Court Opinion

ID: 3193377
Source: CourtListenerOpinion
Date Created: 2016-04-12 21:01:12.677592+00
Date Added: 2024-06-11T14:36:15.531511
License: Public Domain

UNITED STATES DISTRICT COURT
                            FOR THE DISTRICT OF COLUMBIA

 GAG Enterprises, Inc.,
   Plaintiff,
        v.
 Leonard Rayford, et al.,                             Civil Action No. 15-cv-00041 (CKK)
   Defendant.

                                MEMORANDUM OPINION
                                    (April 12, 2016)

       Plaintiff GAG Enterprises, Inc. filed the Complaint in the above-captioned action on

January 12, 2015 against Defendants Leonard Rayford and Jason Rayford, alleging a claim of

breach of contract concerning a commercial property lease. See Compl., ECF No. [1]. Presently

before the Court is Plaintiff’s Revised Motion for Default Judgment against Defendant Jason

Rayford. See ECF No. [18]. For the reasons stated below, the Court GRANTS Plaintiff’s Revised

Motion for Default Judgment and shall enter a JUDGMENT for Plaintiff against Defendant Jason

Rayford in the amount of $107,119.73.

                                      I. BACKGROUND

       Plaintiff’s Complaint sets out the following allegations, which the Court takes as true for

purposes of Plaintiffs’ Motion for Default Judgment. See Int'l Painters & Allied Trades Indus.

Pension Fund v. R.W. Amrine Drywall Co., 239 F.Supp.2d 26, 30 (D.D.C. 2002).

       On or about July 1, 2007, Jerry Dale Leonard (“Leonard”) entered into a lease agreement

(the “Lease Agreement”) with Ace Check Cashing, Inc., whereby he let certain commercial

property in Warminster, Pennsylvania (the “Subject Property”) to Ace Check Cashing, Inc.

Compl. ¶ 7. The Lease Agreement was for a ten-year term, beginning on July 1, 2007 and ending

on June 30, 2017. Lease Agreement, Exhibit A to Complaint, at 1. The lease was a triple net
lease, which means that in addition to rent, Ace Checking Cashing, Inc. was responsible to pay net

real estate taxes on the leased asset, net building insurance, and net common area maintenance.

Compl. ¶ 9. Under the terms of the Lease Agreement, Ace Check Cashing, Inc. was primarily

responsible for the payment of all rents, but the non-payment of rent was guaranteed by an affiliate

of Ace Check Cashing, Inc., CW Financial of PA, LLC, and its principals, Defendants Leonard

Rayford and Jason Rayford. Id. ¶ 9.

        On June 19, 2009, Leonard died, and his Estate sold the Subject Property to Plaintiff. Id.

¶ 12. The sale included all rights to the Lease Agreement and collection of rents. Id. Following

the sale, rent was paid pursuant to the Lease Agreement through the payment due for February

2013. Id. ¶ 13. After that point, however, the business operating out of the Subject Property

closed, and the rent payable as of March 2013, and each month thereafter, has not been paid. Id.

The Lease Agreement provides, in pertinent part, that upon non-payment of the rents, or other

events of default, the “rent for the entire unexpired term of the [Lease Agreement], as well as all

other charges, payments and expenses” shall become immediately due. Id. ¶ 14. According to the

Complaint, there is currently due and owing under the Lease Agreement the following sums:

           Rent for March, April, May, and June 2013 at $1350/month                     $5,400.00
           Rent for July 2013 through June 2014 at $1390/month                         $16,680.00
           Rent for July 2014 through June 2015 at $1430/month                         $17,160.00
           Rent for July 2015 through June 2016 at $1470/month                         $17,640.00
           Rent for July 2016 through June 2017 at $1510/month                         $18,120.00
           Real Estate Taxes                                                           $17,724.32
           Insurance                                                                    $8,000.00
           Water                                                                        $3,740.00
           Oil                                                                         $17,974.60
           Trash Removal                                                                $4,800.00
           Fire Extinguisher                                                              $700.00
           Electric                                                                    $13,930.00

