Liberty Mutual Insurance Company v. Contractors Northwest Inc et al, No. 2:2020cv00010 - Document 27 (E.D. Wash. 2020)

Court Description: ORDER GRANTING PLAINTIFF'S MOTION FOR DEFAULT JUDGMENT AGAINST CONTRACTORS NORTHWEST, INC. Plaintiff's Motion for Default Judgment Against Contractors Northwest, Inc. (ECF No. 21 ) is GRANTED. Judgment is awarded to Plaintiff Liberty Mut ual Insurance Company against Defendant Contractors Northwest, Inc. in the amount of $180,230.74, plus taxable costs and attorney's fees in the amount of $10,314.10. The file remains open. Signed by Judge Thomas O. Rice. (LLH, Courtroom Deputy)

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Liberty Mutual Insurance Company v. Contractors Northwest Inc et al Doc. 27 1 2 3 4 5 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF WASHINGTON 6 7 8 LIBERTY MUTUAL INSURANCE COMPANY, a Massachusetts corporation, Plaintiff, 9 10 11 12 v. NO. 2:20-CV-0010-TOR ORDER GRANTING PLAINTIFF’S MOTION FOR DEFAULT JUDGMENT AGAINST CONTRACTORS NORTHWEST, INC. CONTRACTORS NORTHWEST INC., a Washington corporation and HAAGENSON ENTERPRISES, INC., an Idaho corporation, 13 Defendants. 14 15 BEFORE THE COURT is Plaintiff’s Motion for Default Judgment Against 16 Contractors Northwest, Inc. (ECF No. 21). This matter was submitted for 17 consideration without oral argument. The Court has reviewed the record and files 18 herein, and is fully informed. For the reasons discussed below, Plaintiff’s Motion 19 for Default Judgment Against Contractors Northwest, Inc. (ECF No. 21) is 20 GRANTED. ORDER GRANTING PLAINTIFF’S MOTION FOR DEFAULT JUDGMENT AGAINST CONTRACTORS NORTHWEST, INC. ~ 1 Dockets.Justia.com 1 BACKGROUND 2 This case arises out of obligations owed under an indemnity agreement. 3 ECF No. 1. On January 8, 2020, Plaintiff filed a complaint against three 4 defendants, including Defendant Contractors Northwest, Inc. (“CNI”). Id. On 5 January 13, 2020, CNI’s registered agent was served with an amended summons 6 and complaint. ECF No. 16. On April 20, 2020, CNI having failed to answer, 7 plead, or otherwise defend against the complaint, Plaintiff filed a Motion for Entry 8 of Default against CNI. ECF No. 12. That same day, the Clerk of the Court 9 entered the Order of Default. ECF No. 19. On September 1, 2020, Plaintiff filed 10 the instant Motion for Default Judgment against CNI. ECF No. 21. The factual 11 allegations, as set forth below, are derived from Plaintiff’s motion and supporting 12 documents. ECF Nos. 21-23, 26. 13 On or about August 17, 2015, CNI entered into a construction contract 14 regarding a waste water treatment plan with the City of Asotin, Washington for 15 $2,126,434.19. ECF No. 21 at 2. Under the terms of the contract, Plaintiff issued 16 a Performance Bond and a Payment Bond to the City of Asotin pursuant to 17 RCW 39.08.010 on behalf of CNI. Id. at 3. Plaintiff also issued a Contractor’s 18 License Bond pursuant to RCW 18.27.040 on behalf of CNI. Id. at 4. 19 In partial consideration for these bonds, CNI executed a General Agreement 20 of Indemnity in favor of Liberty Mutual, which was executed prior to the bonds on ORDER GRANTING PLAINTIFF’S MOTION FOR DEFAULT JUDGMENT AGAINST CONTRACTORS NORTHWEST, INC. ~ 2 1 May 24, 2010. Id. at 3. Two amendments added Yellowstone Properties, LLC and 2 Haagenson Enterprises, Inc. as indemnitors. Id. at 3-4. Under this agreement, the 3 indemnitors jointly and severally agreed “to exonerate, hold harmless and 4 indemnify [Plaintiff] from and against any and all liability for losses, fees, costs 5 and expenses sustained by [Plaintiff] as a consequence of issuing bonds on behalf 6 of CNI, or as a consequence of a breach of the Indemnity Agreement.” Id. at 4. 