United States District Court, D. Maryland
REPORT AND RECOMMENDATION
Timothy J. Sullivan United States Magistrate Judge
Report and Recommendation addresses the “Motion for
Clerk's Entry of Default Judgment in a Sum Certain
Pursuant to Fed.R.Civ.P. 55(b)(1)”
(“Motion”) (ECF No. 14) filed by Plaintiffs
Hartford Underwriters Insurance Company, Hartford Fire
Insurance Company, Property and Casualty Insurance Company of
Hartford, and Twin City Fire Insurance Company (collectively,
“Hartford”). Defendant Trinity Protection
Services Inc. (“Trinity”) has not filed a
response, and the time for doing so has passed. See
Loc. R. 105.2(a). On June 26, 2017, in accordance with 28
U.S.C. § 636 and pursuant to Local Rule 301.6, Judge
Chuang referred this case to me for a report and
recommendation on Hartford's Motion. (ECF No. 15.) 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 Hartford's Motion be
GRANTED IN PART and DENIED IN PART.
FACTUAL AND PROCEDURAL HISTORY
case, Hartford filed suit against Trinity for breach of
contract, account stated, quantum meruit, and unjust
enrichment. (ECF No. 1.) Trinity was served with the
Complaint, summons, and case management order, but did not
file an answer or responsive pleading within the requisite
time period. On March 1, 2017, Hartford moved for the
Clerk's entry of default (ECF No. 12), and the Clerk
entered default against Hawk on March 28, 2017 (ECF No. 13).
On April 4, 2017, Hartford filed the Motion, to which Trinity
has not responded.
Standard for Entry of Default Judgment
determining whether to award a default judgment, the Court
accepts as true the well-pleaded 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.
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).
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 (1992). Under the lex
loci principle, the law of the place where the contract
was made governs. Rouse Co. v.. Fed. Ins. Co., 991
F.Supp. 460, 462 (D. Md. 1998). “[A] contract is
‘made' where the last act necessary for its
formation is performed.” Id. For an insurance
policy, the last act necessary for formation of the contract
is the delivery of the policy and payment of premiums.
Id.; Commercial Union Ins. Co. v. Porter Hayden Co.,
97 Md.App. 442 (1993) (vacated on other grounds).
insurance policy at issue in this case was signed by Trinity,
paid for (at least initially), delivered, and cancelled in
Maryland. Applying Maryland's choice of law rules, I find
that the last acts necessary for the formation of the
insurance contract at issue occurred in Maryland.
Accordingly, I will apply Maryland substantive law.
Count I - Breach of Contract
of the Complaint asserts a claim of breach of contract. (ECF
No. 1 ¶¶ 10-13.) “To prevail in an action for
breach of contract, a plaintiff must prove that the defendant
owed the plaintiff a contractual obligation and that the
defendant breached that obligation.” Taylor v.
NationsBank, N.A., 365 Md. 166, 175 (2001). According to
the allegations of the Complaint, Hartford issued a Workers
Compensation Insurance Policy (“Policy”) to
Trinity for the periods of December 10, 2013 to December 10,
2014; December 10, 2014 to December 10, 2015; and December
10, 2015 to December 10, 2016. (ECF No. 1 ¶ 8.) Hartford
cancelled the Policy on July 14, 2016. (Id.) Under
the terms of the Policy, Trinity agreed to pay certain
premiums to Hartford. Initially, Trinity was to pay an
initial estimated annual premium (“estimated
premium”), which was based on an estimate of the
covered employees and their respective work duties during the
policy period. At the end of each policy period, Hartford
performed an audit of Trinity's records to determine
whether the estimated premium established at the beginning of
the policy period was too high or too low. If the estimated
premium was too low, Trinity would be required to pay
additional premiums to Hartford. If the estimated premium was
too high, Hartford would be required to pay a refund to
to the Complaint, Hartford performed an audit of
Trinity's records, as it was permitted to do by the
Policy. (Id. ¶ 11.) Hartford determined that
Trinity owed “additional audit premiums and/or unpaid
fixed monthly premiums of $299, 539.68” due under the
Policy. (Id.) Hartford sent several bills to Trinity
demanding payment of the additional premiums owed, but
Trinity refused to pay the additional premiums. Accepting as
true the unchallenged allegations of the Complaint, Hartford
has shown that Trinity had a contractual obligation to pay
Hartford the premiums due under the Policy. Trinity breached
that obligation by failing to make ...