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GFRS Equipment Leasing Fund II LLC v. Nguyen

United States District Court, N.D. Texas, Dallas Division

August 1, 2019

GFRS EQUIPMENT LEASING FUND II LLC, Plaintiff,
v.
DIANE TRANG NGUYEN, NGUYENCAT DOAN VO, THANH TRAN, PHILLIP PHAM, SHERMAN TRINITY SPA, LLC, THE TRINITY SPA, LLC, and T.T. SPA PLUS, [1] Defendants.

          MEMORANDUM OPINION AND ORDER

          Sam A. Lindsay, United States District Judge

         Before the court is Plaintiff GFRS Equipment Leasing Fund II, LLC's (“Plaintiff” or “GFRS”) Motion for Default Judgment Against Defendants Trang Nguyen, Sherman Trinity Spa, LLC (Doc. 18), filed November 29, 2018. After careful consideration of the motion, memorandum of law, record, and applicable law, the court grants in part and denies in part Plaintiff's Motion for Default Judgment Against Defendants Trang Nguyen, Sherman Trinity Spa, LLC.

         I. Factual Background

         On August 24, 2018, GFRS filed this action against Defendants Diane Trang Nguyen (“Nguyen”), Nguyencat Doan Vo (“Vo”), Thanh Tran (“Tran”), Hoa Minh Pham[2] (“Pham”), Sherman Trinity Spa, LLC (“Sherman Spa”), The Trinity Spa, LLC (“Trinity Spa”), and T.T. Spa Plus (“T.T. Spa Plus”) (collectively, “Defendants”). On April 25, 2019, GFRS filed the First Amended Complaint (“Amended Complaint”) to correct Pham's name; the Amended Complaint is otherwise substantively identical to the Original Complaint (“Original Complaint”). The Amended Complaint asserts claims against Nguyen for breach of the Sherman Trinity lease agreements and its accompanying guaranty agreement, and breach of the Tiffany Nails lease agreement (counts 1, 2, and 3); a claim against Nguyen and Vo for breach of the guaranty agreement accompanying the Tiffany Nails lease agreement (count 4); claims against Nguyen, Vo, Tran, T.T. Spa Plus, and Trinity Spa for fraud, unlawful misappropriation of funds under the Texas Theft Liability Act, and a civil RICO violation based on the predicate offense of wire fraud (claims 5, 6, and 9); and claims against all Defendants for unjust enrichment, civil conspiracy, and RICO conspiracy (claims 7, 8, and 10).

         With respect to the remaining Defendants, the Amended Complaint alleges that GFRS is a company that leases equipment to business entities. In this case, it leased nail salon equipment to Defendants pursuant to several lease agreements, which were accompanied by guaranty agreements. Pl.'s Am. Compl., Doc. 31 ¶¶ 11, 13. Nguyen allegedly represented to GFRS that she was acting as a broker on behalf of the lessees and personal and corporate guarantors of the leases. Id. ¶ 43. Nguyen requested that GFRS purchase the nail salon equipment from a vendor, T.T. Spa Plus. Id. ¶ 44. On or about December 7, 2017, GFRS alleges that it initiated a wire transfer to T.T. Spa Plus in the amount of $680, 500 to purchase the requested equipment. Id. ¶ 45. The lessees were expected to directly receive the equipment from T.T. Spa Plus by delivery to the locations set forth in the leases. Id. ¶¶ 46-47.

         Defendants subsequently defaulted on all the leases. Id. ¶ 48. GFRS contends that it sent the lessees, the guarantors, and Nguyen a notice of default and demand letter on March 23, 2018. Id. One of the listed guarantors who purportedly signed the leases was an individual named Thy Mong Hoang (“Hoang”). In response to the notice of default and demand letter, GFRS received a letter from attorney Jonathan Keeler, indicating that he represented Hoang and informing GFRS that Hoang had been the subject of identity theft with respect to the leases. Id. ¶ 49. The letter stated that Hoang did not sign the leases, and any signature purporting to be Hoang was, therefore, fraudulent. Id. Hoang subsequently executed a sworn affidavit stating she was not familiar with GFRS and did not execute any of the documents in connection with the leases. Id. ¶ 50.

         GFRS alleges that Nguyen forged Hoang's signature on the leases and other accompanying documents. Id. ¶ 51. GFRS alleges that Nguyen and Codefendant Vo fraudulently entered into the leases with the intent of causing GFRS to tender a payment of $680, 500 to T.T. Spa Plus for the equipment that Defendants requested. Id. ¶ 52. GFRS alleges that, after it tendered the payment, either of two scenarios occurred: (1) Nguyen and Vo canceled the equipment order and directed T.T. Spa Plus to issue a refund payment to them, or (2) Nguyen and Vo instructed T.T. Spa Plus to not place GFRS's equipment order and transfer to them GFRS's tendered payment. Id. ¶¶ 52-53.

