Unreported / Non-Citable
Background
First Citizen Bank & Trust Company sued Omotayo CPA III, PLLC and nine guarantors for breach of contract and breach of guaranty. In October 2023, the bank made a $3.35 million loan and extended a $300,000 line of credit to Omotayo CPA III. The other defendants executed commercial guaranties unconditionally guaranteeing Omotayo CPA III’s repayment and performance.
Omotayo CPA III stopped making payments on the larger loan in June 2025. After the defendants failed to cure the default, the bank declared a cross-default under the line of credit and accelerated all amounts due. The defendants were served but did not respond, and the clerk entered default against all of them.
The Court’s Holding
The court granted the bank’s request for final default judgment. Applying the Fifth Circuit’s default-judgment factors, it found that the defendants’ failure to respond left no disputed material facts, service was proper, the grounds for default were established, and nothing suggested a good-faith mistake, excusable neglect, or a reason the judgment would later have to be set aside.
Accepting the complaint’s well-pleaded allegations as true, the court concluded that the bank established breach of contract against Omotayo CPA III and breach of guaranty against the remaining defendants. It determined that the defendants were jointly and severally liable for $3,797,647.98 and that no damages hearing was required because the debt was calculable from the pleadings and supporting documents.
The court also held that prejudgment interest accrued at 18% beginning December 10, 2025, the date suit was filed, and that postjudgment interest would accrue at the applicable federal rate of 4%. Because the bank’s proposed judgment did not calculate the prejudgment-interest amount, the court ordered an amended proposed judgment and supporting calculations. It administratively closed the case pending entry of judgment, expressly stating that the closure was not a dismissal or disposition.
Key Takeaways
- A defendant’s default admits well-pleaded allegations establishing liability, but the plaintiff must still show that those allegations state viable claims.
- The loan documents and guaranties established joint and several liability for $3,797,647.98, allowing the court to determine damages without a hearing.
- The court granted default judgment but required the bank to calculate the exact prejudgment-interest amount before entry of the separate final judgment.
Why It Matters
The opinion illustrates the proof a lender must provide to obtain default judgment on promissory notes and commercial guaranties. Even when defendants do not appear, the court independently examines procedural fairness, the sufficiency of the pleaded claims, and the evidentiary basis for damages.
It also underscores that an interest-rate request must be translated into a supported dollar calculation for the proposed judgment. Administrative closure after the merits ruling did not terminate or dismiss the action; the court retained the case for entry of the final judgment and any necessary further proceedings.