Unreported / Non-Citable
Background
SSCP Restaurant Investors LLC acquired substantially all assets of the Corner Bakery debtors in bankruptcy, including their claims and avoidance actions. SSCP alleged that after Corner Bakery was purchased through Ronak J. Pandya and Pandya Restaurant Growth Brands, LLC, $33.886 million was transferred from insolvent Corner Bakery to Boston Market Corporation. Corner Bakery’s lender later declared a default and accelerated the company’s debt, and Corner Bakery eventually sought bankruptcy protection.
SSCP sued over the transfers, asserting actual and constructive fraudulent-transfer claims under Texas law, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, and unjust enrichment. The three remaining defendants—Ronak Pandya, Pandya Restaurant Growth Brands, and Boston Market—were properly served but did not answer or otherwise respond. The clerk entered default, and SSCP moved for default judgment.
The Court’s Holding
The court granted default judgment against all three remaining defendants. It found that diversity and personal jurisdiction existed, the procedural requirements for default judgment were satisfied, and the relevant discretionary factors favored judgment. Because the defendants failed to appear, the court accepted SSCP’s well-pleaded factual allegations as true and concluded that the complaint sufficiently supported each asserted claim.
The court awarded SSCP $33,886,000 in actual damages without an evidentiary hearing, finding the amount ascertainable by mathematical calculation from the pleadings and supporting evidence. It also awarded prejudgment interest at 4.10% from the filing of the lawsuit through the day before judgment, post-judgment interest at 4.10% until payment, $18,112.50 in attorneys’ fees, and $3,348.58 in costs. A final default judgment was to be entered separately.
Key Takeaways
- A defendant’s failure to appear does not automatically warrant default judgment; the complaint still must contain well-pleaded allegations providing a sufficient basis for relief.
- The court held that SSCP’s allegations supported default judgment on its fraudulent-transfer, fiduciary-duty, aiding-and-abetting, and unjust-enrichment claims.
- No damages hearing was required because sworn evidence and calculations established the $33.886 million loss with sufficient certainty.
Why It Matters
The ruling illustrates the substantial exposure defendants face when they fail to respond after proper service, particularly where the complaint and supporting records establish both liability and a calculable loss. Even on default, however, the plaintiff had to establish jurisdiction, satisfy Rule 55’s procedural requirements, and plead facts supporting each claim.
The decision also shows that a court may resolve a large damages request on written submissions alone when the claimed amount is liquidated or capable of mathematical calculation.