ZURICH AMERICAN INSURANCE COMPANY et al v. BIG GREEN GROUP, LLC et al

Filing 10

OPINION. Signed by Judge John Michael Vazquez on 2/5/2020. (bt, )

Not for Publication
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

ZURICH AMERICAN INSURANCE
COMPANY, et aL,

Plaintffs,

Civil Action No. 19-11500
(JMV)UBC)

V.

OPINION
BIG GREEN GROUP, LLC, et aL,

Defendants.

John Michael Vazguez, U.S.D.J.
This case concerns the breach of insurance contracts for failure to remit premium
payments.

D.E. 1

*

Currently pending before the Court is an unopposed motion for default

judgment pursuant to Fed. R. Civ. P. 55(b) by Plaintiffs Zurich American Insurance Company
(“ZAIC”) and Zurich American Insurance Company of Illinois (“ZAIC Illinois”) (collectively,
“Plaintiffs”) against Defendants Big Green Group, LLC; BOG Holdings I, LLC; and The Dennis
Group, LLC (collectively, “Defendants”). D.E. 9. The Court reviewed all submissions made in
support of this motion and considered the motion without oral argument pursuant to Fed. R. Civ.
P. 78(b) and L. Civ. R. 78.1(b). For the reasons stated below, Plaintiffs’ motion for default
judgment is DENIED.

I.

BACKGROUND’
Plaintiffs issued workers compensation insurance policies to Defendants, under which

Defendants failed to remit thll payment of premiums. See generally D.E. I (“Compl.”). Plaintiffs
therefore brought claims for breach of contract, account stated, and unjust enrichment. Compl.

¶N

39-59. Plaintiffs filed their Complaint on April 26, 2019. D.E. 1. Plaintiffs thereafter moved for
entry of default on June 14, 2019, D.E. 4, which the Clerk of the Court declined to enter because
service did not appear proper. Id. Plaintiffs subsequently filed a motion for reconsideration, D.E.
5, which they later withdraw, choosing instead to refile another motion for entry of default, D.E.
7. Upon entry of default, Plaintiffs then moved for default judgment as to all Defendants. D.E. 9.
II.

LAW AND ANALYSIS
Federal Rule of Civil Procedure 55(a) allows for the entry of default against a party who

“has failed to plead or otherwise defend” claims against him. Fed. R. Civ. P. 55(a). Once a default
has been entered, the plaintiff “may [then] seek the Court’s entry of default judgement under either
Rule 55(b)(l) or Rule 55(b)(2).” Doug Brady, Inc.

i’.

N.J. Bldg. Laborers Statewide Funds, 250

F.R.D. 171, 177 (D.N.J. 2008); see also Nationwide Mutual Ins. C’o. v. Starlight Ballroom Dance
Club, Inc., 175 F. App’x 519, 521 n.l (3d Cir. 1984) (“Prior to obtaining a default judgment.
there must be entry of default as provided by Rule 55(a).”). “The entry of a default judgment is
largely a matter of judicial discretion, although the Third Circuit has emphasized that such
‘discretion is not without limits.

.

.

.

and [has] repeatedly state[d] [its] preference that cases be

disposed of on the merits whenever practicable.” Chanel, Inc. v. Gordashevshy, 558 F. Supp. 2d

The Court derives the facts from Plaintiffs’ Complaint, D.E. 1, as well as the certifications and
ethibits submitted in conjunction with Plaintiffs’ motion for default judgment, D.E. 9. See
Trustees of the Teamsters Pension Trust Fund ofPhila. & Vicinity i Riccelli Premium Produce,
Inc.,No. 10-3000,2011 WL1114175,at*l (D.N.J.Mar.23,20l1).
2

532, 535 (D.N.J. 2008) (quoting F/ritz v Woma Corp., 732 F.2d 1178, 1181 (3d Cir. 1984)). “Once
a party has defaulted, the consequence is that ‘the factual allegations of the complaint, except those
relating to the amount of damages, will be taken as true.” Teamsters Pension Fund ofPhiladelphia
and Vicinity v. Am. Helper, Inc., No. 11-624, 2011 WL 4729023, at *2 (D.N.J. Oct. 5, 2011)
(quoting DIRECTV, Inc. v. Pepe, 431 F.3d 162, 165 n.6 (3d Cir. 2005)).

