Electronic Funds Solutions v. Murphy

Defendants Electronic Payments Technologies, LLC (EPT), Michael Murphy and Ty Bishop appeal a default judgment of $24,040,272 entered in favor of plaintiffs Electronic Funds Solutions, LLC (EFS) and Michael Barry following the trial court’s order striking defendants’ answer as a discovery sanction. Defendants contend (1) the court should have limited compensatory damages to $50,000, the amount requested in plaintiffs’ complaint; (2) the complaint failed to state causes of action supporting the damages awarded; (3) no substantial evidence supported the damages awarded; (4) plaintiffs were not entitled to either treble or punitive damages; (5) the legal theories and facts asserted in the default prove-up materially differed from those alleged in the complaint and therefore opened the default; and (6) the sanction striking defendants’ answer violated their due process rights.

We conclude the trial court did not err by issuing a terminating sanction, but we reverse the judgment because the trial court awarded damages based on EPT’s value, instead of EFS’s lost profits. We also conclude that plaintiffs’ complaint for damages “in an amount in excess of $50,000,” failed to…