CompuCom Systems Inc v. WJ Global LLC
Filing
53
ORDER accepting as modified the [50 ] Findings, Conclusions, and Recommendation of the United States Magistrate Judge. The court denies without prejudice 47 Plaintiff's Motion for Entry of Default Judgment, except for Plaintiffs contract claim based on WJ Globals failure to pay its subcontractors, which is denied; and denies without prejudice 52 Plaintiff's Expedited Motion to Release or Reduce Preliminary Injunction Bond. (Ordered by Judge Sam A Lindsay on 3/31/2017) (aaa)
IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
COMPUCOM SYSTEMS, INC.,
Plaintiff,
v.
WJ GLOBAL, LLC,
Defendant.
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Civil Action No. 3:14-CV-3625-L
ORDER
Before the court is Plaintiff CompuCom Systems, Inc.’s Motion for Entry of Default
Judgment (“Motion”) (Doc. 47), filed October 9, 2015; and Plaintiff CompuCom Systems, Inc.’s
Expedited Motion to Release or Reduce Preliminary Injunction Bond (Doc. 52), filed January 20,
2017. On June 21, 2016, Magistrate Judge Paul D. Stickney entered the Findings, Conclusions and
Recommendation of the United States Magistrate Judge (“Report”) (Doc. 50), recommending that
the court grant in part and deny in part the Motion. Specifically, the magistrate judge recommended
that the court grant the Motion as to liability with respect to Plaintiff’s breach of contract claim but
deny the Motion with respect to its request for declaratory relief and deny as moot the Motion with
respect to its request for an accounting.* The magistrate further recommended that the court defer
ruling on the amount of damages that Plaintiff is entitled to for its contract claim until after Plaintiff
submits supplemental briefing establishing the reasonableness of the attorney’s fees requested.
*
In its objections to the Report, Plaintiff clarified that it was not seeking entry of a default judgment on its
request for accounting and other matters originally included in Plaintiff’s pleadings with respect to its request for
declaratory relief. Accordingly, the court focuses only on the claims for which Plaintiff seeks a declaratory judgment in
its Motion.
Order – Page 1
On July 8, 2016, Plaintiff CompuCom Systems, Inc. (“Plaintiff” or “CompuCom”) filed
objections regarding the Report’s recommendation as to its request for declaratory relief and
attorney’s fees. After considering the motions, Plaintiff’s pleadings and evidence, the Report, and
conducting a de novo review of that portion of the Report to which objection was made, the court,
for the reasons herein explained, accepts as modified the Report, overrules Plaintiff’s objections,
and denies without prejudice Plaintiff’s Motion (Doc. 47), except for Plaintiff’s contract claim
based on WJ Global’s failure to pay its subcontractors, which is denied. Further, the court denies
without prejudice Plaintiff CompuCom Systems, Inc.’s Expedited Motion to Release or Reduce
Preliminary Injunction Bond (Doc. 52).
I.
Standard of Review
A magistrate judge’s determination regarding a dispositive matter is reviewed de novo if a
party timely objects. 28 U.S.C. § 636(b)(1)(C); Fed. R. Civ. P. 72(b). A magistrate judge’s
determination regarding a nondispositive matter is reviewed under the “clearly erroneous or contrary
to law” standard. 28 U.S.C. § 636(b)(1)(A); Fed. R. Civ. P. 72(a). As explained by the court in
Arters v. Univision Radio Broadcasting TX, L.P., No. 3:07-CV-0957-D, 2009 WL 1313285 (N.D.
Tex. May 12, 2009):
The clearly erroneous standard applies to the factual components of the
magistrate judge’s decision. The district court may not disturb a factual finding of the
magistrate judge unless, although there is evidence to support it, the reviewing court
is left with the definite and firm conviction that a mistake has been committed. If a
magistrate judge’s account of the evidence is plausible in light of the record viewed
in its entirety, a district judge may not reverse it. The legal conclusions of the
magistrate judge are reviewable de novo, and the district judge reverses if the
magistrate judge erred in some respect in [his] legal conclusions. [T]he abuse of
discretion standard governs review of that vast area of choice that remains to the
[magistrate judge] who has properly applied the law to fact findings that are not
clearly erroneous.