Prior to entering a default judgment, the court must “(1) determine it has jurisdiction both
over the subject matter and parties; (2) determine whether defendants have been properly served;
(3) analyze the Complaint to determine whether it sufficiently pleads a cause of action; and (4)
determine whether the plaintiff has proved damages.” Moroccanoil, Inc. v. JMG Freight Gro.
LLC, No. 14-5608, 2015 WL 6673839, at *1 (D.N.J. Oct. 20, 2015). Additionally, the court must

consider the following factors: (1) the prejudice suffered by the party seeking default; (2) whether
the party subject to default has a meritorious defense; and (3) the culpability of the party subject
to default. Doug Brady, Inc., 205 F.R.D. at 177. Importantly, “district courts must resolve all
doubt in favor of proceeding on the merits.” Id. (citing Zawadski de Bueno v. Bueno Castro, 822
F.2d 416, 420 (3d Cir. 1987)).
Default was entered as to all Defendants on July 15, 2019. D.E. 8. However, “[bjefore the
Court can enter default judgment, it must find that process was properly sewed on the
[d]efendant[s].” Teamsters, 2011 WL 4729023, at *2 (citing Gold Kist, Inc. v. Lanrinburg Oil
Co., Inc., 756 F.2d 14, 19 (3d Cir. 1985)). Here, default judgment is not warranted because it
appears that Plaintiffs did not properly serve Defendants. At the very least, the Court has serious
concerns regarding Plaintiffs’ service.
Plaintiffs initially attempted to serve Defendants via process sewer at the listed address of
Defendants’ registered agent, but the process sewer could not effectuate service because the

3

registered agent had apparently moved without providing a forwarding address.
Yablonsky Ccii.,

¶ 3.

D.E. 9-2,

Thereafter, Plaintiffs attempted to serve Defendants via process server at

their principal place ofbusiness; however, the process server again was unable to effectuate service
because the provided address instead belonged a different company. Id.

¶ 4.

Plaintiffs then claim

that they were subsequently contacted via telephone by Defendants’ counsel, William Solomon,
who informed Plaintiffs that he was “representing Defendants in regard to the instant litigation,”
was “authorized to accept service of the Complaint on behalf of Defendants,” and “would indeed
accept service of the Complaint on behalf of Defendants.” Id.

¶ 5.

As a result, Plaintiffs served

Mr. Solomon via (1) certified mail, return receipt requested, and (2) email, acknowledgement of
service requested. Id.

¶ 6.

Plaintiffs contend that this was proper service of process. The Court

disagrees.
Plaintiffs argue that they effectuated proper service under Federal Rule of Civil Procedure
4(h)(l)(A) and the accompanying Rule 4(e)(l) by serving Defendants in accordance with N.J. Ct.
R. 4:44(c)(l). D.E. 9-8, Yablonsky Cert., Ex. F, ¶ 15. Federal Rule of Civil Procedure 41h)U )(A)
states:
(h) Serving a Corporation, Partnership, or Association. Unless federal law
provides otherwise or the defendant’s waiver has been filed, a domestic or foreign
corporation, or a partnership or other unincorporated association that is subject to
suit under a common name, must be served:
(1) in ajudicial district of the United States:
(A) in the manner prescribed by Rule 4(e)(l) for serving an individual[.1
Fed. R. Civ. P. 4(h)(l)(A). The accompanying Federal Rule of Civil Procedure 4(e)(l) states:
(e) Serving an Individual Within a Judicial District of the United States. Unless
federal law provides otherwise, an individual other than a minor, an incompetent
person, or a person whose waiver has been filed may be served in a judicial district
of the United States by:
—

—

4

(1) following state law for serving a summons in an action brought in courts of
general jurisdiction in the state where the district court is located or where
service is made[.]
Fed. R. Civ. P. 4(e)(l). Accordingly, Plaintiffs argue that service on Defendants was proper
because service was made on Mr. Solomon
R. 4:4-4(c)(1). Yablonsky Cert, Ex. F,

¶IJ

—

Defendants’ alleged attorney

—

pursuant to N.J. Ci.

