Waterfurnace International Inc v. B&S Sheet Metal Mechanical Inc et al

Filing 19

OPINION AND ORDER granting in part and denying in part WaterFurnace's 18 Motion for Default Judgment. Specifically, the motion is DENIED with leave to refile as to defendants William Craig Jackson and Garth C. Jackson. However, the motion is GRANTED as to defendants B & S Sheet Metal Mechanical, Inc.; B & S Sheet Metal Mechanical, Inc. d/b/a Jackson Geothermal HVAC and Drilling, LLC; and Jackson Geothermal HVAC and Drilling, LLC, in the amounts set forth inthis order. WaterFurnace is OR DERED to submit its attorneys fees and costs within 14 days of this order, after which, if requested by WaterFurnace, the Court will direct the Clerk to enter a final judgment as to those defendants. Signed by Judge Jon E DeGuilio on 10/28/2015. (rmn) Modified on 10/28/2015 to (cc: Jackson) (rmn).

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
FORT WAYNE DIVISION
WATERFURNACE INTERNATIONAL,
INC.,
Plaintiff,
v.
B&S SHEET METAL MECHANICAL,
INC., et al.,
Defendants.

)
)
)
)
)
)
)
)
)
)
)

Case No. 1:15-CV-008 JD

OPINION AND ORDER
Now before the Court is the motion for default judgment filed by the plaintiff,
WaterFurnace International, Inc., against each of the defendants in this case. [DE 18]. Those
defendants include three entities, which are B&S Sheet Metal Mechanical, Inc.; B&S Sheet
Metal Mechanical, Inc. d/b/a Jackson Geothermal HVAC and Drilling, LLC1; and Jackson
Geothermal HVAC and Drilling, LLC; in addition to two individuals, William Craig Jackson and
Garth C. Jackson. For the reasons set forth below, the motion for default judgment is granted in
part as to the entity defendants, and is denied in part with leave to refile as to the individual
defendants.
I. BACKGROUND
WaterFurnace International, Inc. is a corporation engaged in the business of
manufacturing, marketing, and selling geothermal systems and equipment. [DE 5].
WaterFurnace received a credit application from a company that listed its name as “B&S Sheet

1

The Court construes this as the same entity as the first defendant, B&S Sheet Metal
Mechanical, Inc., with its name pled in the alternative with its doing-business-as name.

Metal Mech, Inc.” In the line next to “D/B/A,” the application stated: “Jackson Geothermal
HVAC & Drilling, LLC.” The application was signed by William Craig Jackson and Garth
Jackson, who listed their titles as “President” and “Member,” respectively. Relying on the
representation that those companies constituted the same entity, and thus believing that any
extensions of credit would be the obligation of each of those companies, WaterFurnace accepted
the application and thereafter extended credit. The entity defendants then issued purchase orders
for WaterFurnace materials and equipment for use in a federally funded construction project.
WaterFurnace accepted the purchase orders and thereafter shipped the materials and equipment
to the entity defendants. The terms and conditions of those sales specify that any amounts that
remain unpaid after thirty days will accrue service charges at the rate of 1.5% per month or 18%
annually. They also specify that WaterFurnace may recover “all costs and attorneys’ fees
incurred in collection of all past due invoices and accounts.” [DE 5 p. 8, 16].
However, the entity defendants have failed to pay the amounts due, and had an unpaid
balance of $312,427.09 as of December 8, 2014. Accordingly, on December 11, 2014,
WaterFurnace filed a complaint in Allen County, Indiana against the five defendants, seeking
recovery of that amount plus other fees and costs. By January 13, 2015, WaterFurnace had
properly effected service of the summons and complaint on each of the defendants by way of a
private process server. On January 12, 2015, defendant William Craig Jackson filed a pro se
notice of removal in this Court, alleging diversity jurisdiction as the basis for removal. After
twice amending the notice of removal, Mr. Jackson properly asserted the predicates for diversity
jurisdiction. Specifically, WaterFurnace is incorporated in Indiana and has its principal place of
business in Indiana, making it an Indiana citizen. Defendant B&S Sheet Metal Mechanical Inc.
(and thus its alias, B&S Sheet Metal Mechanical Inc., d/b/a Jackson Geothermal HVAC and