Order – Page 2
Id. at *2 (citations and internal quotation marks omitted). As Plaintiff’s request for entry of a default
judgment against Defendant is dispositive, the court will conduct a de novo review of the Report.
II.
Motion for Default Judgment
A.
Standard for Default Judgment
The magistrate judge set forth the correct legal standard for entry of default judgment
pursuant to Federal Rule of Civil Procedure 55(b). Accordingly, the court need not repeat that legal
standard for purposes of ruling on CompuCom’s Motion and objections to the Report.
B.
Breach of Contract
The magistrate judge found that Plaintiff’s pleadings satisfied the requirements for its breach
of contract claim and recommended that the court grant Plaintiff’s Motion as to liability with respect
to Plaintiff’s breach of contract claim. Although CompuCom did not object to this finding or
recommendation, the court believes this issue warrants further discussion and rejects the magistrate
judge’s finding that Plaintiff’s pleadings satisfy the requirements for its breach of contract claim
based on Defendant WJ Global, LLC’s (“Defendant” or “WJ Global”) breach of the parties’ contract.
In its Motion, CompuCom seeks a default judgment on its contract claim to recover damages
sustained for the following alleged material breaches by WJ Global of the parties’ contractual
agreements: (1) Defendant’s failure to pay its subcontractors under the Subcontractor Master
Agreement (“Master Agreement”) and related statements of work (“SOW” or “SOWs”); (2)
Defendant’s failure to indemnify CompuCom “when presented with a claim or demand arising from
an act or omission in WJ Global’s relationship with its subcontractors”; (3) Defendant’s failure to
provide CompuCom with a release of liens by WJ Global and its subcontractors; and (4) Defendant’s
Order – Page 3
refusal or failure to provide requested information timely regarding it subcontractors and their claims
at the request of CompuCom. Pl.’s Br. 4.
As correctly noted by the magistrate judge, the elements for breach of contract under Texas
law are as follows: “(1) a valid contract; (2) the plaintiff performed or tendered performance; (3) the
defendant breached the contract; and (4) the plaintiff was damaged as a result of that breach.” Aquila
Sw. Pipeline, Inc. v. Harmony Exploration, Inc., 48 S.W.3d 225, 235 (Tex. App.—San Antonio
2001, pet. denied). There are five elements of a contractual indemnity claim under Texas law: (1)
a contractual indemnity agreement exists; (2) the indemnity agreement obligates one party to
indemnify the other for particular claims; (3) those claims were made; (4) all conditions precedent
for recovery have occurred or been waived or excused; and (5) the party seeking relief has been
damaged. See Transamerica Ins. Co. v. Avenell, 66 F.3d 715, 719 (5th Cir. 1995) (citing Ford v.
Aetna Ins. Co., 394 S.W.2d 693 (Tex. App.—Corpus Christi 1965, writ ref’d n.r.e.)). The court
determines as a matter of law what the contract requires of the parties. See Meek v. Bishop Peterson
& Sharp, P.C., 919 S.W.2d 805, 808 (Tex. App.—Houston [14th Dist.] 1996, writ denied). When
the terms of a contract are clear and unambiguous, and the facts concerning breach or performance
are undisputed or conclusively established, the issue of whether the facts show performance or
breach is also decided as a matter of law. Id. A breach of contract also occurs when one party to a
contract prevents another party to the contract from performing its side of the bargain. See Texas
Nat’l Bank v. Sandia Mortg. Corp., 872 F.2d 692, 699 (5th Cir.1989). The “party seeking to recover
under a contract bears the burden of proving that all conditions precedent have been satisfied.”