14-15. Specifically, Plaintiffs argue that “[s]ervice of

the Defendants upon Mr. Solomon [was] proper as, by retaining him as counsel and providing him
with the authority to accept service of the Complaint, he became a ‘person authorized by
appointment or by law to receive service of process on behalf of [a] corporation’ pursuant to [N.J.
Ct. R.] 4:4-4(c)(l).” Id.

¶J

14 (emphasis removed).

N.J. Ct. R. 4:4-4(c)(1), however, does not exist. Rather, it appears that Plaintiffs are
referring to a citation to N.J. Ct. R. 4:4-4(c)(1) found in Trustees ofLoc. 478 Trucking and Allied
Industries Pension Fund v. Baron Holding Corp., 224 N.J. Super 485 (App. Div. 1988) (citing N.J
Ct. R. 4:4-4(c)( 1) for the proposition that “[t]he pertinent portion of [New Jersey Court] Rule [4:44] provides that proper service of a corporation is upon either an officer, director, trustee, or
managing or general agent; or any person authorized by appointment or by law to receive service
of process on behalf of the corporation”); see also Yablonsky Cert., Ex. F, ¶j 11, 14. The Court
notes, however, that Baron Holding Corp. was decided over thirty years ago and presumably
referenced the New Jersey Court Rules in effect in 1988.
With respect to the current New Jersey Court Rules, N.J. Ct. R. 4:4-4(c) does not contain
sub-provisions. N.J. Ct. R. 4:4-4(e) states, in relevant part, that
[w]here personal service is required to be made pursuant to
paragraph (a) of this rule, service, in lieu of personal service, may
be made by registered, certified or ordinary mail, provided,
however, that such service shall be effective for obtaining in
personam jurisdiction only f the defendant answers (lie complaint
or othenvise appears in response thereto, and providedfiinher that
S

default shall not be entered against a defendant who fails to answer
or appear in response thereto.
N.J. Ct. R. 4:4-4(c) (emphasis added). Thus, Rule 4:4-4(c) apparently requires the Court to deny
the current motion because Defendants did not file answers or otherwise appear in this matter.
The language cited by Plaintiffs in reference to N.J. Ct. R. 4:44(c) appears to instead
mirror the language found in N.J. Ct. R. 4:44(a)(6). Compare Yablonsky CerL, Ex. F,

¶

14

(arguing that service was proper under N.J. Ct. R. 4:44(c)( 1) because Mr. Solomon was a “person
authorized by appointment or by law to receive service of process on behalf of the corporation”)
(emphasis removed), with N.J. Ct. R. 4:4-4(a)(6) (explaining that in personam jurisdiction may be
obtained over a defendant by personally serving “any person authorized by appointment or by law
to receive service of process on behalf of the corporation”). But even construing Plaintiffs’ method
of service under N.J. Ct. R. 4:4-4(a)(6). service would still be improper because N.J. Ct. R. 4:44(a) explicitly requires that “the summons and complaint

[]

be personally sen’e&’

—

i.e. not by

mail or email. See N.J. Ct. R. 4:4-4(a) (explaining that the “primary method of obtaining in
personamjuñsdiction over a defendant in [New Jersey] is by causing the summons and complaint
to be personally served within [New Jersey]”) (emphasis added). Therefore, even assuming that
Mr. Solomon was, in fact, a person authorized to receive service on behalf of Defendants, service
does not appear to be proper under N.J. Ct. R. 4:4-4(c) or 4:4-4(a)(6).
Moreover, the Court has concerns as to whether Mr. Solomon even agreed to accept service
on behalf of Defendants.

