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Cirrus DX, Inc. v. Corridor Medical Services, Inc.

United States District Court, D. Maryland

February 12, 2019

CIRRUS DX, INC. Plaintiff,



         Pending before the Court is Plaintiff Cirrus DX, Inc.'s motion for default judgment, ECF No. 8. Defendant Corridor Mobile Medical Services has not responded and the time for doing so has passed. See D. Md. Loc. R. 105.2. Pursuant to Local Rule 105.6, a hearing is not necessary. For the following reasons, Plaintiff's request for this Court to enter default judgment is GRANTED, and the final damages calculation is DEFERRED consistent with this opinion.

         I. BACKGROUND

         The following facts are taken from the Complaint and accepted as true. Cirrus DX, Inc. (“Cirrus”) is a medical laboratory specializing in the development and manufacture of diagnostic assays and molecular testing solutions used in clinical pathology. ECF No. 1 ¶ 4. Corridor Mobile Medical Services (“Corridor”) is a mobile imaging and laboratory service provider that serves patients in nursing homes, hospice centers, assisted living facilities, and clinics. Id. ¶ 5.

         Cirrus entered into a Lab Services Agreement (the “Agreement”) with Corridor effective February 15, 2018. ECF No. 1 ¶ 9; see also ECF No. 1-3. Cirrus agreed to perform urinary tract infection tests on samples provided by Corridor's patients and to report the test results directly to Corridor. ECF No. 1 at ¶ 9; see also ECF No. 1-3 at 2. According to the terms of the Agreement, Corridor was responsible for properly collecting, preparing and labeling the samples furnished to Cirrus. Id. Corridor was also in charge of billing Medicare for the services that Cirrus performed. ECF No. 1 ¶ 9; see also ECF No. 1-3 at 3.

         The Agreement also specified that Corridor's failure to pay amounts owed to Cirrus within 30 days of the payment due date entitled Cirrus to terminate the Agreement and immediately collect all accounts due, as well as to “avail itself of any other remedy or remedies provided under law or in equity.” ECF No. 1-3 ¶ 12. The Agreement also provides for reimbursement of “any and all costs and expenses reasonably incurred by [Cirrus] in exercising its rights . . . including but not limited to reasonable attorney's fees and legal expenses.” Id.

         For several months, Cirrus invoiced Corridor for services rendered, but despite repeated demands, Corridor failed to pay. ECF No. 1 ¶17. On August 16, 2018, Cirrus informed Corridor in writing that Corridor was in default of its obligations under the Agreement. Id. ¶ 18, ECF No. 1-4. On August 31, 2018, Cirrus filed this breach of contract action, seeking payment on six outstanding invoices totaling $1, 828, 401.78, plus attorneys' fees and costs. ECF No. 1 ¶ 26. On September 14, 2018, Cirrus served the Complaint and Summons on Corridor. ECF No. 10. On October 18, 2018, Cirrus moved for default and default judgment. ECF Nos. 7, 8. The Clerk entered default on October 24, 2018. ECF No. 11.


         Federal Rule of Civil Procedure 55 governs defaults and default judgments. Rule 55(a) provides that default must be entered “[w]hen a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise.” Fed.R.Civ.P. 55(a). The court may then enter default judgment at the plaintiff's request and with notice to the defaulting party. Fed.R.Civ.P. 55(b)(2). Although courts maintain “a strong policy that cases be decided on the merits.” United States v. Schaffer Equip. Co., 11 F.3d 450, 453 (4th Cir. 1993), the court may exercise its discretion in granting default judgment 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).

         When considering the propriety of default judgment, the court takes as true the well-pleaded factual allegations of the complaint, other than those pertaining to damages. Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780 (4th Cir. 2001); 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.”). The court applies the pleading standards announced in Ashcroft v. Iqbal, 556 U.S. 662 (2009), and Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), in the context of default judgments. See, e.g., Balt. Line Handling Co. v. Brophy, 771 F.Supp.2d 531, 544 (D. Md. 2011). A complaint that avers bare legal conclusions or “naked assertion[s] devoid of further factual enhancement, ” is insufficient to award default judgment. Russell v. Railey, No. DKC 08-2468, 2012 WL 1190972, at *3 (D. Md. Apr. 9, 2012) (quoting Iqbal, 556 U.S. at 678). See, e.g., Balt. Line Handling Co., 771 F.Supp.2d at 545 (“The record lacks any specific allegations of fact that ‘show' why those conclusions are warranted.”).

         If the complaint avers sufficient facts from which the court may find liability, the court next turns to damages. See Ryan, 253 F.3d at 780-81. Damages are circumscribed by that which is requested in the complaint. See Fed. R. Civ. P. 54(c) (“A default judgment must not differ in kind from, or exceed in amount, what is demanded in the pleadings.”). The damages request must be supported by evidence introduced either at a hearing or by affidavit or other records. See Fed. R. Civ. P. 54(c); Lawbaugh, 359 F.Supp.2d at 422. See, e.g., Monge v. Portofino Ristorante, 751 F.Supp.2d 789, 794-95 (D. Md. 2010).


         A. Liability

         Taking the Complaint allegations as true, Cirrus has plausibly averred that Corridor failed to pay on six months of invoices for services rendered. A successful Maryland breach of contract claim must establish that (1) the defendant owed the plaintiff a contractual obligation; and (2) the defendant materially breached that obligation. See RRC Ne., LLC v. BAA Maryland, Inc., 413 Md. 638, 658 (2010). According to the Complaint, Corridor voluntarily and competently entered into a bilateral agreement with Cirrus. See ECF No. 1-3 at 5. Cirrus ...

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