Associated Indem. Corp. v. CAT Contracting, Inc., 964 S.W.2d 276, 283 (Tex. 1998). “A condition
precedent is an act or event that must take place before performance of a contractual obligation is
Order – Page 4
due.” Cedyco Corp. v. PetroQuest Energy, LLC, 497 F.3d 485, 488 (5th Cir. 2007); Centex Corp.
v. Dalton, 840 S.W.2d 952, 956 (Tex. 1992). “[T]o determine whether a condition precedent exists,
the intention of the parties must be ascertained; and that can be done only by looking at the entire
contract.” Solar Applications Eng’r, Inc. v. T.A. Operating Corp., 327 S.W.3d 104, 109 (Tex. 2010);
Criswell v. European Crossroads Shopping Ctr., Ltd., 792 S.W.2d 945, 948 (Tex. 1990). Indemnity
agreements are construed under the normal rules of contract construction. Associated Indem. Corp.,
964 S.W.2d at 284.
Because of its default, Defendant is deemed to have admitted the allegations set forth in the
Plaintiff’s Complaint (“Complaint”). Nonetheless, the court must review the pleadings to determine
whether Plaintiff can establish a viable claim for the relief sought. Nishimatsu Const. Co. v. Houston
Nat’l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975). Plaintiff’s pleadings are sufficient to establish the
existence of valid contracts entered into between CompuCom and WJ Global that include the Master
Agreement and several SOWs. In addition, the Master Agreement contains an indemnity provision.
The court’s concern rests with the remaining requirements for Plaintiff’s contract claim.
1.
Failure to Pay Subcontractors under Master Agreement and SOWs
In its Motion, Plaintiff cites to paragraph 61 of its Complaint to support its contention that
WJ Global breached the parties’ contract(s) by failing to pay subcontractors. CompuCom also relies
on other evidence, to the extent necessary, in support its Motion and the relief requested. Paragraph
61 of the Complaint states: “WJ Global materially breached the contract. Among other things, WJ
Global breached its representations, warranties, and obligations by failing to pay its subcontractors
and by failing to provide to CompuCom release of liens from WJ Global itself and from its
subcontractors.” Pl.’s Compl. ¶ 61. The Complaint does not contain information from which the
Order – Page 5
court can determine what WJ Global’s obligations were with respect to paying it subcontractors, and
the court was unable to find any provision in the Master Agreement or SOW (Doc. 7-2) that requires
WJ Global, as part of its agreement with CompuCom, to pay its subcontractors. Moreover,
CompuCom does not contend that it has standing to assert any claim based on agreements between
WJ Global and its subcontractors under which WJ Global presumably agreed to pay its
subcontractors in exchange for services rendered. Accordingly, CompuCom is not entitled to entry
of a default judgment on this contract claim, and Plaintiff’s Motion with respect to this claim is
denied. See Lindsey v. Prive Corp., 161 F.3d 886, 893 (5th Cir. 1998) (setting forth the factors for
determining whether entry of a default judgment is appropriate and explaining that any doubts as to
the propriety of a default judgment should be resolved in favor of the defendant).
2.
Breach of Indemnity Provision
Plaintiff seeks a default judgment against WJ Global on its claim for breach of contract based
on breach of the indemnity provision. Under the Master Agreement, WJ Global agreed to provide
certain services in exchange for payment by CompuCom. Regarding general payment terms, section
2.1 states:
In consideration of [WJ Global’s] satisfactory performance, CompuCom shall
pay [WJ Global] according to the payment terms set forth in the applicable [SOW].
Vendor shall submit invoices on a monthly basis for Services furnished during the
preceding month, unless otherwise stated in such [SOW], and each invoice shall
reference the applicable [SOW] and include supporting detail and documentation of
all charges. All amounts are due and payable in U.S. dollars, unless otherwise agreed
by CompuCom in writing, within sixty (45) forty-five days from the date on which
CompuCom receives a correct invoice from Vendor.
Pl.’s App. 16 (Doc. 7-2). The foregoing reference in section 2.1 to “sixty (45) forty-five days”
appears to be a typographical error, and the court assumes for purposes of this order that payment
Order – Page 6
was due 45 days from the date CompuCom received a “correct invoice” from WJ Global. See id.
The indemnification provision in section 11.1 of the Master Agreement provides in pertinent part:
Vendor [WJ Global] will indemnify, defend (at CompuCom’s request) and hold
CompuCom, Clients, and their respective Representatives harmless from any and all
claims or demand (including all losses, damages, and liabilities resulting from such
claims or demands, and all related costs and expenses, including reasonable
attorney’s fees and expenses) (“Claims”) arising from or in connection with (a)
Vendor’s performance of, or failure to perform any of its obligations under this
Agreement; (b) an act or omission of [WJ Global] in its relationship with its
Representatives or suppliers; (c) breach of any of Vendor’s representations or
warranties under this Agreement; . . . or (f) claims by Vendor’s Representatives.
