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Jacques and Associates, Inc. v. Hawk Institute for Space Sciences, LLC

United States District Court, D. Maryland

December 5, 2014

JACQUES AND ASSOCIATES, INC., Plaintiff,
v.
HAWK INSTITUTE FOR SPACE SCIENCES, LLC, Defendant.

REPORT AND RECOMMENDATION

TIMOTHY J. SULLIVAN, Magistrate Judge.

This Report and Recommendation addresses "Plaintiff's Request Pursuant to Federal Rule of Civil Procedure 55(b)(1) for Default Judgment Against Hawk Institute for Space Sciences, LLC" (the "Motion") (ECF No. 7) filed by Plaintiff Jacques and Associates, Inc. ("Jacques"). Defendant Hawk Institute for Space Sciences, LLC ("Hawk") has not filed a response, and the time for doing so has passed. See Loc. R. 105.2.a. On August 15, 2014, in accordance with 28 U.S.C. § 636 and Local Rule 301, Judge Hollander referred this case to me for a report and recommendation on Jacques's Motion. (ECF No. 8.) I find that a hearing is unnecessary in this case. See Fed.R.Civ.P. 55(b)(2); Loc. R. 105.6. For the reasons set forth below, I respectfully recommend that Jacques's Motion be GRANTED IN PART and DENIED IN PART.

I. FACTUAL AND PROCEDURAL HISTORY

In this case, Jacques filed suit against Hawk for breach of contract, account stated, unjust enrichment, quantum meruit, intentional misrepresentation and negligent misrepresentation. (ECF No. 1.) Hawk was served with the Complaint and summons but did not file an answer or responsive pleading within the requisite time period. On July 29, 2014, Jacques moved for the Clerk's entry of default (ECF No. 5), and the Clerk entered default against Hawk on July 30, 2014 (ECF No. 6). On August 15, 2014, Jacques filed the Motion, to which Hawk has not responded.

II. LEGAL ANALYSIS

A. Standard for Entry of Default Judgment

In determining whether to award a default judgment, the Court accepts as true the wellpleaded factual allegations in the complaint as to liability. See Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780-81 (4th Cir. 2001); United States ex rel. Durrett-Sheppard Steel Co. v. SEF Stainless Steel, Inc., No. RDB-11-2410, 2012 WL 2446151, at *1 (D. Md. June 26, 2012). Nonetheless, the Court must consider whether the unchallenged facts constitute a legitimate cause of action, since a party in default does not admit mere conclusions of law. United States v. Redden, No. WDQ-09-2688, 2010 WL 2651607, at *2 (D. Md. June 30, 2012) (citing Ryan, 253 F.3d at 790). Although the Fourth Circuit has a "strong policy that cases be decided on the merits, " United States v. Shaffer Equip. Co., 11 F.3d 450, 453 (4th Cir. 1993), default judgment "is appropriate when the adversary process has been halted because of an essentially unresponsive party." S.E.C. v. Lawbaugh, 359 F.Supp.2d 418, 421 (D. Md. 2005). If the Court determines that liability is established, the court must then determine the appropriate amount of damages. CGI Finance, Inc., v. Johnson, No. ELH-12-1985, 2013 WL 1192353, at *1 (D. Md. March 21, 2013). The Court does not accept factual allegations regarding damages as true, but rather must make an independent determination regarding such allegations. Durrett-Sheppard Steel Co., 2012 WL 2446151 at *1.

Rule 55 of the Federal Rules of Civil Procedure provides that "[i]f, after entry of default, the Plaintiff's Complaint does not specify a sum certain' amount of damages, the court may enter a default judgment against the defendant pursuant to Fed.R.Civ.P. 55(b)(2)." A plaintiff's assertion of a sum in a complaint does not make the sum "certain" unless the plaintiff claims liquidated damages; otherwise, the complaint must be supported by affidavit or documentary evidence. United States v. Redden, No. WDQ-09-2688, 2010 WL 2651607, at *2 (D. Md. June 30, 2012). Rule 55(b)(2) provides that "the court may conduct hearings or make referrals... when, to enter or effectuate judgment, it needs to... determine the amount of damages." The Court is not required to conduct an evidentiary hearing to determine damages, however; it may rely instead on affidavits or documentary evidence in the record to determine the appropriate sum. See, e.g., Mongue v. Portofino Ristorante, 751 F.Supp.2d 789, 795 (D. Md. 2010).

B. Liability

Subject matter jurisdiction in this case is predicated on the diversity of the parties. A federal court sitting in diversity must apply the choice of law rules applicable in the forum state. Klaxon v. Stentor Electric Mfg. Co., Inc., 313 U.S. 487, 496-97 (1941). In contract actions, Maryland courts generally apply the law of the jurisdiction where the contract was made, pursuant to the doctrine of lex loci contractus. See, e.g., Allstate Ins. Co. v. Hart, 327 Md. 526, 611 A.2d 100 (1992). It is well established in Maryland, however, that "parties to a contract may agree to the law which will govern their transaction, even as to an issue going to the validity of the contract." Kunda v. C.R. Bard, Inc., 671 F.3d 464, 469 (4th Cir. 2011). There are two exceptions that Maryland courts consider with respect to the enforcement of a contract's choiceof-law provision:

The law of the state chosen by the parties to govern their contractual rights and duties will be applied unless: (a) the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties' choice, or (b) application of the law of the chosen state would be contrary to a fundamental policy of a state which has materially greater interest than the chosen state in the determination of the particular issue and which [otherwise] would be the state of applicable law in the absence of an effective choice of law by the parties.

Id. (quoting Restatement (Second) Conflict of Laws § 187(2)(a), (b) (1971)).

Here, the Service Agreement ("Agreement") (ECF No. 1-2) that underlies this dispute provides that it "shall be construed in accordance with, and by governed by, the laws of the State of Maryland." Neither of the exceptions that would prevent Maryland courts from applying Maryland law are ...


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