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Robert O'brien v. Biobanc Usa

June 23, 2011


The opinion of the court was delivered by: Kugler, United States District Judge:



This matter arises out of a contract dispute over a warrant to purchase common stock. Presently before the Court is the Motion for Default Judgment filed by Plaintiff Robert O' Brien. For the reasons discussed below, the Court will GRANT Plaintiff's request for entry of default judgment.


The relevant facts of this dispute are outlined in the Court's Opinion filed on July 19, 2010. (Doc. No. 47). Therefore, the Court will include only the additional facts relevant to the pending motion.

In the Opinion issued on July 19, 2010, the Court denied Defendant BioBanc USA's ("BioBanc") motion for summary judgment, Plaintiff's cross-motion for summary judgment, and Plaintiff's motion to seal. In that Opinion, the Court expressly rejected Plaintiff's argument that he is entitled to monetary damages because BioBanc conceded liability in a letter dated December 17, 2009. (Id. at 6). In particular, the Court noted "[o]utside the letter, Plaintiff has done nothing to demonstrate that he is entitled to a cashless exercise under the 2006 Agreement under basic principles of contract interpretation." (Id.).

On July 15, 2010, Magistrate Judge Williams issued an order granting Diane Stolbach's motion to withdraw as BioBanc's counsel. (Doc. No. 46). Magistrate Judge Williams nevertheless ordered Stolbach to "continue to represent [BioBanc] until August 16, 2010 for the limited purpose of continuing settlement discussions," and instructed [BioBanc] to obtain new counsel "[o]n or before August 16, 2010" or "be subject to default judgment." (Id.). BioBanc failed to obtain counsel prior to August 16, 2010.

On July 23, 2009, BioBanc issued a Private Placement Memorandum ("PPM"). (O'Brien Decl. Ex. C, at 27). The PPM valued the company at $20,000,000.00, and represented that a 1% interest in BioBanc was worth $200,000.00. (Id.).

On August 17, 2010, the Clerk made an entry of default against BioBanc. On September 2, 2010, Plaintiff moved for default judgment. BioBanc did not respond to Plaintiff's motion.


Federal Rule of Civil Procedure 55(b)(2) governs a court's determination concerning entry of default judgment. Parties requesting default judgment are not entitled to that relief as a matter of right. Local Union No. 98, Int'l Brotherhood of Elec. Workers v. Cableco, Inc., No. 99-755, 1999 WL 269903, at *1 (E.D. Pa. Apr. 28, 1999). Before granting default judgment, "it remains for the court to consider whether the unchallenged facts constitute a legitimate cause of action." Signs by Tomorrow-USA, Inc. v. G.W. Engel Co., No. 05-4353, 2006 WL 2224416, at *2 (D.N.J. Aug. 1, 2006) (citing DirecTV, Inc. v. Asher, No. 03-1969, 2006 WL 680533, at *1 (D.N.J. Mar. 14, 2006)); 10A Charles Alan Wright, Arthur R. Miller, & Mary Kay Kane, Federal Practice and Procedure § 2688 (3d ed. 1998). The court should accept as true all well-pleaded factual allegations in the complaint by virtue of the defendant's default, except for allegations relating to the amount of damages. Comdyne I, Inc. v. Corbin, 908 F.2d 1142, 1149 (3d Cir. 1990); Asher, 2006 WL 680533, at *1; 10A Wright, Miller & Kane § 2688. However, the court need not accept a plaintiff's legal conclusions. Cotapaxi Custom Design & Mfg., LLC v. Pacific Design, No. 07-4378, 2010 WL 2330086, at *3 (D.N.J. June 8, 2010) (citing Signs by Tomorrow-USA, Inc., 2006 WL 2224416, at *2).

In addition, the Court must consider the following three factors when exercising its discretion to grant default judgment: "(1) whether the party subject to default has a meritorious defense, (2) the prejudice suffered by the party seeking default, and (3) the culpability of the party subject to default." GP Acoustics, Inc. v. Brandnamez, LLC, No. 10-539, 2010 WL 3271726, at *3 (D.N.J. Aug. 17, 2010) (citing Emcasco Ins. Co. v. Sambrick, 834 F.2d 71, 74 (3d Cir. 1987)). "In weighing these factors, [the] district court[] must remain mindful that, like dismissal with prejudice, default is a sanction of last resort." Doug Brady, Inc. v. New Jersey Bldg. Laborers Statewide Funds, 250 F.R.D. 171, 177 (D.N.J. 2008) (citing Poulis v. State Farm Fire & Cas. Co., 747 F.2d 863, 867-68 (3d Cir. 1984)).



"Before entering a default judgment against a party that has not filed responsive pleadings, 'the district court has an affirmative duty to look into its jurisdiction both over the subject matter and the parties.'" Bank of Am., N.A. v. Hewitt, No. 07-4536, 2008 WL 4852912, at *2 (D.N.J. Nov. 7, 2008) (quoting Williams v. Life Sav. & Loan, 802 F.2d 1200, 1203 (10th Cir. 1986)).

In this case, the Court has subject-matter jurisdiction pursuant to 28 U.S.C. ยง 1332 because the case involves citizens of different states and the amount in controversy exceeds $75,000.00. Plaintiff is a citizen of New Jersey and BioBanc is a California corporation with its principal ...

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