7 Subsequently, CNI subcontractors and suppliers asserted claims against 8 Plaintiff for CNI’s failure and refusal to pay for labor, material, and equipment. Id. 9 As a result of those claims, Plaintiff made the following payments: 10 1. On December 19, 2018, Plaintiff paid Star Rentals, Inc. $6,000.00. 11 2. On February 8, 2019, Plaintiff paid Lakeside Equipment Corp. $65,000.00. 12 13 14 3. On February 22, 2019, Plaintiff paid Twin City Electricians, Inc. $11,996.15. 4. On July 26, 2019, Plaintiff paid Western Const. of Lewiston, Inc. $97,234.59. 15 16 17 ECF No. 21. 4-5. In total, Plaintiff paid $180,230.74 for these claims. Id. at 5. Defendants 18 failed to indemnify Plaintiff for these losses. Id. As a result, Plaintiff also claims 19 $10,484.50 in taxable costs and attorney’s fees incurred in bringing this present 20 action. Id. at 7. ORDER GRANTING PLAINTIFF’S MOTION FOR DEFAULT JUDGMENT AGAINST CONTRACTORS NORTHWEST, INC. ~ 3 1 DISCUSSION 2 A. Procedural Requirements 3 Obtaining a default judgment is a two-step process. LCivR 55. A party 4 must first file a motion for entry of default to obtain a Clerk’s Order of Default, 5 and then file a separate motion for default judgment. Id. To obtain a default 6 judgment, the moving party must “(A) specify whether the party against whom 7 judgment is sought is an infant or an incompetent person and, if so, whether that 8 person is represented by a general guardian, conservator, or other like fiduciary; 9 and (B) attest that the Servicemembers Civil Relief Act, 50 U.S.C. App. §§ 501- 10 597b [now codified at 50 U.S.C. § 3901, et seq], does not apply.” LCivR 55(b)(1). 11 Federal Rule of Civil Procedure 55(b) provides that a plaintiff is entitled to 12 default judgment by the Clerk where the “claim is for a sum certain or a sum that 13 can be made certain by computation” or by the Court in all other cases. When a 14 party applies for default judgment with the Court or the Clerk refers the motion to 15 the Court, the Court “may conduct hearings or make referrals—preserving any 16 federal statutory right to a jury trial—when, to enter or effectuate judgment, it 17 needs to: (A) conduct an accounting; (B) determine the amount of damages; 18 (C) establish the truth of any allegation by evidence; or (D) investigate any other 19 matter.” Fed. R. Civ. P. 55(b)(2); LCivR 55(b)(2). 20 ORDER GRANTING PLAINTIFF’S MOTION FOR DEFAULT JUDGMENT AGAINST CONTRACTORS NORTHWEST, INC. ~ 4 1 Here, Plaintiff complied with the first step in seeking default judgment. 2 Plaintiff submitted a motion for entry of default on April 20, 2020. ECF No. 17. 3 The Clerk of the Court entered the Clerk’s Order of Default the same day for 4 CNI’s failure “to answer, plead, or otherwise defend against the complaint.” ECF 5 No. 19. Plaintiff also complied with the second step under Local Civil Rule 55 by 6 certifying CNI is not an infant nor incompetent person, and the Servicemembers 7 Civil Relief Act does not apply. ECF No. 21 at 7. 8 B. Substantive Requirements 9 Federal Rule of Civil Procedure 55 “gives the court considerable leeway as 10 to what it may require as a prerequisite to the entry of a default judgment.” 