Bellridge Capital, LP v. EVMO, Inc

Background

Bellridge invested $6 million in EVmo in March 2018. In return, EVmo issued Bellridge a $6 million promissory note and a warrant to purchase up to 1.5 million EVmo shares at $4 per share. The warrant included anti-dilution provisions that could reduce the exercise price if EVmo later sold shares for less than $4 per share.

After EVmo disclosed that it had sold approximately 2.5 million shares for $0.0097 per share, Bellridge sought to exercise the warrant at a lower adjusted price. EVmo refused. Bellridge filed the underlying breach-of-contract action and sought damages, attorneys’ fees, and costs.

Settlement and Confession of Judgment

The parties entered into a settlement agreement on March 16, 2023. EVmo agreed to pay Bellridge $1.62 million in 36 monthly installments from April 2023 through March 2026. The agreement also provided that the prevailing party in an action concerning the agreement could recover reasonable attorneys’ fees, disbursements, and costs.

EVmo’s chief executive officer separately signed a declaration confessing judgment on EVmo’s behalf. The declaration authorized Bellridge to seek judgment if EVmo failed to make the required installment payments and failed to cure the default after receiving the required written notice. It authorized judgment for $1.62 million, plus interest at the judgment rate and taxable costs, minus payments already made.

The Court’s earlier dismissal order retained jurisdiction over claims arising from the settlement agreement. Bellridge said EVmo made three $25,000 payments, totaling $75,000, and then defaulted on the July 1, 2023 payment. Bellridge sent notices of default on July 10 and August 4, but EVmo made no further payments. EVmo received three extensions to respond to the motion for entry of judgment but filed no response. The Court later ordered EVmo to respond, warning that it would treat the motion as unopposed if EVmo did not do so. EVmo did not respond.

Court’s Analysis

The Court explained that a federal court may enforce a settlement agreement when its dismissal order expressly retains jurisdiction over that agreement. The Court also stated that it may enter judgment based on a confession of judgment when subject-matter jurisdiction exists and the confession was made voluntarily, knowingly, and intelligently.

The Court found subject-matter jurisdiction through diversity of citizenship because Bellridge was a limited partnership with its principal place of business in Fort Lauderdale, Florida, EVmo was a corporation with its principal place of business in Beverly Hills, California, and the amount in controversy exceeded $75,000.

The Court found no dispute that EVmo’s confession of judgment was voluntary, knowing, and intelligent. The declaration stated that EVmo’s chief executive officer had consulted EVmo’s counsel, that EVmo agreed the judgment amount was fair and reasonable, and that the declaration was supported by consideration. EVmo also did not dispute its default or the amount Bellridge claimed was due.

Applying New York law, the Court found that the confession of judgment authorized entry of judgment in the Southern District of New York, stated the amount authorized, and concisely described the breach of contract giving rise to the debt. The Court concluded that the requirements for entry of judgment were satisfied.

Disposition

The Court granted Bellridge’s motion for entry of judgment against EVmo. The order did not yet determine the amount of attorneys’ fees and costs. It directed Bellridge to submit the requested amount, an affidavit or declaration, contemporaneous billing records, and an itemized list of costs by December 18, 2023. Any opposition was due December 22, 2023.