Opinion
5:20-CV-00239-M
04-22-2022
Gaege Root, Plaintiff, v. Tony Robinson, Tony The Closer, LLC &I Close Deals, LLC, Defendants.
MEMORANDUM & RECOMMENDATION
ROBERT T. NUMBERS, II UNITED STATES MAGISTRATE JUDGE
This case is about someone who left Las Vegas with less money than they hoped they would. That by itself is not unusual. But here, unlike in most cases, Plaintiff Gage Root had a legal right to leave Las Vegas $100,000 richer than when he arrived. Defendants Tony Robinson, Tony the Closer, LLC, and I Close Deals, LLC (collectively “Robinson”) owed Root this amount after he won a drawing at their real-estate-focused conference. Their failure to honor their obligation to Root led to this lawsuit.
The Defendants have also failed to honor their obligations to the court. In October 2021, the court ordered the Defendants to respond to Root's discovery requests. But they have not done so. In fact, they have abandoned their defense of this lawsuit entirely.
Root now asks the court to enter a default judgment against the Defendants for their failure to obey the court's order. He seeks an award of $210,000 as well as his attorney's fees and costs. Root has shown that he is entitled to the relief he requests, so the district court should grant his motion.
I. Background
Tony Robinson claims to be a real property “wholesaling” expert. Compl. ¶ 8. And, based on this purported expertise, he offers programs and puts on conferences for people interested in wholesaling or flipping real estate. Id. ¶¶ 8 & 9. He called one of his conferences, which was to take place in Las Vegas, Nevada, the “100K Conference.” Id. ¶ 10. The name presumably stemmed from the promise that each attendee who paid the admission price would be entered into a sweepstakes to win $100,000. Id. ¶ 12.
Root was one of those who bought a ticket and attended the conference hoping to win the sweepstakes. Id. ¶ 13. His bet paid off as he was selected as the winner. Id. ¶ 15.
But rather than walk away from the event with $100,000, Root walked away with a set of instructions. Robinson told him that he would need to sign an “Affidavit of Eligibility and Release” which would be mailed to him. Id. ¶ 18. He dutifully signed and returned the affidavit, which told him that rather than get his award in a lump sum, he would receive ten monthly payments of $10,000. Id. ¶ 19.
Over the next few months, Root received three checks totaling $30,000 from Tony the Closer, LLC, a company owned by Tony Robinson. Id. ¶ 21. But that was it. Id. Root never received the remaining $70,000. Id. When he asked about the missed payments he received “hostile and belligerent” responses. Id. ¶ 22. In one exchange, Tony Robinson said that he would not pay Root “another dollar[.]” Id. ¶ 22. And he didn't. Id. ¶ 21.
Litigation ensued. Root sued Robinson alleging breach of contract, fraud, unfair and deceptive trade practices. Id. ¶¶ 23-30, 33-37. The fraud claim relies on Root's allegation that Robinson never intended to pay Root the full amount he was owed. Id. ¶ 28. Root sought various damages, an award of attorney's fees and costs, and imposition of a constructive trust. Id. ¶¶ 25, 31-32, 37, 38-39.
Root eventually asked the court to compel Robinson to respond to his discovery requests. D.E. 42. Robinson neither responded to the motion nor produced the requested discovery. So the court granted Root's motion and gave Robinson 14 days to comply. Order, D.E. 48. In its order, the court warned Robinson that failure to comply could result in entry of default judgment. Id.
The court allowed Robinson's attorneys to withdraw from the case the day after Root moved to compel. D.E. 45. In consideration of Robinson's need obtain new counsel, the court extended the time to respond to Root's motion. D.E. 47. But Robinson neither responded to the motion nor had new counsel appear.
Despite this warning, Robinson ignored the order. Root then asked the court to sanction Robinson by entering a default judgment. D.E. 49. Robinson did not respond to Root's motion.
Root notified the court that the copy of his Motion for Sanctions an accompanying memorandum sent to Defendants was returned as undeliverable. Notice, D.E. 52. But the copies sent by the court were not returned as undeliverable. So the court considers Defendants to have been served.
II. Analysis
Root claims he is entitled to a default judgment because Robinson ignored the court's discovery order. D.E. 49. Robinson has not responded to this motion. All the requirements for entry of a default judgment are met, so the district court should grant Root's motion.
A. Sanctions for Failure to Comply with a Discovery Order
The Federal Rules allow the court to sanction a party who violates a discovery order. Fed.R.Civ.P. 37(b)(2). These sanctions can include entry of a default judgment against the offending party. Id. Robinson has not complied with the October 2021 Order, so the only question is what sanction the court should impose for Robinson's conduct.