                                                                               Total: $141,768.92
Id. ¶ 15.
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       On January 12, 2015, Plaintiff filed this action, alleging that Ace Check Cashing, Inc. has

ceased business operations, and as a result, Defendants Jason Rayford and Leonard Rayford are

obligated under the guarantee of the Lease Agreement to make payment. Id. ¶ 21. Plaintiff’s

Complaint demands judgment against Defendants Leonard Rayford and Jason Rayford jointly and

severally in the amount of $141,768.92, plus attorneys’ fees and costs, and such other and further

relief as the Court deems just and proper. Id. at 5.1

       On February 26, 2015, Plaintiff filed an affidavit of service as to Jason Rayford. See ECF

No. [8]. On March 17, 2015, after Jason Rayford failed to plead or otherwise defend this action,

the Clerk entered an Entry of Default as to Jason Rayford. See ECF No. [12]. On November 24,

2015, the Court denied Plaintiff’s initial Motion for Default Judgment by the Clerk against Jason

Rayford. See Mem. Op. & Order, ECF Nos. [16], [17]. In its Order, the Court required Plaintiff,

in its revised motion, to at a minimum:

        (1) provide a sworn affidavit from Plaintiff, or another party with personal knowledge
       of the circumstances alleged in this case, attesting under oath to the itemized damages
       incurred by Plaintiff as a result of the breach of the Lease Agreement; (2) include a
       detailed explanation as to the calculation of each of the itemized damages incurred by
       Plaintiff; (3) identify the specific provisions in the Lease Agreement that provide the
       basis for each of the itemized damages incurred by Plaintiff as rent due under the lease
       as well as for attorneys’ fees and court costs; (4) include documentary evidence
       supporting a conclusion that Plaintiff in fact incurred the amount of damages alleged
       in Plaintiff’s motion; and (5) include, as an exhibit to Plaintiff’s revised motion, a clear
       and legible copy of the Lease Agreement.

Order (Nov. 24, 2015), ECF No. [16], at 1.

       On December 29, 2015, Plaintiff filed its Revised Motion for Default Judgment against

Defendant Jason Rayford. See Pl.’s Rev. Mot., ECF No. [18]. The Court notes that Plaintiff’s

Revised Motion complies with all of the requirements set forth in the Court’s prior Order.

1
 In the Court’s Order issued on November 24, 2015, the Court dismissed Plaintiff’s claims against
Defendant Leonard Rayford without prejudice. See Order (Nov. 24, 2015), ECF No. [16], at 2.
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                                         II. DISCUSSION

       Plaintiff requests that the Clerk enter a default judgment against Defendant Jason Rayford

under Rule 55(b)(2). See Pl.’s Rev. Mot. at 2. Under Rule 55(b)(2), the “determination of whether

default judgment is appropriate is committed to the discretion of the trial court.” Int'l Painters &

Allied Trades Indus. Pension Fund v. Auxier Drywall, LLC, 531 F.Supp.2d 56, 57 (D.D.C. 2008)

(citing Jackson v. Beech, 636 F.2d 831, 836 (D.C. Cir. 1980)). Although the Court’s entry of

default against an absent defendant establishes the defendant’s liability, the Court is required to

make an “independent determination of the sum to be awarded.” Id. (citing Adkins v. Teseo, 180

F.Supp.2d 15, 17 (D.D.C.2001)). Accordingly, Plaintiff must prove its entitlement to the amount

of monetary damages requested. Id. “In ruling on such a motion, the court may rely on detailed

affidavits or documentary evidence to determine the appropriate sum for the default judgment.”

Id. (citing United Artists Corp. v. Freeman, 605 F.2d 854, 857 (5th Cir.1979)).

       In its revised Motion for Default Judgment, Plaintiff seeks a default judgment in its favor

and against Defendant Jason Rayford in the amount of $107,119.73, as well as prejudgment

interest and post-judgment interest from the date of the judgment. The amount that Plaintiff

seeks in its revised motion—$107,119.73—is a reduced amount from the sum due on the lease

alleged in the Complaint—$141,768.92. Plaintiff, noting the expenses that it has incurred in this

matter to date, indicates that it is seeking “only a portion of the amounts sought in the Complaint,

which are based upon the information that was quickly available to it.” Pl.’s Rev. Mot., ECF No.

