JTH Tax LLC v. Sanchez

Background

JTH Tax LLC d/b/a Liberty Tax Service sued Josue Sanchez d/b/a Triple J and other defendants. On February 6, 2023, Judge Failla entered a default judgment against Don Varghese on count four of the verified complaint. On February 7, 2023, the case was referred to James L. Cott, United States Magistrate Judge, to conduct an inquest into damages against Varghese.

The court explained that a default establishes liability only to the extent stated in the default judgment; allegations about damages are not treated as admitted. JTH Tax LLC therefore must provide admissible evidence allowing the court to determine damages with reasonable certainty. The court also noted that the only count brought against Varghese appears to have been brought against Redhills Corporation and Merrick Henry, who settled the case as to themselves. JTH Tax LLC was ordered to explain whether that settlement affects the damages it seeks from Varghese.

Order

The court ordered JTH Tax LLC to serve Varghese and file proposed findings of fact and conclusions of law concerning damages and any other monetary relief permitted by the default judgment by March 6, 2023. The submission must state the exact dollar amount or other monetary relief requested, connect each proposed damages figure to the claim on which liability was established, explain how each figure was calculated, and include supporting affidavits and documentary evidence. Each proposed factual finding must cite the supporting affidavit paragraphs or documentary pages.

Any request for attorney’s fees must identify its legal basis and include contemporaneous time records, attorney experience and hourly-rate information, and appropriate fee charts. Requests for costs must have supporting documentary evidence. JTH Tax LLC may submit a legal memorandum instead of conclusions of law, but its papers must include an affidavit from someone with personal knowledge establishing the proposed damages.

Varghese was ordered to serve JTH Tax LLC’s counsel and file any response by March 27, 2023. Judge Cott stated that the court may conduct the damages inquest using written submissions alone. A party seeking an evidentiary hearing must explain why written submissions are insufficient and identify the proposed witnesses and evidence. This order scheduled and set requirements for the damages inquest; it did not determine the amount of damages.