Capital Investment PTY, LLC v. Onestone Capital, LLC

Background

Capital Investment PTY, LLC brought claims against Onestone Capital, LLC for breach of a loan agreement and, alternatively, unjust enrichment. Capital Investment served the amended complaint on Onestone, but Onestone did not timely respond. The Clerk of Court entered a certificate of default.

Capital Investment later moved for a default judgment and served the motion on Onestone. Onestone did not respond by the deadline. The court withdrew its earlier referral of the case to a magistrate judge and decided the motion based on the existing record.

Court’s Analysis

Under Federal Rule of Civil Procedure 55, a court may enter a default judgment when a defendant fails to plead or otherwise defend. The court considered whether Onestone’s default was willful, whether Onestone had a meritorious defense, and whether denying default judgment would prejudice Capital Investment. The court found that the first and third factors were satisfied because Onestone had been served, failed to answer, and did not appear to contest the motion.

For the breach-of-contract claim, the court applied New York law, which requires allegations showing a contract, the plaintiff’s performance, the defendant’s failure to perform, and damages. The court found that the allegations and supporting evidence established these elements. The parties formed the Loan Agreement in July 2019; Capital Investment transferred $250,000 to Onestone; the agreement allowed Capital Investment to request repayment after six months’ written notice; Capital Investment provided that notice; and Onestone failed to timely pay the outstanding principal and accrued interest.

The court declined to enter default judgment on the alternative unjust-enrichment claim because it was impermissibly duplicative of the breach-of-contract claim. Capital Investment had acknowledged that it would dismiss that claim if default judgment were entered on the contract claim and the unjust-enrichment claim remained.

Damages and Disposition

The court determined that the damages could be calculated with reasonable certainty from the affidavits and documents, so no separate hearing, or inquest, was required. It awarded Capital Investment $324,008.34 for breach of the Loan Agreement: $235,000 in unpaid principal, $20,890.49 in unpaid interest from January 2, 2020, through October 31, 2020, and $68,117.85 in unpaid interest from November 1, 2020, through September 25, 2023. The court also awarded post-judgment interest under 28 U.S.C. § 1961(a).

Judge Jennifer L. Rochon granted Capital Investment’s motion for default judgment. The court entered judgment on the breach-of-contract claim, denied the request for default judgment on the unjust-enrichment claim, directed the Clerk to terminate the motion, and closed the case.