Notwithstanding the foregoing, Vendor Indemnification and hold harmless
obligations under . . . Section 11.1(f) above shall not apply if CompuCom, Clients
or any of their respective officers, directors, or employees is the sole cause of the
Claim.
Id. at 16. In its Motion, Plaintiff contends that WJ Global breached section 11.1(b) of the indemnity
provision by failing to indemnify CompuCom when presented with a claim or demand arising from
WJ Global’s acts or omissions in its relationship with its subcontractor. According to CompuCom,
the acts or omissions refer to WJ Global’s failure to pay its subcontractors.
As noted, section 11.1(b) applies to “an act or omission of [WJ Global] in its relationship
with its Representatives or suppliers.” Id. The Master Agreement does not appear to define the term
“Representatives” and, when discussing WJ Global’s subcontractors and personnel, the Master
Agreement does not use the term “Representatives.” See id. at 13 (§ 3 “Use of Subcontractors by
Vendor”; § 4.1-4.3 “Vendor Personnel; Performance. . . . CompuCom reserves the right to
reasonably determine the quality of Vendor’s performance (including the performance of any
approved subcontractors)”). The court, therefore, questions whether section 11.1(b) applies to a
“Claim” arising from an act or omission of WJ Global in its relationship with its subcontractors.
Order – Page 7
Moreover, Plaintiff’s pleadings and evidence are insufficient to establish that it performed
or tendered performance under the Master Agreement and that all conditions precedent for recovery
have occurred or been waived or excused. Regarding performance, CompuCom alleges in its
Complaint that it paid WJ Global certain amounts and that it “continuously made progress payments
for properly submitted invoices for which there is no dispute.” Pl.’s Compl. 5 (emphasis added).
CompuCom’s evidence similarly contains evidence that it made payments in certain amounts, some
of which were made shortly before Plaintiff filed this action.
Such allegations and evidence, however, do not demonstrate that CompuCom complied with
its material payment obligations or that its performance of its payment obligations was excused or
waived. Section 2.1 of the Master Agreement does not state that payment may be withheld if
invoices are disputed; nor does it state that the parties contemplated continuous “progress payments”
by CompuCom. Instead, section 2.1 requires CompuCom to pay amounts owed to WJ Global
“within . . . (45) forty-five days from the date on which CompuCom receives a correct invoice from
Vendor.” Pl.’s App. 12. Plaintiff’s evidence contains information regarding payment amounts and
payment dates but does not include information regarding invoice dates from which the court can
determine whether payments were made timely.
It is evident from Plaintiff’s allegations and evidence that CompuCom did not comply with
this provision because Plaintiff acknowledges that it withheld $309,012.63 in amounts owed to WJ
Global, and its evidence shows there were delays in paying prior invoices submitted by WJ Global,
which according to WJ Global constituted a material, uncured breach of CompuCom’s payment
obligations under section 2.1, for which written notice was given. See Pl.’s App. 55 (Doc. 7-3). In
a declaration submitted by Plaintiff, Karly Curtis (“Curtis”) states that there were delays in paying
Order – Page 8
WJ Global’s invoices submitted May through July 2014 for services related to Dick’s Sporting
Goods because WJ Global did not “correctly submit[]” invoices and some invoices included
“incorrect pricing” or “formatting was an issue.” Pl.’s App. 155 (Doc. 7-6). While section 2.1 states
that CompuCom must pay WJ Global within 45 days of receiving a “correct invoice,” the court was
unable to find any specific requirements in the Master Agreement or SOW regarding the “correct”
manner for submitting invoices.
In this regard, the Master Agreement merely states that
“CompuCom shall pay Vendor according to the payment terms set forth in the applicable [SOW]”;
and unless otherwise stated in a SOW, “each invoice shall reference the applicable [SOW] and
include supporting detail and documentation of all charges.” Pl.’s App. 12 (Doc. 7-2).
Regardless, the formatting and other “billing issues” referenced in Curtis’s declaration would
not constitute material breaches of the Master Agreement by WJ Global that would excuse
CompuCom’s payment obligations or entitle it to withhold or delay payment. Pl.’s App. 155 (Doc.
