FRANK MAAS, Magistrate Judge
I. Introduction
Plaintiff ORIX Financial Services, Inc. ("OFS") is the assignee of the lessor's rights under an equipment lease ("Lease"), dated June 24, 1999, between defendant Eric Clark Brewer, d/b/a National Digital Cable ("Brewer"), as lessee, and Vermeer of Tennessee, Inc. ("Vermeer"), as lessor. In this action, OFS seeks to recover the damages arising out of Brewer's failure to make the required Lease payments beginning in July 2001. On November 12, 2003, after Brewer failed to answer the complaint or otherwise appear, Your Honor referred the matter to me for an inquest. (Docket No. 4).
By order dated January 7, 2004, I directed OFS to serve and file an inquest memorandum by February 9, 2004, accompanied by supporting affidavits and exhibits, setting forth its proof of damages, as well as its proposed findings of fact and conclusions of law. The order also gave Brewer until February 23, 2004 to respond. (Docket No. 5). OFS initially submitted only the affirmation of its counsel, Lewis M. Smoley, Esq., in support of its request for damages. (See Affirm. of Lewis M. Smoley, Esq., dated January 30, 2004 ("Smoley I")). Thereafter, at my request, OFS supplemented the record with the affidavit of William G. Bagby, a Senior Vice President of OFS, sworn to on April 6, 2004 ("Bagby I"), and a second affirmation from Mr. Smoley dated April 7, 2004 ("Smoley II"). The principal difference between Mr. Smoley's two affirmations is that Smoley I voluntarily limited OFS' request for attorneys' fees to the amounts that counsel actually billed; Smoley II did not contain similar language and, read together with Bagby I, seemed to seek a considerably larger award of attorneys' fees based on the liquidated damages language in the Lease.
Despite these submissions, I concluded that it still was not possible to determine how the damages sought by OFS had been calculated. Accordingly, by letter dated July 1, 2004, I requested certain supplemental information from one or more knowledgeable persons at OFS. On July 22, 2004, OFS submitted a supplemental affidavit by Mr. Bagby sworn to on July 19, 2004 ("Bagby II"), which supplied that information.
For the reasons set forth below, I recommend that OFS be awarded damages pursuant to the Lease in the amount of $188,024.85, plus prejudgment interest in the amount of $116.58 per day from May 17, 2003, through the date that judgment is entered in this action.
II. Standard of Review
In light of Brewer's default, OFS' well-pleaded allegations concerning issues other than damages must be accepted as true.See Cotton v. Slone, 4 F.3d 176, 181 (2d Cir. 1993);Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992); Time Warner Cable of New York City v. Barnes, 13 F. Supp.2d 543, 547 (S.D.N.Y. 1998); Cablevision Sys. New York City Corp. v. Lokshin, 980 F. Supp. 107, 111 (E.D.N.Y. 1997).
Additionally, although a plaintiff seeking to recover damages against a defaulting defendant must prove its claim through the submission of evidence, the Court need not hold a hearing as long as (i) it has determined the proper rule for calculating damages on the claim, see Credit Lyonnais Secs. (USA), Inc. v. Alcantara, 183 F.3d 151, 155 (2d Cir. 1999), and (ii) the plaintiff's evidence establishes, with reasonable certainty, the basis for the damages specified in the default judgment. See Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 111 (2d Cir. 1997); Fustok v. ContiCommodity Servs., Inc., 873 F.2d 38, 40 (2d Cir. 1989);see also Tamarin v. Adam Caterers, Inc., 13 F.3d 51, 53-54 (2d Cir. 1993) (improper to base inquest solely on a "single affidavit only partially based upon real numbers").
III. Facts
On the basis of the complaint and OFS' inquest papers, I find as follows:
A. Jurisdiction
OFS is a New York corporation with its principal place of business in Georgia, and Brewer is a citizen of Tennessee. (Compl. ¶¶ 2-3). In addition, the amount in controversy exceeds $75,000. (Id. ¶ 1). The Court therefore has jurisdiction over this matter pursuant to 28 U.S.C. § 1332.
B. Brewer's Lease and Default
On June 24, 1999, Brewer leased a 1992 Chevy Kodiac trailer (the "Equipment") from Vermeer. The Lease required Brewer to pay Vermeer a total of $221,520 in 48 installments (including the downpayment) of $4,615 per month. (Id. Ex. A). As part of the Lease transaction, Brewer acknowledged, in writing, that the Equipment that he had received was satisfactory. (Id. Ex. C).
That same day, Vermeer assigned all of its right, title and interest in the Lease to OFS, which was then known as ORIX Credit Alliance. (Compl. ¶¶ 6, 8). Brewer made the required payments from June 24, 1999 through June 1, 2001, but he defaulted on the lease on July 1, 2001, by failing to make the payment for that or any subsequent month. (Compl. ¶ 9).
C. Remedies Available to Lessor Under the Lease
In the event of a payment default, the Lease authorizes OFS to accelerate the remaining sums ("Total Rent") that it is owed. (Id. Ex. A at 2). Additionally, OFS is entitled to recover the "unpaid aggregate amount of Total Rent for the entire term" "discounted to its then present value using as a rate the then current Federal Reserve Discount Rate." (Id.). OFS is further entitled to recover any additional "taxes, late charges, [and] collection charges" owed to the lessor, as well as an agreed "Terminal Purchase Option" amount if Brewer fails to deliver possession of the Equipment. (Id.). These sums are subject to an interest charge of "1/15 of 1% per day (the `Past Due Rate') until [the L]ease is paid in full." (Id. at 1). All of these sums are referred to collectively in the Lease as the Balance ("Balance"). (Id. at 2). OFS also is entitled to recover its attorney's fees. (Id.). Finally, pursuant to the Lease, OFS may take possession of the Equipment and sell it at either a public or a private sale, with the net proceeds to be applied against the Balance. (Id.).
