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Granite State Insurance Company v. CME Professional Services LLC

United States District Court, D. Arizona

January 30, 2019

Granite State Insurance Company, Plaintiff,
v.
CME Professional Services LLC, Defendant.

          ORDER

          HONORABLE JENNIFER G. ZIPPS UNITED STATES DISTRICT JUDGE.

         Pending before the Court is a Motion for Default Judgment filed by Plaintiff on October 25, 2018. (Doc. 18.) Defendant did not file a response. Having reviewed the motion and all filings in this matter, the Court will grant the Motion for Default Judgment.

         FACTUAL AND PROCEDURAL BACKGROUND

         This case arises out of a workers' compensation and employer's liability insurance policy for two separate periods of coverage. Plaintiff Granite State Insurance Company issued the policy to Defendant CME Professional Services LLC on or about August 6, 2015, to cover the period of August 2, 2015 to August 2, 2016 (“First Policy Period”). (Doc. 11, ¶ 16.) Per the policy's terms, Plaintiff provided Defendant with the estimated annual premium, including taxes and fees, of $727, 502. (Doc. 11, Ex. A.)[1] The policy further provided that the final premium would be determined “after this policy ends by using the actual, not the estimated, premium basis and the proper classifications and rates that lawfully apply to the business and work covered by this policy.” (Id.) Between September 9, 2015 and May 26, 2016, Plaintiff issued several endorsements that increased the premium by a net $780, 565. (Doc. 11, ¶¶ 18-24.) Plaintiff subsequently conducted two audits of Defendant's books and records for the First Policy Period. Based on the audits, Plaintiff calculated that the Defendant's premium should be increased by a net $66, 014. (Id. at ¶¶ 25-28.) Ultimately, Plaintiff determined that the Defendant owed a total premium on the First Policy Period of $1, 574, 081. (Doc. 11, ¶ 29.) Defendant has paid $1, 370, 865.74 to Plaintiff towards the premium due for the First Policy Period. (Doc. 11, ¶ 30.)

         On or about August 4, 2016, Plaintiff renewed the Policy for the policy period of August 2, 2016 to August 2, 2017 (“the Second Policy Period”). The total estimated annual premium for the Second Policy Period was $1, 700, 135. (Id. at ¶¶ 32-33.) Between October 4, 2016 and May 24, 2017, Plaintiff issued several endorsements and amended class codes, decreasing the premium by a net $968, 625. (Id. at 34-41.) After conducting an audit, Plaintiff reduced the premium by $92, 843. (Id. at ¶¶ 42-43.) The Plaintiff ultimately determined that the Defendant owed a total premium of $638, 667 for the Second Policy Period. (Id. at ¶ 44.) Defendant has paid $544, 921.42 to Plaintiff for the premium due for the Second Policy Period. (Id. at ¶ 45).

         Plaintiff billed Defendant on April 6, 2017 for the $203, 215.26 due on the First Policy Period (Doc. 18-2) and on October 30, 2017 for the $93, 745.58 due on the Second Policy Period. (Doc. 18-3.) Plaintiff also sent Defendant demand letters requesting payment. (Doc. 18.)[2] Defendant has failed to provide payment regarding either invoice. (Doc. 11, ¶¶ 51-54.)

         On August 6, 2018, Plaintiff initiated this action, seeking contractual damages in the amount of $296, 256.84, pretrial and posttrial interest, and attorney's fees and costs. (Doc. 1.) On August 13, 2018, Plaintiff filed an Amended Complaint to address subject matter jurisdiction. (Docs. 9 & 11.)[3] Defendant was served with the Amended Complaint and Summons on September 7, 2018. (Doc. 14.) Defendant failed to respond or answer. Thereafter, Plaintiff requested the Clerk of the Court to enter default against Defendant (Doc. 15), which the Clerk entered on October 2, 2018. (Doc. 16.) Plaintiff now seeks entry of default judgment against Defendant.

         DISCUSSION

         A. Default Judgment

         After entry of default, a court may grant a default judgment on the merits of the case. See Fed. R. Civ. P. 55. The decision to enter a default judgment is a matter left to the sound discretion of the court. Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). In its determination whether to enter default judgment, the court may consider as factors:

(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.

Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). Once default has been entered, the court may take as true all factual allegations in Plaintiff's Complaint, except those relating to the amount of damages. TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915 (9thCir. 1987). However, that does not relieve the plaintiff of its duty to plead specific allegations, as “defendant is not held to admit facts that are not well-pleaded or to admit conclusions of law.” DirecTv, Inc. v. Hoa Huynh, 503 F.3d 847, 855 (9th Cir. 2007).

         Upon consideration of the Eitel factors, the Court concludes that entry of default judgment against Defendant CME Professional Services is proper.

         1. The possibility of prejudice to Plaintiff

         Plaintiff will suffer prejudice if default judgment is not entered. Eitel, 782 F.2d at 1471-72. Plaintiff provided insurance coverage, which Defendant accepted, and for which Defendant has failed to pay the $296, 960.84[4] balance owed. Plaintiff attempted to resolve the matter without judicial involvement by sending invoices and demand letters. Defendant's failure to remit payment, along with its failure to respond to or answer the Complaint makes it unlikely Plaintiff could recover absent entry of default judgment. The Court concludes that Plaintiff would suffer prejudice if its motion for default judgment was denied because it would be “without other recourse for recovery.” PepsiCo, Inc. v. Cal. Sec. Cans, 238 F.Supp.2d 1172, 1177 (C.D. Cal. 2002). This factor greatly weighs in favor of granting default judgment.

         2. Merits of the Substantive Claim & Sufficiency of ...


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