Before entering a default judgment as a sanction a court must consider four things. Wilson v. Volkswagen of Am., Inc., 561 F.2d 494, 503-04 (4th Cir. 1977). To begin with, it must consider whether the offending party acted in bad faith. Id. Next, the court must determine the amount of prejudice that the failure to respond caused to the party who served the discovery. Id. Then, the court must determine the need to deter similar conduct. Id. Finally, the court must evaluate whether less drastic sanctions would be effective. Id.
After analyzing these factors, it is appropriate for the district court to enter a default judgment against the Defendants.
1. Bad Faith
The court first looks to whether Robinson's conduct amounts to bad faith. A party acts in bad faith when it shows a “callous disregard for the authority of the district court and the Rules.” Mut. Fed. Sav. & Loan Ass'n v. Richards & Assocs., Inc., 872 F.2d 88, 92 (4th Cir. 1989). A primary example of bad-faith conduct is ignoring the opposing party's discovery requests and the court's orders requiring compliance. Id. at 93; Anderson v. Found. for Advancement, Educ. & Emp. of Am. Indians 155 F.3d 500, 504 (4th Cir. 1998) (responding party “stonewall[ing] on discovery from the inception of the lawsuit” constituted bad faith).
Robinson disregarded the court's discovery order. He has also ignored Root's discovery requests and his other obligations under the Federal Rules. In fact, Robinson has abandoned this case entirely. His behavior amounts to bad faith.
2. Prejudice
The second factor focuses on whether Robinson's noncompliance prejudiced Root. One type of prejudice a party can suffer from a discovery order violation is the inability to effectively prepare and litigate its case. See Mut. Fed. Sav. & Loan Ass'n, 872 F.2d at 93 (affirming district court's determination that requesting party “suffered great prejudice” because the requested documents were necessary for the party to prove its case); Porter v. Guarino, 223 F.R.D. 282, 284 (M.D. N.C. 2004) (requesting party “suffered great prejudice” when he could not prepare his case and wasted considerable resources moving to obtain discovery material).
Robinson's conduct has done just that. Root still has not received responses to his document requests even after the court ordered Robinson to produce them. The documents at issue include the Defendants' bank records and the Sweepstakes rules. These documents are crucial to resolving whether Defendants had the ability to pay the full $100,000, which Root believes would clarify whether Robinson ever intended to pay the full prize. Root also believes Robinson falsely represented to the court that the Sweepstakes rules were published and available to him. And documents relating to the publication of the Sweepstakes rules are also essential to resolving this question. Without these documents, Root cannot effectively pursue his case. So the undersigned finds that Robinson's actions have unnecessarily extended litigation, prevented Root from preparing his case, caused Root and the court to waste considerable resources, and prejudiced Root.
3. Deterrence
Not only has Robinson violated the court's order, but he has also completely abandoned this case. This conduct impedes the administration of justice. There is a strong need to deter this type of conduct both from Robinson and others who may come before this court. So this factor supports a strong sanction.
4. Sufficiency of Lesser Sanctions
Given that Robinson has ignored a court order and walked away from this case, no sanction other than entry of a default judgment would be effective. Any lesser sanction would only lead to a waste of resources as Root and the court have already attempted to get Robinson to comply with his obligations and cooperate in moving this matter towards a resolution.
5. Warning About Potential Entry of a Default Judgment
Along with considering the Wilson factors, the court must ensure that a party had explicit notice about the potential for a default judgment before imposing that sanction. See Hathcock v. Navistar Int'l Transp. Corp., 53 F.3d 36, 40 (4th Cir. 1995) (“[T]his court has emphasized the significance of warning a defendant about the possibility of default before entering such a harsh sanction.”). The court previously warned Robinson about the potential for entry of a default judgment if he did not comply with the October 2021 Order. D.E. 48 at 1. But that warning went unheeded.
Given that each factor supports doing so, the court should enter a default judgment against the Defendants.
If a court must consider the merits of the claims before entering a default judgment as a sanction, see Anderson v. Foundation for Advancement Educ. & Emp. of Am. Indians, 155 F.3d 500, 5050-6 (4th Cir. 1998) (reversing entry of a default judgment on a RICO claim because the complaint failed to state a claim for relief), the undersigned has done so and finds that the allegations state a claim for relief. The complaint's allegations state a claim for breach of contract under North Carolina law. Compare Compl. ¶¶ 13, 15, 17, 18, 19, 21, 23 with Wells Fargo Ins. Servs. USA, Inc. v. Link, 372 N.C. 260, 276, 827 S.E.2d 458, 472 (2019) (explaining elements of a North Carolina breach of contract claim). And, based on the allegations that Robinson never intended to honor his contractual obligations to Root, the breach of contract (which impacted commerce) qualifies as an unfair trade practice under North Carolina law. Compare Compl. ¶¶ 28, 29, 35 with Gilbane Bldg. Co. v. Fed. Rsrv. Bank of Richmond, Charlotte Branch, 80 F.3d 895, 903 (4th Cir. 1996) (explaining that a breach of contract can support a North Carolina Unfair Trade Practices Act claim “if the promisor had no intent to perform when he made the promise.”)
