United States of America for the use and benefit of Asphalt Roads and Materials Co., Inc. v. Western Insurance Company et al
Filing
40
OPINION AND ORDER - Plaintiff Asphalt Roads and Materials Co., Inc.'s AmendedMotion for Default Judgment (Case No. 2:llcv491, ECF No. 33) is GRANTED and the Clerk is DIRECTED to enter judgment in the amount of $60,956.49 for the plaintiff a s against defendant Western Insurance Company in Case No. 2:llcv491.2. Plaintiff E.G. Middleton, Inc.'s Motion for Default Judgment (Case No. 2:llcv4 95, ECF No. 22) is GRANTED and the Clerk is DIRECTED to enter judgment in the amount of $178,876.00 for the plaintiff as against defendant Western Insurance Company in Case No. 2:llcv495. Signed by Magistrate Judge F. Bradford Stillman and filed on 7/18/12. (jcow, )
FILED
i
IN THE UNITED
FOR THE
STATES DISTRICT
COURT
EASTERN DISTRICT OF VIRGINIA
JUL 1 8 2012
Norfolk Division
UNITED
THE
STATES
USE AND
OF AMERICA
BENEFIT
c _tf:.K.us i;-is!;?;ci coi> T
FOR
U'V-,rrV S
OF ASPHALT
ROADS AND MATERIALS CO.,
INC.,
Plaintiff,
Case No.:
Case No.:
WESTERN INSURANCE COMPANY,
2:llcv491
2:llcv495
et al.,
Defendants,
UNITED
STATES
THE USE AND
MIDDLETON,
OF AMERICA
BENEFIT
and -
FOR
OF E.G.
INC.,
Plaintiff,
v,
WESTERN INSURANCE COMPANY,
et al.,
Defendants.
OPINION AND ORDER
This matter has been referred to the undersigned United States
Magistrate
Judge
on
consent
provisions of 28 U.S.C.
of
Civil
Procedure.
judgment as
against
of
§ 636(c)
Before
the
the
parties,
Court
defendant Western
Middleton,
Inc.
to
the
and Rule 73 of the Federal Rules
are
motions
for
Insurance Company,
behalf of Asphalt Roads & Materials Co.,
behalf of E.G.
pursuant
Inc.,
default
one on
and the other on
7A
I.
BACKGROUND
When a party against whom judgment is sought fails to file a
responsive pleading or otherwise defend the action, the plaintiff
may request, and the court may enter, default judgment against the
non-responsive
Insurance
party.
Company
Fed.
R.
Civ.
("Western")
has
P.
55.
failed
Defendant
to
file
Western
responsive
pleadings or to appear in either of these two related cases.
result,
the
plaintiffs
Western
in both cases.
From inception,
tracks.
have moved
for
default
As a
judgment against
these two cases have proceeded on parallel
Both cases concern an underlying construction project at
the Dam Neck Annex to Oceana Naval Air Station in Virginia Beach,
Virginia.
In June 2008,
("Key Turf"),
defendant
Key Turf Construction,
Inc.
entered into a contract with the United States of
America to perform certain improvements to the Sea Mist RV Park at
Dam Neck Annex, Contract No. NAVMWR-08-C-0012 (the "Project").
Turf
entered
into
subcontracts
with
each
of
the
Key
plaintiffs,
pursuant to which plaintiff Asphalt Roads & Materials Co., Inc.
("Asphalt") was responsible for furnishing labor and materials for
asphalt pavement on the Project, and plaintiff E.G. Middleton, Inc.
("Middleton") was responsible for furnishing labor and materials
for certain electrical work on the Project.
Pursuant to the Miller Act, 40 U.S.C.
Turf was
§§ 3131 et seq., Key
required to secure a payment bond in the value of the
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2
-
contract to make prompt payment to Key Turf's subcontractors.
Turf,
as principal,
surety.
Western,
Key
entered into a payment bond with Western,
in turn,
as
entered into a reinsurance contract on
the payment bond with defendant Lexon Insurance Company ("Lexon") .
On April 20, 2011, Key Turf informed both plaintiffs that it
could not pay any outstanding invoices on the Project,
subcontractors should look to its surety, Western,
and that
for payment.
At
the time,
Key Turf owed $60,956.49 to Asphalt and $178,876.00 to
Middleton
for
their
completed
work
on
the
Project.
