Belfor USA Group, Inc. v. GMC Charlotte, LLC et al
Filing
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ORDER granting 13 Motion for Default Judgment. Signed by District Judge Robert J. Conrad, Jr on 7/26/2013. (blf)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NORTH CAROLINA
CHARLOTTE DIVISION
3:13-cv-170-RJC
BELFOR USA GROUP, INC., d/b/a
BELFOR PROPERTY RESTORATION,
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)
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Plaintiff,
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v.
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GMC CHARLOTTE, LLC, d/b/a GMC
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PROPERTIES,
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)
Defendant.
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________________________________________ )
ORDER
THIS MATTER comes before the Court on Plaintiff Belfor USA Group, Inc.’s
(“Belfor”) Motion for Entry of Default Judgment pursuant to Federal Rule of Civil Procedure
55(b)(1), (Doc. No. 13), filed on June 5, 2013. Defendant GMC Charlotte, LLC (“GMC”) has
not opposed the Motion for Entry of Default Judgment and the time for doing so has expired.
I.
BACKGROUND
A.
Procedural Background
Belfor commenced this lawsuit in the Superior Court of the State of North Carolina,
Mecklenburg County, on January 7, 2013. (Doc. No. 1-1). Belfor filed a First Amended
Complaint on February 7, 2013. (Id.). Former defendants Wells Fargo, C-III and Berkadia were
served with the Complaint on February 13, 2013, and removed the action to this Court on March
15, 2013. (Doc. No. 1). On June 5, 2013, Plaintiff filed a stipulation of dismissal, dismissing
Wells Fargo, C-III and Berkadia from this action. (Doc. No. 14).
Defendant GMC was also served with the Amended Complaint on February 13, 2013.
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(Doc. No. 13-5). GMC failed to answer or otherwise defend the action within the time permitted
by the Federal Rules of Civil Procedure. Belfor filed a Motion for Entry of Default on April 8,
2013, (Doc. No. 8), and the Clerk of Court entered GMC’s default on April 26, 2013, (Doc. No.
9). Belfor filed the instant Motion for Entry of Default Judgment, (Doc. No. 13), on June 5,
2013.
B.
Factual Background
Because of its default in this matter, GMC is deemed to have admitted those well-pleaded
facts alleged in the Complaint that are material to Belfor’s claims against it. See Ryan v.
Homecomings Fin. Network, 253 F.3d 778, 780 (4th Cir. 2001) (“The defendant, by his default,
admits the plaintiff’s well-pleaded allegations of fact, is concluded on those facts by the
judgment, and is barred from contesting on appeal the facts thus established.”). Accordingly, the
factual summary below is consistent with that alleged in Belfor’s Amended Complaint. (Doc.
No. 1-1).
Belfor is in the business, among other things, of providing specialized restoration services
in connection with the remediation and restoration of property which has suffered property
damage as a result of insured casualty losses. (Doc. No. 1-1: Amended Complaint at ¶ 12).
Upon Belfor’s information and belief, Defendant GMC and/or former defendant Wells Fargo are,
or at one time were, the owners of real property commonly known as Emerald Bay Apartments,
Buildings A-F, located at 5029 Cherrycrest Lane, Charlotte, North Carolina (the "Property").
(Id. at ¶ 13). On or about October 27, 2011, the Property was severely damaged by a fire. (Id. at
¶ 15).
On or about October 28, 2011, Belfor agreed to furnish labor, materials, and equipment in
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connection with emergency services, fire restoration, reconstruction of structures, and other
improvements to the Property (the "Services") that had been damaged by the fire. (Id. at ¶ 16).
Belfor was authorized to commence the Services via a Work Authorization Contract ("Work
Order"). (Id. at ¶ 17; Doc. No. 13-1: Work Order). The Work Order was executed by GMC on
or about October 28, 2011. (Id. at ¶ 18). The Work Order provides Belfor with a legal
assignment of insurance proceeds for any and all work performed by Belfor. Specifically, it
provides:
The undersigned [GMC] hereby transfers, assigns and conveys to Contractor
[BELFOR] his/her/their right, title and interest in and to the insurance policy
proceeds and all drafts for work performed or to be performed by Contractor
[BELFOR]. Accordingly, undersigned [GMC] authorizes and directs their insurer
(named below) to make "BELFOR USA" a payee on all insurance drafts for all
insurance work performed by Contractor [BELFOR] on the above damaged
property. The undersigned [GMC] also agrees to immediately endorse and tender
all drafts as produced to the Contractor [BELFOR].