B. Damages
Having determined that Root is entitled to a judgment in his favor, the next question is what amount he is entitled to recover. While a court may sometimes need to hold a hearing to determine the amount of damages, if the damages amount is “ascertainable from the pleadings” the court may “award damages. . .without holding a hearing. Anderson, 155 F.3d at 507.
Root's Complaint lays out enough allegations for the court to determine the damages amount without holding a hearing. Robinson promised to pay Root $100,000, but only came up with $30,000, Compl. ¶¶ 12, 21, so Root is entitled to $70,000 in compensatory damages.
Root asks the court to treble this amount, as allowed by North Carolina's Unfair Trade Practices Act. See N.C. Gen. Stat. § 75-16. After doing so, he is entitled to a total of $210,000 in damages. The district court should enter a judgment in his favor in that amount.
Root's Complaint seeks both punitive damages and treble damages. Compl. at 8. But, based on his claims, he cannot recover both types of damages. Bicycle Transit Auth., Inc. v. Bell, 314 N.C. 219, 230, 333 S.E.2d 299, 306 (1985) (quoting Marshall v. Miller, 47 N.C.App. 530, 542, 268 S.E.2d 97, 103 (1980)).
C. Attorney's Fees
Root also asks the court to award him the fees he incurred pursuing his claims. Mem. in Supp. at 1 n.1, D.E. 50. Since he is entitled to an award of attorney's fees under North Carolina law, and he has justified the amount he seeks, the court should grant this request.
North Carolina's UTPA gives judges the discretion to award attorney's fees to the prevailing party if certain circumstances are present. N.C. Gen. Stat. § 75-16.1. As is relevant here, those circumstances include when a party “willfully engaged in the act or practice, and there was an unwarranted refusal by such party to fully resolve the matter which constitutes the basis of such suit.” Id. § 75-16.1(1).
Both elements are satisfied here. The Complaint's allegations establish that Robinson's actions were intentional, Compl. ¶¶ 28, 29, and thus they qualify as willful, Standing v. Midgett, 850 F.Supp. 396, 404 (E.D. N.C. 1993). And both Robinson's belligerent statements to Root before litigation began and his decision to walk away from this case after it started constitutes an unwarranted refusal to resolve this matter. So Root is entitled to recover his attorney's fees from Robinson.
Courts in the Fourth Circuit use a two-step process to calculate an attorney's fees award. First, the court must determine a “lodestar figure by multiplying the number of reasonable hours expended times a reasonable rate.” Robinson v. Equifax Info. Servs., LLC, 560 F.3d 235, 243 (4th Cir. 2009) (citing Grissom v. The Mills Corp., 549 F.3d 313, 320 (4th Cir. 2008)). Twelve factors play into the reasonableness of the hours expended and the rate charged:
• The time and labor expended.
• The novelty and difficulty of the questions raised.
• The skill required to properly perform the legal services rendered.
• The attorney's opportunity costs in pursuing the case.
• The customary fee for similar work.
• The attorney's expectations at the outset of litigation.
• The time limitations imposed by the client or circumstances.
• The amount in controversy and the results obtained.
• The experience, reputation, and ability of the attorney.
• The undesirability of the case within the legal community in which the suit arose.
• The nature and length of the professional relationship between attorney and client.
• Fee awards in similar cases.Id. at 243-44 (quoting Barber v. Kimbrell's Inc., 577 F.2d 216, 226 n. 28 (4th Cir. 1978)). There may be cases, however, where not all factors are relevant. In that case, the court “is under no obligation to go through the inquiry of those factors that do not fit.” In re A.H. Robins Co., Inc., 86 F.3d 364, 376 (4th Cir. 1996).
After it determines the lodestar figure, the court should consider whether to reduce that figure based on the results the attorney obtained for her client. If a fee request includes “fees for hours spent on unsuccessful claims unrelated to successful ones” the court should subtract those fees from the lodestar figure. Johnson v. City of Aiken, 278 F.3d 333, 337 (4th Cir. 2002). Then the court should “award[] some percentage of the remaining amount, depending on the degree of success enjoyed by the” applicant. Id.
With this framework in mind, the court turns to its assessment of Root's fee request.