11 TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917 (9th Cir. 1987) (citing Fed. 12 R. Civ. P. 55(b)(2)). “The general rule of law is that upon default the factual 13 allegations of the complaint, except those relating to the amount of damages, will 14 be taken as true.” Id. at 917-18 (citation omitted). The decision whether to enter 15 default judgment is within the Court’s discretion. Eitel v. McCool, 782 F.2d 1470, 16 1471 (9th Cir. 1986). In evaluating the propriety of default judgment, the Court is 17 guided by seven non-exclusive factors: 18 19 20 (1) the possibility of prejudice to the plaintiff, (2) the merits of plaintiff’s substantive claim, (3) the sufficiency of the complaint, (4) the sum of money at stake in the action[,] (5) the possibility of a dispute concerning material facts[,] (6) whether the default was due to excusable neglect, and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits. ORDER GRANTING PLAINTIFF’S MOTION FOR DEFAULT JUDGMENT AGAINST CONTRACTORS NORTHWEST, INC. ~ 5 1 Eitel, 782 F.2d at 1471-72. The Court assumes facts alleged in the complaint are 2 true. Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977). 3 4 1. Possibility of Prejudice The first factor considers whether Plaintiff will suffer prejudice if default 5 judgment is not entered. Eitel, 782 F.2d at 1471-72. Plaintiff would suffer 6 prejudice if the default judgment is not entered because Plaintiff would be without 7 other recourse for recovery. Philip Morris USA, Inc. v. Castworld Prods., Inc., 8 219 F.R.D. 494, 499 (C.D. Cal. 2003). The Court is cognizant that Plaintiff has a 9 potential avenue to recover from the other remaining defendant under the joint and 10 several liability provision of the indemnity agreement; however, entry of default is 11 not precluded as to one defendant who may be held jointly and severally liable. 12 See In Re Uranium Antitrust Litigation, 617 F.2d 1248, 1256-58 (7th Cir. 1980). 13 In this case, Plaintiff will suffer prejudice if default judgment is not entered, 14 as it would leave Plaintiff with no other remedy to proceed directly against CNI to 15 recover the amount it is owed under the indemnity agreement. Additionally, 16 Plaintiff claims that it has incurred attorney’s fees in bringing this present action. 17 Thus, this factor weighs in favor of an entry of default judgment. 18 19 20 2. Merits and Sufficiency of Claims The second and third factors favor a default judgment when the “plaintiff state[s] a claim on which the plaintiff may recover.” Danning v. Lavine, 572 F.2d ORDER GRANTING PLAINTIFF’S MOTION FOR DEFAULT JUDGMENT AGAINST CONTRACTORS NORTHWEST, INC. ~ 6 1 1386, 1389 (9th Cir. 1978). Plaintiff’s complaint is well pleaded in that it 2 adequately states that facts, circumstances, and elements of its claims against CNI. 3 ECF No. 1. Plaintiff identified the payments made pursuant to the bond terms and 4 the obligations under the corresponding indemnity agreement. ECF No.1 at 3-7; 5 ECF No. 21 at 6-7. Thus, the second and third factors weigh in favor of an entry of 6 default judgment. 7 3. Money at Stake 8 Regarding the fourth factor, the Court considers the sum of money at stake 9 in the action. Eitel, 782 F.2d at 1471-72. Considerations include “the amount of 10 money requested in relation to the seriousness of the defendant’s conduct, whether 11 large sums of money are involved, and whether ‘the recovery sought is 12 proportional to the harm caused by defendant’s conduct.’” Curtis v. Illumination 13 Arts, Inc., 33 F. Supp. 3d 1200, 1212 (W.D. Wash. 2014) (quoting Landstar 14 Ranger, Inc. v. Earth Enters., Inc., 725 F. Supp. 2d 916, 921 (N.D. Cal. 2010)). 