Chesapeake Bay Diving, Inc. v. Delta Demolition Group, Inc. et al

Filing 26

OPININ AND ORDER granting 25 Motion for Default Judgment as to Delta Demolition Group. A copy of this order was forwarded to all counsel of record on 5/22/15. Signed by District Judge Henry C. Morgan, Jr and filed on 5/22/15. (tbro)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
Norfolk Division

CHESAPEAKE BAY DIVING, INC.,
Plaintiff,
v.

Civil Action No. 2:13cv640

DELTA DEMOLITION GROUP, INC., ET AL.,
Defendants.

OPINION & ORDER

This matter is before the Court on Plaintiff Chesapeake Bay Diving, Inc.'s ("Plaintiff or

"Chesapeake") Motion for Default Judgment ("Motion"). Doc. 25. Defendant Delta Demolition
Group, Inc. ("Defendant" or "Delta") failed to answer after its petition in bankruptcy, which

stayed the action, was denied and the stay lifted on December 31, 2014. Doc. 20. Default was

entered against Defendant Delta on April 6, 2015.

Doc. 24. Plaintiff moved for default

judgment on May 7, 2015. Doc. 25. Defendant has not made an appearance in or attempted to
defend this action.1 For the reasons set forth herein, the Court GRANTS Plaintiffs Motion.
I. BACKGROUND

On November 18, 2013, Plaintiff filed a Complaint alleging that Defendants Delta and

Lee Chaklos ("Chaklos") (collectively, "Defendants") breached a maritime contract by failing to
pay for diving services related to a salvage operation for the barge BECKY THATCHER.
Compl. at 2. Defendants were served on December 5, 2013, Docs. 4, 5, and neither Defendant
filed an answer following service.

Accordingly, the Clerk first entered default against

Defendants on February 11, 2014. Doc. 7. Plaintiff filed its first Motion for Default Judgment

1On April 24, 2014, Defendant filed a letter with attachments informing the Court that it has filed for bankruptcy on
March 14, 2014. Doc. 9. Defendant, however, did not enter a notice of appearance in this action.

on March 5, 2014. Doc. 8. Plaintiff then filed an Amended Complaint on May 7, 2014, Doc. 11,
and as such, the Court removed the entries of default and dismissed the first Motion for Default

Judgment without prejudice.

Doc. 12. After Chaklos was served and failed to answer the

Amended Complaint, the Clerk entered default against only Chaklos on June 17, 2014.

Doc. 16.

A second Motion for Default Judgment against only Defendant Chaklos was filed on June 24,
2014. Doc. 17. Chaklos failed to respond, and the Court granted Default Judgment against him
on December 12, 2014. Doc. 18.

On January 9, 2015, the Court Ordered Plaintiff to serve a copy of the Amended

Complaint on Defendant Delta, as Delta was denied a discharge in bankruptcy proceedings and
the automatic stay had been lifted as of December 31, 2014. Doc. 21. Plaintiffserved Delta in

the following three ways: (1) Service on Delta's former registered agent, Domozick Law Firm,

on January 13, 2015, which was refused on the ground that the firm was no longer Delta's

registered agent; (2) Post service at the last known address of Delta, 2700 Broad Bay Road,
Virginia Beach, Virginia, 23451, on January 13, 2015; and (3) Post service at an alternative last
known address of Delta, 5701 Thurston Avenue, Ste. 104, Virginia Beach, Virginia, 23455, on

January 20, 2015. Doc. 25 at 2. The posted summons was filed with the Court on March 11,
2015. Doc. 22. Defendant failed to answer and has not made an appearance in this action.

Plaintiff claims Delta is liable on Count I of the Amended Complaint, which alleges breach of
maritime contract with damages in the principle amount of $ 36,975.00. Am. Compl. at 3; Doc.
25 at 4.

2Defendant Delta was in bankruptcy at the time of the first entry of default, and thus this litigation wassubject to
the automatic stay.

