Commerce and Industry Insurance Company v. Newhall Contracting, Inc.
Filing
32
MEMORANDUM OPINION AND ORDER granting in part and denying in part plaintiff's 29 MOTION for Attorneys' Fees, Costs, and Interest; denying the Motion for Attorneys' Fees, Costs, and Interest as to its requests for attorneys' fe es and costs; and granting said motion as to its request for post-judgment interest; directing that defendants pay post-judgment interest on the default judgment entered 12/29/2014, at the rate specified by 28 U.S.C. § 1961, until that jud gment is paid. Signed by Judge Thomas E. Johnston on 9/29/2015. (cc: counsel of record for plaintiffs Commerce and Industry and National Union; defendant Newhall Contracting (Newhall Contracting, Inc., P.O. Box 52, Newhall, WV 24866-0052); defendant Parsley Enterprises (Parsley Enterprises, Inc., P.O. Box 457, Lenore, WV 25676-0457)) (taq)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA
CHARLESTON DIVISION
COMMERCE AND INDUSTRY
INSURANCE COMPANY, et al.,
Plaintiffs,
v.
CIVIL ACTION NO. 2:13-cv-30260
NEWHALL CONTRACTING, INC., et al.,
Defendants.
MEMORANDUM OPINION AND ORDER
Pending is Plaintiff’s Motion for Attorneys’ Fees, Costs, and Interest. (ECF 29.) For the
reasons discussed herein, the Motion is GRANTED in part, and DENIED in part.
I.
Background
This is a motion for attorneys’ fees stemming from an underlying action involving
Defendants’ non-payment of worker’s compensation insurance premiums to Plaintiff insurance
providers. On December 29, 2014, this Court entered default judgment against Defendants,
pursuant to Federal Rules of Civil Procedure 16(f) and 37(b), as a sanction for continued
noncompliance with both discovery requests and the pretrial Orders of this Court. (ECF 28.)
Specifically, this Court entered judgment against Defendant Newhall Contracting, Inc. (“Newhall
Contracting”) in the amount of $414,138.91 and against Defendant Parsley Enterprises, Inc.
(“Parsley Enterprises”) in the amount of $4,313,141.10. In that Order, the Court explicitly
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reserved judgment on the Plaintiffs’ prayer for pre-judgment and post-judgment interest, court
costs, and fees, pending a Plaintiff’s motion specifying more clearly the sum sought. (ECF 28 at
6.) The present motion follows that direction and places the issue of fees squarely before the
Court.
The case began as two separate civil actions, one by Plaintiff Commerce and Industry
Insurance Company (“Commerce and Industry”) against Defendant Newhall Contracting, and the
other by Plaintiff National Union Fire Insurance Company of Pittsburgh, PA (“National Union”)
against Defendant Parsley Enterprises. The cases were consolidated by Order entered March 6,
2014. (ECF 13.) The trouble began when Defendants’ initial counsel, W. Kent Varney, moved
to withdraw as counsel for both defendants. (ECF 16 & 17.) The Court granted those motions
by Order entered on June 19, 2014.
The June 19, 2014 Order required that both Defendants retain replacement counsel, and
that such counsel file an entry of appearance within 30 days of the entry date of that Order. (ECF
18.) Because the discovery deadline specified in this Court’s Scheduling Order was set for June
23, 2014, (ECF 15), Defendants’ delay induced Plaintiffs to file an Ex Parte Motion to Modify
Scheduling Order and Extend Discovery Deadlines. (ECF 19.) The Court granted that motion.
(ECF 20.) Notice of counsel, however, was not entered within the specified period, and so this
Court entered another Order on July 25, 2014, again directing Defendants to retain replacement
counsel. (ECF 21.) This time such counsel was ordered both to file an entry of appearance
within 14 days of the Order and demonstrate good cause for failing to comply with the previous
Order. (ECF 21.) Defendants failed to respond either to this Order or to Plaintiffs’ numerous
discovery requests. Further, despite this Court’s explicit warning that failure to defend the case
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or comply with Court Orders could lead to entry of default, (ECF 23), Defendants continued to
disregard discovery and ignore the deadlines specified in this Court’s Scheduling Order, (ECF 15),
and First Amended Scheduling Order. (ECF 20.) It was in response to these continued failures
that this Court noted that Defendants “failed to act in good faith in this case,” (ECF 28), and entered
default judgment.
II.
Discussion
Federal Rule of Civil Procedure 16 governs pretrial procedure in civil litigation.
It
provides a comprehensive mechanism by which courts direct pretrial activities and resolve pretrial
disputes. See Fed. R. Civ. P. 16(a) advisory committee’s note to 1983 amendment (noting that
the goal of the amended rule is to facilitate a “process of judicial management that embraces the
entire pretrial phase, especially motions and discovery”). Pursuant to this Rule, district courts can
order parties to participate in pretrial conferences, issue scheduling orders, and enter orders
concerning a number of other pretrial issues in the interest of promoting the efficient
administration of pretrial activity. See Fed. R. Civ. P. 16(c)(2). When these orders and mandates
are disobeyed and ignored, courts have several tools to ensure compliance with their orders and
respect for the judiciary. See Fed. R. Civ. P. 16(f) advisory committee’s note to 1983 amendment
(listing several sanctions authorized by Rule 16 and providing that the “references in Rule 16(f)
are not exhaustive”).
