AIG Property Casualty Co. v. M&J Dumptruck & Backhoe Services, Inc.

          MEMORANDUM OPINION AND ORDER STRIKING DEFENDANT'S “RESPONSE”AND GRANTING DEFAULT JUDGMENT AND DAMAGES OF SUM CERTAIN AGAINST DEFENDANT

         THIS MATTER comes before the Court upon Plaintiffs' Motion for Default Judgment Against Defendant, filed February 21, 2018 (Doc. 9). Having reviewed the parties' pleadings and the applicable law, the Court finds that Plaintiffs' motion for default judgment is well taken and, therefore, is granted and judgment shall be entered in favor of Plaintiffs' for actual damages and interest.

         BACKGROUND

         Plaintiffs collectively issued a workers' compensation insurance policy to Defendant for three separate policy periods: (1) from December 10, 2013 to December 10, 2014 (“First Policy Period”); (2) from December 10, 2014 to December 10, 2015 (“Second Policy Period”); and (3) from December 10, 2015 to December 10, 2016 (“Third Policy Period”). See Compl., 9, 21 & 32. Plaintiffs allege that Defendant now owes premiums in the amount of $357, 426.00. Their attempts to resolve this dispute without litigation have been unsuccessful, and Defendant has not responded to several demand letters sent by Plaintiffs before the filing of this lawsuit.^[1]

         DISCUSSION

         Rule 55 mandates a two-step process for a default judgment. First, a party must obtain a Clerk's entry of default. Second, the party must request a default judgment.” Gomes v. Williams, 420 F.2d 1364, 1366 (10th Cir. 1970) (citing Fed.R.Civ.P. 55(a) & (b)). Once a defendant is found to be in default, a court must “t[ake] as true all factual allegations in the complaint, except those pertaining to the amount of damages.” Archer v. Eiland, 64 F. App'x 676, 679 (10th Cir. 2003). A court is not required to accept the plaintiff's legal conclusions or factual allegations when assessing damages and must ensure that there is a legal basis for the damages specified in the default judgment. Klapprott v. United States, 335 U.S. 601, 611-12 (1949). A court may set an evidentiary hearing to determine the amount of damages if such amount is not “for a sum certain or a sum that can be made certain by computation.” Fed.R.Civ.P. 55(b)(1).

         Plaintiffs filed this lawsuit on November 6, 2017, and served Defendant with a copy of the Complaint and Summons on November 11, 2017. Defendant filed a “Response to Summons” on December 7, 2017-three days late under the federal procedural rules. See Fed.R.Civ. P. 12(a)(1)(A)(i). Based on the untimeliness of the response, as well as Defendant's violation of this Court's local rule requiring a corporation or business entity to be represented by an attorney in order to appear in this Court, see D.N.M.LR-Civ. 83.7, Plaintiffs requested that the Clerk of Court enter default against Defendant on December 12, 2017 (Doc. 6). The Clerk's Entry of default was entered on January 3, 2018 (Doc. 7).

         Plaintiffs seek default judgment against Defendant (1) in the amount of $357, 426.00 in actual damages (representing the premium amounts owed under the policy); (2) prejudgment interest at the rate of 15% per year; and (3) postjudgment interest at the statutory rate until the judgment is paid in full.

         I. Defendant's Response Shall be Stricken

         Defendant filed a pleading self-styled as a “Response to Summons in a Civil Action” which states that M&J is no longer in business, having been “closed down . . . by the IRS and the State of New Mexico.” Doc. 6. It can also be easily construed as an admission of liability, as it states that the owners are unemployed and “have no means to pay any of M&J's debts.” Id. However, the Court will not consider this as a responsive pleading because of Defendant's failure to comply with this Court's local rule requiring it to be represented by an attorney. See D.N.M. LR-Civ.83.7; see also Rowland v. California Men's Colony, Unit II Men's Advisory Council, 506 U.S. 194, 201-02 (1993) (recognizing that the law has been well established for the better part of two centuries that a corporation may appear in the federal courts only through licensed counsel). Defendant's “response” (Doc. 6) is therefore stricken.

         II. Plaintiffs Are Entitled to Default Judgment and Claim of Sum Certain

         As a result of Defendant's failure to obtain representation by an attorney and the Court's striking of the response, Defendant has effectively failed to appear for purposes of Rule 55 and Plaintiff is therefore entitled to default judgment.^[2]

         Under Fed.R.Civ.P. 55(b)(1), judgment can be entered for a “sum certain” or a “sum that can be made certain by computation” where a defendant has been defaulted for a failure to appear. KPS & Assocs., Inc. v. Designs By FMC, Inc., 318 F.3d 1, 20 (1st Cir. 2003). To be a “sum certain” there must be no doubt as to the amount that must be awarded. Franchise Holding II, LLC. v. Huntington Rests. Group, Inc., 375 F.3d 922, 928-29 (9th Cir.2004). Thus, “a court may enter a default judgment without a hearing only if the amount claimed is a liquidated sum or one capable of mathematical calculation.” Hunt v. Inter-Globe Energy, Inc., 770 F.2d 145, 148 (10th Cir.1985). In this case, Plaintiff claims an amount of damages which can be readily ascertained under the terms of the policy based on a calculation of premiums owed by Defendant. See, e.g., Rummel v. Lexington Ins. Co., 123 N.M. 752, 758 (1997) (insurance contracts are construed by the same principles which govern the interpretation of all contracts); Farmers Alliance Mutual Ins. Co. v. Bakke et al., 619 F.3d 867, 8858th Cir. 2010 (obligation of liability insuror is contractual and is to be determined by the terms of the policy) (emphasis added).

         A. Actual Damages

         Plaintiffs seek an award of actual damages of $357, 426.00, which is the amount of premiums owed under ...