2

Drilling, LLC) is incorporated in and has its principal place of business in Pennsylvania.
Defendant Jackson Geothermal HVAC and Drilling, LLC is a limited liability company that has
four members, each of whom are individuals who are citizens of Pennsylvania. The two
individual defendants, William Craig Jackson and Garth Jackson, are also each citizens of
Pennsylvania. Thus, none of the defendants are citizens of the same state as the plaintiff,
satisfying the complete diversity requirement. Further, the amount in controversy exceeds
$75,000, exclusive of interest and costs. Accordingly, the Court has diversity jurisdiction
pursuant to 28 U.S.C. § 1332(a).
Since filing and amending the notice of removal, though, William Craig Jackson has
taken no further action in this case. In addition, none of the other defendants has ever appeared,
either in this Court or in state court prior to the removal. Accordingly, on February 16, 2015,
WaterFurnace moved for a clerk’s entry of default as to each defendant, and certified its service
of the motion as to all defendants. The Clerk entered default as to each defendant on February
25, 2015, and no defendant has moved to set aside that default. WaterFurnace then filed the
present motion for default judgment on March 30, 2015, along with a Declaration of
Indebtedness and a certificate that it served the motion on each defendant. None of the
defendants have responded to the motion, and their time to do so has expired.
II. DISCUSSION
The entry of a default judgment under Rule 55(b) lies within the sound discretion of the
district court. Merrill Lynch Mortg. Corp. v. Narayan, 908 F.2d 246, 252 (7th Cir. 1990). “In
determining whether to enter a default judgment, the court may consider a number of factors
including whether there is a material issue of fact, whether the default is largely technical,
whether the plaintiffs were substantially prejudiced, and how harsh an effect a default judgment
might have.” Wolf Lake Terminals, Inc. v. Mut. Marine Ins. Co., 433 F. Supp. 2d 933, 941 (N.D.
3

Ind. 2005) (citing 10A Wright & Miller, Federal Practice and Procedure § 2685 (3d ed. 1998)).
Default judgment, however, is not automatic. Plaintiffs seeking default judgment must
demonstrate that they are entitled to judgment as a matter of law. Cass Cnty. Music Co. v.
Muedini, 55 F.3d 263, 265 (7th Cir. 1995). “In making this inquiry, the court must assume that
the factual allegations are, by reason of the default, true.” Id. at 265–66; see also Dundee
Cement Co. v. Howard Pipe & Concrete Prods., Inc., 722 F.2d 1319, 1323 (7th Cir. 1983)
(“Upon default, the well-pleaded allegations of a complaint relating to liability are taken as
true.”).
In this case, the docket reflects that each of the defendants were served with the summons
and complaint via process server, the last of which occurred on January 13, 2015. The defendants
have therefore each received proper notice that an action was pending against them. However,
none of the defendants filed an answer to the complaint. Only William Craig Jackson has even
appeared in this action, and his activity only encompassed filing and then amending a notice of
removal. In addition, even after the Clerk entered each defendant’s default and WaterFurnace
moved for default judgment, no defendant has moved to set aside the default or responded in
opposition to the motion for default judgment. Under these circumstances, the Court must
conclude that the defendants do not intend to defend themselves. Default judgment is therefore
appropriate as long as the Court has personal jurisdiction over each defendant and the
uncontested factual allegations in the complaint establish the requisite elements for liability on
WaterFurnace’s claim.
While WaterFurnace’s motion for default judgment contains no discussion or analysis of
those questions, their resolution is straightforward as to the entity defendants. As part of the
terms and conditions of the underlying transaction, the entity defendants consented to personal

