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Hanover Insurance Co. v. Persaud Companies, Inc.

United States District Court, D. Maryland, Southern Division

July 22, 2015

THE HANOVER INSURANCE CO., Plaintiff,
v.
PERSAUD COMPANIES, INC., ET AL., Defendants.

MEMORANDUM OPINION

George Jarrod Hazel United States District Judge

This Memorandum Opinion and accompanying Order address Plaintiff Hanover Insurance Company’s (“Hanover’s”) Motion for Default Judgment. See ECF No. 49. Defendants Persaud Companies, Inc. (“Persaud”), Veterans Construction Group, LLC (“Veterans”), Andy Persaud, and Katherine Baradaran (collectively, “Defendants”) have not filed a response to Hanover’s motion and the deadline for a response has now passed. See Loc. R. 105.2(a). Having reviewed the filings, a hearing is unnecessary. See Loc. R. 105.6. For the reasons discussed more fully below, the Court will GRANT Hanover’s Motion for Default Judgment.

I. BACKGROUND

On September 19, 2007, Persaud contracted with the United States government to provide labor and materials for the renovation of the fifth floor of the Veteran’s Affairs Medical Center (“the Medical Center”) in Philadelphia, Pennsylvania. See ECF No. 32 at ¶ 13. On January 25, 2008, at Persaud’s request, Hanover issued surety bonds – the Payment Bond and the Performance Bond – on Persaud’s behalf for work to be performed at the Medical Center. See id at ¶ 8. Under these bond agreements, Hanover assumed responsibility for Persaud’s payments to various subcontractors and suppliers. See id at ¶¶ 14-15.

In partial consideration for Hanover issuing surety bonds on Persaud’s behalf, on January 25, 2008, Persaud, Andy Persaud and Katherine Baradaran executed an Agreement of Indemnity in favor of Hanover. See Id. at ¶ 8; see also ECF No. 32-1. On June 15, 2009, Veterans, as well as the other Defendants, executed a separate Agreement of Indemnity in favor of Hanover. See ECF No. 32 at ¶ 9; see also ECF No. 32-2. Under both of these agreements, Defendants agreed to indemnify Hanover for any damages, including attorneys’ fees and costs, arising from the issuance of the Payment Bond and the Performance Bond. See ECF No. 32-1; see also ECF No. 32-2.

Persaud then contracted with various subcontractors and suppliers to provide work and materials for the Medical Center project. See ECF No. 32 at ¶ 15. Persaud, however, failed to pay certain subcontractors and suppliers. See id. Consequently, these unpaid subcontractors and suppliers asserted claims against Hanover’s Payment Bond, including, the claims of Whitehall Manufacturing Co., Division of Acorn Engineering, Co., Westcott Electric Co., Revolutionary Recovery, LLC, and MEP Solutions, Inc. See ECF No. 50 at 3. Pursuant to its Payment Bond, Hanover was obligated to, and did, pay the following Persaud subcontractors and suppliers as follows: Whitefall Manufacturing Co., $8, 408.16; Wescott Electric Co., $130, 016.16; Revolution Recovery, LLC, $6, 579.97; and MEP Solution, Inc., $115, 000.00. See Id. Thus, the total amount Hanover paid pursuant to the Payment Bond was $260, 004.29.

On February 13, 2013, Hanover filed this action seeking contractual indemnification from Defendants in the amount $321, 663.49, which included the $260, 004.29 paid by Hanover to Persaud’s subcontractors and suppliers, as well as $61, 659.20 in attorneys’ fees and costs. Defendants, however, never filed an answer to Hanover’s amended complaint.[1] Thus, on August 11, 2014, Hanover filed a Motion for Clerk’s Entry of Default. See ECF No. 41. Defendants did not respond to Hanover’s motion and the Clerk entered Defendants’ defaults on September 10, 2014 and September 22, 2014. See ECF Nos. 47, 48. Hanover then filed a Motion for Default Judgment on December 4, 2014 (see ECF No. 49), which remains unopposed by Defendants. Having considered Hanover’s motion and the attachments thereto, as well as its amended complaint, the Court will GRANT Hanover’s Motion for Default Judgment.