IV. Discussion
A. Balance Exclusive of Attorney's Fees
The Total Rent outstanding under the lease is $110,760. (Bagby II ¶ 3.A) The Court can take judicial notice that the Federal Reserve Discount Rate in July 2001, when Brewer defaulted, was 3.25% per annum. See http://www.federalreserve.gov/ releases/H15/data/m/dwb.txt (last visited August 2, 2004); see also Bagby II ¶ 3.B). The Total Rent outstanding under the lease discounted to its present value at the time of the default, therefore, was $107,386.79 ($110,760 ! $3,373.21). (See Bagby II ¶ 3.B).
In addition to the Total Rent outstanding, OFS is entitled to recover the Terminal Purchase Option Amount, which the Lease specifies is $40,000. (See id.; Compl. Ex. A, at 2-3).
OFS sold the Equipment for $24,000 at a public sale on May 27, 2003. The expenses attributable to the sale were $1,725.89. (Bagby Aff. ¶ 11). Accordingly, Brewer is entitled to a credit against the Balance in the amount of $22,274.11 ($24,000-$1,725.89) as a consequence of the sale. (Id.)
The Lease also entitles OFS to recover late charges for payments that Brewer made prior to his default which were received late by OFS. Those late charges amount to $313.08. (See Bagby II ¶ 3.D Ex. 4).
OFS is also entitled to recover sales tax at the rate of six percent per annum on the unpaid Lease payments, which OFS has calculated to be $8,843.21. (See Bagby I ¶ 12; Bagby II ¶ 3.D).
In sum, exclusive of interest and attorney's fees, up to the date of the public sale, Brewer owed OFS $156,543.08 ($107,386.79 + $40,000 + $313.08 + $8,843.21).
In addition to these sums, OFS is entitled to recover interest at the rate of 1/15 of 1 percent per day, or 24.33 percent per annum, on the unpaid Balance. While I calculate this amount through the date of the sale (695 days) to be $72,530.20 ($156,543.08 ÷ 100 ÷ 15 x 695), OFS has submitted a worksheet indicating that the correct amount is only $49,755.88. (See Bagby II ¶ 3.D Ex. 3). Accordingly, I have accepted the lower amount as correct.
The Balance due and owing prior to the public sale was, therefore, $206,298.96 ($156,543.08 + $49,755.88),
The net proceeds of the public sale reduced the Balance to $184,024.85 ($206,298.96-$22,274.11). I calculate the per diem interest rate on that sum to be $122.68 ($184,024.95 ÷ 100 ÷ 15). OFS, on the other hand, has calculated that per diem rate as $116.58. (Id.). Accordingly, because OFS's number is lower, I have accepted it as the correct post-saleper diem rate.
B. Attorney's Fees
Pursuant to the Lease, in addition to the Balance, OFS may recover from Brewer "a reasonable sum (not less than 20% of the Balance) as attorneys' fees plus the expenses of such attorneys." (See Compl. Ex. A at 2). Because the Lease is governed by New York law, (see id.), this requires OFS to show that "the agreed sum is a reasonable estimate of potential damages" and that "the actual damages are difficult to determine, or are not readily ascertainable." Howard Johnson Intern. Inc. v. HBS Family, Inc., No. 96 Civ. 7687 (SS), 1998 WL 411334, at *5 (S.D.N.Y. July 22, 1998). Here, if the liquidated attorneys' fees provision were to be enforced, OFS would be entitled to recover more than $35,000.
In its most recent submission, OFS has agreed to limit its attorney's fees to $4,000. (See Bagby II ¶ 3.C). Previously, OFS submitted the affirmation of Mr. Smoley, which established that the time charges for his legal services and those of his associate through January 2004 were $2,297.50. (See Smoley I ¶ 5). I am familiar with Mr. Smoley and his extensive experience in this field. His billing rates of $300 (and later $350) per hour for his own time and $200 per hour for his associate seem eminently reasonable. Moreover, while OFS has not submitted any bills for legal services rendered by Mr. Smoley since January, it is clear that OFS has incurred substantially more in legal fees in connection with the submission of Bagley I and Bagley II. OFS will likely also incur additional legal fees in the course of attempting to collect on its judgment. In these circumstances, and in light of the liquidated damages clause, I recommend that OFS be awarded the $4,000 in legal fees that it has requested.
V. Conclusion
OFS should be awarded damages pursuant to the Lease in the amount of $188,024.85 ($184,024.85 + $4,000), plus prejudgment interest in the amount of $116.58 per day from May 17, 2003, through the date that judgment is entered in this action.
VI. Notice of Procedure for Filing of Objections to this Report and Recommendation
The parties are hereby directed that if they have objections to this Report and Recommendation, they must, within ten days from today, make them in writing, file them with the Clerk of the Court, and send copies to the chambers of the Honorable Robert L. Carter and to the chambers of the undersigned, at the United States Courthouse, 500 Pearl Street, New York, New York 10007, and to any opposing parties. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), 6(e), 72(b). Any requests for an extension of time for filing objections must be directed to Judge Carter. The failure to file timely objections will result in a waiver of those objections for purposes of appeal. See Thomas v. Arn, 474 U.S. 140, 106 So. Ct. 466, 88 L.Ed.2d 435 (1985); Frank v. Johnson, 968 F.2d 298, 300 (2d Cir. 1992); 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), 6(e), 72(b).