1. Reasonable Hourly Rate
The court begins by considering the reasonable hourly rate to apply in the lodestar calculation. The court should use an hourly rate that reflects “the prevailing market rates in the relevant community for the type of work for which [a party] seeks an award.” Id. at 277. The relevant community will typically be the “community in which the court sits[.]” Rum Creek Coal Sales, Inc. v. Caperton, 31 F.3d 169, 179 (4th Cir. 1994).
Once the court has determined the relevant community, it must then determine the prevailing market rate in that community for the type of work involved in the fee request. The chosen rate should reflect “what attorneys earn from paying clients for similar services in similar circumstances[.]” Depaoli v. Vacation Sales Assocs., L.L.C., 489 F.3d 615, 622 (4th Cir. 2007). The party seeking the fee award must provide “‘specific evidence of the ‘prevailing market rates in the relevant community' for the type of work for which he seeks an award.” Spell v. McDaniel, 824 F.2d 1380, 1402 (4th Cir. 1987) (quoting Blum v. Stenson, 465 U.S. 886, 895 (1984)). A party meets this burden by supplying the court with “affidavits of other local lawyers who are familiar both with the skills of the fee applicants and more generally with the type of work in the relevant community.” Robinson, 560 F.3d at 245.
Root has established that his attorneys are entitled to their requested hourly rate. He has provided declarations from two North Carolina attorneys who attest that the requested $250 hourly rate is reasonable and similar to the rate charged by local attorneys for comparable work. D.E. 541; D.E. 54-2. And he has provided a declaration from his attorney that he regularly bills his client at $250 an hour. He also points to attorney's fees awards in each of the federal districts in this state which found a reasonable hourly rate for an attorney with this experience to be consistent with, if not greater than, the $250 hourly rate he requests.
Given Taylor's nine years in practice and experience litigating breach of contract, fraud, and UTPA claims, the court finds that Root has established that $250 is a reasonable hourly rate. Thus the undersigned will apply that rate in determining the fee award.
2. Reasonable Hours Expended
The court next considers the hours that should be included in the reasonable fee calculation. To meet its burden on this issue, a fee applicant must submit billing records that contain “sufficient detail that a neutral judge can make a fair evaluation of the time expended, the nature and need for the service, and the reasonable fees to be allowed.” Hensley, 461 U.S. 424, 441 (1983) (Burger, C.J., concurring). If, however, an attorney submits a request made up of “vague task entries or block billing, ” the court may exclude these entries from the fee award. Two Men & A Truck/Intern., Inc. v. A Mover Inc., 128 F.Supp.3d 919, 925-26 (E.D. Va. 2015). After receiving the records, the court will independently review them to ensure their reasonableness as well as ensure that the applicant is not compensated for “excessive, redundant, or otherwise unnecessary work.” Rivers v. Ledford, 666 F.Supp.2d 603, 606 (E.D. N.C. 2009) (citing Trimper v. City of Norfolk, 846 F.Supp.2d 1295, 1307 (E.D. Va. 1994)).
Here, the factors relevant to the reasonable number of hours expended include the time spent on the matter, the novelty and difficulty of the questions, and the skill required. Taylor attests he has worked on this case for 128 hours and 11 minutes between May 2020 and present. D.E. 543. Having reviewed both the issues involved and its procedural history, this is a reasonable amount of time to have spent on this case. So the district court should award Root fees for all of the time his attorney expended on this case.
In light of the findings on the reasonableness of the hourly rate and time spent on the case, the lodestar calculation yields a fee award of $32,045.
3. Results Obtained
Having calculated the lodestar amount, the court must consider whether that amount should be reduced because of the case's outcome. Since Root is entitled to recover the entire amount he sought, there is no reason to reduce the lodestar amount.
D. Costs
Root also seeks to recover costs and expenses for filing and service of the Summons and Complaint. Federal Rule of Civil Procedure 54 and the court's local rules govern the taxing of costs after the entry of a judgment. Root should submit the forms and documentation required by those rules in a timely manner once the Clerk of Court has entered a judgment.
III. Conclusion
The undersigned recommends granting Root's motion and entering a default judgment against Defendants in the amount of $210,000 and awarding Root $32,045 in attorney's fees.
The Clerk of Court must serve a copy of this Memorandum and Recommendation (“M&R”) on each party who has appeared in this action. Any party may file a written objection to the M&R within 14 days from the date the Clerk serves it on them. The objection must specifically note the portion of the M&R that the party objects to and the reasons for their objection. Any other party may respond to the objection within 14 days from the date the objecting party serves it on them. The district judge will review the objection and make their own determination about the matter that is the subject of the objection. If a party does not file a timely written objection, the party will have forfeited their ability to have the M&R (or a later decision based on the M&R) reviewed by the Court of Appeals.