Shortly
thereafter, each plaintiff submitted a Proof of Claim to Western,
seeking payment of these outstanding amounts.
Asphalt and Middleton filed substantially identical complaints
in
this
Court
respectively.
Lexon as
on
August
31,
2011,
and
September
The plaintiffs each named Key Turf,
defendants.
Both
complaints
were
1,
2011,
Western,
and
served on Western's
registered agent in Virginia on September 7, 2011.
Western has not
filed an answer to the complaint in either case.
On November 1, 2011, Utah Insurance Commissioner Neal T. Gooch
filed motions to intervene in both cases in his capacity as the
court-appointed
liquidator
of
Western
Insurance
Company
"Liquidator").
While those motions remained pending,
(the
the Clerk
entered default as to Western in both cases on November 9, 2011,
pursuant
to Rule
55(a)
of the
Federal
Rules
of Civil
Procedure.
The plaintiffs moved for default judgment in both cases on December
-
3
-
6,
2011,
pursuant
Procedure.
to
Rule
55(b)
of
the
Federal
Rules
of Civil
Asphalt has requested default judgment in the amount of
$60,956.49.1
Middleton has
requested default
judgment in the
amount of $178,876.00.2
On December 16, 2011,
motions to intervene.
the Court held a hearing and granted the
The Court briefly stayed the cases to permit
the Liquidator to determine whether he would seek to set aside the
default and defend these cases on the merits.
on
January
26,
2012,
but
the
Court
gave
The stay was lifted
the
Liquidator
until
February 29, 2012, to file any motions to set aside default or any
responses to the plaintiffs'
Liquidator
filed
neither
motions for default judgment.
a motion
to
set
aside
default
The
nor
a
response to the plaintiff's motion for default judgment in either
case.
On March 5, 2012, both cases were referred to the undersigned
for
disposition
on
consent
of
the
provisions of 28 U.S.C. § 636(c)
of Civil
parties,
pursuant
to
the
and Rule 73 of the Federal Rules
Procedure.
1 Asphalt
originally
requested
an
award
of
prejudgment
interest and attorney's fees as well, pursuant to the terms of its
contract with Key Turf.
On March 8, 2012, Asphalt amended its
motion for default judgment to eliminate the request for interest
and attorney's fees.
2 The Court notes that, unlike Asphalt, Middleton's contract
with Key Turf did not provide for recovery of prejudgment interest
or attorney's fees.
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4
-
On May
24,
2012,
the
Court
held
a
hearing
motions for default judgment in both cases.
appeared on behalf of the plaintiffs.
appeared
on
behalf
of
the
on
pending
Megan E. Burns,
Robert F.
Liquidator.
the
Tami
Friedman,
Tichenor
Esq.,
Esq.,
was
the
official court reporter.
II.
"Under [28 U.S.C]
JURISDICTION
§ 636(c),
a magistrate judge may conduct
any or all proceedings in a civil matter and order the entry of
judgment in the case when,
two,
the
one,
district court has
the parties have consented,
specially designated the magistrate
judge to exercise such jurisdiction."
530,
532
(5th Cir.
Servs.,
753
see also Gairola
1281,
1284-85
constitutionality of
enters
judgment
(4th
Section 636(c)).
pursuant
to
this
appropriate
consent
and
reference
results
a
of
jurisdiction
in
error . . . )."
Neals v. Norwood,
1995);
F.2d
lack
Neals,
and
59 F.3d at
or
v.
Cir.
Va.
59 F.3d
Dep't of Gen.
1985)
(upholding
"When a magistrate judge
statute,
absence
of
special
designation
(or
least
532.
at
the
order
fundamental
Under the circumstances
presented in this case, the undersigned magistrate judge finds it
necessary to examine whether the exercise of consent jurisdiction
is appropriate.
First,
the
Court
notes
that
Section
636(c)
requires
"the
consent of the parties," and Rule 73 requires "the consent of all
parties."
28 U.S.C.
§ 636(c)(1)
(emphasis added); Fed. R. Civ. P.
5
-
73(a)
(emphasis
added).
The
identifies three defendants:
complaint
Key Turf,
in
each
Lexon,
of
these
cases
and Western.
The
Liquidator was later permitted to intervene as a defendant as well.
Although Key Turf is named as a defendant,
it has never been
served with a copy of the complaint in either case,3 and therefore
it is not a "party" to the litigation.