15 a. Indemnity Agreement 16 Plaintiff alleges that CNI owes a sum certain of $180,230.74 pursuant to the 17 indemnity agreement. ECF No. 21. at 7. To substantiate this amount, Plaintiff 18 submitted a declaration with supporting documentation. See ECF No. 22. The 19 amount at stake is directly related to the amount due under the indemnity 20 ORDER GRANTING PLAINTIFF’S MOTION FOR DEFAULT JUDGMENT AGAINST CONTRACTORS NORTHWEST, INC. ~ 7 1 agreement. Thus, this factor weighs in favor of default judgment for the amount 2 alleged under the indemnity agreement. 3 b. Attorney’s Fees and Costs 4 Plaintiff alleges that it incurred $10,484.50 in taxable costs and attorney’s 5 fees. ECF No. 21. at 7. To substantiate this amount, Plaintiff submitted 6 declarations with supporting documentation. See ECF Nos. 23, 26. 7 Courts assess attorney’s fees by calculating the lodestar figure, which is the 8 number of hours reasonably expended multiplied by the reasonable hourly rate of 9 compensation. Hensley v. Eckerhart, 461 U.S. 424, 433 (1983); Johnson v. MGM 10 Holdings, Inc., 943 F.3d 1239, 1242 (9th Cir. 2019). This lodestar calculation is 11 presumptively reasonable. Camacho v. Bridgeport Fin., Inc., 523 F.3d 973, 978 12 (9th Cir. 2008). When determining hourly rates, courts look to the “prevailing 13 market rates in the relevant community.” Vargas v. Howell, 949 F.3d 1188, 1194 14 (9th Cir. 2020) (quoting Blum v. Stenson, 465 U.S. 886, 895 (1984)). Courts 15 typically use the rates of comparable attorneys in the forum district, here the 16 Eastern District of Washington. Gates v. Deukmejian, 987 F.2d 1392, 1405 (9th 17 Cir. 1992). When determining the reasonableness of the hours expended, the Court 18 should exclude from its calculation “hours that were not reasonably expended” 19 such as hours that are “excessive, redundant, or otherwise unnecessary.” Gates, 20 987 F.2d at 1397 (quoting Hensley, 461 U.S. at 433-34). ORDER GRANTING PLAINTIFF’S MOTION FOR DEFAULT JUDGMENT AGAINST CONTRACTORS NORTHWEST, INC. ~ 8 1 Two attorneys and one paralegal billed time on this matter. ECF No. 26 at 2 2, ¶ 4. Mr. Thomas K. Windus, a licensed attorney since 1977, is a Principal at 3 Carney Badley Spellman, P.S. in Seattle, Washington and charges $335 per hour. 4 Id. at 1-2, ¶¶ 1-2, 4. Mr. Nicolas McCann, a licensed attorney who graduated in 5 2010, charges $320 per hour. Id. at 2, ¶ 4. Mr. Mitchell Johnson, a certified 6 paralegal since 2017, charges $240 per hour. Id. To compare these rates within 7 this District, Plaintiff submitted the United States Consumer Law Attorney Fee 8 Survey from 2015-2016. See ECF No. 26-1. 1 According to this report, the average 9 hourly rate for an attorney practicing in Spokane for over 41 years is $375 and for 10 an attorney practicing for 10 years is $325. ECF No. 26-1 at 5. The average 11 paralegal hourly rate in Spokane is $98. ECF No. 26-1 at 4. 12 While a significant sum of money weighs in favor of resolving a case on the 13 merits, the Court finds that the recovery sought is reasonable with a slight 14 modification. The Court finds the hourly rates for Mr. Windus and Mr. McCann 15 are reasonable. However, the Court finds that Mr. Johnson’s hourly rate of $240 16 far exceeds the average rate of a paralegal in this District and will consequently 17 18 1 Plaintiff acknowledges that this is a commercial rather than consumer law 19 matter but believes that the rates are comparable for the Spokane area. ECF No. 26 20 at 2, ¶ 5. The Court does not take issue with the comparison. ORDER GRANTING PLAINTIFF’S MOTION FOR DEFAULT JUDGMENT AGAINST CONTRACTORS NORTHWEST, INC. ~ 9 1 reduce it to $98 per hour. Finally, the Court finds that the number of hours 2 expended in this case are reasonable as they do not appear excessive, redundant, or 3 otherwise unnecessary. Therefore, the fourth factor weighs in favor of default 4 judgment as to attorney’s fees and costs as modified. 