GREAT AMERICAN INSURANCE COMPANY, Plaintiff, v. GOLD COAST EXPRESS INC., et al., Defendant.

United States District Court,

E.D. New York.

GREAT AMERICAN INSURANCE COMPANY, Plaintiff,

GOLD COAST EXPRESS INC., et al., Defendant.

No. 12 CV 4847(DRH)(ARL). | Signed March 10, 2015.

ORDER

HURLEY, Senior District Judge.

*1 Great American Insurance Company (“plaintiff”) commenced this interpleader action to resolve competing claims to the proceeds of a $10,000 bond issued by plaintiff on behalf of defendant Gold Coast Express, Inc. (“Gold Coast”). Many of the named defendants (“defaulting defendants”) failed to appear in the action, and plaintiff currently seeks a default judgment against them1 and a judgment pursuant to Federal Rule of Civil Procedure (“Rule”) 54(b) that the defaulting defendants are not entitled to any relief under the bond at issue.

After the defendants’ default was noted by the Clerk of the Court pursuant to Rule 55(a), plaintiff moved for entry of a default judgment under Rule 55(b). On May 12, 2014, this motion was referred to United States Magistrate Judge Arlene R. Lindsay to issue a Report and Recommendation as to whether plaintiff demonstrated that default judgment and judgment under Rule 54(b) is appropriate against the defaulting defendants.

On February 17, 2015, Judge Lindsay issued a Report and Recommendation which recommended that a default judgment be entered against the defaulting defendants and that plaintiff “is entitled to a judgment that the defaulting defendants are not entitled to any relief under the bond.” (Report and Recommendation at 6.) More than fourteen days have elapsed since service of the Report and Recommendation and no party has filed an objection.

Pursuant to 28 U.S.C. § 636(b) and Federal Rule of Civil Procedure 72, this Court has reviewed the February 17, 2015 Report and Recommendation for clear error, and finding none, now concurs in both its reasoning and its result. Therefore, the Court adopts the Report and Recommendation of Judge Lindsay as is set forth therein. Accordingly, the Court hereby directs that the clerk of the Court enter default judgment in favor of plaintiff and against defaulting defendants and enter judgment that defaulting defendants are not entitled to any relief under the bond.

SO ORDERED.

REPORT AND RECOMMENDATION

LINDSAY, United States Magistrate Judge.

Plaintiff Great American Insurance Company (“Plaintiff”) brings this interpleader action to resolve competing claims to the proceeds of a $10,000.00 bond issued by Plaintiff on behalf of defendant Gold Coast Express, Inc. (“Gold Coast”). This matter was referred to the undersigned by District Judge Denis R. Hurley for the purpose of issuing a report and recommendation on whether Plaintiff’s motion for a default judgment should be granted and, if so, the appropriate relief to be awarded. Plaintiff has submitted an affidavit or Eric M. Eusanio, dated May 8, 2014, along with exhibits, in support of its motion. Despite having been served with the motion, the defaulting defendants1 have not submitted papers in opposition to the motion. Based upon the papers submitted, the undersigned respectfully recommends that Plaintiff’s motion for a default judgment be granted.

BACKGROUND

*2 The following facts are taken from the complaint and the motion for default judgment.

Plaintiff, as surety, issued a bond—expressly limited to $10,000 .00—on behalf of its principal, Gold Coast, with respect to Gold Coast’s contracts or agreements for the supply of transportation. Prior to the filing of this action, defendants asserted claims under the bond, claiming that Gold Star failed to pay them for the alleged transportation of freight and goods. Because these claims vastly exceeded the bond’s express limit of $10,000.00, defendants’ claims were adverse and conflicting and could not be satisfied by the bond. Accordingly, in order to avoid multiple liabilities and inconsistent rulings, Plaintiff filed the instant interpleader action, pursuant to 28 U.S.C. § 1335, seeking Court direction as to distribution of the bond.

Plaintiff commenced this lawsuit on September 27, 2012 and filed an amended complaint on October 10, 2012. On August 20, 2013, Plaintiff filed a “third amended complaint” adding several new defendants but otherwise adding no new claims for relief.

With regard to the appearing defendants, Plaintiff has agreed, in principle, to a Stipulation and Order for Entry of Final Judgment. With regard to the defaulting defendants, Plaintiff has filed the instant motion. All of the defaulting defendants named in the amended complaint were served with that pleading, and all of the newly added defaulting defendants were served with the third amended complaint.2 The defaulting defendants have not interposed an answer or otherwise responded to the complaint.

