Annon Consulting, Inc. v. Bionitrogen Holdings Corp., et al

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
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No. 15-15263
Non-Argument Calendar
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D.C. Docket No. 9:15-cv-80088-KLR
ANNON CONSULTING, INC.,
Plaintiff - Appellee,
versus
BIONITROGEN HOLDINGS CORP.,
BIO-SNG TECHNOLOGIES INTERNATIONAL CORP.,
BIONITROGEN FLORIDA HOLDINGS, LLC,
BIONITROGEN PLANT FL HENDRY LLC,
4A TECHNOLOGIES, LLC,
Defendants - Appellants,
BIONITROGEN BIOMASS SOURCING, LLC, et al.,
Defendants.
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Appeal from the United States District Court
for the Southern District of Florida
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(May 27, 2016)
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Before WILSON, ROSENBAUM, and EDMONDSON, Circuit Judges.
PER CURIAM:
Defendants appeal (1) the district court’s denial of Defendants’ motion to set
aside the clerk’s entries of default and (2) the district court’s entry of default
judgment against Defendants in favor of Annon Consulting, Inc. No reversible
error has been shown; we affirm.
Briefly stated, Annon loaned $845,000 to Defendant BioNitrogen Holdings
Corp. (“BioNitrogen”), pursuant to a written loan agreement. The loan was
guaranteed by Defendants Bio-SNG Technologies International Corp.,
BioNitrogen Florida Holdings, LLC, BioNitrogen Plant FL Hendry, LLC,
BioNitrogen Plant FL Hardee, LLC, BioNitrogen Biomass Sourcing, LLC, and B
Group, LLC, and secured in part by Bio-SNG’s pledged securities in Defendant 4A
Technologies, LLC. BioNitrogen failed to repay the loan.
On 26 January 2015, Annon filed suit against Defendants, seeking to enforce
the terms of the loan. After proper service, Defendants failed to respond to the
complaint. The clerk of the court then entered default on 24 February (against all
Defendants except 4A Technologies) and on 19 March (against 4A Technologies).
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On 8 May 2015, Defendants filed a motion (which they later amended) to set
aside the clerk’s entries of default. The district court denied Defendants’ motion
and later entered final default judgment against Defendants in excess of
$1,188,000. This appeal followed.
I.
We first address Defendants’ assertion that the district court erred in
concluding that it had subject-matter jurisdiction based on diversity of citizenship.
Defendants argue that insufficient evidence exists to support the district court’s
factual determination that Annon is a “citizen” of Ontario, Canada.
We review for clear error the district court’s jurisdictional factfindings about
citizenship. Travaglio v. Am. Express Co., 735 F.3d 1266, 1269 (11th Cir. 2013).
“A finding is clearly erroneous if the record lacks substantial evidence to support
it.” Id.
For purposes of establishing diversity jurisdiction, “a corporation shall be
deemed to be a citizen of every State and foreign state by which it has been
incorporated and of the State or foreign state where it has its principal place of
business.” 28 U.S.C. § 1332(b). The phrase “principal place of business” means
“the place where a corporation’s officers direct, control, and coordinate the
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corporation’s activities.” Hertz Corp. v. Friend, 130 S. Ct. 1181, 1192 (2010). In
practice, a corporation’s principal place of business “should normally be the place
where the corporation maintains its headquarters.” Id.
Competent evidence supports the district court’s finding that Annon is a
“citizen” of Ontario, Canada for purposes of diversity-of-citizenship jurisdiction.
In its well-pleaded complaint, Annon alleged both that it was organized under the
laws of Ontario and that it had its principal place of business in Ontario.1 These
factual allegations are supported both by the Security Agreement (identifying
Annon as “a corporation organized and existing under the laws of Canada”) and a
sworn declaration by Annon’s sole director and general manager (testifying that
Annon’s place of incorporation and principal place of business are both Ontario,
Canada).
About Annon’s principal place of business, the record evidences that Annon
is affiliated with a single address: in Toronto, Ontario, Canada. The record also
demonstrates that Annon maintained a bank account with an Ontario branch of a
Canadian bank and that Annon used this Ontario bank account to wire the pertinent
loan proceeds to Defendants. Nothing in the record evidences that Annon’s
corporate activities were directed, controlled, or coordinated from a location other
1 In general, “a defaulted defendant is deemed to admit the plaintiff’s well-pleaded allegations of
fact.” Cotton v. Mass. Mut. Life Ins. Co., 402 F.3d 1267, 1278 (11th Cir. 2005) (quotations and
alterations omitted).
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than from Ontario, Canada. On this record, the district court committed no clear
error in determining that Annon is a citizen of Ontario, Canada. Because
Defendants are citizens of Florida, New Jersey, Delaware, and Texas, complete
diversity exists and the district court exercised properly subject-matter jurisdiction.
