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Jonestown Bank and Trust Co v. Automated Teller Machine

December 5, 2012

JONESTOWN BANK AND TRUST CO., PLAINTIFF
v.
AUTOMATED TELLER MACHINE, SERVICES, INC., DEFENDANT



The opinion of the court was delivered by: Chief Judge Kane

MEMORANDUM

Presently pending before the Court is Plaintiff's motion for default judgment. (Doc. No. 6.) As Defendant has yet to appear or defend in this action, no opposition to the motion has been filed. For the reasons that follow, the Court will grant the motion but defer entering judgment pending determination as to the amount of damages to be awarded.

I. BACKGROUND

On August 21, 2012, Plaintiff Jonestown Bank and Trust Company filed this diversity action against Defendant Automated Teller Machine, Services, Inc., raising claims of breach of contract, quantum meruit, and fraud under Pennsylvania law. (Doc. No. 1.) In its complaint, Plaintiff alleges that it entered into a contract with Defendant in 2011 under which Defendant agreed to install nine automated teller machines ("ATMs"), including two refurbished ATMs, as well as the current version of Agilis software on all nine ATMs. (Id. ¶ 4.) Prior to entering into the contract, Plaintiff informed Defendant that the performance of these services was "necessary for [Plaintiff] to be compliant with the Department of Justice (DOJ) directive, requiring financial institutions [to] comply with DOJ regulations promulgated under the Americans with Disabilities Act (ADA) . . . on or before March 15, 2012." (Id. ¶ 5.) Plaintiff paid Defendant $53,568.00 for the installation of the two refurbished ATMs and the current software licenses for all of the ATMs. (Doc. No. 7 ¶ 15.) Defendant, however, despite representing on multiple occasions that it would perform the installations, has neither installed the two refurbished ATMs nor the current version of the software on any of the other ATMs. (Doc. No. 1 ¶¶ 11, 13; Doc. No. 7 ¶¶ 13-14, 19.) As a result of Defendant's failure to fulfill its contractual obligations, Plaintiff contracted with another vendor, who performed the services at a cost of $69,793.00. (Doc. No. 7 ¶ 11.)

Plaintiff now seeks $69,793.00 in damages, "representing the $53,568.00 paid . . . to [Defendant], plus the difference between the vendor payment ($69,793.00) and monies paid to [Defendant] for services not rendered, $16,225.00," as well as prejudgment interest and attorney's fees and costs. (Doc. No. 6-1 ¶¶ 14, 23-24.) Plaintiff also seeks punitive damages in the amount of $160,704.00 in compensation for its future exposure to ADA claims due to its noncompliance with the DOJ regulations that became effective on March 15, 2012. (Id. ¶ 23.)

The record shows that, although Defendant was properly served with the summons and complaint (Doc. No. 3), Defendant has not appeared, answered, moved, or otherwise responded to the pleading. After Defendant failed to respond to the pleading, Plaintiff requested, and the Clerk of Court entered, default against Defendant pursuant to Rule 55(a) of the Federal Rules of Civil Procedure. (Doc. Nos. 4, 5.) Now before the Court is Plaintiff's motion for entry of default judgment under Rule 55(b). (Doc. No. 6.)

