Colon v. Blades

717 F.Supp.2d 175

William Anthony COLÓN, Plaintiff

v.Rubén BLADES, Roberto Morgalo, Martínez, Morgalo & Associates, Defendants.

Rubén Blades, Cross-Plaintiff

v.Roberto Morgalo, in his Personal capacity and as Owner and Member of Martínez, Morgalo & Associates, LLC; Martínez, Morgalo & Associates, LLC., Cross-Defendants.

Civil No. 07-1380(JA).

United States District Court, D. Puerto Rico.

June 15, 2010.

Jose A. Hernandez-Mayoral, Hernandez Mayoral Law Office, Juan H. Saavedra-Castro, Juan H. Saavedra Castro Law Office, San Juan, PR, for Plaintiff.

Pamela D. Gonzalez-Robinson, Eduardo J. Corretjer-Reyes, Roberto Corretjer Piquer Law Office, San Juan, PR, for Defendants.

OPINION AND ORDER

JUSTO ARENAS, United States Chief Magistrate Judge.

This matter is before the court on motion for default judgment filed on March 1, 2010 by cross-plaintiff Rubén Blades against cross-defendant Martínez, Morgalo & Associates, Inc., (hereinafter "M.M.A."). (Docket No. 133.) A hearing on damages was held on April 5, 2010. (Docket No. 163.)

I. FACTUAL AND PROCEDURAL BACKGROUND

In 2002, Roberto Morgalo, Arturo Martínez, and their company M.M.A. entered into negotiations to book a concert featuring a musical performance between William Anthony Colón and Mr. Blades to commemorate the album "Siembra" originally released in 1978. (Docket No. 56, at 4, ¶ 12.)

On or about January, 2003, Mr. Morgalo's company acting as an agent on behalf of Mr. Blades and Mr. Colón, entered into an Engagement Contract with DISSAR Productions to hold the concert in May, 2003, at the Estadio Hiram Bithorn in San Juan, Puerto Rico. (Docket No. 14-5.) According to the contract, Mr. Colón and Mr. Blades were to receive a $350,000 all-inclusive fee, except for sound and lights, as compensation for their performance. ( Id. at 1.) Mr. Blades and Mr. Colón would each receive fifty percent (50%) of the fee after all of the concert expenses were paid. (Docket No. 56, at 5, ¶ 14.)

On May 4, 2007, seeking the collection of monies which he alleged were owed to him, Mr. Colón filed a complaint against Mr. Blades, Mr. Morgalo, and M.M.A. alleging that Mr. Blades was solely responsible for breaching the contract. (Docket No. 1.) On April 29, 2008, Mr. Colón filed an amended complaint to which Mr. Bladesreplied on May 9, 2008. (Docket Nos. 45 & 48.) On June 5, 2008, Mr. Blades sought indemnification from Mr. Morgalo in his personal capacity and as owner and member of M.M.A., and also from M.M.A. by filing a cross claim which was amended on July 29, 2008. (Docket Nos. 49 & 56.)

Mr. Morgalo also filed a defamation claim against Mr. Blades and his company, Blades Productions, Inc., in the United States District Court for the Southern District of New York on May 2, 2008. (Docket No. 58-2.) The claim was consolidated with this action on August 12, 2008. ( Id.) On September 2, 2008, Mr. Morgalo answered Mr. Colón's amended complaint as well as Mr. Blades' amended cross claim (Docket Nos. 66 & 67) and on October 17, 2008, Mr. Blades answered Mr. Morgalo's defamation claim. (Docket No. 73.) That claim was dismissed on March 31, 2010. (Docket No. 154.)

On April 21, 2009, Mr. Morgalo waived service of summons specifically on behalf of M.M.A. pursuant to Federal Rule of Civil Procedure 4(d). (Docket No. 97.) On February 2, 2010, Mr. Blades asked the Clerk of the Court to enter default against M.M.A. for its failure to plead or otherwise defend. (Docket No. 118.) See Fed.R.Civ.P. 55(a). The Clerk entered default as to M.M.A. in relation to the amended cross-claim on February 25, 2010. (Docket No. 128.) Finally, Mr. Blades moved for default judgment as to M.M.A. on March 1, 2010. (Docket No. 133.) Specifically, Mr. Blades asks for $143,000 in damages plus interest under the first cause of action, cost and attorneys fees, and judgment by default on all six causes of action of the amended cross-claim. ( Id.) The default hearing was set for March 23, 2010 and then moved to and held on April 5, 2010. (Docket Nos. 141 & 144.) On May 6 and May 7, 2010, Mr. Colón moved to voluntarily dismiss his claims against Mr. Blades, Mr. Morgalo, and M.M.A. (Docket Nos. 188 & 194.) Mr. Colón's amended complaint was voluntarily dismissed on May 9, 2010. (Docket No. 196).

