Medallion Transport & Logistics LLC v. Superior Choice Logistics Inc

Filing 88

Memorandum Opinion and Order denying 70 Motion to Dismiss filed by Superior Choice Logistics Inc, granting 64 Motion to Set Aside Default filed by Hallmark County Mutual Insurance Company, denying as moot 56 Motion for Default Judgment filed by Medallion Transport & Logistics LLC, setsaside the 48 Clerks entry of default against Hallmark. (Ordered by Judge Sam A Lindsay on 2/29/2016) (mem)

IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
MEDALLION TRANSPORT &
LOGISTICS LLC,
Plaintiff,
v.
SUPERIOR CHOICE LOGISTIC, INC,
et al.,
Defendants.

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Civil Action No. 3:14-CV-4361-L

MEMORANDUM OPINION AND ORDER
Before the court are Plaintiff’s Motion for Default Judgment (Doc. 56) filed September 2,
2015; Defendant Hallmark County Mutual Insurance Company’s Amended Motion to Set Aside the
Entry of Default (Doc. 64), filed October 7, 2015; and Defendant Superior Choice Logistics, Inc.’s
Motion to Dismiss for Want of Subject Matter Jurisdiction (Doc. 70), filed October 26, 2015, which
was joined by Defendant Hallmark County Mutual Insurance Company (Doc. 79). After considering
the motions, responses, reply, evidence, record, and applicable law, the court denies Defendant
Superior Choice Logistics, Inc.’s Motion to Dismiss for Want of Subject Matter Jurisdiction (Doc.
70); grants Defendant Hallmark County Mutual Insurance Company’s Amended Motion to Set
Aside the Entry of Default (Doc. 64); and denies as moot Plaintiff’s Motion for Default Judgment
(Doc. 56).
I.

Motion to Dismiss for Lack of Subject Matter Jurisdiction
Defendant Superior Choice Logistics, Inc. (“Superior) contends that subject matter

jurisdiction is lacking because, although complete diversity exists, the requisite amount in
controversy is not satisfied under 28 U.S.C. § 1332(a). For support, Superior points to Plaintiff’s
Memorandum Opinion and Order – Page 1

September 25, 2015 summary judgment motion in which Plaintiff contends that it is entitled to
$65,986.13 in damages. Superior contends that the amount of damages sought by Plaintiff does not
meet the $75,000 amount-in-controversy threshold.
Plaintiff responds that, in addition to damages, it specifically sought attorney’s fees in its
Amended Complaint and that attorney’s fees are included in determining whether the amount in
controversy has been satisfied. Plaintiff asserts that, to prosecute this case from beginning through
trial, it will incur at least $10,000 in reasonable attorney’s fees. Plaintiff, therefore, contends that
the amount in controversy is satisfied and the court should deny Superior’s motion. Superior did not
file a reply in support of its motion.
A federal court has subject matter jurisdiction over civil cases “arising under the
Constitution, laws, or treaties of the United States,” or over civil cases in which the amount in
controversy exceeds $75,000, exclusive of interest and costs, and in which diversity of citizenship
exists between the parties. 28 U.S.C. §§ 1331, 1332. Plaintiff brought this action based on diversity
jurisdiction. For diversity purposes, the amount in controversy normally is determined by the
amount sought on the face of the plaintiff’s pleadings, so long as the plaintiff’s claim is made in
good faith. St. Paul Reinsurance Co. v. Greenberg, 134 F.3d 1250, 1253 (5th Cir. 1998); De Aguilar
v. Boeing Co., 47 F.3d 1404, 1408 (5th Cir. 1995). “[U]nless the law gives a different rule, the sum
claimed by the plaintiff controls if the claim is apparently made in good faith. To justify dismissal,
it must appear to a legal certainty that the claim is really for less than the jurisdictional amount.”
Paul Reinsurance Co., 134 F.3d at 1253 (internal quotation marks and footnotes omitted). The court
must first determine whether it is “facially apparent” from the plaintiff’s pleadings whether the
claims exceed the jurisdictional amount. Id. If it is not apparent, the court may rely on “summary