Plaintiffs claim that sometime after failing to personally serve

Defendants for the second time, they were subsequently contacted via telephone by Mr. Solomon,
who, according to Plaintiffs, indicated that he was counsel for Defendants and would accept
service on behalf of all Defendants. In support of this contention, Plaintiffs submit a single
sentence email in which Mr. Solomon appears to confirm that he would “accept[] service on behalf
6

of Big Green Group.” D.E. 9-6, Ex. D. Thereafter, Plaintiffs served Mr. Solomon via certified
mail, return receipt requested, and email.

It does not appear that Mr. Solomon executed an

acknowledgement of service form. To the extent Plaintiffs may be construing Mr. Solomon’s
agreement as waiving personal service, the facts above give the Court enough pause to warrant
denial of default judgment on such grounds. See Grand Entertainment Grp. v. Star Media Sales,
988 F.2d 476, 488 (3d Cit. 1993) (explaining that “the party asserting the validity of service bears
the burden of proof on that issue”); see also Doug Brady, Inc., 205 F.R.D. at 177 (explaining that
“district courts must resolve all doubt in favor of proceeding on the merits”) (citing Zawadski de
Bueno, 822 F.2d at 420)). Plaintiffs, moreover, do not provide any authority indicating that such
service was appropriate.
Lastly, even if the Court were to find that Mr. Solomon did, in fact, agree to accept service,
his email confirmed that he was only “accepting service on behalf of Big Green Group.” D.E. 96, Ex. D. However, there are three Defendants in this case: (1) Big Green Group, LLC; (2) BGG
Holdings I, LLC; and (3) The Dennis Group, LLC. While Plaintiffs contend that Mr. Solomon
indicated via telephone that he was authorized to accept service on behalf of all Defendants, this
assertion is undercut by the email submitted by Plaintiffs in which Mr. Solomon appears to have
agreed to accept service on behalf of Big Green Group, only.
Assuming that is the case, “[i]f a default is entered against some defendants in a multi
party case, the preferred practice is for the court to withhold granting default judgment until the
action is resolved on its merits against the non-defaulting defendants.” Animal ScL Products, Inc.
1’.

China Nat. Metals & Minerals Import & Export Corp., 596 F. Supp. 2d 842, 849 (D.N.J. 2008).

This is because courts do not want to “create the risk of potentially inconsistent judgments.”
Eteam, Inc. v. Hilton Worldwide Holdings, Inc., No. 15-5057, 2016 WL 54676, at *3 (D.N.J. Jan.

7

5, 2016) (denying motion for default judgment where allegations against defaulting and nondefaulting defendants were identical). To the extent Plaintiffs may argue that the reference to “Big
Green Group” instead encompasses all three Defendants, the Court is cognizant of the fact that
“district courts must resolve all doubt in favor of proceeding on the merits.” Doug Brady, Inc.,
205 F.R.D. at 177 (citing Zawadski de Bueno, 822 F.2d at 420). In sum, “the party asserting the
validity of service bears the burden of proof on that issue.” Grand Entertainment Grp., 988 F.2d
at 488. Here, the Court finds that Plaintiffs have not carried their burden, and therefore, Plaintiffs’
motion for default judgment is denied.
III.

CONCLUSION
For the foregoing reasons, Plaintiffs’ motion for default judgment, D.E. 9, is DENIED

without prejudice. Plaintiff shall be granted leave to re-serve Defendants within ninety (90) days
pursuant to the Federal Rules of Civil Procedure.2 If Plaintiff does not properly re-serve
Defendants within ninety (90) days and file proof of service on the docket within ninety-five (95)
days from receipt of this Order, then Plaintiffs’ motion for default judgment will be dismissed
without prejudice. An appropriate Order accompanies this Opinion.

Dated: February

5th,

2020

(Nc’ OQV’ç V
Johri”Michael Vazqz¼J.S.D.J.

2

In lieu of re-serving Defendant Big Green Group, LLC, Plaintiffs may instead choose to provide
the Court with relevant authority which establishes that its service was proper as to Defendant Big
Green Group, LLC.
8