II. STANDARD OF REVIEW

A judgment by default pursuant to Federal Rule of Civil Procedure 55(b) "is a 'final disposition of the case and an appealable order' that has the same effect as a judgment rendered after a trial on the merits." U.S. v. $23,000 in U.S. Currency, 356 F.3d 157, 163 (1st Cir.2004) (quoting 10A Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure Civil § 2684 (3d ed.1998)). "Pursuant to Rule 55(b), a [party] 'must apply to the court for a default judgment' where the amount of damages claimed is not a sum certain." Lang-Correa v. Diaz-Carlo, 672 F.Supp.2d 265, 269 (D.P.R.2009) (quoting Fed.R.Civ.P. 55(b)(2)). The court may enter a judgment by default provided that "[i]f the party against whom a default judgment is sought has appeared personally or by a representative, that party or its representative must be served with written notice of the application at least 7 days before the hearing." Fed.R.Civ.P. 55(b)(2); see U.S. v. $23,000 in U.S. Currency, 356 F.3d at 163-64. Also, Rule 55(b)(2) provides that "[t]he court may conduct hearings ... when ... it needs to: ... determine the amount of damages." Fed.R.Civ.P. 55(b)(2)(B). Entry of default by the Clerk "constitutes an admission of all facts well-pleaded in the complaint." Metropolitan Life Ins. Co. v. Colón Rivera, 204 F.Supp.2d 273, 274 (D.P.R.2002) (citing Banco Bilbao Vizcaya Argentaria v. Family Restaurants, Inc. (In re The Home Restaurants, Inc.), 285 F.3d 111, 114 (1st Cir.2002)); see Franco v. Selective Ins. Co., 184 F.3d 4, 9 n. 3 (1st Cir.1999). Consequently, "a defaulting [party will be precluded] from contesting liability."Lang-Correa v. Diaz-Carlo, 672 F.Supp.2d at 269. However, the court may "examine [the] complaint to determine whether it alleges a cause of action." Id. (quoting Quirindongo Pacheco v. Rolon Morales, 953 F.2d 15, 16 (1st Cir.1992)). "Once the entry of a default establishes the fact of damage, the trial judge ... has considerable latitude in determining the amount of damages." Jones v. Winnepesaukee Realty, 990 F.2d 1, 4 (1st Cir.1993) (citing Sony Corp. v. Elm State Elecs., Inc., 800 F.2d 317, 321 (2d Cir.1986)).

III. FINDINGS OF FACT

At all relevant times, Mr. Morgalo and M.M.A. were involved in the business of promoting and representing performers of salsa and Latin music. (Docket No. 56, at 3, ¶ 7.) Mr. Morgalo also was the owner, business proprietor, manager member, principal, agent, servant, representative and/or employee of M.M.A., and was acting within the course and scope of such ownership, membership, agency and employment. ( Id. ¶ 8.) When the company was organized, Mr. Morgalo and co-owner Mr. Martínez assigned membership interest as follows: fifty-one percent (51%) to Mr. Morgalo and forty-nine percent (49%) to Mr. Martínez. Mr. Morgalo was and served as president of the company and Mr. Martínez was named vice president. ( Id. at 4, ¶¶ 9 & 10.)

On 2002, M.M.A. began negotiations for the performance of a reunion concert between Mr. Blades and Mr. Colón to commemorate the album "Siembra" originally released in 1978 (hereinafter the "Siembra concert or show"). ( Id. ¶ 12.) On January 2003, M.M.A. executed an Engagement Contract with the Puerto Rican promoters DISSAR Productions and ROMPEOLAS for the performance on behalf of both Mr. Blades and Mr. Colón. ( Id. ¶ 13.) In the fall of 2003, Mr. Martínez transferred and/or assigned his membership interest in the company to Mr. Morgalo, and Mr. Morgalo then became the sole owner and member of M.M.A. ( Id. ¶ 11.) The Engagement Contract provided that the fee payable to both artists-Colón and Blades-was $350,000, all-inclusive, except for sound and lights. ( Id. at 5, ¶ 14.) Mr. Blades and Mr. Colón would receive fifty percent (50%) of the fee after payment of concert expenses, including production and personnel, which were to also be split between Mr. Blades and Mr. Colón. ( Id.)

On or about February 2002, Mr. Morgalo and M.M.A. received $62,500 for a concert between Mr. Blades and Cheo Feliciano. ( Id. ¶ 15.) However, the concert was cancelled and Mr. Blades never received the money. ( Id.) Instead, M.M.A. applied the $62,500 as a "credit" toward the Siembra Concert, without the knowledge, consent or approval of either Mr. Blades or Mr. Colón. ( Id.) Thus, the $62,500 are exclusively owed to Mr. Blades, over and above and independent from the balance of the fee owed to Mr. Blades for the Siembra Concert. ( Id.) Despite owing money to Mr. Blades, M.M.A. charged and received a booking commission equal to ten percent (10%) of the fee, or $35,000 for the Siembra concert. ( Id. at 6, ¶ 16.)

As booking agents Mr. Morgalo and M.M.A. served Mr. Blades and Mr. Colón in a fiduciary capacity and owed such fiduciary duties to act and handle the concert's affairs with the care, skill, and diligence a fiduciary rendering that kind of service would reasonably be expected to use. ( Id. ¶ 17.) Mr. Morgalo and M.M.A. were also responsible for collecting and paying the fee to both artists, payment of musician salaries, travel and accommodation arrangements, transportation, security, etc. ( Id. ¶ 18.)

The Engagement Contract provided that all payments were to be made by thepromoters to M.M.A in the form of wire transfer, cash, certified check or money order payable to M.M.A. ( Id. ¶ 19.) Mr. Morgalo and M.M.A. were required to make full payment to the artists prior to traveling to Puerto Rico. ( Id.) Mr. Colón received an up front advance of $62,500 from M.M.A. while Mr. Blades received an up front advance of $68,000 from M.M.A. ( Id. ¶¶ 20 & 21.) Mr. Morgalo and M.M.A. failed to make the scheduled payments of the balance of the fee to Mr. Blades and Mr. Colón under the terms of...