failing to object would waive objections and prevent appellate review.