KPS & Associates, Inc. v. Designs by FMC, Inc.

Brief Fact Summary.

Plaintiff moved for default judgment because the Defendant did not file an answer to the complaint.

Synopsis of Rule of Law.

A trial court properly denies a Rule 55(c) motion when the party does not provide an adequate explanation for the default and shows bad faith during litigation.

Facts.

A sales agent, KPS & Associates (Plaintiff), sued a vendor, Designs by FMC, Inc. (Defendant), to recover commissions. Plaintiff moved for default judgment because the Defendant did not file an answer to the complaint.

Issue.

Did the lower court properly deny Defendant’s Rule 55(c) motion? Did the lower court properly determine the measure of damages?

Held.

Yes, the lower court properly denied Defendant’s Rule 55(c) motion. No, the lower court improperly determined the measure of damages. The case is remanded for consideration of damages.

Discussion.

The Court determined the lower court correctly considered the nature of the Defendant’s explanation for the default and the good faith of the parties. However, the lower court improperly determined the measure of damages because it failed to look beyond the complaint, instead relying on the Plaintiff’s erroneous calculation of damages.