On April 15, 2014, Plaintiff requested a Certificate of Default with the Clerk of the Court. Although the request was initially denied on April 23, 2014, it was thereafter granted. Thus, on April 29, 2014, the Clerk of the Court issued the Certificate of Default and certified the defendants’ default.3 On May 9, 2014, Plaintiff served and filed the instant motion.

DISCUSSION

A. Legal Standard Governing Defaults

Federal Rule of Civil Procedure 55 establishes a two-step process regarding default judgments. First, the Clerk of the Court enters the party’s default. Then, as here, a motion for a default judgment is made to the district court judge. A default constitutes an admission of all well-pleaded factual allegations in the complaint, except those relating to damages. See Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir.1992); see also Joe Hand Promotions, Inc. v. El Norteno Rest. Corp., No. 06–CV–1878, 2007 WL 2891016, at *2 (E.D.N.Y. Sept. 28, 2007) (“[A]ll well-pleaded factual allegations in the plaintiff’s complaint pertaining to liability are deemed true”). However, even if a plaintiff’s claims are deemed admitted, a plaintiff must still demonstrate that the allegations set forth in the complaint state valid claims. See City of New York v. Mickalis Pawn Shop, LLC, 645 F.3d 114, 137 (2d Cir.2011) (suggesting that “a district court is ‘required to determine whether the plaintiff’s allegations establish the defendant’s liability as a matter of law’ “ prior to entering default judgment) (quoting Finkel v. Romanowicz, 577 F.3d 79, 84 (2d Cir.2009)) (alterations omitted). Thus, the Court examines Plaintiff’s allegations to determine if they state a valid claim.

B. The Court Recommends that Plaintiff’s Motion Be Granted

*3 In the instant default motion, Plaintiff does not seek damages or attorneys’ fees. Rather, Plaintiff asserts a claim for interpleader pursuant to the Federal Interpleader Act, 28 U.S.C. § 1335. Essentially, Plaintiff’s complaint seeks to deposit the proceeds of the bond with the Court, pursuant to 28 U.S.C. § 1335, with a discharge of liability, pursuant to 28 U.S.C. § 2361. By instant motion, Plaintiff requests that the Court direct that, pursuant to Federal Rule of Civil Procedure 54(b), there being no just reason for delay, Plaintiff is entitled to a final judgment of default against the defaulting defendants directing that such defendants are entitled to no relief under the bond at issue in this action.4 For the reasons that follow, the Court reports and recommends that Plaintiff’s motion be granted.

Interpleader is designed to “protect stakeholders from undue harassment in the face of multiple claims against the same fund, and to relieve the stakeholder from assessing which claim among many has merit.” Fidelity Brokerage Servs., LLC v. Bank of China, 192 F.Supp.2d 173, 177 (S.D.N.Y.2002) (citing Wash. Elec. Coop. v. Paterson, Walke & Pratt, P.C., 985 F.2d 677, 679 (2d Cir.1993)). Interpleader actions normally proceed in two stages. First, the stakeholder must demonstrate that “the requirements for interpleader have been met and that it is entitled to a discharge.” Metropolitan Life Ins. Co. v. Little, No. 13 cv 1059, 2013 WL 4495684, at *1 (E.D.N.Y. Aug. 17, 2013). Second, the court “determines the adverse claims between the claimants.” Id.

“As to the first stage, the interpleader statute applies only where there is minimal diversity,’ i.e., where there are two or more adverse claimants, of diverse citizenship, and when money or property worth $500 or more is involved.” Perlman v. Fidelity Brokerage Servs. LLC, 932 F.Supp.2d 397, 415 (E.D.N.Y.2013) (citations and internal quotation marks omitted). In addition, once subject matter jurisdiction is show, “a court must assess whether the stakeholder legitimately fears multiple liability directed against a single fund, regardless of the merits of the competing claims.” Id. (citation and internal quotation marks omitted). Finally, plaintiff “must state that he has deposited or is depositing the fund with the court.” Id. (citation and internal quotation marks omitted).

Here, the Court finds that Plaintiff has satisfied all of the requirements of the first stage of an interpleader action. First, there is “minimal diversity” because there are adverse claimaints of diverse citizenship and the value of the bond exceeds $500.00. Next, Plaintiff is a neutral party that takes no position as to the proper disbursement of the proceeds of the bond, against which there are multiple and competing claims. Lastly, Plaintiff has stated that it is depositing the value of the bond with the Court.

