United States of America for the use and benefit of Asphalt Roads and Materials Co., Inc. v. Western Insurance Company et al, No. 2:2011cv00491 - Document 40 (E.D. Va. 2012)
Court Description: 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, )
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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 - 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. - 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. - 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 - 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. - 10 - 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 - 11 -
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