4

jurisdiction in Indiana courts. [DE 5 p. 8, 17]. The complaint further alleges that the purchase
orders were issued by each of the entity defendants, that WaterFurnace fulfilled its obligations by
delivering the materials and equipment, and that the entity defendants have failed to pay as
required, which gives rise to liability against each of the entity defendants for breach of contract.
Therefore, a default judgment is warranted against the entity defendants.
The resolution of those issues is not as readily apparent as to the individuals, though. The
complaint does not identify any activities by the individuals that occurred in or were directed at
the State of Indiana, and it does not indicate that the individuals have consented to personal
jurisdiction here. Moreover, under Indiana law, owners and agents of corporations and limited
liability companies are generally not liable for the debts of the entities. Meridian N. Invs. LP v.
Sondhi, 26 N.E.3d 1000, 1004 (Ind. 2015) (“Although a corporation acts only through its agents,
officers, shareholders, and employees, it is the corporate entity that is legally responsible for
those acts.”); Pazmino v. Bose McKinney & Evans, LLP, 989 N.E.2d 784, 786 (Ind. Ct. App.
2013). The complaint contains brief and rather conclusory allegations that may be aimed at
piercing the corporate veil, but the motion contains no analysis as to how those allegations
suffice to establish personal jurisdiction over and liability against the individuals. Accordingly,
the Court denies the motion for default judgment against the individuals, but with leave to refile
with proper analysis and, if necessary, additional factual support.
The Court therefore turns to what amount of damages should be awarded for the default
judgment against the entities. While the well-pleaded allegations of the complaint with respect to
liability are generally taken as true, the amount of damages must still be proved. Wehrs v. Wells,
688 F.3d 886, 892 (7th Cir. 2012). Here, WaterFurnace presented a declaration that allows the
Court to ascertain the amount of damages that WaterFurnace suffered as a result of the failure to

5

pay for the ordered materials and equipment. As such, no hearing need be held to determine the
amount of damages. See Dundee Cement Co., 722 F.2d at 1323 (clarifying that the Rule 55(b)(2)
hearing provision is discretionary, and that a court need not hold a hearing before entering
default judgment).
According to the declaration, the amount owed to WaterFurnace pursuant to the contract
was $312,427.09 as of December 8, 2014. The terms and conditions of the sale also specify that
service charges of 1.5% per month, or 18% per year, will apply to any remaining balances.
Accordingly, WaterFurnace seeks an additional $15,253.28, which it calculates as the service
charge for the period from December 9, 2014 through March 17, 2015 (just prior to when it filed
the motion for default judgment). It further seeks service charges that have accrued from March
18, 2015 through the date judgment is entered; at an 18% interest rate on the amount due as of
March 18, 2015, that amount is $161.59 per day. Because those amounts are supported by the
declaration, the Court will award each of those amounts as part of the default judgment.
WaterFurnace further seeks recovery of its attorneys’ fees and costs, which the terms and
conditions specify may be recovered when they are incurred in collection of past due amounts.
The Court accordingly awards WaterFurnace the attorneys’ fees and costs incurred in this action
relative to the entity defendants. Because WaterFurnace has not yet specified those amounts, it is
directed to submit and certify those amounts within 14 days of this order. Last, because this order
resolves this action as to some, but not all, of the defendants in this case, WaterFurnace may
request at that time that the Court enter a final judgment against the entity defendants pursuant to
Rule 54(b).
III. CONCLUSION
WaterFurnace’s motion for default judgment is GRANTED in part and DENIED in part.
Specifically, the motion is DENIED with leave to refile as to defendants William Craig Jackson
6

and Garth C. Jackson. However, the motion is GRANTED as to defendants B & S Sheet Metal
Mechanical, Inc.; B & S Sheet Metal Mechanical, Inc. d/b/a Jackson Geothermal HVAC and
Drilling, LLC; and Jackson Geothermal HVAC and Drilling, LLC, in the amounts set forth in
this order. WaterFurnace is ORDERED to submit its attorneys’ fees and costs within 14 days of
this order, after which, if requested by WaterFurnace, the Court will direct the Clerk to enter a
final judgment as to those defendants.
SO ORDERED.
ENTERED: October 28, 2015
/s/ JON E. DEGUILIO
Judge
United States District Court

7