United Sheet Metal, Inc. v. Fed. Ins. Co., Case No.: PWG-13-3791
Decision Date | 29 April 2014 |
Docket Number | Case No.: PWG-13-3791 |
Parties | UNITED SHEET METAL, INC., Plaintiff, v. FEDERAL INSURANCE CO., Defendant. |
Court | U.S. District Court — District of Maryland |
United Sheet Metal, Inc. ("USM"), a subcontractor who performed HVAC ductwork on a project but did not receive payment, filed this payment bond claim against Federal Insurance Co., the surety on a payment bond issued on behalf of Madison Mechanical ("Madison"), the mechanical subcontractor obligated to pay Plaintiff for its work on the project. Defendant failed to file a timely response and, at Plaintiff's request, the Clerk entered Defendant's default. I must determine whether to vacate the Clerk's entry of default and to grant Defendant leave to respond, as Defendant requests.1 Because Defendant has shown that it has a meritorious defense, I will vacate the entry of default and grant Defendant leave to respond.
The procedural background of this case is brief and straightforward: USM filed its Complaint on December 16, 2013, ECF No. 1, and served Federal Insurance Co. on December 20, 2013, ECF No. 4, such that Defendant's answer was due January 10, 2014. After Defendantfailed to file an answer or otherwise respond to Plaintiff's Complaint, Plaintiff filed a Motion for Clerk's Entry of Default on January 13, 2014. ECF No. 6. Defendant had until January 27, 2014 to respond. See Fed. R. Civ. P. 5(b)(2)(E) & 6(d); Loc. R. 105.2.a. The Clerk granted USM's motion on January 14, 2014, ECF No. 7, and Defendant filed the pending Motion to Vacate Entry of Default and for Leave to Respond on January 27, 2014, ECF No. 8.
According to Defendant, Plaintiff served the Maryland Insurance Commissioner, who received the Complaint and summons on December 30, 2013 and forwarded them to Defendant's resident agent via certified mail. Def.'s Mem. 2. The agent received the Complaint and summons on Thursday, January 2, 2014 and forwarded them to Defendant via Federal Express two-day delivery, such that Defendant itself received them Monday, January 6, 2014. Id. Defendant says that, as a result, it thought that it had until January 23, 2014 to respond. Id.
Rule 55(c) permits the Court to "set aside an entry of default for good cause." Fed. R. Civ. P. 55(c).
Mavilla v. Absolute Collection Serv., Inc., 539 F. App'x 202, 205-06 (4th Cir. 2013).
Plaintiff only challenges whether Defendant has a meritorious defense. See Pl.'s Opp'n 3-7. To establish a meritorious defense, Defendant must "proffer . . . evidence which wouldpermit a finding for the defaulting party or which would establish a valid counterclaim." Augusta Fiberglass Coatings, Inc. v. Fodor Contracting Corp., 843 F.2d 808, 812 (4th Cir. 1988) (citing Central Operating Co. v. Utility Workers of Am., 491 F.2d 245, 252 n.8 (4th Cir. 1974); Williams v. Blitz, 226 F.2d 463 (4th Cir. 1955)). The Court considers "'whether there is some possibility that the outcome ... after a full trial will be contrary to the result achieved by the default.'" Id. (quoting 10 C. Wright, A. Miller & M. Kane, Fed. Prac. & Proc. § 2697, at 531 (2d ed. 1983)).
Defendant sets forth two defenses that it contends are meritorious. Def.'s Mem. 6-8. First, Defendant insists that Plaintiff's "alleged performance was deficient in several material respects." Id. at 7. In support, Defendant provides the Affidavit of Robert Buczkowski. Def.'s Mem. Ex. 3. Mr. Buczkowski declares that "USM's performance on the Project was deficient in several significant respects including its failure to provide sufficient manpower necessary for the timely completion of its scope of work and its inability to provide equipment and materials necessary for the completion of its scope of work." Id. ¶ 6. According to Mr. Buczkowski, "[a]s a result of USM's deficiencies, Madison incurred significant expenses in order to purchase equipment and materials for the completion of USM's work as well as to supplement, and in certain cases replace, USM's forces." Id. ¶ 7.
Plaintiff argues that Defendant fails to show a meritorious defense by providing the Buczkowski Affidavit because it "is so generic, formulaic and conclusory such that the Court cannot find in favor of Federal on its account." Pl.'s Opp'n 3. Essentially, Plaintiff contends that the affidavit lacks specificity, id. at 4, insisting that Iqbal and Twombly's pleading requirements should apply in determining whether Defendant sufficiently showed a meritorious defense, id. at 5.
The Buczkowski Affidavit certainly is not detailed. But, it is more than a "bald allegation"; it is evidentiary proof. See Dahl v. Kanawha Inv. Holding Co., 161 F.R.D. 673, 684 -85 (N.D. Iowa 1995) () . Further, the affidavit shows that Plaintiff may have breached its contract, such that it was not entitled to payment under the payment bond. See In re Ashby Enters., Ltd., 250 B.R. 69, 72 (Bankr. D. Md. 2000) ( ). Therefore, the Buczkowski Affidavit is sufficient to show that "there is some possibility" that Defendant would prevail at trial. See Augusta Fiberglass, 843 F.2d at 812.
Second, Defendant contends that there was a "pay-if-paid" provision under which Madison did not have to pay Plaintiff until the general contractor, Clark Construction...
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