The most powerful of these tools is the imposition of default against an offending party.
See Anderson v. Found. for Advancement, Educ., and Employment of Am. Indians, 155 F.3d 500,
505 (4th Cir. 1998) (finding that default judgment as a pre-trial sanction “was warranted both as a
deterrent and as a last-resort sanction following the [defendant’s] continued disregard of prior
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warnings”). As noted above, this Court has already resorted to the “drastic” measure, Link v.
Wabash R. Co., 370 U.S. 626, 642 (1962) (Black, J., dissenting), of entering default against the
defendants in this case. See also Young Again Prods., Inc. v. Acord, 459 F. App’x 294, 301 (4th
Cir. 2011) (“Recognizing the seriousness of the imposition of default judgment, we have instructed
district courts to apply a four part test when determining appropriate sanctions under [the discovery
sanction rule] . . .”). In so doing, the Court explicitly determined that “less drastic sanctions”
would not have been effective to address the defendants’ failure to comply with Court orders.
(ECF 28 at 5.)
With respect to attorney’s fees, Rule 16(f) provides that “[I]nstead of or in addition to any
other sanction, the court must order the party, its attorney, or both to pay the reasonable expenses—
including attorney’s fees—incurred because of any noncompliance with this rule . . . .” However,
such fees are not to be awarded where “the noncompliance was substantially justified or other
circumstances make an award of expenses unjust.” Id. The advisory committee’s notes make
clear that a court “has discretion to impose whichever sanction it feels is appropriate under the
circumstances.” Fed. R. Civ. P. 16(f) advisory committee’s note to 1983 amendment. Indeed,
courts have traditionally enjoyed broad discretion to manage their docket and enforce compliance
with court orders within the specific contexts of individual cases, and Rule 16(f)’s express sanction
provision was designed to “reflect that existing practice.” Id. See also Jones v. Winnepesaukee
Realty, 990 F.2d 1, 5 (1st Cir. 1993) (“When confronted with a party’s defiance of its management
authority, a district court is necessarily vested with considerable discretion in deciding whether to
impose sanctions on that party, and, if so, in determining what form the sanctions should take.”
(citation omitted)); Turnbull v. Wilcken, 893 F.2d 256, 259 (10th Cir. 1990) (finding that the award
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of fees under Rules 16(f) and 37(b) “is discretionary, and the amount and impact of a monetary
sanction should depend on the seriousness of the violation and where the fault lies . . .”).
Based on the circumstances of the case as it presently stands, the Court determines that
Plaintiff’s requested fee award is not justified. The Court has already entered a substantial default
judgment against the defendants in this case. In so doing, it determined that less drastic sanctions,
implicitly including attorneys’ fees, would not be effective to address Defendants’ offending
conduct.1 That conduct has not changed—the plaintiff seeks fees in this motion for the exact
same recalcitrance that the Court has already determined justified an imposition of default
judgment. On these facts, the Court determines that a further award of attorneys’ fees, on the
basis of behavior that has already been accounted for and severely punished by this Court, would
be cumulative and excessive. The non-responsive defendants have already been fully sanctioned,
and an award of attorneys’ fees and costs on top of the default judgment would be unjust in the
circumstances.
Accordingly, the Plaintiff’s request for attorneys’ fees and costs is DENIED.
Finally, Plaintiffs request post-judgment interest under 28 U.S.C. § 1961. 2 The Court
FINDS that Plaintiffs are entitled to post-judgment interest at the rate specified in that statute on
the default judgment entered December 29, 2014.
III.
CONCLUSION
In the context of Rule 16(f), attorney’s fees are a common “less drastic” sanction considered by courts when deciding
whether to enter default judgment. See, e.g., Mutual Federal Sav. And Loan Ass’n v. Richards & Associates, Inc.,
872 F.2d 88, 93 (4th Cir. 1989).
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The federal statute applies because federal law governs the calculation of post-judgment interest in diversity cases.
Forest Sales Corp. v. Bedingfield, 881 F.2d 111, 113 (4th Cir. 1989). Section 1961 provides for the calculation of
interest at a rate equal to the weekly average 1-year constant maturity Treasury yield for the calendar week preceding
the date of judgment.
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For the reasons described above, the Court DENIES the Motion for Attorneys’ Fees, Costs,
and Interest as to its requests for attorneys’ fees and costs and GRANTS that motion as to its
request for post-judgment interest. The Court ORDERS Defendants pay post-judgment interest
on the default judgment entered December 29, 2014, at the rate specified by 28 U.S.C. § 1961,
until that judgment is paid.
IT IS SO ORDERED.
The Court DIRECTS the Clerk to send a copy of this Order to counsel of record for
Plaintiffs Commerce and Industry and National Union, to Defendant Newhall Contracting at the
following last-known address (Newhall Contracting, Inc., PO Box 52, Newhall, WV 24866-0052),
and to Defendant Parsley Enterprises at the following last-known address (Parsley Enterprises,
Inc., PO Box 457, Lenore, WV 25676-0457).
ENTER:
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September 29, 2015
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