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Air Energy Global, Inc. v. Grier

United States District Court, S.D. Illinois

November 16, 2016

AIR ENERGY GLOBAL, INC., Plaintiff,
v.
NAPOLEON GRIER, et al., Defendants.

          MEMORANDUM AND ORDER

          STACI M. YANDLE United States District Judge.

         Before the Court are Plaintiff Air Energy Global, Inc.'s motions for default judgment as to Defendants Napoleon Grier (“Grier”) and Napoleon Grier Enterprises, Inc. (“NGE”) (Doc. 212), Susette McDaniel Harris a/k/a Jade Harris (“Harris”) (Doc. 251), Benjamin Privett (“Privett”) (Doc. 252), and Petrash Capital, LLC (“Petrash”) (Doc. 253). A hearing was held on January 28, 2015 to determine damages. For the following reasons, Plaintiff's motions are GRANTED.

         BACKGROUND

         AEG filed this action alleging that Defendants breached a contract whereby the defendants were to obtain financing for a business opportunity on behalf of AEG (see Doc. 57). AEG alleges that, pursuant to the contract, AEG wire-transferred a $1, 000, 000.00 funding fee to a specified bank account. A “Closing Agreement” was to be created within two to five days following the transfer and funds in the amount of $10, 000, 000.00 were to be made available to AEG. However, the funds were never made available to AEG. AEG alleges that it was unable to pursue a business deal because it did not receive the funding it had contracted for. AEG further alleges that it never received a refund of the $1, 000, 000.00 funding fee. AEG later learned from bank records that the funding fee was divvied up among the defendants or paid out on their behalf and at their direction.

         AEG seeks to recover the $1, 000, 000.00 funding fee (“Funding Fee”); compensation for the loss of its business opportunity which was to have been funded by the financing to be made available by the defendants; and a refund of and interest on the Funding Fee. Regarding the RICO claim, AEG also seeks to recover treble damages and the costs of suit, including reasonable attorneys' fees.

         Although served with process, the defendants failed to plead or otherwise defend this action (Docs. 78, 80, 81, 96). As a result, on July 22, 2013 and September 12, 2013, the Clerk of Court entered default against Defendants pursuant to Rule 55(a) of the Federal Rules of Civil Procedure (see Docs. 91, 101). Following the Clerk's Entry of Default, AEG moved for default judgment against the defendants. Pursuant to Rule 55.1(b), copies of AEG's Motions for Entry of Default Judgment were mailed to each named defendant at his or her last known address.

         On January 28, 2015, the Court held a hearing to determine the amount of damages pursuant to Rule 55(b)(2) of the Federal Rules of Civil Procedure. Following the hearing, the Court permitted AEG to supplement its motions with a computation of damages and/or any further legal authority (Doc. 271). AEG provided a supplemental memorandum in support on February 11, 2015 (Doc. 278). In the supplemental memorandum, AEG seeks the following damages: (1) return of the $1, 000, 000.00 Funding Fee plus prejudgment interest at the rate of seven percent (7%) per year; (2) the $10, 000, 000.00 in loan funding sought from Defendants Grier and NGE plus an award of prejudgment interest on the $10, 000, 000.00 at the rate of five percent (5%) per year pursuant to the Illinois Interest Act, 815 Ill. Comp. Stat. 205/2; (3) unspecified damages for loss of business opportunity; and (4) treble damages and attorneys' fees pursuant to 18 U.S.C. § 1964(c) (Doc. 278).

         DISCUSSION

         Damages

         Pursuant the Federal Rules of Civil Procedure, a defendant must file its answer “within 21 days after being served with summons and complaint.” Fed.R.Civ.P. 8(a)(1)(A)(i). A defendant who fails to do may be found in default under Federal Rule of Civil Procedure 55(a). It is in the district court's discretion whether to enter default judgment. O'Brien v. R.J. O'Brien & Assocs., Inc., 998 F.2d 1394, 1398 (7th Cir. 1993). Default judgment establishes, as a matter of law, that a defendant is liable to the plaintiff on each cause of action alleged in the complaint. United States v. Di Mucci, 879 F.2d 1488, 1497 (7th Cir. 1989).

         When a defendant is found to be in default, all factual allegations in the complaint are deemed admitted and not subject to challenge. Black v. Lane, 22 F.3d 1395, 1399 (7th Cir. 1994). However, allegations in the complaint relating to the amount of damages are not deemed admitted. Dundee Cement Co. v. Howard Pipe & Concrete Prods., 722 F.2d 1319, 1323 (7th Cir. 1983); see also Fed.R.Civ.P. 8(b)(6). The court may conduct hearings when it is necessary to perform an accounting, ascertain damages, “establish the truth of any allegation by evidence, ” or investigate any other matter. Fed.R.Civ.P. 55(b)(2)(A)-(D). The plaintiff's complaint provides a ceiling for available remedies and “a default judgment must not differ in kind from, or exceed in amount, what is demanded in the pleadings.” Fed. R. Civ.P. 54(c).

         Here, during the hearing on Plaintiff's motions for default judgment, AEG President, Virgil Straeter, testified that AEG had a business plan with projected earnings based on the $10, 000, 000 financing negotiated with the defendants. Specifically, AEG offered into evidence exhibits along with an affidavit from Robert A.H. Brunet, President of Biro Air Energy Inc., stating that the estimated revenue and growth of (projected earnings) would amount to $127, 381, 000.00. Streater further testified that AEG was unable to proceed with its business plan because it never received the funding. AEG also proffered evidence that it obtained a loan from Robert Schwarze in the amount of $1, 000, 000.00 with an interest rate of seven percent (75) per annum in order to pay the Funding Fee.

         The Complaint allegations are sufficient to support AEG's entitlement, on default, to judgment for the $1, 000, 000 funding fee. Additionally, the purpose of prejudgment interest is to put a party in the position it would have been in had it been paid immediately. Am. Nat. Fire Ins. Co. ex rel. Tabacalera Contreras Cigar Co. v. Yellow Freight Sys., Inc., 325 F.3d 924, 935 (7th Cir. 2003). It is designed to ensure that a party is fully compensated for its loss. See City of Milwaukee v. Cement Div. Nat'l Gypsum Co., 515 U.S. 189, 195, 115 S.Ct. 2091, 132 L.Ed.2d 148 (1995). Consequently, prejudgment interest typically accrues from the date of the loss or from the date on which the claim accrued. See West Virginia v. United States, 479 U.S. 305, 311, 107 S.Ct. 702, 93 L.Ed.2d 639 n. 2 (1987).

         Here, there are no countervailing considerations that would make an award of prejudgment interest inequitable or unjust. AEG provided evidence that it took out a $1, 000, 000 loan from Robert Schwarze with an interest rate of 7% per annum. Thus, an award of prejudgment interest at 7% is necessary to fully compensate AEG for its injuries. Accordingly, Plaintiff is awarded damages in the amount of $1, 000, 000.00 with ...


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