II.
We review for abuse of discretion a district court’s denial of a motion to set
aside an entry of default. Jones v. Harrell, 858 F.2d 667, 669 (11th Cir. 1988). We
also review under an abuse-of-discretion standard the district court’s entry of a
default judgment. Sanderford v. Prudential Ins. Co. of Am., 902 F.2d 897, 898
(11th Cir. 1990).
A.
The district court may set aside an entry of default “for good cause shown.”
Fed.R.Civ.P. 55(c). In determining what constitutes “good cause,” courts have
considered, but are not limited to, factors such as whether the default was willful,
whether the defaulting party would have a meritorious defense, and whether setting
aside the default would result in prejudice to the non-defaulting party. See
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Compania Interamericana Export-Import, S.A. v. Compania Dominicana de
Aviacon, 88 F.3d 948, 951 (11th Cir. 1996).
The district court abused no discretion in denying Defendants’ motion to set
aside the clerk’s entries of default. First, Defendants deny that the default was
willful and, instead, contend that the failure to answer the complaint was due solely
to the mismanagement of litigation by Defendants’ former CFO and President.
Contrary to Defendants’ assertions of ignorance about the litigation,
BioNitrogen’s CEO testified that he was aware of the suit and that Defendants’
former CFO -- together with Defendants’ corporate counsel -- was attempting to
effect a settlement with Annon. Defendants’ CEO also testified that he learned
about the initial entry of default on 25 February and retained trial counsel to defend
against Annon’s suit. The CEO understood, however, that Annon would take no
further action until 10 March, allowing the parties to continue settlement
negotiations. Only after the parties failed to reach a settlement -- and after another
nine days elapsed -- did the clerk enter default against the final Defendant.
By Defendants’ own account, Defendants’ failure to file an answer was due
to litigation strategy: to effect a settlement and avoid proceeding with the litigation.
Because Defendants knew of Annon’s complaint and of the clerk’s initial entry of
default and still failed to file a responsive pleading, the default can be deemed
willful. See id. at 952 (“willfulness” may be shown when a party fails to comply
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with court orders after having been given “ample opportunity” to do so, and
requires no evidence of “flaunting an intentional disrespect for the judicial
process”).
Defendants have also failed to demonstrate a meritorious defense to suit.
About Defendants’ first asserted defense, we have already determined that the
district court exercised properly subject matter jurisdiction over this case. Second,
Defendants contend that the terms of the loan violate Florida’s usury laws. But the
pertinent loan documents provide expressly that they are governed by the laws of
Ontario, Canada. And the record demonstrates sufficiently the existence of a
“normal relationship” between Annon and Ontario, such that Ontario’s usury laws
govern, as agreed upon by the parties. For background, see Cont’l Mortg. Inv’rs v.
Sailboat Key, Inc., 395 So. 2d 507 (Fla. 1981) (a “normal relationship” exists
between a litigant and a jurisdiction when, among other things, the litigant’s sole
domicile and principal place of business are located within the jurisdiction and
when the loan proceeds are disbursed from the jurisdiction). Because the loan
terms are not violative of Ontario’s usury laws, Defendants second asserted
defense is also without merit.
Given these circumstances -- and because Annon would likely suffer
prejudice as a result of the defaults being set aside -- the district court abused no
discretion in denying Defendants’ motion to set aside the clerk’s entries of default.
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B.
The district court also abused no discretion by entering a default judgment
against Defendants. Because the allegations in Annon’s complaint -- admitted as
true -- establish Defendants’ liability under the loan documents, default judgment
was appropriate. See Nishimatsu Constr. Co. v. Houston Nat’l Bank, 515 F.2d
1200, 1206 (5th Cir. 1975) (entry of default judgment is warranted when there
exists “a sufficient basis in the pleadings for the judgment entered”).
Moreover, because Annon’s damages are capable of mathematical
computation, the district court abused no discretion in granting default judgment
without first conducting an evidentiary hearing. See Fed.R.Civ.P. 55(b)(2)(B)
(when entering a default judgment, “[t]he court may conduct hearings . . . when, to
enter or effectuate judgment, it needs to . . . determine the amount of damages”);
SEC v. Smyth, 420 F.3d 1225, 1231, 1232 n.13 (11th Cir. 2005) (no evidentiary
hearing required under Rule 55(b)(2) when “the amount claimed is a liquidated
sum or one capable of mathematical calculation.”).
AFFIRMED.2
2 In their appellate brief, Defendants also argue that the district court erred in applying a post-
judgment interest rate in excess of the rate provided for in 28 U.S.C. § 1961. Because
Defendants failed to raise this argument in the district court, it is waived. See Albra v. Advan,
Inc., 490 F.3d 826, 828 n.1 (11th Cir. 2007).
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