II. DISCUSSION

Federal Rule of Civil Procedure 55(b) governs the entry of default judgments. Pursuant to Rule 55(b), the Clerk may enter a default judgment “[i]f the plaintiff’s claim is for a sum certain or a sum that can be made certain by computation . . . .” Fed.R.Civ.P. 55(b)(1). Here, Hanover seeks a default judgment against Defendants in the amount $321, 663.49. The entry of default judgment is a matter within the discretion of the Court. See SEC v. Lawbaugh, 359 F.Supp.2d 418, 421 (D. Md. 2005) (citing Dow v. Jones, 232 F.Supp.2d 491, 494 (D. Md. 2002)). As the Court noted in Disney Enterprises, Inc. v. Delane, 446 F.Supp.2d 402 (D. Md. 2006), “[t]he United States Court of Appeals for the Fourth Circuit has a ‘strong policy that cases be decided on the merits.’” Id. at 405 (quoting United States v. Shaffer Equip. Co., 11 F.3d 450, 453 (4th Cir. 1993)). Nonetheless, “default judgment is available when the ‘adversary process has been halted because of an essentially unresponsive party.’” Id. (quoting Lawbaugh, 395 F.Supp.2d at 421).

In determining whether to award a default judgment, the Court takes as true the well-pleaded factual allegations in the complaint, other than those pertaining to damages. See Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780 (4th Cir. 2001) (“The defendant, by his default, admits the plaintiff’s well-pleaded allegations of fact, is concluded on those facts by the judgment, and is barred from contesting on appeal the facts thus established.” (citation and internal quotation marks omitted)); see Fed.R.Civ.P. 8(b)(6) (“An allegation – other than one relating to the amount of damages – is admitted if a responsive pleading is required and the allegation is not denied.”). It remains, however, “for the court to determine whether these unchallenged factual allegations constitute a legitimate cause of action.” Agora Fin., LLC v. Samler, 725 F.Supp.2d 491, 494 (D. Md. 2010); see also FED. PRAC. & PROC. § 2688 (3d ed. 1998) (“[L]iability is not deemed established simply because of the default . . . and the court, in its discretion, may require some proof of the facts that must be established in order to determine liability.”).

If the Court finds that “liability is established, [it] must then determine the appropriate amount of damages.” Samler, 725 F.Supp.2d at 494 (citing Ryan, 253 F.3d at 780-81). This is so because “an allegation ‘relating to the amount of damages’ is not deemed admitted based on a defendant’s failure to deny in a required responsive pleading.” Hartford Fin. Servs. Grp. Inc. v. Carl J. Meil, Jr., Inc., Case No. 10-2720, 2011 WL 1743177, at *7 (D. Md. May 5, 2011) (quoting Fed.R.Civ.P. 8(b)(6)); see also Trs. of the Elec. Welfare Trust Fund v. MH Passa Elec. Contracting, LLC, Case No. 08-2805, 2009 WL 2982951, at *1 (D. Md. Sept. 14, 2009) (“Upon default, the well-pled allegations in a complaint as to liability are taken as true, although the allegations as to damages are not.”); Int’l Painters & Allied Trades Indus. Pension Fund v. Metro Glass & Mirror, Inc., Case No. 11-2389, 2012 WL 893262, at *2 (D. Md. Mar.14, 2012) (“The court does not accept factual allegations regarding damages as true, but rather must make an independent determination regarding such allegations.”).

In sum, the Court must make two determinations. First, the Court must decide “whether the unchallenged facts in plaintiff[’s] complaint constitute a legitimate cause of action[.]” Samler, 725 F.Supp.2d at 494. Second, if the Court finds that liability is established, it must “make an independent determination regarding the appropriate amount of damages.” Id.

A. Liability

Hanover’s amended complaint, as well as the attachments thereto, adequately demonstrates that Hanover is entitled to indemnification from Defendants for its losses associated ...


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