7-6). After reviewing the parties’ entire agreement set forth in the Master Agreement and the sample
SOW submitted by Plaintiff, the court also concludes that CompuCom’s payment obligations were
a condition precedent to any indemnification obligation of WJ Global, particularly to the extent that
CompuCom seeks indemnification for claims by WJ Global’s Representatives or subcontractors.
Solar Applications Eng’r, Inc., 327 S.W.3d at 109. To conclude otherwise would lead to the absurd
result whereby CompuCom could materially breach the parties’ agreement with impunity by failing
to make payments to WJ Global, causing WJ Global to default on its payment obligations to
subcontractors, resulting in the filing of liens and claims against WJ Global, CompuCom, and
CompuCom’s clients. See Mobil Chem. Co. v. Blount Bros. Corp., 809 F.2d 1175, 1182 (5th Cir.
1987) [“The district court held: ‘It is inconceivable that Blount would have agreed to indemnify
Order – Page 9
Mobil for damages resulting from its [Mobil’s] own breaches of contract.’ We agree. Mobil’s
interpretation is completely artificial in the context of the entire contract.”); see also Marquette
Transp. Co. v. La. Mach. Co., 367 F.3d 398, 408 (5th Cir. 2004) (“If Quality had been found to be
in breach of [its warranty duties under the contract], perhaps our application of the indemnity clause
would be different. As Quality apparently met its duties under the contract, however, it is entitled
to indemnification from Marquette for the costs and expenses caused by the latter’s suit.”). The
court’s conclusion that CompuCom’s payment obligations were a condition precedent to WJ
Global’s indemnification obligation in this case is also consistent with the language in section 11.2
that states the indemnity obligations under this provision do not apply to claims by WJ Global’s
Representatives if CompuCom is the “sole cause of the Claim.” Pl.’s App. 16 (Doc. 7-2).
Accordingly, resolving all doubts in favor of Defendant, the court concludes that entry of
default judgment against WJ Global on this claim is not appropriate based on Plaintiff’s pleadings
and evidence. See Lindsey, 161 F.3d at 893. Plaintiff’s Motion with respect to this claim is,
therefore, denied without prejudice.
Any amended motion for default judgment submitted by Plaintiff must be supported by
evidence that shows the dates and amounts of invoices received and the dates and amounts of
payments made by CompuCom. If payments were delayed, Plaintiff’s evidence must include an
explanation for why its performance was excused or waived. Additionally, the court will require
evidence that shows CompuCom cured the material breaches alleged by WJ Global, as this goes to
the essence of the parties’ dispute.
Order – Page 10
3.
Failure to Provide Release of Liens
CompuCom contends in its Complaint and Motion that “WJ Global materially breached the
contract” by failing to provide CompuCom with a release of liens for WJ Global and its
subcontractors. Regarding the release of liens, the Complaint states:
The August 28, 2013 Statement of Work regarding the project for Client ATC and
end customer STF provided in applicable part that:
Vendor [WJ Global] will be responsible for providing to CompuCom release of
lien(s) from Vendor or Vendor’s suppliers(s) [sic] for any claims related to
construction or electrical work, consistent with the Indemnification clause in
Subcontractor Master Agreement.”
Pl.’s Compl. ¶ 14. Even assuming that all of the SOWs executed between Plaintiff and Defendant
contain this same language, the Complaint and corresponding SOW (Doc. 7-2) that is quoted in the
Complaint both make clear that any release of liens is tied to “the Indemnification clause in
Subcontractor Master Agreement,” and the court, for the reasons already explained, has determined
that material fact issues exist regarding Plaintiff’s entitlement to relief based on the indemnification
provision in the Master Agreement. See Lindsey, 161 F.3d at 893. In addition, this release of lien
language applies only to WJ Global and its “suppliers,” not WJ Global’s subcontractors, and review
of the parties’ Master Agreement and SOW reveal that the terms subcontractors and suppliers are
not synonymous. Accordingly, entry of default judgment against WJ Global on this claim is not
appropriate. Id. Plaintiff’s Motion with respect to this claim is, therefore, denied without
prejudice.