         GFRS alleges that, on December 8, 2017-the day after it wired the payment to T.T. Spa Plus-T.T. Spa Plus issued four cashier's checks made payable to Vo, each in the amount of $50, 000. Id. ¶ 56. On that same day, T.T. Spa Plus also allegedly made a wire transfer to Trinity Spa in the amount of $200, 000 and a second wire transfer to Sherman Trinity Spa in the amount of $270, 000. Id. ¶ 58. GFRS alleges that T.T. Spa Plus retained the remaining funds as compensation for its participation in the scheme, as well as for use as a “deposit” for future orders of equipment. Id. ¶¶ 59-60. GFRS alleges that Vo, using the funds transferred to him by T.T. Spa, paid Nguyen approximately $102, 000 using the money he received from T.T. Spa Plus as compensation for her participation in the scheme. Id. ¶ 61.

         Since GFRS filed the Original Complaint on August 24, 2018, and the Amended Complaint on April 25, 2019, Defendants Nguyen, Trinity Spa, and Sherman Trinity Spa have not filed an answer or otherwise responded in this action. On October 24, 2018, GFRS requested that the clerk enter default as to Nguyen, Sherman Trinity Spa, and Trinity Spa, which the clerk subsequently did. On November 29, 2018, GFRS filed the Motion for Default Judgment against these Defendants. The Motion for Default Judgment does not seek relief against Defendants Vo or Pham.

         II. Discussion

         A party is entitled to entry of a default by the clerk of the court if the opposing party fails to plead or otherwise defend as required by law. Fed.R.Civ.P. 55(a). Under Rule 55(a), a default must be entered before the court may enter a default judgment. Id.; New York Life Ins. Co. v. Brown, 84 F.3d 137, 141 (5th Cir. 1996). The clerk of court has entered a default against Defendants Nguyen, Trinity Spa, and Sherman Trinity Spa, and GFRS now requests the court to enter a final default judgment as to all claims asserted against them in the Amended Complaint.[3]

         To date, Defendants Nguyen, Trinity Spa, and Sherman Trinity Spa have not responded to or otherwise defended against GFRS's claims in this lawsuit. By failing to answer or otherwise respond to Defendant's counterclaims, Defendants Nguyen, Trinity Spa, and Sherman Spa have admitted the well-pleaded allegations of the counterclaims asserted in the Amended Complaint and are precluded from contesting the established facts on appeal. Nishimatsu Constr. Co. v. Houston Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975). Stated differently, a “defendant is not held to admit facts that are not well-pleaded or to admit conclusions of law.” Wooten v. McDonald Transit Assocs., Inc., 788 F.3d 490, 496 (5th Cir. 2015) (citation omitted). Accordingly, Defendants may not contest the “sufficiency of the evidence” on appeal but “[are] entitled to contest the sufficiency of the complaint and its allegations to support the judgment.” Id.

         When an action “presents more than one claim for relief . . . or when multiple parties are involved, the court may direct entry of a final judgment as to one or more, but fewer than all, claims or parties only if the court expressly determines that there is no just reason for delay.” Fed.R.Civ.P. 54(b). When, however, one of multiple defendants has defaulted, “judgment should generally not be entered against the defaulting defendant until the matter has been adjudicated as to all defendants, ” especially in situations where several defendants are alleged to be jointly liable. Underwriters at Lloyds, Syndicate 4242 v. Turtle Creek Partnership, Ltd., No. 4:14-CV-702, 2010 WL 5583118, at *2 (S.D. Tex. Feb. 26, 2019) (citing Frow v. De La Vega, 82 U.S. 552, 553 (1872)); Great Am. Assur. Co. v. Wills, No. SA-10-CV-353-XR, 2010 WL 4007330, at *1 (W.D. Tex. Oct. 12, 2010). This court has previously declined to enter default judgment against a defendant who was alleged to have conspired with codefendants against whom claims remained pending. Beta Health Alliance MD PA v. Mukuro & Assocs. Law Firm, No. 3:09-CV-1401-L, 2010 WL 1685847, at *2 (N.D. Tex. Apr. 26, 2010). The court noted that, “While there is no Fifth Circuit authority precisely on point, other courts have held that entering default judgment and awarding damages on conspiracy claims while the alleged coconspirators' claims remain is error.” Id. The court applied the approach used by other courts that “a court may enter default as to liability, but . . . it should not enter judgment as to damages to prevent inconsistent damages.” Id. (citations omitted).

         Accordingly, with respect to the claims alleged against Defendants in this action for civil conspiracy and RICO conspiracy, the court will defer entering judgment as to damages on these claims until the claims against Vo and Pham are resolved. The court will likewise defer entering judgment as to damages for breach of the guaranty agreement accompanying the Tiffany Nails lease agreement because the claim is asserted against both Nguyen and Vo, and Vo is not a defendant against whom GFRS moves for default judgment. The court will also defer entering judgment as to damages for fraud, unlawful misappropriation of funds under the Texas Theft Liability Act, and RICO conspiracy, as these claims are asserted against all Defendants named in this matter, and GFRS seeks joint and several liability with respect to these ...


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