(Id. at ¶ 19). On October 29, Belfor commenced emergency restoration services on the Property.
(Id. at ¶ 20). On or about December 1, 2011, Belfor entered into a "Construction Contract
between Owner and Belfor USA Group, Inc." (the "Contract") with GMC to perform the
Services to improve the Property. (Id. at ¶ 21; Doc. No. 13-2: Construction Contract). Under the
Contract, Defendant GMC assigned all of its right, title, and interest in and to any insurance
proceeds covering Belfor's work in restoring the Property. (Id. at ¶ 22). Specifically, the
Contract provides the following:
The Owner [GMC] hereby assigns their right, title and interest in those proceeds
adjusted by their insurer for the work performed by Contractor to BELFOR USA.
Owner agrees to provide notice to their insurer of this provision and of this
Contract.
(Id.). As compensation for the Services performed on the Property under the Contract and the
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Work Order, on February 16, 2012, ACE Insurance issued a check in the amount of $384,666.74,
payable to Defendants GMC and Berkadia to cover, among other things, some of the Services
that Belfor had performed at the Property pursuant to the Work Order and Contract. (Id. at ¶ 23).
On July 25, 2012, Belfor was informed that a different contractor would be completing the fire
restoration work. (Id. at ¶ 26). At that point, Belfor had performed Services on the Property
with a value of $294,297.69. (Id. at ¶ 27).
Belfor invoiced GMC for $294,297.69 on October 3, 2012. (Doc. Nos. 1-1 at ¶ 27; 13-3:
Invoice). According to Belfor, the amount invoiced represents the portion of the total work
Belfor had performed prior to termination and remains due and owing. (Doc. No. 13-4: Aff. of
Evans Lalas). Belfor states that despite the fact that it fully performed its obligations under the
Work Order and Contract, GMC failed to pay Belfor for the Services performed on the Property.
(Id. at ¶¶ 36, 43).
II.
LEGAL STANDARD
The entry of default judgment is governed by Rule 55 of the Federal Rules of Civil
Procedure which provides in relevant part that “[w]hen a party against whom a judgment for
affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by
affidavit or otherwise, the clerk must enter the party’s default.” FED. R. CIV. P. 55(a).
Upon the entry of default, the defaulted party is deemed to have admitted all well-pleaded
allegations of fact contained in the complaint. Ryan, 253 F.3d at 780 (citations omitted); Weft,
Inc. v. GC Inv. Assocs., 630 F. Supp. 1138, 1141 (E.D.N.C. 1986) (citations omitted); FED. R.
CIV. P. 8(b)(6) (“An allegation - other than one relating to the amount of damages - is admitted if
a responsive pleading is required and the allegation is not denied.”). However, the defendant is
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not deemed to have admitted conclusions of law and the entry of “default is not treated as an
absolute confession by the defendant of his liability and of the plaintiff’s right to recover.”
Ryan, 253 F.3d at 780 (citations omitted); see also E.E.O.C. v. Carter Behavior Health Servs.,
Inc., No. 4:09-cv-122-F, 2011 WL 5325485, at *3 (E.D.N.C. Oct. 7, 2011). Rather, in
determining whether to enter judgment on the default, the court must determine whether the
well-pleaded allegations in the complaint support the relief sought. See Ryan, 253 F.3d at 780
(citing Weft, 630 F. Supp. at 1141); DIRECTV, Inc. v. Pernites, 200 F. App’x 257, 258 (4th Cir.
2006) (a ““defendant is not held to admit facts that are not well-pleaded or to admit conclusions
of law”“) (quoting Nishimatsu Constr. Co. v. Houston Nat’l Bank, 515 F.2d 1200, 1206 (5th Cir.
1975)); Arista Records, LLC v. Gaines, 635 F. Supp. 2d 414, 416 (E.D.N.C. 2009); 10A Wright,
Miller & Kane, Federal Practice and Procedure § 2688 (3d ed. Supp. 2010) (“[L]iability is not
deemed established simply because of the default ... and the court, in its discretion, may require
some proof of the facts that must be established in order to determine liability.”).
To that end, the Fourth Circuit has “repeatedly expressed a strong preference that, as a
general matter, defaults be avoided and that claims and defenses be disposed of on their merits.”
Colleton Preparatory Acad., Inc. v. Hoover Univ., Inc., 616 F.3d 413, 417 (4th Cir. 2010)
(citations omitted). Nonetheless, default judgment “may be appropriate when the adversary
process has been halted because of an essentially unresponsive party.” SEC v. Lawbaugh, 359 F.