[18], at 3. Specifically, Plaintiff seeks a default judgment as to (1) unpaid rental payments,

totaling $75,000.00, (2) unpaid “additional rents” under the lease—which include real estate

taxes, utility costs, insurance, and attorneys’ fees and costs incurred in this litigation—totaling

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$32,119.73, (3) prejudgment interest, and (4) post-judgment interest from the date of the

judgment.

            A. Plaintiff is entitled to recover $75,000 in unpaid rental payments due under
               the lease.

       The Lease Agreement, which was for a ten-year term, provides for rent payments to

commence on July 1, 2007, at the rate of $1,150.00 per month. Affidavit of Glenn Goodman

(“Goodman Aff.”), ECF No. [18-1], at ¶¶ 7, 8; Lease Agreement at 1.2 The Lease Agreement

further states that the monthly rental payment will increase by $40 on each anniversary of the

Lease Agreement: “rental of $1,150.00 per month for the first year with $40/month increase in

monthly rental on each annual anniversary.” Goodman Aff. at ¶ 9, Lease Agreement at 1.

Section 14 of the Lease Agreement provides, among other things, that upon the failure to “pay in

full when due any and all installments of rent and/or any other charge or payments herein

reserved” the rent “for the entire unexpired balance of the term of the lease” shall become due.

Goodman Aff. at ¶ 12.

       According to the Affidavit of Glenn Goodman, the sole shareholder and owner of

Plaintiff GAG Enterprises, Inc., monthly rental payments were paid pursuant to the Lease

Agreement through February 2013. Id. at ¶ 10. However, Ace Check Cashing, Inc. closed its

operation on the Subject Property, and failed to pay the rent due as of March 2013, and each

month thereafter. Id. at ¶ 11. Because Ace Check Cashing, Inc. failed to pay the March 2013

2
  The Lease Agreement is attached as Exhibit “A” to the Goodman Affidavit. See ECF No. [18-
1]. The Lease Agreement has also been retyped and presented as a “true and correct rendition of
the original Lease Agreement” as Exhibit “A” to Affidavit of Brett L. Messinger. See ECF No.
[18-2].
                                               5
payment and each payment thereafter, and in consideration of the annual $40 increase of the rent

due, the total amount due for the term of the Lease, totaling $75,000, is as follows:

           Rent for March, April, May, and June 2013 at $1350/month                          $5,400.00
           Rent for July 2013 through June 2014 at $1390/month                              $16,680.00
           Rent for July 2014 through June 2015 at $1430/month                              $17,160.00
           Rent for July 2015 through June 2016 at $1470/month                              $17,640.00
           Rent for July 2016 through June 2017 at $1510/month                              $18,120.00

                                                              Total Unpaid Monthly Rent: $75,000
Goodman Aff. at ¶ 13; Lease Agreement at § 4.

        Accordingly, upon close review of the record, the Court finds that Plaintiff is entitled to

recover $75,000 in unpaid monthly rental payments due under the lease.

            B. Plaintiff is entitled to recover $32,119.73 in unpaid additional rent due under
               the lease.

        As the Lease Agreement is a “triple net” lease, the monthly rental payment is the

minimum amount of rent due under the Lease Agreement. See Lease Agreement at § 4. Under a

“triple net” lease, the tenant is solely responsible for all of the costs relating to the asset being

leased in addition to the rent fee applied under the lease. See Pl.’s Rev. Mot., ECF No. [18], at 5

n.2; Lease Agreement at § 4.3 Additionally, the Addendum to the Lease requires the tenant to

pay, as additional rent, the “costs of all sewer rental and water imposed against the premises.”