Michetti
Pipe
Stringing,
Inc.,
See Murphy Bros.,
526 U.S.
344,
350
(1999)
Inc. v.
("[0]ne
becomes a party officially, and is required to take action in that
capacity,
only
upon
service
of
a
summons
or
other
authority-
asserting measure stating the time within which the party served
must appear and defend."); see also Saucier v. Katz,
211
n.l
(2001)
("Though named as
a defendant,
533 U.S.
Parker was
194,
never
served with the complaint, and therefore did not become a party to
this
litigation.")
Alexander,
that
691
defendants
F.
(Ginsberg,
Supp.
named
J.,
2d 312,
in
but
concurring);
315 n.l
not
(N.D.N.Y.
served
with
a
Cusamano
2009)
copy
v.
(noting
of
the
complaint are not parties to the lawsuit).
3 On August 24, 2011, Key Turf filed a petition for bankruptcy
under Chapter 7 of the Bankruptcy Code, triggering an automatic
stay of any litigation with respect to Key Turf, nationwide.
Based
on the docket, the plaintiffs do not appear to have attempted
service of the complaint on Key Turf, and even if attempted,
service would have been void in light of the automatic bankruptcy
stay, which predates the filing of both cases.
On December 9,
2011, the plaintiffs filed a Suggestion of Bankruptcy in both of
these cases, and soon thereafter, the Court entered orders staying
this litigation as to Key Turf only, with the cases proceeding as
to the other parties.
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6
-
Although Lexon was
at
one time an active defendant,
since been dismissed from both actions.
it
has
On November 9, 2011, Lexon
filed an interpleader action, depositing into the Court all funds
at issue between Lexon and Middleton, Asphalt, and Key Turf's other
subcontractors.
On December 15, 2011,
the plaintiffs voluntarily
dismissed their claims against Lexon in both cases by stipulations
signed by counsel for the plaintiffs, Lexon, and the Liquidator.
On August 25, 2011, Western had been placed into receivership
under the Utah Insurer Receivership Act.
§§ 31A-27a-301 et seq.
See generally Utah Code
Utah Insurance Commissioner Neal T. Gooch
was appointed rehabilitator of Western and vested with "all the
powers of
whose
the directors,
authority
is
rehabilitator."
officers,
suspended,
See
id.
and managers
except
as
of
the insurer,
redelegated
by
the
Western
was
§ 31A-27a-302(1) (b) .
subsequently placed into liquidation on September 13,
generally
id.
§§ 31A-27a-401
et
seq.
Commissioner
2011.
Gooch
See
was
appointed the liquidator of Western and "vested with all the rights
of the one or more entities in receivership."
See id. § 31A-27a-
405(2).
On January 26, 2012, counsel for the plaintiffs filed written
consent forms in both cases.
On January 27, 2012, counsel for the
Liquidator likewise filed written consent forms in both cases.
May
24,
2012,
on
the
record
in
open
court,
counsel
for
On
the
Liquidator confirmed that the Liquidator's consent was intended to
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7
-
be on behalf of Western as well.
incapacity
of
Western
as
an
Based on this representation, the
insurer
in
receivership,
and
the
Liquidator's being "vested with all the rights" of Western by the
law of its state of domicile, the Court FINDS that all parties have
consented
to
proceed
before
pursuant to Section 636(c)
Second,
a
United
States
Magistrate
Judge
and Rule 73.
the Court notes that
the undersigned was specially
designated to exercise consent jurisdiction in both cases by orders
signed by the Honorable Robert G. Doumar,
Senior United States
District Judge, on March 5, 2012, and filed by the Clerk on March
7,
2012.
Accordingly,
the Court FINDS that the undersigned's exercise
of consent jurisdiction in these cases is appropriate.
III.
"Upon
admitted
default,
and
the
facts
610,
alleged
appropriate
alleged state a claim."
250 F. Supp.
ANALYSIS
in
inquiry
the
is
GlobalSantaFe Corp.
612 n.3
(E.D. Va. 2003).
complaint
whether
are
the
deemed
facts
as
v. GlobalSantaFe.com,
Rule 8 of the Federal
Rules of Civil Procedure requires a "short and plain statement of
the claim showing that the pleader is entitled to relief."
Civ.
in
P. 8(a)(2).
a
complaint
Fed. R.