Memorandum Opinion and Order – Page 2

judgment-type” evidence to ascertain the amount in controversy. Id. “[J]urisdictional facts must be
judged as of the time the complaint is filed; subsequent events cannot serve to deprive the court of
jurisdiction once it has attached.” Id. at 1253-54. In determining the jurisdictional amount,
attorney’s fees may be included. Foret v. Southern Farm Bureau Life Ins. Co., 918 F.2d 534, 536
(5th Cir. 1990).
In its original Complaint, Plaintiff asserted claims for breach of contract and
misrepresentation and alleged “damages in excess of . . . $75,000.” Pl.’s Compl. 4. In addition to
damages, Plaintiff requested attorney’s fees, costs, and prejudgment interest. These good faith
allegations alone are sufficient to satisfy the amount-in-controversy requirement.
Even taking into consideration, as requested by Superior, Plaintiff’s summary judgment
motion in which Plaintiff presented evidence that it has incurred damages totaling $65,986.13 as
a result of Defendants’ conduct, the court concludes that amount-in-controversy requirement has
been satisfied. By applying a common-sense approach to Plaintiff’s pleadings and evidence of
damages, the court concludes that it is facially apparent from the Complaint that the amount Plaintiff
seeks to recover for its claims and attorney’s fees more likely than not exceeds $75,000. See,
e.g.,Wilson v. Hibu Inc., 3:13-CV-2012-L, 2013 WL 5803816, at *3-4 (N.D. Tex. Oct. 28, 2013)
(applying a common-sense approach in analyzing the amount-in-controversy prong of diversity
jurisdiction). This is so because the court knows from experience and common sense that attorney’s
fees would easily exceed $10,000 if Plaintiff is successful on its claims. Plaintiff has, therefore,
satisfied the amount-in-controversy prong of diversity jurisdiction. Accordingly, the court denies
Defendant Superior Choice Logistics, Inc.’s Motion to Dismiss for Want of Subject Matter
Jurisdiction (Doc. 70).

Memorandum Opinion and Order – Page 3

II.

Motions for Default Judgment and to Set Aside Entry of Default
This case was transferred to this court on December 12, 2014, from the United States District

Court for the Western District of Tennessee, Jackson Division. On June 4, 2015, Plaintiff filed its
Amended Complaint. According to the Amended Complaint, the case was at that time pending in
the Western District of Tennessee, Jackson Division. In an August 4, 2015 order, the court
admonished Plaintiff as follows: “[A]ccording to Plaintiff’s motion, this case is pending in the
Western District of Tennessee, Jackson Division. This is not the first time that Plaintiff has filed a
motion with the wrong case caption since the case was transferred to the Northern District of Texas.”
Order (Doc. 43).
The summons as to Hallmark was returned as executed on August 19, 2015, and shows that
Hallmark was served with a copy of the summons and Amended Complaint on July 17, 2015. On
August 19, 2015, following Plaintiff’s request, the clerk entered default against Hallmark. On
August 27, 2015, Hallmark filed its Answer to Plaintiff’s Amended Complaint. On September 2,
2015, Plaintiff filed its Motion for Default Judgment against Defendant Hallmark County Mutual
Insurance Company. On September 14, 2015, Hallmark moved to set aside the clerk’s entry of
default against it, and on October 7, 2015, Hallmark filed its Amended Motion to Set Aside the Entry
of Default and noted in a footnote that the amended filing was done to “correct certain formatting
anomalies contained in Hallmark’s original filing, Defendant’s Motion to Set Aside the Entry of
Default. The substance of this submission is otherwise unaltered and unaffected.” Hallmark’s Am.
Mot. 1 n.1. For the reasons that follow, the court determines that Hallmark’s motion to set aside
the clerk’s entry of default against it should be granted.

Memorandum Opinion and Order – Page 4

A court may set aside an entry of a default for good cause shown. Fed. R. Civ. P. 55(c); Lacy
v. Sitel Corp., 227 F.3d 290, 291-92 (citing Fed. R. Civ. P. 55(c)). In determining whether good
cause is present to set aside a default, a court considers “whether the default was willful, whether
setting it aside would prejudice the adversary, and whether a meritorious defense is present.” Id. at
292 (citation and quotation marks omitted). A court also considers whether the defaulting party
“acted expeditiously” to cure the default. Id. (citation omitted). If the court determines that a default
is willful—that is, intentional failure to answer or otherwise respond—such “[w]illful failure alone
may constitute sufficient cause for the court to deny [the] motion [to set aside default].” Matter of
Dierschke, 975 F.2d 181, 184-85 (5th Cir.1992). Default judgments are “generally disfavored in the
law” and “should not be granted on the claim, without more, that the defendant ha[s] failed to meet
a procedural time requirement.” Lacy, 227 F.3d at 292 (quoting Mason & Hanger–Silas Mason Co.
v. Metal Trades Council, 726 F.2d 166, 168 (5th Cir.1984)). The Fifth Circuit has adopted a policy
in favor of resolving cases on the merits and against the use of default judgments. See Rogers v.
Hartford Life & Accident Ins. Co., 167 F.3d 933, 936 (5th Cir. 1999); see also Sun Bank of Ocala
v. Pelican Homestead & Sav. Ass’n, 874 F.2d 274, 276 (5th Cir. 1989) (“Default judgments are a
drastic remedy, not favored by the Federal Rules and resorted to by the courts in extreme situations
[and] are available only when the adversary process has been halted because of an essentially
unresponsive party.”) (internal quotations and citations omitted).
In support of its motion, Hallmark asserts and provided evidence to show that its failure to
answer or respond timely after receiving a copy of the summons and Amended Complaint was due
to inadvertence of Hallmark’s new litigation manager, and further delay ensued when Hallmark
initially retained Tennessee counsel, rather than Texas counsel, because Plaintiff’s Amended

