Frosted Apple, LLC v. Coastal Labs.

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FROSTED APPLE, LLC, et al., Plaintiffs, v. COASTAL LABORATORIES, INC., et al., Defendants.

Civ. No. JKB-22-1128

United States District Court, D. Maryland

August 7, 2024

MEMORANDUM AND ORDER

James K. Bredar, United States District Judge

Pending before the Court is Plaintiffs' Motion to Modify Scheduling Order. (ECF No. 140.) The Court will deny the Motion without prejudice and direct further action in this case.

In their Motion, Plaintiffs explain that there is a pending Motion for Default Judgment as to Defendants Coastal Laboratories, Inc. (Delaware); Coastal Laboratories, Inc. (Maryland); AMSOnSite, Inc.; Britton-Harr Enterprises, Inc. Coastal Management Group; Tombstone Holdings, LLC; AeroVanti Inc.; AeroVanti Aviation, LLC; and AeroVanti Hangar, LLC (the “Entity Defendants”). (ECF No. 140 at 1.) They also explain that there are two other remaining Defendants in this case: Patrick Britton-Harr and Tracy Deckman (the “Individual Defendants”). (Id. at 2.)

Plaintiffs state that, should the Court grant the pending Motion for Default Judgment against the Entity Defendants, Plaintiffs likely will not require expert testimony or reports, as Plaintiffs do not believe they need such evidence to prove their claims against the Individual Defendants. (Id.) However, Plaintiffs assert, if the Court denies the pending Motion for Default Judgment, they may need expert testimony to prove their claims against the Entity Defendants. (Id.) Plaintiffs therefore request that the Scheduling Order be modified to permit sufficient time for the Court to consider and rule on the outstanding Motion.” (Id.)

As an initial matter, the Court generally does not-and in certain situations cannot-rule on motions seeking default judgment against certain defendants when additional defendants remain in the case. As this Court has explained, “[a]lthough it is an old case, Frow v. De La Vega, 82 U.S. 552 (1872), remains the leading authority on the effect that a default judgment against one defendant should have on non-defaulting defendants.” Boyd v. SFS Commc'ns, LLC, Civ. No. 153068 PJM, 2021 WL 1430723 at *3 (D. Md. Apr. 15, 2021) (explaining that “[i]n Frow, the Supreme Court held that a court may not enter final judgment on the merits separately against one ot several defendants upon a joint charge against all, where the case is still pending as to the others, (quotation marks omitted)). Further, “although other jurisdictions have cabined Frow to cases involving true joint liability, courts within the Fourth Circuit have adopted a broader approach, denying default judgment where the defendants' liability is premised on the same facts or causes of action.” Grim v. Balt. Police Dep't, Civ. No. ELH-18-3864, 2019 WL 5865561, at *30 (D. Md. Nov. 8, 2019). Courts within this district deny as premature motions for default judgment when the claims against the defaulting and non-defaulting defendants “substantially overlap.” Id.

Here, the claims against the Individual Defendants and the Entity Defendants substantially overlap such that resolution of the Motion for Default Judgment against the Entity Defendants would be inappropriate at this time. For instance. Plaintiffs allege that the Individual Defendants were alter egos of the Entity Defendants. (See generally ECF No. 103.) Accordingly, Plaintiffs' Motion for Default Judgment will be denied as premature, without prejudice to refiling at the appropriate time and in accordance with this Memorandum and Order.

Further Plaintiffs explain that the Individual Defendants, who were previously represented by counsel and who filed Answers in this matter (ECF Nos. 73, 96), “have thus far failed to participate in this action in any manner since their respective counsel withdrew.” (ECF No. 140 at 2.) It is possible that in such a circumstance default may be appropriate, although the caselaw appears to be limited. See S.E.C. v. Lawbaugh, 359 F.Supp.2d 418, 422 (D. Md. 2005) (concluding that default judgment is appropriate when defendant is “unresponsive for more than a year' after denial of motion to dismiss). However, Plaintiffs have not briefed the issue. Plaintiffs will therefore be directed to either move for entry of default against...