II. LEGAL STANDARDS

Federal Rule of Civil Procedure 55 sets forth a two-step process for obtaining a default
judgment. Subsection (a) calls for an entry of default when a party has failed to file a responsive
pleading "or otherwise defend" the action within the applicable time limit. Fed. R. Civ. P. 55(a).
The entry of default does not automatically entitle a party to a default judgment; rather,

subsection (b) requires the Court take final action following entry of default by the Clerk. Fed.

R. Civ. P. 55(b). The decision whether or not to grant a motion for default judgment rests with
the sound discretion of the court. See Curtiss-Wright Corp. v. General Elec. Co., 446 U.S. 1, 8

(1980). Further, "[Defendant, by his default, admits the plaintiffs well-pleaded allegations of
fact[.]" Rvan v. Homecomings Fin. Network, 253 F.3d 778, 780 (4th Cir. 2001) (quoting
Nishimatsu Constr. Co., Ltd. v. Houston Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975)).

However, the Court is still required to "determine whether the well-pleaded allegations in [the]

complaint support the reliefsought in this action." Rvan, 253 F.3d at 780.
III. ANALYSIS
A. Jurisdiction

In order for the Court to enter judgment it must have jurisdiction. As the amount in

controversy in this matter is not sufficient to establish diversity jurisdiction, the contract in
question must be a maritime contract. Contracts like the one in this case have routinely been
held to be maritime contracts so as to implicate the Court's admiralty jurisdiction. See, ej^,

Odyssey Marine Exploration, Inc. v. Unidentified Shipwrecked Vessel or Vessels, 636 F.3d
1338, 1340 (11th Cir. 2011) (finding contract to provide research to assist the recovery of a
sunken vessel to be maritime); Williamson v. Recovery Ltd. P'ship, 542 F.3d 43, 49 (2d Cir.

2008) (finding a contract related to the recovery of a shipwreck to be a maritime commercial

venture); Cont'l Cas. Co. v. Canadian Universal Ins. Co., 605 F.2d 1340, 1343 (5th Cir. 1979)

(finding a contract for diving services to be a maritime contract). Accordingly, the Court FINDS
it has admiralty jurisdiction over the matter and is permitted to enter judgment.
B. Breach of Contract

At the request of Defendant Delta, in November 2012 Plaintiff performed a salvage

survey and provided other diving services to the BECKY THATCHER, Defendant's barge
anchored near Neville Island, Pennsylvania. Am. Compl. at 2. Firstly, Plaintiffs dive team

inspected the barge, and an invoice dated November 12, 2012 in the amount of $5,750.00 was
sent to Delta for these services. Id. at 3. Secondly, between November 11 and November 20,

2012, Plaintiff performed various diving and salvage services to the barge, and an invoice dated
November 23, 2012 in the amount of $31,225.00 was sent to Delta for these services.

Id.

Plaintiff alleges it has not received payment on either invoice and that at no time did Defendants
complain about these invoices or the work performed. Doc. 25, Ex. 1 at 2.
"Under Virginia Law, a breach of contract requires (1) a legally enforceable obligation,
(2) the defendant's material breach of that obligation, and (3) damage to the plaintiff caused by
the breach of that obligation." Vienna Metro LLC v. Pulte Home Corp., 786 F. Supp. 2d 1076,

1086 (E.D. Va. 2011) (citing Filak v. George, 594 S.E.2d 610, 614 (2004)).3 In order to enter
default judgment against Defendant Delta, the allegations in Plaintiffs complaint must satisfy
each of these three elements. Firstly, it must be determined if there is a legally enforceable
obligation. In the absence of an express contract, it is well established that "when one person
renders services for another which are requested and accepted by him, the law creates an

3 Although Virginia law likely applies to the present dispute, even if Pennsylvania law applies, the elements for
breach of contract are the same. In Pennsylvania, a plaintiff must show that "there was a contract, the defendant
breached it, and plaintiffs suffered damages from the breach." McShea v. City of Philadelphia, 995 A.2d 334, 340
(Pa. 2010).

obligation, which is an implied-in-law contract, on his party to pay a reasonable compensation."
Humphreys Railways, Inc. v. F/V Nils S, 603 F. Supp. 95, 98 (E.D. Va. 1984).

