United States District Court, D. Minnesota
U.S. Bank National Association, doing business as Elan Financial Services, Plaintiff,
San Antonio Cash Network, Pendum LLC, and Loomis Armored US, LLC, Defendants.
T. Wiegert, Meagher & Geer, PLLP, and Martin Jerome
Flannery, Jr. and Paul C. Fonseca, Pattison & Flannery,
Antonio Cash Network, Attn: Joseph Vasquez, (Defendant).
REPORT & RECOMMENDATION
N. Leung United States Magistrate Judge
matter is before the Court, United States Magistrate Judge
Tony N. Leung, on Plaintiff U.S. Bank National
Association's (“U.S. Bank”) Motion for Entry
of Default Judgement (ECF No. 62). A hearing was held on
February 9, 2018. (ECF No. 72.) Joel T. Wiegert appeared on
behalf of U.S. Bank. Defendant San Antonio Cash Network
(“SACN”) did not appear. For the reasons stated
below, the Court recommends U.S. Bank's motion be
PROCEDURAL AND FACTUAL HISTORY
2011, U.S. Bank and Defendants SACN and Pendum LLC
(“Pendum”) entered into a Cash Provisioning
Agreement (“CPA”) where U.S. Bank would provide
currency to SACN for use in the operation of its ATMs and
Pendum would transport the currency. (Am. Compl. ¶ 10,
ECF No. 14.) Defendant Loomis Armored US, LLC
(“Loomis”) subsequently acquired Pendum's
armored-transportation-and-cash-in-transit business, agreed
to assume all Pendum's agreements with U.S. Bank, and
agreed to be bound by the CPA. (Am. Compl. ¶ 11.) Under
the terms of the CPA, U.S. Bank retained ownership of the
currency, but SACN was responsible for and bore the risk of
loss of the currency while in SACN's ATMs. (Am. Compl.
¶¶ 13-14.) The CPA also provided that SACN was not
to have access to the currency. (Am. Compl. ¶ 16.)
following the execution of the CPA, SACN's president, Joe
Vasquez, obtained keys to the ATM vaults from Pendum. (Am.
Compl. ¶¶ 28, 41.) U.S. Bank alleges that Vasquez
accessed ATMs after they were restocked and removed currency.
(Am. Compl. ¶ 40.) Vasquez also accessed the ATMs
immediately prior to the next replenishment to replace enough
currency to avoid suspicion. (Am. Compl. ¶ 40.) U.S.
Bank alleges that lock audits on the ATMs showed irregular
patterns of access and Loomis was aware of unauthorized
access to the ATMs by 2014. (Am. Compl. ¶¶ 32-33,
35, 42.) This unauthorized access continued until November
2016, when U.S. Bank became aware of suspicious activity
involving SACN's ATMs. (Am. Compl. ¶¶ 24-25.)
Bank directed Loomis to remove all of the currency from
SACN's ATMs. (Am. Compl. ¶ 25.) Each of SACN's
ATMs contained less currency than U.S. Bank's records
showed should have been remaining. (Am. Compl. ¶ 25.)
U.S. Bank alleges that a conference call took place between
U.S. Bank, Vasquez, and Vasquez's attorney on November
14, during which Vasquez admitted to taking currency from
SACN's ATMs. (Am. Compl. ¶ 26.) U.S. Bank
“estimates that SACN, through Vasquez, stole
approximately $1, 084, 600.” (Am. Compl. ¶ 29.)
The missing currency has neither been returned nor refunded
to U.S. Bank. (Am. Compl. ¶ 46.)
Bank commenced this action against SACN, Pendum, and Loomis
for breach of contract, negligence, breach of the duty of
good faith and fair dealing, an accounting, breach of
fiduciary duty, civil theft, and conversion. (Compl., ECF No.
1.) U.S. Bank's claims arise out of the loss of
approximately $1, 084, 600 in currency used in SACN's
ATMs. (Am. Compl. ¶¶ 29, 52, 59, 66, 78, 81, 84,
89.) By Amended Complaint, U.S. Bank seeks an accounting
“to determine the full extent of its losses due to
Defendants' wrongful acts”; a monetary judgment in
the amount of $1, 084, 600, plus interest and “other
charges”; punitive damages pursuant to Minn. Stat.
§ 604.14; and attorney fees and costs as provided in the
CPA. (Am. Compl. ¶¶ 52, 59, 66, 67-71, 78, 83-84,
the filing of the Amended Complaint and Loomis's motion
to dismiss, SACN filed its Answer in April 2017. (ECF Nos.
14, 16, 19.) In June, the Court held a pretrial scheduling
conference attended by counsel for all parties, including
SACN. (ECF Nos. 31, 35.) A Pretrial Scheduling Order was
issued as well as an Order for Settlement Conference.
(Pretrial Scheduling Order, ECF No. 36; Order for Settlement
Conference, ECF No. 37.) The parties, including SACN, later
stipulated to the entry of a Protective Order and established
a protocol for electronically stored information. (ECF Nos.
38, 39, 40.)
SACN's Counsel is Permitted to Withdraw
August, SACN's counsel moved to withdraw due to a
breakdown in the attorney-client relationship. (ECF 42; Sept.
5, 2017 Order at 2, ECF No. 53 [hereinafter Order].) SACN and
counsel had not communicated since an exchange of emails in
July. (Order at 2.) SACN failed to respond to counsel's
requests for information to complete the required Rule
26(a)(1) disclosures and to make disclosures relating to
electronically stored information. (Order at 2-3.) Counsel
represented that SACN's “failure to communicate and
to participate in its defense ha[d] made continued