5 4. Dispute of Material Facts 6 The fifth factor weighs the possibility of a dispute regarding any material 7 facts in the case. Eitel, 782 F.2d at 1471-72. As CNI has not responded in this 8 case, all well-pleaded facts in Plaintiff’s complaint are taken as true, except those 9 relating to damages. TeleVideo Sys., Inc., 826 at 917-918. In light of the 10 contractual nature of the claim, there is little to no likelihood of a dispute 11 concerning material facts with the action, especially where no evidence has been 12 introduced contrary to the supporting documents. Thus, the fifth factor weighs in 13 favor of default judgment. 14 5. Excusable Neglect 15 The sixth factor considers whether the defendant’s default is due to 16 excusable neglect. Eitel, 782, F.2d at 1471-72. Plaintiff has shown proper service 17 on CNI, and there is no evidence that the failure to respond to the complaint is the 18 result of excusable neglect. United States v. High Country Broad. Co., 3 F.3d 19 1244, 1245 (9th Cir. 1993) (per curiam) (Default judgment “perfectly appropriate” 20 ORDER GRANTING PLAINTIFF’S MOTION FOR DEFAULT JUDGMENT AGAINST CONTRACTORS NORTHWEST, INC. ~ 10 1 against a corporation that failed to appear in the action.). Thus, the sixth factor 2 weighs in favor of default judgment. 3 4 6. Decision on the Merits The seventh factor considers the policy favoring a decision on the merits. 5 Eitel, 782 F.2d at 1471-72. Although this factor “almost always disfavors the entry 6 of default judgment,” it is not dispositive. Curtis, 33 F. Supp. 3d at 1213. While 7 resolving this matter on the merits weighs in favor of denying a default judgment, 8 is not sufficient to overcome the weight of the other factors, especially where 9 Defendant’s failure to respond makes a decision on the merits impractical. Thus, 10 11 default judgment in favor of Plaintiff and against CNI is warranted. Having reviewed the motion and record in light of the Eitel factors, the 12 Court finds the entry of default judgment appropriate in this case. 13 ACCORDINGLY, IT IS HEREBY ORDERED: 14 15 16 1. Plaintiff’s Motion for Default Judgment Against Contractors Northwest, Inc. (ECF No. 21) is GRANTED. 2. Judgment is awarded to Plaintiff Liberty Mutual Insurance Company 17 against Defendant Contractors Northwest, Inc. in the amount of 18 $180,230.74, plus taxable costs and attorney’s fees in the amount of 19 $10,314.10. 20 ORDER GRANTING PLAINTIFF’S MOTION FOR DEFAULT JUDGMENT AGAINST CONTRACTORS NORTHWEST, INC. ~ 11 1 3. Pursuant to Fed. R. Civ. P. 54(b), there being no just reason for delay, the 2 Clerk of Court is directed to enter Judgment against Defendant 3 Contractors Northwest, Inc. accordingly, noting the applicable post- 4 judgment statutory interest rate, 28 U.S.C. § 1961. 5 The District Court Executive is directed to enter this Order, furnish copies to 6 counsel. The file remains open. 7 DATED October 1, 2020. 8 9 THOMAS O. RICE United States District Judge 10 11 12 13 14 15 16 17 18 19 20 ORDER GRANTING PLAINTIFF’S MOTION FOR DEFAULT JUDGMENT AGAINST CONTRACTORS NORTHWEST, INC. ~ 12

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