In the Amended Complaint, Doc. 11, Plaintiff alleges that Chesapeake performed the
services at issue at the request of Defendant Delta, that the President of Delta stated he would
make certain Chesapeake was paid for the services, and that the value of the services rendered is
$36, 975.00, as itemized in the invoices. Am. Compl. at 2-4, Ex. 1, 2. Accordingly, this Court

FINDS that there was a legally enforceable contractual obligation between Plaintiff and
Defendant Delta. Secondly, it must be determined if the breach of contract was material. A
breach is considered material "when the nonbreaching party did not receive the substantial

benefit of its bargain." U.S. ex rel. Virginia Beach Mech. Serv., Inv. V. SAMCO Const. Co., 39
F. Supp. 2d 661, 670 (E.D. Va. 1999). Here, Plaintiff alleges that Defendant has failed to pay all
monies due for the services rendered; consequently, Plaintiff has received no benefit to its

bargain and has suffered damages in the amount of $36,975.00, exclusive of interest and costs.
The well plead allegations of Plaintiffs Amended Complaint, therefore, support the relief sought
in this action.

C. Pre-Judgment Interest

In its Motion, Plaintiff seeks prejudgment interest from the date of the invoices and postjudgment interest in accordance with Title 28, United States Code, Section 1961. Doc. 25 at 4.
Under Virginia law, if a contract does not fix an interest rate the Court shall apply the rate of six

percent per annum to calculate prejudgment interest.

Va. Code §§ 6.1-330.54 and 8.01-382.

Moreover, the decision to award prejudgment interest is within the sound discretion of the trial
court. Norfolk Shipbuilding & Drydock Corp. v. M/Y La Belle Simone, 537 F.2d 1201, 1204

(4th Cir. 1976) (stating that an award of prejudgment interest is appropriate in admiralty actions);

see also Va. Code. § 801-382. In exercising this discretion, the Court must balance "the equities

in a particular case to determine whether an award of prejudgment interest is appropriate."
Moore Bros. Co. v. Brown & Root, Inc., 207 F.3d 717, 727 (4th Cir. 2000).

This balance

includes the existence of a bona fide dispute, id. at 727, and Delta has not disputed liability in

this litigation. Accordingly, an award of prejudgment interest is appropriate in this matter.
Although Plaintiff is seeking pre-judgment interest from the dates certain as specified on
the invoices, November 12 and November 23, 2012 respectively, it does not alleged when the
invoices were due and payable. Virginia law specifies that "[a]n agreement to pay money, no

time being specified, is held to be an agreement to pay the same on demand." Irwin v. Irwin, 623
S.E.2d 438, 442 n.5 (Va. 2005) (quoting Young v. Ellis. 21 S.E. 480, 482 (Va. 1895)). Plaintiffs
President, Aaron Addison, states in his affidavit that the invoices were mailed to Defendant Delta

on November 12, 2012 and November 23, 2012. Doc. 25, Ex. 1 at 1. In the interest of justice,

this Court will apply the three day mailing presumption as specified for service of pleadings in
Federal Rule of Civil Procedure 6(d). November 12, 2012 was a Monday; as such, the invoice is
considered to have been received on Thursday, November 15, 2012 and due and payable on that
date. November 23, 2012 was a Friday; as such, the invoice is considered to have been received
on Monday, November 26, 2012 and due and payable on that date.
IV. CONCLUSION

For the reasons stated herein, the Court GRANTS Plaintiffs Motion, Doc. 25.

The Clerk is DIRECTED to enter judgment, jointly and severally, against Defendant

Delta in the amount of $36,975.00, plus prejudgment interest at six percent per annum from
November 15, 2012 on the first invoice and November 26, 2012 on the second invoice, along
with post judgment interest at the federal rate in accordance with 28 U.S.C. § 1961.

The Clerk is REQUESTED to send a copy of this Order to all counsel of record.
It is so ORDERED

/s/

Henry Coke Morgan, Jr.

Senior United States District^

HENRYCOKE MORGAN, JR. /fti
SENIOR UNITED STATES DISTRICT JUDGE

Norfolk, Virginia

May^a,2015