Although the Court "must accept the facts alleged
as
true
and
construe
them
in
the
light
most
favorable to the plaintiff," Coleman v. Md. Ct. App., 626 F.3d 187,
188
(4th Cir.
2010),
threadbare "legal conclusion[s]
-
8
-
. . . [are]
not entitled to the assumption of truth."
S. Ct.
1937,
1950
(2009).
Moreover,
Ashcroft v. Iqbal,
129
the well-pleaded facts of a
complaint must permit the court to infer the plausibility rather
than the mere possibility of misconduct entitling the plaintiff to
relief.
Id.;
F.3d 186,
To
Coleman,
193
state
626 F.3d at 190; Francis v. Giacomelli,
(4th Cir.
a
588
2009).
valid
sufficiently allege that:
Miller
(1)
Act
claim,
a
plaintiff
must
it supplied labor or materials "in
carrying out work provided for in a contract for which a payment
bond [was]
furnished under section 3131";
(2)
it has not been paid;
(3) it had a good faith belief that the labor or materials supplied
were intended for the specific work;
requisites
of
§ 3133(b)(1);
Grp.,
Inc.,
Both
plaintiffs
the
Miller
U.S.
ex
rel.
Act
have
Polied
238 F. Supp. 2d 456,
complaints
allege
and
been
Envtl.
they
supplied
the jurisdictional
met.
Servs.,
460 (D. Conn.
sufficiently allege
that
(4)
Inc.
U.S.C.
v.
Incor
2002).
these
labor
40
elements.
and
Both
materials
in
performing work on the Project,
and that Key Turf failed to pay
them
and
for
the
work
performed
materials
supplied.
Both
plaintiffs allege that the work performed and materials supplied
were for use on this specific Project,
respective
subcontracts.
Finally,
as
both
provided for in their
plaintiffs
filed
suit
within one year after the last day upon which they each performed
labor
or
supplied
materials
in
-
9
connection
-
with
the
Project.
Accordingly,
both plaintiffs have stated valid Miller Act claims
against Western.
Upon request for default judgment,
a court may not award an
amount in excess of that sought in the pleadings, and it must make
an independent determination of the appropriate amount of damages
to be awarded.
See Fed. R. Civ.
The Miller Act
provides
P. 8(b)(6);
that
an
Fed.
R. Civ.
P. 54(c).
aggrieved party may bring
action "on the payment bond for the amount unpaid at the time the
civil
action
execution
is
and
§ 3133(b)(1).
judgment,
Middleton
brought
judgment
In
their
and may prosecute
for
the
the
amount
complaints
and
action
due."
to
40
motions
for
final
U.S.C.
default
Asphalt seeks damages in the amount of $60,956.4 9 and
seeks
damages
in
the
amount
of
$178,876.00.
Both
plaintiffs have submitted invoices and other documentary evidence
to
support
the
damages
claimed.
Moreover,
the
Liquidator
stipulated on the record in open court on May 24, 2012, that these
damages amounts were correct.
Accordingly, the Court FINDS that plaintiff Asphalt Roads and
Materials Co., Inc. is entitled to recover damages in the amount of
$60,956.49 from defendant Western Insurance Company.
further FINDS that plaintiff E.G.
Middleton,
Inc.
The Court
is entitled to
recover damages in the amount of $178,876.00 from defendant Western
Insurance Company.
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10
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IV.
CONCLUSION
For the foregoing reasons,
1.
the Court ORDERS the following:
Plaintiff Asphalt Roads and Materials Co.,
Motion for Default Judgment
(Case No.
2:llcv491,
Inc.'s Amended
ECF No.
33)
is
GRANTED and the Clerk is DIRECTED to enter judgment in the amount
of
$60,956.49
for
the
plaintiff
Insurance Company in Case No.
2.
Judgment
Plaintiff
E.G.
as
against
defendant
Western
2:llcv491.
Middleton,
(Case No. 2:llcv4 95, ECF No.
Inc.'s
Motion
for
Default
22) is GRANTED and the Clerk
is DIRECTED to enter judgment in the amount of $178,876.00 for the
plaintiff as against defendant Western Insurance Company in Case
No.
2:llcv495.
IT
IS
SO ORDERED.
UNITED SPATES MAGISTRATE JUDGE
Norfolk, Virginia
July
\%, 2012
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