Addendum at § 5. It further requires the tenant to pay “the cost of all real estate taxes imposed

on the building on which the leased premises are a part.” Id. at § 6. The Addendum also

requires the tenant to pay the cost of insurance premiums. Id. at § 5, 13. Moreover, the

Addendum provides that if the tenant breaches the terms of the Lease Agreement, the tenant shall

3
  The structure of this type of lease requires the tenant to pay for net real estate taxes on the
leased assert, net building insurance, and net common area maintenance. Pl.’s Rev. Mot., ECF
No. [18], at 5 n.2; Lease Agreement at § 6.
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pay, as additional rent, the “costs and expenses incurred by the Landlord, including attorneys

fees, put to curing any defaults, of the Tenant and/or Guarantors[.]” Id. at § 11.

       Plaintiff has provided extensive documentary evidence—including billing records, copies

of checks, invoices, and an affidavit from Glenn Goodman, Plaintiff’s sole shareholder and

owner—that details the amounts that have been incurred by Plaintiff as additional rent, which

has not been paid by Tenant. The amounts due under the lease as additional rent are as follows:

 Description                           Support for Amount                     Amount
 Real Estate Taxes (2012)              Goodman Aff. at Exhibit “B”            $1120.79
 Real Estate Taxes (2012)              Goodman Aff. at Exhibit “B”            $3220.46
 Real Estate Taxes (2013)              Goodman Aff. at Exhibit “B”            $3285.29
 Real Estate Taxes (2013)              Goodman Aff. at Exhibit “B”            $1120.79
 Real Estate Taxes (2015)              Goodman Aff. at Exhibit “B”            $3527.98
 Real Estate Taxes (2015)              Goodman Aff. at Exhibit “B”            $1120.79
 Electric Bill 7/24/15                 Goodman Aff. at Exhibit “B”            $258.39
 Electric Bill 4/27/15                 Goodman Aff. at Exhibit “C”            $198.01
 Electric Bill 12/26/14                Goodman Aff. at Exhibit “C”            $260.98
 Sewer Bill 10/2/15                    Goodman Aff. at Exhibit “D”            $281.60
 Check for Sewer Bill 1/20/14          Goodman Aff. at Exhibit “D”            $240.57
 Check for Sewer Bill 7/14/14          Goodman Aff. at Exhibit “D”            $208.88
 Check for Sewer Bill 10/11/12         Goodman Aff. at Exhibit “D”            $188.30
 Check for Sewer Bill 1/10/13          Goodman Aff. at Exhibit “D”            $201.53
 Check for Sewer Bill 4/16/13          Goodman Aff. at Exhibit “D”            $240.23
 Check for Sewer Bill 7/13/13          Goodman Aff. at Exhibit “D”            $221.62
 Heating Oil 2/26/14                   Goodman Aff. at Exhibit “E”            $821.99
 Heating Oil 3/9/15 (with check)       Goodman Aff. at Exhibit “E”            $517.30
 Check for Heating Oil 12/29/13        Goodman Aff. at Exhibit “E”            $712.35
 Check for Heating Oil 1/20/14         Goodman Aff. at Exhibit “E”            $655.47
 Check for Heating Oil 11/29/13        Goodman Aff. at Exhibit “E”            $756.93
 Check for Heating Oil 2/10/14         Goodman Aff. at Exhibit “E”            $851.11

       (Continued . . .)

                                                 7
    Check for Heating Oil 3/31/14          Goodman Aff. at Exhibit “E”              $595.85
    Trash                                  Goodman Aff. at Exhibit “F”              $86.52
    Insurance (2015-2016)                  Goodman Aff. at Exhibit “G”              $1827.00
    Insurance (2014-2015)                  Goodman Aff. at Exhibit “G”              $2025.00
    Attorneys’ Fees (Dec. 2014)            Messinger Aff. at Exhibit “B”            $2541.00
    Attorneys’ Fees (Feb. 2015)            Messinger Aff. at Exhibit “B”            $1976.00
    Attorneys’ Fees (March 2015)           Messinger Aff. at Exhibit “B”            $693.00
    Attorneys’ Fees (April 2015)4          Messinger Aff. at Exhibit “B”            $1242.00
    Service of Process                     Messinger Aff. at Exhibit “C”            $1122.00
                                                                 TOTAL:             $32,119.73

Pl.’s Rev. Mot., ECF No. [18], at 6-7.