Supp. 2d 418, 421 (D. Md. 2005).
If the court finds that liability is established, it must then determine damages. Carter
Behavior Health, 2011 WL 5325485, at *4 (citing Ryan, 253 F.3d at 780-81; Gaines, 635 F.
Supp. 2d at 416-17). The court must make an independent determination regarding damages,
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and cannot accept as true factual allegations of damages. Id. (citing Lawbaugh, 359 F. Supp. 2d
at 422). While the court may conduct an evidentiary hearing to determine damages, it is not
required to do so, but may rely instead on affidavits or documentary evidence in the record to
determine the appropriate sum. See EEOC v. CDG Mgmt., LLC, No. RDB-08-2562, 2010 WL
4904440, at *2 (D. Md. Nov. 24, 2010) (citations omitted); EEOC v. North Am. Land Corp., No.
1:08-cv-501, 2010 WL 2723727, at *2 (W.D.N.C. Jul. 8, 2010).
III.
DISCUSSION
Defendant GMC failed to pay Belfor for the work it performed in partially restoring
GMC’s property to its pre-loss condition and Belfor subsequently initiated this action. (Doc.
Nos. 1-1 at ¶¶ 28-37; 13-4 at ¶ 5). Defendant GMC was served with process on February 13,
2013. (Doc. No. 13-5). GMC also demonstrated its awareness of this action when it executed a
Consent to Removal in March 2013. (Doc. No. 1-3). GMC failed to respond to the First
Amended Complaint and the Clerk of Court entered Default against GMC on April 26, 2013.
(Doc. No. 9). Notice of the Entry of Default was served upon GMC on May 29, 2013. (Doc.
No. 13-7).
The amount sought in the First Amended Complaint is for a sum certain based upon the
invoice sent to Defendant GMC by Belfor following completion of Belfor’s work, and is
identical to the amount sought in Belfor’s Complaint.1 (Doc. No. 13 at ¶ 15). Belfor also seeks
attorney’s fees and costs in the amount of $26,408.61, and is entitled to recovery of such
expenses from Defendant GMC pursuant to the Contract and under North Carolina law. (Doc.
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In the First Amended Complaint, Belfor sought a judgment that it was entitled to payment of at
least $294,297.69. (Doc. No. 1-1 at ¶¶ 45, 106).
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No. 13-8: Aff. of Eric Linden); N.C. GEN. STAT. § 6-21.6(b). Belfor also seeks interest on the
unpaid balance at the rate of 1% per month from thirty days after the Invoice was due and
payable, November 18, 2013, to the date of judgment,2 which equals $17,657.86 in pre-judgment
interest.3
Having reviewed the claims asserted in the Amended Complaint, (Doc. No. 1-1), and the
evidence submitted in connection with Belfor’s Motion for Default Judgment, (Doc. No. 13), the
Court finds that Belfor’s Motion should be, and hereby is, GRANTED.
IV.
CONCLUSION
IT IS, THEREFORE, ORDERED that:
1.
Plaintiff Belfor’s Motion for Entry of Default Judgment, (Doc. No. 13), is
GRANTED;
2.
Judgment in the principal amount of $294,297.69 is entered against Defendant
GMC Charlotte, LLC d/b/a GMC Properties, and in favor of Belfor USA Group,
Inc.;
3.
Belfor shall be entitled to pre-judgment interest on the principal amount owed, at
the contractual rate of 1% per month from November 18, 2012, through June 18,
2013, in an amount totaling $17,657.86;
4.
Belfor is awarded from Defendant GMC its actual attorneys’ fees and costs in the
amount of $26,408.61;
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Belfor used June 18, 2013 as the approximate date of entry of the judgment.
Pursuant to the Contract, payment of the Invoice was due in fifteen days. (Doc. No. 13-2:
Contract at Art. 2.4). Failure to pay the Invoice within thirty days of the date it was due,
November 18, 2012, allowed Belfor to charge 1% interest per month on the balance due. (Id. at
Art. 2.7).
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5.
Belfor shall be entitled to post-judgment interest at the statutory rate until the
judgment is fully paid, pursuant to 28 U.S.C. § 1961; and
6.
Belfor is legally entitled to any additional insurance proceeds which may later
come into the possession of Defendant GMC Charlotte, LLC d/b/a GMC
Properties which were assigned to Belfor under the relevant contracts at issue in
this case.
Signed: July 26, 2013
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