Philadelphia Indemnity Insurance Company v. TCM Construction, LLC et al

Filing 14

MEMORANDUM OPINION & ORDER in favor of Philadelphia Indemnity Insurance Company against Defendants. The Court will, and the Clerk is direct to, enter judgment in favor of PIIC, and against Defendants, in the amount of $226,457.43. That sum includes an award of $29,765.25 in attorneys' fees, costs, and expenses. Signed by Senior Judge Norman K. Moon on 10/4/2021. (Opinion and Order mailed to Defendants via US Mail)(al)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF VIRGINIA
LYNCHBURG DIVISION

10/4/2021

PHILADELPHIA INDEMNITY
INSURANCE COMPANY,
CASE NO. 6:20-cv-00046

Plaintiff,
v.

MEMORANDUM OPINION
& ORDER

TCM CONSTRUCTION, LLC, et al.,
Defendants.

JUDGE NORMAN K. MOON

This matter is before the Court on Plaintiff Philadelphia Indemnity Insurance Company’s
(“PIIC”) Motion for Default Judgment. Dkt. 12.
“Rule 55 of the Federal Rules of Civil Procedure authorizes the entry of a default
judgment when a defendant fails to plead or otherwise defend in accordance with the Rules.”
United States v. Morandi, 673 F.2d 725, 727 (4th Cir. 1982) (quotations omitted). The Clerk of
Court’s interlocutory “entry of default” pursuant to Fed. R. Civ. P. 55(a) provides notice to the
defaulting party prior to the entry of default judgment by the court. Carbon Fuel Co. v. USX
Corp., 153 F.3d 719 (Table), 1998 WL 480809, at *2 (4th Cir. Aug. 6, 1998). After the entry of
default, the non-defaulting party may move the court for “default judgment” under Fed. R. Civ.
P. 55(b). Rule 55(b)(1) states that, “[i]f the plaintiff’s claim is for a sum certain or a sum that can
be made certain by computation, the clerk—on the plaintiff’s request, with an affidavit showing
the amount due—must enter judgment for that amount and costs against a defendant who has
defaulted for not appearance and who is neither a minor nor an incompetent person.” Rule
55(b)(2) states, in relevant part, that “[i]n all other cases, the party must apply to the court for a
default judgment.”
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The Court has examined the pleadings, the service of process, and the record in this case.
PIIC filed its complaint on July 21, 2020. Dkt. 1. Defendant TCM Construction, LLC was served
with process on July 25, 2020. Dkt. 12 ¶ 2; Dkt. 7. Defendant Ernest R. Nisser, Jr. was also
served with process on July 25, 2020. Dkt. 12 ¶ 3; Dkt. 8. Defendant Arthur F. Brookshire was
served with process on July 23, 2020. Dkt. 12 ¶ 4; Dkt. 9. See also Dkt. 11 at 1 (providing dates
of service of process). TCM Construction’s and Nisser’s responsive pleadings were due by
August 17, 2020, and Brookshire’s responsive pleading was due by August 13, 2020. See Dkts.
7–9; Dkt. 12 ¶ 5. None of the Defendants filed timely responsive pleadings. See Dkt. 12 ¶ 7.
Thereafter, PIIC sought Clerk’s Entry of Default against the Defendants, and the Clerk
subsequently entered Clerk’s Entry of Default against each of the Defendants. Dkts. 10, 11. To
date, none of the Defendants have appeared, answered the complaint, or otherwise defended this
action. Therefore, the Defendants are in default.
By failing to answer or otherwise respond, Defendants have admitted the allegations as
fact in the complaint which are accepted as true, except for those relating to damages. Ryan v.
Homecomings Fin. Network, 253 F.3d 778, 780 (4th Cir. 2001); Fed. R. Civ. P. 8(b)(6). Default
judgment should be entered then if the well-pleaded allegations in the complaint are sufficient to
state a claim upon which relief can be granted. Proctor v. Edmonds, No. 7:18-cv-87, 2020 WL
4735348, at *2 (W.D. Va. Aug. 14, 2020).
PIIC is a Pennsylvania corporation authorized to conduct business in Virginia as a surety,
and PIIC serves as a bond surety for TCM Construction. Dkt. 1 ¶ 1. On August 11, 2017, PIIC,
as surety, TCM Construction, as principal and corporate indemnitor, and Nisser and Brookshire
in their individual capacities as personal indemnitors, executed a General Indemnity Agreement