          Accordingly, upon close review of the record, the Court finds that Plaintiff is entitled to

recover $32,119.73 in unpaid additional rent due under the lease.

              C. Plaintiff is not entitled to recover prejudgment interest.

          In Plaintiff’s Revised Motion for Default Judgment, Plaintiff appears to include a one-

line request for prejudgment interest. See Pl.’s Rev. Mot., ECF No. [18], at 7 (“[Plaintiff] seeks

a default judgment in its favor and against Defendant Jason Rayford in the amount of

$107,119.73 prejudgment interest[.]”). However, Plaintiff does not identify any provision in the

Lease Agreement, or the Lease Addendum, indicating that Plaintiff is entitled to prejudgment

4
  The Court notes that the attorneys’ fees and court costs incurred by Plaintiff are reasonable.
According to detailed billing records submitted by Plaintiff, the charged attorneys’ fees were for
routine work related to the drafting and filing of the Complaint, service of the Complaint and
summons, the drafting and filing of the motion for entry of default against Jason Rayford. The
Court further notes that the majority of the work performed by Plaintiff’s counsel as to the
Motions for Default Judgment were not charged, as a courtesy. Accordingly, the award of
attorneys’ fees for the work performed on those motions is minimal.

The Court also notes that the lease provides that the Landlord is entitled to recover all “costs and
expenses incurred by the Landlord, including attorneys fees, put to curing any defaults, of the
Tenant and/or Guarantors[.]” Lease Agreement at § 11. The Court finds that Plaintiff is entitled
under this provision to recover the reasonable attorneys’ fees and court costs that have been
identified in the Plaintiff’s submissions.
                                                 8
interest. Furthermore, the Court has not found any such provision through its own examination

of the submitted materials.

        “The determination of whether prejudgment interest should be awarded is within the

discretion of the district court and is subject to equitable considerations.” McClam v. D.C., 808

F.Supp.2d 184, 191 (D.D.C.2011). Considering the equities in this case, the Court finds that an

award of prejudgment interest would not be appropriate. Plaintiff has offered no equitable

justification for why prejudgment interest should be awarded in this case, nor has it pointed to a

provision in the Lease Agreement stating that Plaintiff is entitled to prejudgment interest under

the agreement.

        Accordingly, in an exercise of its discretion, the Court shall not include pre-judgment

interest to Plaintiff as part of the award issued by the Court. See Romero v. ITW Food Equip.

Grp. LLC, 118 F. Supp. 3d 349, 354 (D.D.C. 2015) (holding that the Court would not exercise its

discretion to award prejudgment interest where Plaintiff had not produced evidence of an

equitable justification for such relief).

            D. Plaintiff is entitled to post-judgment interest from the date of judgment
               under 28 U.S.C. § 1961.

        Finally, along with its request for prejudgment interest, Plaintiff includes a request for

post-judgment interest. See Pl.’s Rev. Mot., ECF No. [18], at 7.

        Federal statute provides that “[i]nterest shall be allowed on any money judgment in a

civil case recovered in a district court[,]” and that “[s]uch interest shall be calculated from the

date of the entry of judgment. . . .” 28 U.S.C. § 1961(a). Application of Section 1961(a) is

mandatory, not discretionary. See, e.g., Cont'l Transfert Technique Ltd. v. Fed. Gov't of Nigeria,

850 F. Supp. 2d 277, 287 (D.D.C. 2012).

                                                  9
       Accordingly, Plaintiff is statutorily entitled to post-judgment at the statutory rate set by

Section 1961(a). See 28 U.S.C. § 1961(a).

                                       III. CONCLUSION

       For the reasons described above, the Court GRANTS Plaintiff’s Revised Motion for

Default Judgment and shall enter a JUDGMENT for Plaintiff against Defendant Jason Rayford

in the amount of $107,119.73.

       An appropriate Order accompanies this memorandum opinion.

                                                        /s/
                                                      COLLEEN KOLLAR-KOTELLY
                                                      UNITED STATES DISTRICT JUDGE

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