Order – Page 11
4.
Refusal to Provide Requested Information Timely Regarding
Subcontractor Claims
Plaintiff contends that WJ Global materially breached the parties’ contract when it “refused
to timely provide information relating to its subcontractors and their claims at the request of
CompuCom.” Pl.’s Br. 4. Plaintiff similarly alleges in its Complaint that WJ Global materially
breached the parties’ contract by refusing to “cooperate in providing information to CompuCom in
its efforts to resolve the issues in this matter [regarding liens] in breach of its agreements with
CompuCom. Pl.’s Compl. ¶¶ 19, 49. Plaintiff alleges that WJ Global was obligated to provide this
information pursuant to the “Further Assurances” provision in the Master Agreement.
The court agrees that the Further Assurances provision applies to the information requested
by CompuCom; however, resolution of this issue will likewise require the court to first determine
whether CompuCom performed its payment obligations under the Master Agreement, and, if not,
whether its performance in this regard was excused. Moreover, Plaintiff’s pleadings and evidence
do not establish that CompuCom suffered the type of damages recoverable for breach of contract or
that the damages sustained resulted from WJ Global’s failure to provide requested information
“timely,” especially since Plaintiff acknowledges that WJ Global provided information as ordered
by the court. In addition, the Master Agreement does not set forth a deadline for providing requested
information or assurances and does not state that time is of the essence regarding the parties’
performance of this obligation. Accordingly, entry of default judgment against WJ Global on this
claim is not appropriate. See Lindsey, 161 F.3d at 893. Plaintiff’s Motion with respect to this claim
is, therefore, denied without prejudice.
Order – Page 12
C.
Request for Declaratory Judgment
Under the federal Declaratory Judgment Act, a federal court may “declare the rights and other
legal relations” of parties in “a case of actual controversy.” 28 U.S.C. § 2201. The controversy must
be “of a justiciable nature, thus excluding an advisory decree upon a hypothetical state of facts.”
Ashwander v. Tenn. Valley Auth., 297 U.S. 288, 325 (1936). An actual controversy exists when “a
substantial controversy of sufficient immediacy and reality [exists] between parties having adverse
legal interests.” Middle S. Energy, Inc. v. City of New Orleans, 800 F.2d 488, 490 (5th Cir. 1986).
The issue of whether particular facts are sufficiently immediate to establish an actual controversy
is determined on a case-by-case basis. Orix Credit Alliance, Inc. v. Wolfe, 212 F.3d 891, 896 (5th
Cir.2000) (citations omitted).
In its Motion, Plaintiff requests declaratory relief to: (1) confirm its “right to withhold as a
setoff . . . $309,012.63” in funds previously withheld and its right to “withhold future payments from
WJ Global . . . and use such funds to set off the amounts CompuCom pays and/or has paid to WJ
Global’s subcontractors and the amounts CompuCom and or its clients reasonably incurred as a
result of WJ Global’s failure to pay its subcontractors, including but not limited to any necessary
attorney’s fees and costs,” Pl.’s Br. 6; and (2) confirm CompuCom’s contractual right to be
indemnified in accordance with the Master Agreement by WJ Global for future claims and demands
made by WJ Global’s subcontractors. The magistrate judge recommended that the court deny
Plaintiff’s request for declaratory relief because it cannot be reasonably inferred from the Complaint
and record in this case that there is a continuing controversy, particularly in light of Defendant’s
October 31, 2014 letter notifying the court that WJ Global ceased its daily operations and terminated
the parties’ contract as of October 9, 2014.
Order – Page 13
Plaintiff objected to this portion of the Report, contending that, under section 15.2 of the
Master Agreement, the indemnity provision survives any termination of the parties’ agreement by
WJ Global. Plaintiff contends that declaratory relief is necessary to confirm its setoff rights with
respect to its present and continuing withholding of $309,012.63 from WJ Global following its
breach of the parties’ contract, resolve the current dispute, and preclude later litigation over the
money. Alternatively, Plaintiff contends that the court should adjust its damages award by
subtracting this amount from any award. Plaintiff contends that, if the court does not confirm its
setoff rights by declaratory judgment, it should award CompuCom an additional sum of $309,012.63.