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(the “Agreement”). Id. ¶¶ 7–9; Dkt. 1-1. In paragraph 1 of the Agreement, TCM Construction,
Nisser and Brookshire, as indemnitors, agreed to
defend, indemnify, and save harmless Surety [PIIC] from and against any and all
demands, liabilities, costs, penalties, obligations, interest, damages and expenses of
whatever nature or kind, including but not limited to attorneys’ fees and costs and
fees that Surety may sustain or incur … in investigation of claims or potential
claims, adjustment of claims, procuring or attempting to procure the discharge of
Bond, or attempting to recover losses or expenses from Indemnitors or third parties,
whether Surety shall have paid out, or anticipates paying out any such sums ….
Dkt. 1-1 ¶ 1; see also Dkt. 1 ¶ 10.
Relying on the terms of the Agreement, PIIC issued a Payment Bond and a Performance
Bond, each naming TCM Construction as principal and co-obligor, and the Virginia Department
of Transportation (“VDOT”) as obligee. Dkt. 1 ¶ 11; Dkt. 12-2 ¶ 5; Dkt. 1-2 (Performance
Bond); Dkt. 1-3 (Payment Bond) (collectively, the “Bonds”). PIIC issued the Bonds in
connection with TCM Construction’s contractual obligations to VDOT concerning a construction
project, identified as the “VDOT Lynchburg District Shop Building Safety Stair Upgrades
Project,” (the “Project”). Dkt. 1 ¶ 12.
On July 13, 2018, VDOT issued a Notice of Termination for Cause, terminating TCM
Construction’s right to complete the Project. Dkt. 1 ¶ 13. At first, PIIC sought to use TCM
Construction as its “completion contractor.” Id. ¶ 14. But VDOT refused to consent to TCM
Construction. Id. PIIC thereafter executed a Takeover Agreement with VDOT, and a Completion
Contract with Hancock Fuqua Robertson, Inc. (“Robertson Construction”). Id. ¶ 15. The Project
is now completed. Id.; see also Dkt. 12-2 ¶ 7 (Clime Decl.).
On the Performance Bond, PIIC asserts that it paid $456,305.37 to Robertson
Construction as the completion contractor, which, following collection of $311,693.24 in
remaining contract funds from VDOT, resulted in a net loss of $144,612.13 to PIIC under the

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Performance Bond. Dkt. 12 ¶ 11; Dkt. 12-2 ¶ 10 (attesting to amount of loss); Dkt. 1 ¶ 21. On the
Payment Bond, PIIC asserts that it paid $11,051.24, resulting in a loss of that amount to PIIC, to
satisfy Bohling Steel, Inc.’s claim under the Payment Bond. Dkt. 12 ¶ 11; Dkt. 12-2 ¶¶ 8, 10;
Dkt. 1 ¶ 17.
PIIC further attests that it incurred “internal direct costs” of $2,934.23, consultants’ fees,
costs and expenses amounting to $38,094.58, and attorneys’ fees, costs and expenses amounting
to $29,737.75. Dkt. 12 ¶ 12; Dkt. 12-2 ¶ 10. PIIC demanded that Defendants reimburse it for
these sums, as PIIC asserts they were required to do under the Agreement, but they have failed to
do so. Dkt. 12-2 ¶¶ 11–12. PIIC also asserts that it will continue to be exposed to future losses,
including further attorneys’ fees, costs and expenses. Dkt. 12 ¶ 13.
PIIC’s complaint against Defendants raises a single claim for breach of contract. Dkt. 1
¶¶ 24–27. “The elements for breach of contract in Virginia are ‘(1) a legally enforceable
obligation of a defendant to a plaintiff; (2) the defendant’s violation or breach of that obligation;
and (3) injury or damage to the plaintiff caused by the breach of obligation.’” Jones v. Fulton
Bank, N.A., 565 F. App’x 251, 252 (4th Cir. 2014) (quoting Filak v. George, 594 S.E.2d 610,
614 (Va. 2004)). These elements are satisfied.
First, the Agreement is a valid, legally enforceable obligation, executed and entered into
on August 11, 2017, between PIIC, as surety, TCM Construction, as principal and corporate
indemnitor, and Nisser and Brookshire in their individual capacities as personal indemnitors. See
Dkt. 1-1 ¶ 1; Dkt. 1 ¶ 10; Dkt. 12-2 ¶¶ 3–4. The Agreement included Defendants’ agreement to
“defend, identify, and safe harmless” PIIC, “from and against any and all demands, liabilities,
costs, penalties, obligations, interest damages and expenses of whatever nature or kind,” as
specifically set forth above. Dkt. 1-1 ¶ 1; see also Dkt. 1 ¶ 10; Dkt. 12-2 ¶ 4. Relying on the

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terms of the Agreement, PIIC issued the Bonds, each naming TCM Construction as principal and
co-obligor, and VDOT as obligee. See Dkt. 1 ¶ 11; Dkt. 12-2 ¶ 5; Dkt. 1-2; Dkt. 1-3. PIIC has
fulfilled its obligations as TCM Construction’s surety and in doing so, as sustained losses under
the Bonds. Dkt. 12-2 ¶ 9.
Second, despite the demand by PIIC to do so, Defendants as indemnitors have “failed” or
“refused to honor their contractual obligations to collateralize, reimburse, and indemnify and
hold PIIC harmless,” as required by the Agreement. See, e.g., Dkt. 12-2 ¶ 11.
Third, to date, PIIC has suffered damages in the amount of $226,457.43 for actual losses,
including consultants’ fees, costs, and expenses of $38,094.58, and attorneys’ fees, costs, and
expenses of $29,765.25 through August 26, 2020, which were suffered and incurred by PIIC on
account of Defendants’ refusal to honor the terms of their commitments under the Agreement.
The Court finds the amount of attorneys’ fees, costs, and expenses incurred to be reasonable in
connection with the scope of such work. See Dkt. 12-2 ¶¶ 10, 13.
For these reasons, the Court has granted PIIC’s Motion for Default Judgment. Dkt. 13.
Accordingly, the Court will, and the Clerk is direct to, enter judgment in favor of PIIC, and
against Defendants, in the amount of $226,457.43. That sum includes an award of $29,765.25 in
attorneys’ fees, costs, and expenses.
The Clerk of the Court is directed to send this Memorandum Opinion & Order to the
parties.
It is so ORDERED.
Entered this 4th

day of October, 2021.

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