US Specialty Insurance Company v. Mata Electric LLC et al

Filing 20

MEMORANDUM OPINION. Signed by Judge R David Proctor on 3/31/2021. (KAM)

FILED
2021 Mar-31 PM 02:41
U.S. DISTRICT COURT
N.D. OF ALABAMA

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION

U.S. SPECIALTY INSURANCE
COMPANY,
Plaintiff,
v.
MATA ELECTRIC, LLC, et al,
Defendants.

}
}
}
}
}
}
}
}
}
}

Case No.: 2:20-cv-01722-RDP

MEMORANDUM OPINION
This matter is before the court on U.S. Specialty Insurance Company’s (“USSIC”) Motion
for Default Judgment against the remaining, non-bankrupt Defendants in this case, Mata
Construction, LLC, Mata Auto, LLC, La Perla Nayarita, LLC Birmingham, La Perla Nayarita,
LLC and individual defendant Erick A. Mata Cabrera (Defendants). (Doc. # 18). The Motion was
filed on March 16, 2021. No response to the Motion has been filed.
1.

Background
At the request of the Defendants, Plaintiff USSIC issued Subcontract Performance and

Payment Bonds in favor of the general contractors on the following public construction projects,
in the indicated amounts, and for the referenced obligees: (1) Rudd Middle School Renovations
and Additions (obligee Trawick Contractors, Inc.), bond amount $1,918,892.17; (2) Erwin Middle
School (obligee Amason & Associates, Inc.), bond amount $1,814,942.00; (3) Hueytown Middle
School (obligee Argo Building Company), bond amount $1,701,976.00; and (4) UAB Job (obligee
MJ Harris), bond amount $ 455,011.00. (Doc. # 1, &6).

USSIC issued the Bonds in reliance upon the terms and conditions of a General Indemnity
Agreement (GIA) executed by the Defendants, separately and severally, in August of 2018. In the
GIA, the Defendants have promised, upon demand, to deposit collateral security if demanded by
USSIC:
X. Deposit with Surety
A. If an Event of Default occurs, or if a claim is made against the Surety under any
Bond, the Principals and Indemnitors shall, on demand from the Surety,
immediately deposit with the Surety collateral in any amount, value or form as the
Surety may designate in its sole and absolute discretion. Such collateral shall be
held by the Surety as collateral security in addition to and not in lieu of or
substitution for any other collateral that may have been previously deposited with
the Surety or any other benefits and protection afforded to the Surety by this
Agreement or any other agreement.
(Doc. # 1, &7).
Disputes arose between Defendants and the general contractors on the Rudd Middle
School, Erwin Middle School, and UAB Projects. After declaring Defendants to have defaulted in
its performance on the Rudd Middle School Subcontract, Trawick Contractors has terminated the
Mata Electric Subcontract and has demanded that USSIC, as Surety, take over and complete that
work. Amason & Associates, Inc. has also declared Defendants to be in default of the performance
of the Subcontract, and has requested USSIC, as Surety, undertake to complete the remaining
scope of work on the Subcontract. (Doc. # 1, &8).
MJ Harris has not terminated Defendants Subcontract, but has advised USSIC that it is
considering a declaration of default by Defendants on the UAB Subcontract. Argo Building
Company has advised Defendants that they are behind schedule on the Hueytown Middle School
Project, and has begun supplementing Defendants’ workforce to comply with the Project’s
Schedule. Accordingly, USSIC anticipates losses on the Rudd and Erwin Middle School Projects,
and losses remain possible on the Hueytown Middle School and UAB Projects. (Doc. # 1, &9).
2

USSIC has also received and paid a Payment Bond Claim from EquipmentShare.com in the
amount of $2,872.98 on the Erwin Middle School project. (Doc. # 1, &10).
In the GIA, Defendants promised, upon demand, to deposit collateral with USSIC in an
amount deemed appropriate by USSIC to protect it from liability and loss under any bond. (Doc.
# 1, &11). On July 1, 2020, USSIC demanded collateral to be deposited in the amount of $350,000.
(Doc. # 1, &12; Doc. # 1-3). Defendants have failed to respond or perform as requested, and thus
are in breach of their obligations as agreed in the GIA. (Doc. # 1, &12).
On November 2, 2020, USSIC initiated this action by filing a Verified Complaint against
the Defendants. (Doc. # 1). In the Complaint, USSIC seeks recovery from Defendants of the
amounts it paid as a result of its issuance of subcontract performance and payment bonds and costs
incurred by USSIC to administer, negotiate, and satisfy claims against the bonds. (Id.).
On December 6, 2020, the Complaint and Summons were properly served Defendants
Mata Construction, Mata Auto, La Perla Nayarita Birmingham, La Perla Nayarita, and Erick Mata
Cabrera. (Docs. # 4-11). The deadline to file a responsive pleading was December 27, 2020 (Doc.
# 12)., but no response was filed.
On January 29, 2021, the Clerk of Court entered Default against these Defendants. (Doc.
# 14).
On March 16, 2021, USSIC filed its Motion for Default Judgment together with an
Affidavit and supporting documents. (Doc. # 18). Those documents establish that, to date, USSIC
has sustained a loss in the amount of $549,220.87, consisting of a claim loss of $488,871.48 and
loss adjustment expense of $60,349.39, which are liabilities of Defendants pursuant to the terms
of the GIA. (Docs. # 18-2, 18-3).