According to CompuCom, this would allow it to apply this sum withheld to the judgment as a setoff
such that the net amount of the judgment is the same. Regarding indemnity rights, CompuCom
contends that declaratory relief is necessary to confirm its continuing indemnity rights against WJ
Global. Plaintiff asserts, “Much like a policy coverage lawsuit for insurance, the declaratory relief
requested here is that WJ Global is required, under the parties’ contractual indemnity clause, to
indemnify and defend CompuCom (and CompuCom’s clients) for claims and demands arising from
WJ Global’s failure to pay its subcontractors.” Pl.’s Obj. 5.
For the reasons previously explained, the court has concerns regarding Plaintiff’s contract
claim based on indemnification, and those same concerns apply to the related declaratory relief
requested by Plaintiff. These concerns are not alleviated by the survival clause in the Master
Agreement, which applies to terminations of the parties’ agreement, as opposed to the issue of
whether CompuCom performed as required under the contract or whether its performance was
excused. Plaintiff’s contention that it should be awarded a judgment that includes the $309,012.63
withheld if the court does not confirm its setoff rights by declaratory judgment is also perplexing,
Order – Page 14
as such an award or judgment would entitle CompuCom to recover from WJ Global additional
monies for which it is not out-of-pocket. Further, although Plaintiff contends that it may be “is
exposed to an additional $446,036.98 in potential claims from WJ Global’s unpaid subcontractors,”
the court concludes that such potential claims do not constitute a substantial controversy of sufficient
immediacy and reality between the parties, particularly in light of the statement by WJ Global that
the information provided to CompuCom, from which Plaintiff calculated the potential claims,
included paid and unpaid matters and bills that may or may not be valid and approved for payment.
Pl.’s Br. 8 (emphasis added); Pl.’s App. 31 (“To be clear, these bills may or may not be valid and
approved.”). Accordingly, any decree by the court in this regard would be inappropriate, as it would
be advisory in nature and based on a hypothetical state of facts. Accordingly, the court overrules
Plaintiff’s objections and denies without prejudice Plaintiff’s Motion for a default judgment on the
requested declaratory relief.
D.
Request for Attorney’s Fees and Objections
Plaintiff seeks a total of $260,237.64 in reasonable attorney’s fees and expenses. The
magistrate judge recommended that the court defer ruling on Plaintiff’s request for attorney’s fees
pending supplementation of Plaintiff’s Motion to establish the reasonableness of the requested fees
and expenses under applicable law. Plaintiff objected to the magistrate judge’s recommendation.
The court’s determination that CompuCom is not entitled to a default judgment moots this objection
by Plaintiff, which is overruled as moot.
III.
Motion for Release or Reduce Bond
As the court has determined that Plaintiff is not entitled to default judgment on its breach of
contract claim and request for declaratory judgment, the court denies without prejudice Plaintiff’s
Order – Page 15
motion to release or reduce the bond paid it with respect to the temporary restraining order and
preliminary injunction entered by the court. The court will enter an order releasing the bond if: (1)
it determines at a later date that Plaintiff is entitled to a default judgment on its breach of contract
claim or request for declaratory judgment; or (2) the case is dismissed either by order of the court
or upon request of Plaintiff, at which time the court will vacate the preliminary injunction and order
the release of the bond.
IV.
Conclusion
For the reasons stated, the court concludes that entry of a default judgment against WJ
Global is not justified based on CompuCom’s pleadings and evidence and, therefore, declines to
exercise its discretion to enter a default judgment against WJ Global. Accordingly, the court accepts
as modified the magistrate judge’s findings and conclusions, overrules Plaintiff’s objections to the
Report, denies without prejudice Plaintiff CompuCom Systems, Inc.’s Motion for Entry of Default
Judgment (Doc. 47), except for Plaintiff’s contract claim based on WJ Global’s failure to pay its
subcontractors, which is denied; and denies without prejudice Plaintiff CompuCom Systems, Inc.’s
Expedited Motion to Release or Reduce Preliminary Injunction Bond (Doc. 52).
It is so ordered this 31st day of March, 2017.
_________________________________
Sam A. Lindsay
United States District Judge
Order – Page 16
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