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Complaint had the wrong case caption and indicated that the case was pending in the Western
District of Tennessee rather than the Northern District of Texas. Plaintiff responds that Defendant
is not entitled to have the entry of default set aside because: (1) Hallmark did not respond to its
motion for default judgment and in doing so failed to comply with the court’s Local Civil Rules for
motion practice; and (2) Hallmark did not act timely in moving to set aside entry of the default.
Plaintiff contends that it is inconceivable that a litigation manager, even if newly hired, was unable
to timely hire outside litigation counsel to file an answer or respond after receipt of the summons and
Amended Complaint.
Plaintiff is mistaken that the court’s Local Civil Rules require a party to respond to any and
all motions filed in a case by an opposing party. The court’s Local Civil Rules simply set forth the
requirements for motion practice if a motion, response, or reply is filed. Further, Hallmark has
presented undisputed evidence that Plaintiff was partially to blame for Hallmark’s delay in filing an
answer or response because of the confusion caused by Plaintiff including the wrong caption in its
Amended Complaint.
Additionally, the court disagrees that Hallmark did not act in a sufficiently expeditious
manner to cure the default under the circumstances. The timing or failure of Hallmark to not respond
to Plaintiff’s motion for default judgment is not dispositive. Moreover, Hallmark presented evidence
that shows it did not learn that Plaintiff had moved for entry of default against it or that the case had
been filed in the wrong venue until sometime in late August 2015. Hallmark’s Tennessee counsel
states in an affidavit that he spoke with Plaintiff’s counsel by telephone on August 18, 2015, pointed
out the incorrect case caption on the Amended Complaint, and advised that Hallmark had
inadvertently retained Tennessee counsel as a result and would have to retain Texas counsel to

Memorandum Opinion and Order – Page 6

defend in this suit. According to Hallmark’s Tennessee counsel, Plaintiff’s counsel requested that
Hallmark’s Texas counsel contact him upon retention and advised that he would not take any adverse
action against Hallmark in the meantime. Plaintiff, nevertheless, moved for entry of default the next
day on August 19, 2015. Hallmark contends that it detrimentally relied on Plaintiff’s agreement not
to take adverse action against Hallmark before it retained Texas counsel and the parties’ attorneys
had an opportunity to discuss the matter. Hallmark asserts that Plaintiff was not prejudiced because
it knew early on of Hallmark’s intention to defend in this suit.
As previously noted, Hallmark filed its Answer to Plaintiff’s Amended Complaint on August
27, 2015, and moved to set aside the clerk’s entry of default on September 2, 2015. From this and
the foregoing evidence submitted by Hallmark, the court concludes that Hallmark did not unduly
delay in curing the default under the circumstances. There is also no evidence that the failure to
answer or otherwise respond was willful; rather, the evidence submitted by Hallmark establishes the
contrary. Finally, there is no evidence that Plaintiff will suffer any legal prejudice if the entry of
default is set aside, and the court determines that the August 27, 2015 Answer filed by Hallmark
contains a number of meritorious affirmative defenses to Plaintiff’s claims. Accordingly, there is
good cause to set aside the clerk’s entry of default against Hallmark. The court, therefore, grants
Defendant Hallmark County Mutual Insurance Company’s Amended Motion to Set Aside the Entry
of Default (Doc. 64), sets aside the clerk’s entry of default against Hallmark (Doc. 48), and denies
as moot Plaintiff’s Motion for Default Judgment (Doc. 56).
III.

Conclusion
For the reasons stated, the court denies Defendant Superior Choice Logistics, Inc.’s Motion

to Dismiss for Want of Subject Matter Jurisdiction (Doc. 70); grants Defendant Hallmark County

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Mutual Insurance Company’s Amended Motion to Set Aside the Entry of Default (Doc. 64); sets
aside the clerk’s entry of default against Hallmark (Doc. 48); and denies as moot Plaintiff’s Motion
for Default Judgment (Doc. 56). After Plaintiff complies with the court’s February 26, 2016 order
regarding service as to Defendants John Walter Fisher (“Fisher”) and Alliance Agency, Inc.
(“Alliance”), the court will enter by separate order amended scheduling and mediation orders and
reset all deadlines that were not expired as of August 10, 2015, the date that the court vacated the
prior scheduling and mediation orders. See Order dated August 10, 2015 (Doc. 45).
It is so ordered this 29th day of February, 2016.

_________________________________
Sam A. Lindsay
United States District Judge

Memorandum Opinion and Order – Page 8