American Empire Surplus Lines Insurance Company v. JJSL Development, Inc.

Filing 26

MEMORANDUM AND ORDER ADOPTING REPORT AND RECOMMENDATIONS, The Court now adopts the R&R as the opinion of the Court. Pursuant to FRCP 37(b)(2), JJSL's answer is stricken, and the Court grants American Empire's motion for default judgment aga inst JJSL in the amount of $156,542.86. The Court also grants American Empire's request for attorneys's fees related to JJSL's noncompliance, in the amount of $12,349, as recommended by Magistrate Judge Kuo in her R&R. Damage s are, therefore, awarded against JJSL in the amount of $168,891.86. The Clerk of Court is directed to enter judgment accordingly and to close this case. (Ordered by Judge Eric N. Vitaliano on 3/17/2017) c/m Fwd. for Judgment. (Galeano, Sonia)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK

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AMERICAN EMPIRE SURPLUS LINES
INSURANCE COMPANY,
Plaintiff,

us

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/.!AR 2 J 2017 * 'S

BROOKLYN OFFICE

I

MEMORAN DUM & ORDER
14-CV-5353 (ENV)(PK)

-againstJJ SL DEVELOPMENT, INC. ,
Defendant.

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VITALIANO, D.J.

I

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On September 12, 20 14, plaintiff American Empire Surplus Lines Insurance Compan
("American Empire") brought this action against JJSL Development, Inc. ("JJSL") . See Dkt.

o.

1 ("Comp!."). American Empire ' s sole claim is that JJSL fai led to pay a premium owed unde a
commercial general liability policy that American Empire issued to JJSL. Following more than
one year of protracted discovery disputes arising from defendant's repeated and unapologeti c
failure to produce documents and respond to interrogatories, American Empire has moved
pursuant to Federal Ru le of Civi l Procedure 37, to (1) strike JJSL ' s answer, (2) enter a defaul
judgment against JJ SL, and (3) award attorney' s fees associated w ith defendant's discovery
noncompliance. See Dkt. Nos. 16, 2 1, 22.
On March 28, 2016, plaintiffs Rule 37 motion was respectfully referred to Magistrat
Judge Peggy Kuo to make a Report and Recommendation ("R&R"). Magistrate Judge Kuo'
R&R issued on February 13, 20 17, which recommended that the motion be granted in its en irety.

~

Dkt. No. 23 ("R&R"). The R&R gave notice that any objection had to be filed within 14 da s o
service. 1 The Court now adopts the R&R as the opinion of the Court.
Standard of Review
In reviewing a report and recommendation of a magistrate judge, a district court "mar
accept, reject, or modify, in whole or in part, the findings or recommendations made by the
magistrate judge." 28 U.S.C. § 636(b)(l)(C). Further, a district judge is required to "dete

novo any part of the magistrate judge's disposition that has been properly objected to." Fed. R.
Civ. P. 72(b)(3); see also 28 U.S.C. § 636(b)(l)(C); Arista Records, LLC v. Doe 3, 604 F.3d 11 ,
116 (2d Cir. 2010). But, where no timely objection has been made, the "district court need
satisfy itself that there is no clear error on the face of the record" to accept a magistrate jud

's

Report and Recommendation, Gesualdi v. Mack Excavation & Trailer Serv., Inc., No. 09-C 2502 (KAM) (JO), 2010 WL 985294, at *l (E.D.N.Y. Mar. 15, 2010) (citation and internal
quotations omitted), and "may adopt those portions of the [r]eport ... which are not faciall
erroneous[,]" Price v. City ofNew York, 797 F. Supp. 2d 219, 223 (E.D.N.Y. 2011) (citatio
omitted).
Discussion
In this instance, no objection2 has been filed by either party, and the time to do so h s
passed. After careful review of the record, the Court finds the R&R to be correct, well-re one ,
and free of any clear error. The Court, therefore, adopts the R&R as the opinion of the Co[.

l

1

That appropriate notice was given is confirmed by the docket. In addition to havin · be n
served via ECF, defendant received a copy of the R&R on or about February 14, 2017 by way f
certified mail. See Dkt. No. 25.
2

Indeed, at the last status conference, held on March 31, 2016, defense counsel repr sen ed
that he did not oppose plaintiffs motion for sanctions, insofar as the motion did not seek srct ons
against counsel himself. See 3/31/2016 Dkt. Entry. Based on the record, it appears that a Iarg
part of the noncompliance is rooted in the fact that counsel for defendant has simply been fna le
2

Notwithstanding a defendant's default, judgment against that defendant may not ente
unless the district court has found that the claim has been plausibly pleaded. See J & J Spor

Prods., Inc. v. LX Food Grocery Inc., No. 15CV6505NGGPK, 2016 WL 6905946, at *2
(E.D.N.Y. Nov. 23, 2016) ("[B]efore a district court enters a default judgment, it must dete

m

whether the allegations in [the] complaint establish the defendant's liability as a matter of la

"

(alterations in original) (quoting Taizhou Zhongneng Imp. & Exp. Co., Ltd v. Koutsobinas, 09
Fed. App'x. 54, 56 (2d Cir. 2013)). The Court finds that American Empire has plausibly all ge
that JJSL breached the commercial general liability insurance policy, under which Americ
Empire provided liability insurance to JJSL from December 15, 2012 to December 15, 201
JJSL failed to pay the requisite premium, causing American Empire to suffer damages. Co, pl. at
2-5. Manifestly, the essential elements of a breach of contract claim have been plausibly pl d.

See Wausau Bus. Ins. Co. v. Sentosa Care LLC, 10 F. Supp. 3d 444, 454 (S.D.N.Y. 2014).
finding is made nunc pro tune as of March 28, 2016, the date plaintiffs Rule 37 motion w
referred to Magistrate Judge Kuo. Accordingly, default judgment shall enter in the amount of
$156,542.86, the sum certain sought in the complaint. 3

to procure documents from his client and, therefore, was unable to produce documents or
answer interrogatories. See 12/11/2015 Dkt. Entry; Dkt. No. 18.
3

lly

Though there is no express finding in the R&R, it is clear from the pleadings that e
plaintiff sued on this sum certain and that further inquest is unnecessary. See CompI. at 5
(plaintiff seeking $156,542.86 in damages); 3/31/2016 Minute Entry (Magistrate Judge K~o
referring to "the $156,542.86 judgment"). In any event, the Court is confident that the d~ag s
have been calculated with reasonable certainty. See Credit Lyonnais Secs. (USA) v. A/can ara
183 F.3d 151, 155 (2d Cir. 1999). American Empire has furnished a copy of the insuranc po icy,
see Dkt. No. 16-11 at AEOOOl, and a copy of the audit endorsement forms, which docume~t h w
American Empire computed the outstanding premium to be $150,812. See Dkt. No. 16-9 au it
summary); Dkt. No. 16-11 at AOl 16 (audit endorsement letter); id. at A0005 (setting out r te)
Put simply, American Empire's premium was a straight forward calculation - 3.4% of JJ~'s
actual gross receipts for the policy period, combined with a New York Surplus Lines Tax bf 3 6%
($5429.23) and a Stamping Fee of .2% ($301.63). See Dkt. No. 16 at 2-4; Dkt. No. 16-10 D .
No. 20 at 2.
3

/s/ USDJ ERIC N. VITALIANO