3

In its Motion, USSIC seeks entry of judgment against the non-bankrupt Defendants,
separately and severally, in the amount of $549,220.87. (Doc. # 18 at 3). USSIC further requests
leave of court to later seek amendment of the Judgment requested to include any additional loss,
costs, or expenses which may result from the issuance of the bonds at issue in this action. (Id.).
For the reasons outlined below, USSIC’s Motion (Doc. # 18) is due to be granted.
II.

Standard of Review
Rule 55(b) states in relevant part:
(b) Entering a Default Judgment.
(1) By the Clerk. If the plaintiff’s claim is for a sum certain or for a sum which can
be made certain by computation, the clerk--on the plaintiff’s request, with an
affidavit showing the amount due--must enter judgment for that amount and costs
against a defendant who has been defaulted for not appearing and who is neither a
minor or incompetent person.
(2) By the Court. In all other cases, the party must apply to the court for a default
judgment. A default judgment may be entered against a minor or incompetent
person only if represented by a general guardian, conservator, or other like fiduciary
who has appeared. If the party against whom a default judgment is sought has
appeared personally or by a representative, that party or its representative must be
served with written notice of the application at least 7 days before the hearing. The
court may conduct hearings or make referrals--preserving any federal statutory
right to a jury trial--when, to enter or effectuate judgment, it needs to:
(A) conduct an accounting;
(B) determine the amount of damages;
(C) establish the truth of any allegation by evidence; or
(D) investigate any other matter.

Fed.R.Civ.P. 55(b)(1),(2). If the defendant is not an infant or an incompetent person, the court may
enter a default judgment against the defendant because of the defendant's failure to appear or
defend. Fed. R. Civ. P. 55(b)(2). “A default judgment must not differ in kind from, or exceed in
amount, what is demanded in the pleadings.” Fed. R. Civ. P. 54(c).
4

Although this court permits the Clerk of Court to enter default when appropriate pursuant
to Rule 55(a),1 it is the practice of the judges of this court to reserve all decisions about the entry
of a Rule 55(b) default judgment for the discretion of the particular judge to which the case is
assigned, even when Rule 55(b)(1) permits the Clerk of Court to enter a default judgment when a
plaintiff's claim against a defendant is either for a sum certain or for a sum which can by
computation be made certain. Thus, Plaintiff's motion for default judgment in this case is properly
before the undersigned.
A defaulting defendant “admits the plaintiff's well-pleaded allegations of fact” for purposes
of liability. Buchanan v. Bowman, 820 F.2d 359, 361 (11th Cir. 1987) (quoting Nishimatsu Constr.
Co., Ltd. v. Houston Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975) (internal quotation marks
omitted)).
III.

Analysis and Conclusion
The court finds that the requirements of Rule 55(b)(2) are satisfied in this case. On the

issue of damages and fees and costs, “all essential evidence is already on record,” Sec. Exch.
Comm'n v. Smyth, 420 F.3d 1225, 1231–32 & n.13 (11th Cir. 2005), and, therefore, a hearing is
not required. See Fed. R. Civ. P. 55(b)(2). Having considered USSIC’s Motion and evidentiary
submission (Doc. # 18), the court finds that the Motion (Doc. # 18) is due to be granted. USSIC is
entitled to recover from Defendants Mata Construction, Mata Auto, La Perla Nayarita
Birmingham, La Perla Nayarita, and Erick Mata Cabrera the $549,220.87 it has paid as surety on
the subject subcontract performance and payment bonds and in costs incurred to administer,

Rule 55(a) provides: “When a party against whom a judgment for affirmative relief is sought has failed to
plead or otherwise defend as provided by these rules and that fact is made to appear by affidavit or otherwise, the clerk
shall enter the party's default.” Fed. R. Civ. P. 55(a).
1

5

negotiate, and satisfy claims against the bonds. USSIC may later seek to amend the court’s
judgment upon proof of further expenses paid under the subject bonds.
A separate order will be entered.
DONE and ORDERED this March 31, 2021.

_________________________________
R. DAVID PROCTOR
UNITED STATES DISTRICT JUDGE

6