DEEPALI CO., LLC v. FUTURENET GROUP, INC. et al

Filing 54

OPINION AND ORDER granting in part and denying in part 50 Motion for Default Judgment. Signed by District Judge George Caram Steeh. (MBea)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
UNITED STATES FOR USE OF
DEEPALI CO., LLC,
Plaintiff,

Case No. 17-12911

v.

HON. GEORGE CARAM STEEH

FUTURENET GROUP, INC., and
WESTERN SURETY COMPANY,
Defendants.
_______________________________/
OPINION AND ORDER GRANTING IN PART AND DENYING IN PART
PLAINTIFF’S MOTION FOR DEFAULT JUDGMENT (ECF No. 50)
Plaintiff Deepali Co., L.L.C., seeks a default judgment against
FutureNet Group, Inc. This case involves the construction of the visitor
center at the Detroit International Wildlife Refuge in Trenton, Michigan.
FutureNet was the general contractor and obtained payment and
performance bonds from Western Surety Company. Deepali is a
subcontractor of FutureNet that alleges it was not paid for labor and
materials it provided for the project. Contending that FutureNet owes it
$320,751.54, Deepali sued both FutureNet and Western. During this
litigation, FutureNet was placed in receivership in state court and this action

-1-

was stayed as to FutureNet. The stay has been lifted, but FutureNet did
not obtain counsel and has not responded to the default motion.1
Deepali sought payment for the amount FutureNet allegedly owed it
from the surety, Western. In ruling on Western’s motion for summary
judgment, the court determined that parts of Deepali’s claim were
unenforceable as a matter of law. Specifically, the court determined that
the following were unenforceable: Change Order 6 ($160,871.77), Change
Order 7 ($98,812), and Pay Application 7 ($29,062.95), for a total of
$288,746.72. See ECF No. 45.
Nonetheless, Deepali seeks to recover these items as part of its
$320,751.54 claim against FutureNet. Deepali asserts that in its discovery
responses, FutureNet admitted to owing Deepali this amount. However, if
the court were to enter judgment in the amount requested by Deepali, it
would be inconsistent with the court’s previous order finding portions of
Deepali’s claim unenforceable.
Deepali suggests that, although the court found claims in the amount
of $288,746.72 unenforceable against Western, it would not be inconsistent
to award this amount as part of its total claim against FutureNet. However,

The court provided FutureNet 30 days after the stay was lifted to obtain counsel. ECF
No. 36.

1

-2-

the liability of FutureNet, as the general contractor, and Western, as
FutureNet’s surety, is coextensive. See, e.g., Consol. Elec. &
Mechanicals, Inc. v. Biggs Gen. Contracting, Inc., 167 F.3d 432, 435 (8th
Cir. 1999) (“A surety’s liability under the Miller Act is measured by the
general contractor’s liability under the construction contract.”); United
States v. Hartford Accident & Indem. Co., 168 F.Supp. 3d 824, 832 (D. Md.
2016) (“[T]he surety on a Miller Act payment bond is liable only to the
extent that the general contractor would be liable.”). By implication, any
claim brought by Deepali that is unenforceable against Western is also
unenforceable against FutureNet. See Hartford, 168 F.Supp. 3d at 832
(“[I]t is a ‘cardinal rule of the surety/principal relationship that a surety
occupies the shoes of its principal.’”).
To avoid inconsistent judgments, courts have postponed entering
default judgments in multiple-defendant actions until the liability of the
answering defendants has been adjudicated. See Nautilus Ins. Co. v.
I.L.S. General Contractors, Inc., 369 F.Supp. 2d 906, 908-909 (E.D. Mich.
2005). When multiple defendants are jointly liable or have similar
defenses, courts apply the same legal rulings to the defaulting defendants
as to the answering defendants. “[I]f an action against the answering
defendants is decided in their favor, then the action should be dismissed
-3-

against both answering and defaulting defendants.” In re First T.D. & Inv.,
Inc., 253 F.3d 520, 532 (9th Cir. 2001); see also Gulf Coast Fans, Inc. v.
Midwest Elecs. Importers, Inc., 740 F.2d 1499, 1512 (11th Cir. 1984) (“It
would be incongruous and unfair to allow [the plaintiff] to collect a half
million dollars from [the defaulting party] on a contract that a jury found was
breached by [the plaintiff].”).
The court’s grant of summary judgment in favor of Western accrues
to the benefit of FutureNet; it would be “incongruous” and “unfair” to hold
FutureNet liable for charges that the court has determined are
unenforceable. See Lewis v. Lynn, 236 F.3d 766, 768 (5th Cir. 2001); Frow
v. De La Vega, 82 U.S. 552, 554 (1872). Accordingly, the court will deny
Deepali’s motion for default judgment to the extent it is inconsistent with the
court’s summary judgment ruling. See ECF No. 45 (denying Deepali’s
claims in the amount of $288,746.72).
The court did not make a prior ruling on the remaining part of
Deepali’s claim, which amounts to $32,004.82. Given FutureNet’s failure to
obtain new counsel or to respond to Deepali’s motion, the court agrees that
FutureNet is in default. Deepali has sufficiently supported its motion for
liability and damages in the amount of $32,004.82. See ECF No. 50.

-4-

Therefore, IT IS HEREBY ORDERED that Deepali’s motion for
default and default judgment (ECF No. 50) is GRANTED IN PART and
DENIED IN PART, consistent with this opinion and order.
Dated: September 18, 2019
s/George Caram Steeh
GEORGE CARAM STEEH
UNITED STATES DISTRICT JUDGE

CERTIFICATE OF SERVICE
Copies of this Order were served upon attorneys of record on
September 18, 2019, by electronic and/or ordinary mail.
s/Marcia Beauchemin
Deputy Clerk

-5-