II. DISCUSSION

Rule 55(b)(2) of the Federal Rules of Civil Procedure provides for entry of default judgment against a defendant who has not appeared and who is neither a minor nor an incompetent person. Fed. R. Civ. P. 55(b)(2). Entry of default does not entitle a claimant to default judgment as a matter of right. 10 James Wm. Moore et al., Moore's Federal Practice § 55.31 (Matthew Bender ed. 2010). Even when a party has defaulted and all of the procedural requirements for a default judgment are satisfied, the decision to either render default judgment or refuse to render default judgment rests in the discretion of the district court. Emcasco Ins. Co. v. Sambrick, 834 F.2d 71, 74 (3d Cir. 1987). In undertaking this evaluation, the Court must consider: "(1) prejudice to the plaintiff if default is denied; (2) whether the defendant appears to have a litigable defense; and (3) whether defendant's delay is due to culpable conduct." Chamberlain v. Giampapa, 210 F.3d 154, 164 (3d Cir. 2000) (citing United States v. $55,518.05 in U.S. Currency, 728 F.2d 192, 195 (3d Cir. 1984)). But when a defendant has failed to appear or respond in any fashion to the complaint, this analysis is necessarily one-sided; entry of default judgment is typically appropriate in such circumstances at least until the defendant comes forward with a motion to set aside the default judgment pursuant to Rule 55(c). As the United States Court of Appeals for the Third Circuit has explained:

In most instances where a party's right to prosecute or defend would be term inated as a sanction, the m oving party has the burden of creating a record showing the appropriateness of this ultim ate sanction and the district court has the responsibility of m aking a determination on that issue in light of considerations l ike those articulated in Poulis. When a defendant fails to appear and perhaps under other circumstances covered by Rule 55, the district court or its clerk is authorized to enter a default judgm ent based solely on the fact that the default has occurred. Even in those situations, however, consideration of Poulis type factors is required if a motion to lift the default is f iled under R ule 55(c) or R ule 60(b) and a record is supplied that will permit such consideration.

Anchorage Assocs. v. V.I. Bd. of Tax Review, 922 F.2d 168, 177 n.9 (3d Cir. 1990).

Here, the factors weigh in favor of granting default judgment. First, there is a risk of prejudice to Plaintiff if default judgment is denied. The allegations contained in the complaint and the affidavit of Troy Peters, Plaintiff's chief executive officer, indicate that Defendant breached its contract with Plaintiff by failing to install the two refurbished ATMs and the current version of the Agilis software on any of the other ATMs at issue, resulting in monetary losses in the amount of $69,793.00. (Doc. No. 6-1 at 1-3; Doc. No. 7 at 7-8.) Moreover, Plaintiff avers that it may be subject to future monetary losses relating to its ATMs' noncompliance with DOJ regulations, which became effective on March 15, 2012, due to Defendant's conduct. (Doc. No. 6-1 at 5-6.) Second, Defendant has not asserted any defense, either by answering the allegations in the complaint or by opposing the instant motion for entry of default judgment. Finally, the Court can find no excuse or reason for Defendant's default other than its own conduct. Plaintiff has shown that Defendant was personally served with all of the required documents. (Doc. No. 3.) Despite this, Defendant has neither engaged in the litigation process nor offered any reason for its failure to appear. Therefore, the Court finds that Defendant is personally culpable for its failure to appear and that there is no basis in the record to excuse this conduct. Accordingly, the Court finds that default judgment is warranted.

Because default judgment will be entered, "the factual allegations of the complaint, except those relating to the amount of damages, will be taken as true." Comdyne I, Inc. v. Corbin, 908 F.2d 1142, 1149 (3d Cir. 1990). The allegations in the complaint, taken as true, are sufficient to make out breach-of-contract and fraud claims under Pennsylvania law.*fn1

Accordingly, the Court must assess the amount of damages to which Plaintiff is entitled. Fed. R. Civ. P. 55(b)(2)(B). In determining an appropriate award of damages, the Court may conduct a hearing or receive detailed affidavits from Plaintiff. See id.; Durant v. Husband, 28 F.3d 12, 15 (3d Cir. 1994) (stating that, if necessary, the court may hold a hearing to assess damages).

First, with respect to Plaintiff's request for damages stemming from Defendant's breach of contract, Plaintiff presented evidence that: it contracted with Defendant for, inter alia, the installment of two refurbished ATMs and current software; Defendant failed to perform such services; Plaintiff remitted funds to Defendant for these services; and Plaintiff was forced to contract with a third party for the performance of these services. Upon review of this evidence, the Court is satisfied that Plaintiff has ...


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