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Wells Fargo Bank, N.A. v. Standard Chartered Bank

United States District Court, D. New Jersey

June 29, 2018

WELLS FARGO BANK, N.A., Plaintiff,
v.
STANDARD CHARTERED BANK, ROCKLAND TRUST COMPANY, and IPS SKY HAVEN, INC., Defendants.

          OPINION

          KEVIN MCNULTY, U.S.D.J.

         Wells Fargo Bank, N.A. ("Wells Fargo") sues defendant IPS Sky Haven, Inc. ("IPS Sky Haven"), a New Jersey corporation with its principal place of business in New Jersey. Standard Chartered Bank ("SCB") and Rockland Trust Company ("RTC") have been terminated from the case by stipulation of dismissal. (ECF No. 18). Defendant IPS Sky Haven has not responded to the complaint, and the Clerk has entered default. (ECF No. 10). Now before the court is the unopposed motion of plaintiff Wells Fargo for default judgment. (ECF No. 20). For the reasons stated herein, the motion for default judgment is granted.

         I. BACKGROUND

         The complaint alleges that IPS Sky Haven, a New Jersey corporation, opened a Simple Business Checking Account (Account No. XXXXXX3818) with Wells Fargo. (Complaint ("Compl.", ECF No. 1) 1 9). Ismael Pacheco Sierra was designated as an authorized signer on the Account. (Compl. ¶ 10).

         Around January 12, 2017, the Account received a wire transfer from SCB in the amount of $25, 365.00, and from RTC in the amount of $152, 867.56. (Compl. ¶¶ 11-12). Around January 13, 2017, IPS Sky Haven initiated a transfer to China Merchants Bank in the amount of $79, 201.00. (Compl. ¶ 13). After that transfer and other debit transactions, the Account had a balance of $82, 205.56. (Compl. ¶ 14).

         A few days later, SCB and RTC notified Wells Fargo that the two wire transfers into the Account were fraudulent. (Compl. ¶¶ 15-16). SCB and RTC requested that Wells Fargo recall the wire transfers and return the funds. (Compl. ¶¶ 15-16). Around February 9, 2017, a substantial portion of the wire transfer out of the Account to China Merchants Bank was returned to the Account. That return of funds, in the amount of $79, 161.00, left the Account with a balance of $161, 366.56. (Compl. ¶ 17).

         Wells Fargo restrained that balance of $161, 366.56 (the "Restrained Proceeds"). (Compl. ¶ 18). IPS Sky Haven has failed to provide Wells Fargo with any instuctions regarding the Restrained Proceeds. (Compl. ¶ 19). The Restrained Proceeds are not sufficient to cover die claims of both SCB and RTC. (Compl. ¶ 20).

         Wells Fargo, which has no claim of its own to the Restrained funds, then invoked interpleader. It deposited die Restrained Proceeds into die Court Registry so that SCB and RTC could assert their claims to the funds. (Compl. ¶ 21). Wells Fargo then reached a settiement agreement with SCB, RTC, and other interested parties. (See ECF No. 20-1).

         IPS Sky Haven, however, was not a party to the settlement agreement. Wells Fargo now seeks a default judgment that restrains IPS Sky Haven from instituting any action against Wells Fargo to recover the funds at issue in the settlement agreement.

         II. DISCUSSION

"[T]he entry of a default judgment is left primarily to the discretion of the district court.” Hritz v. Woma Corp., 732 F.2d 1178, 1180 (3d Cir. 1984) (citing Tozer v. Charles A. Krause Milling Co., 189 F.2d 242, 244 (3d Cir. 1951)). Because the entry of a default judgment prevents the resolution of claims on the merits, "this court does not favor entry of defaults and default judgments." United States v. $55, 518.05 in U.S. Currency, 728 F.2d 192, 194 (3d Cir. 1984). Thus, before entering default judgment, the court must determine whether the "unchallenged facts constitute a legitimate cause of action, since a party in default does not admit mere conclusions of law." DirecTV, Inc. v. Asher, No. 3-cv-1969, 2006 WL 680533, at *1 (D.N.J. Mar. 14, 2006) (citing 10A Wright & Miller, Federal Practice & Procedure § 2688 (3d ed. 1998)).

         "[Defendants are deemed to have admitted the factual allegations of the Complaint by virtue of their default, except those factual allegations related to the amount of damages." Doe v. Simone, No. 12-cv-5825, 2013 WL 3772532, at *2 (D.N.J. July 17, 2013). While "courts must accept die plaintiffs well-pleaded factual allegations as true," they "need not accept the plaintiffs factual allegations regarding damages as true." Id. (citing Chanel, Inc. v. Gordashevsky, 558 F.Supp.2d 532, 536 (D.N.J. 2008)). Moreover, if a court finds evidentiary support to be lacking, it may order or permit a plaintiff seeking default judgment to provide additional evidence in support of the allegations in the complaint. Id. at *2-3.

         A. Prerequisites for Entry of Default Judgment

         Before a court may enter default judgment against a defendant, the plaintiff must have properly served the summons and complaint, and the defendant must have failed to file an answer or otherwise respond to the complaint within the time period provided by the Federal Rules. See ...


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