American Southern Insurance Co. v. Creative Scapes LLC

          MEMORANDUM OPINION

          LILES C. BURKE UNITED STATES DISTRICT JUDGE.

         This case arises out of an alleged breach of contract by the Defendants, Creative Scapes, LLC, and its sole member and manager, Richard Maranville. This Court has diversity jurisdiction over the matter pursuant to 28 U.S.C. 1332, because, according to the complaint, the amount in controversy exceeds $75, 000, and the parties are of diverse citizenship.^[1] Venue is proper in the Northeastern Division of the Northern District of Alabama because the Defendants maintain their principal place of business and residence in Madison County, Alabama, and the facts underlying the claims asserted in the complaint occurred in this judicial district. See 28 U.S.C. § 1391(b).

         Background

         This Court has reviewed the complaint and finds that it adequately states viable causes of action under Alabama law. According to the complaint, the Defendants entered into a subcontract with Denark^[2] Construction in which the Defendants were to perform “rough carpentry and general trades work on a project known as the Grissom High School Project in Madison County, Alabama.” (Doc. 1, p. 2). The subcontract sum was $372, 600.00. The Plaintiff, American Southern Insurance Company (“American Southern”), issued a subcontract performance bond in the amount of $372, 600.00 naming Creative Scapes as the principal, American Southern as surety, and Denark as obligee.

         According to the complaint, the Defendants failed to timely perform their obligations under the contract. Therefore, Denark called upon American Southern to fulfill Creative Scapes's contractual obligations. In its motion for default judgment, American Southern alleges that it paid Denark a total of $300, 000 to fully satisfy its obligations under the performance bond. American Southern also alleges that it has paid attorney's fees including costs and expenses as well as construction- consulting fees in connection with the bond claim. These are the amounts that American Southern seeks to recover in this action.

         The Plaintiff filed its complaint on January 28, 2019, and the record indicates that each Defendant was served on April 22, 2019.^[3] (Docs. 7 and 8). Accordingly, the Defendants were required to file an answer or other responsive pleading by May 13, 2019. See Rule 12(a)(1)(A)(i), Fed.R.Civ.P. However, neither Defendant did so. Consequently, on motion of the Plaintiff, the Clerk entered default as to both Defendants on June 17, 2019, pursuant to Rule 55(a), Fed.R.Civ.P. (Docs. 11 and 12). The Plaintiff attached to its motion an affidavit stating that the Defendants were personally served with copies of the complaint; that the Defendants were not minors, incompetents, and/or active military; and that the Defendants had failed to plead or otherwise respond to the complaint. Therefore, the Clerk's entry of default was proper.

         On July 9, 2019, the Plaintiff filed a motion for default judgment as to both Defendants. (Doc. 13). On November 5, 2019, this Court issued show-cause orders to both Defendants giving them until November 22, 2019, to show cause as to why the Plaintiff's motion for default judgment should not be granted. See (Docs. 19 and 20). The orders were sent by certified mail to the same address at which both Defendants were personally served with copies of the complaint. However, the orders were returned to the Clerk as “Unclaimed” and “Unable to Forward.” (Doc. 21). The Court has received no further response from either Defendant.

         Discussion

         Rule 55(b), Fed. R. Civ. P., provides:

(b) Entering a Default Judgment.

(1) By the Clerk. If 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 been defaulted for not appearing and who is neither a minor nor an incompetent person.

(2) By the Court. In all other cases, the party must apply to the court for a default judgment. A default judgment may be entered against a minor or incompetent person only if represented by a general guardian, conservator, or other like fiduciary who has appeared. If the party against whom a default judgment is sought has appeared personally or by a representative, that party or its representative must be served with written notice of the application at least 7 days before the hearing. The court may conduct hearings or make referrals--preserving any federal statutory right to a jury trial--when, to enter or effectuate judgment, it needs to:

(A) conduct an accounting;

(B) determine the amount of ...