As to the second stage of the inquiry, there can be no question that the defaulting defendants have forfeited any claim to the proceeds. See Metropolitan Life, 2013 WL 4495684, at *2 (“ ‘The failure of a named interpleader defendant to answer the interpleader complaint and assert a claim to the res can be viewed as forfeiting any claim of entitlement that might have been asserted .’ ”) (quoting Gen. Accident Group v. Gagliardi, 593 F.Supp. 1080, 1089 (D.Conn.1984)). Accordingly, as both stages of the interpleader inquiry have been met, the Court reports and recommends that Plaintiff’s motion for a default be granted and that there being no just reason for delay under Rule 54(b), Plaintiff is entitled to a judgment that the defaulting defendants are not entitled to any relief under the bond.

OBJECTIONS

*4 Any objections to this Report and Recommendation must be filed with the Clerk of the Court within 14 days. Failure to file objections within this period waives the right to appeal the District Court’s Order. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72; Wagner & Wagner, LLP v. Atkinson, Haskins, Nellis, Brittingham, Gladd & Carwile, P.C., 596 F.3d 84, 92 (2d Cir.2010); Beverly v. Walker, 118 F.3d 900, 902 (2d Cir.1997); Savoie v. Merchants Bank, 84 F.3d 52, 60 (2d Cir.1996).

Filed Feb. 17, 2015.

Footnotes

The defaulting defendants are as follows: Gold Coast Express Inc.; Greatwide American Trans–Freight, LLC; ABC Transport LLC, Aleksandr I. Yatchuk d/b/a AL–EX Transportation; R.B. Humphreys, Inc .; Juan Alcalde d/b/a Triplets Transport; A & R Logistics LLC; George E. Huntley; I & J Transport Services, Inc.; Challenge Trucking LLC; Paul Allan Morgan d/b/a Works 2 Wheel Transport; KYS Express, Inc.; Bill’s Trucking Service, Inc.; Speedway Express, Inc.; Kiswani Trucking, Inc.; CTL Express LLC; North Florida Hauling, LLC; Rapid Response Inc.; Hauling Inc.; Blaine Evans Trucking Inc.; Go Trucking Services, Inc.; Cook Logistics, LLC; Wehunt Contract Hauling, Inc.; Reliance Transportation, Inc.; GGS Transport, Inc.; Taylor Truck Line Inc.; Rosedale Transport Inc.; Express Roadside Assistance, Inc .; Viktar Palukoshka d/b/a VIK Transport; Hempel Transportation, LLC; Buchanan Hauling & Rigging Inc.; Master Trucking, LLC; J.C.’s Xpress Transport Solutions, LLC; Graval Corporation; AD Trucking Inc.; University Towing & Transport, Inc.; Road King Unlimited Inc.; Admiral Merchants Motor Freight, Inc.; Werner, LLC; Northern Lights Specialized, LLC; E and V Services, Inc.; Zen Transport, Inc.; Samuel J. Wallis d/b/a Wallis Flats, Inc.; B S L Express, Inc.; Maximum Speed Transportation Inc.; Sammons Transportation Inc.; J.H. Sims Trucking Company, Inc.; Pro–Trans Logistics Inc.; Apex Capital Corporation; Baxter, Bailey & Associates, Inc.; Comdata Network, Inc .; Sunbelt Finance, LLC; and First Bank & Trust d/b/a Firstline Funding Group.

The defaulting defendants are as follows: Gold Coast Express Inc.; Greatwide American Trans–Freight, LLC; ABC Transport LLC, Aleksandr I. Yatchuk d/b/a AL–EX Transportation; R.B. Humphreys, Inc .; Juan Alcalde d/b/a Triplets Transport; A & R Logistics LLC; George E. Huntley; I & J Transport Services, Inc.; Challenge Trucking LLC; Paul Allan Morgan d/b/a Works 2 Wheel Transport; KYS Express, Inc.; Bill’s Trucking Service, Inc.; Speedway Express, Inc.; Kiswani Trucking, Inc.; CTL Express LLC; North Florida Hauling, LLC; Rapid Response Inc.; Hauling Inc.; Blaine Evans Trucking Inc.; Go Trucking Services, Inc.; Cook Logistics, LLC; Wehunt Contract Hauling, Inc.; Reliance Transportation, Inc.; GGS Transport, Inc.; Taylor Truck Line Inc.; Rosedale Transport Inc.; Express Roadside Assistance, Inc .; Viktar Palukoshka d/b/a VIK Transport; Hempel Transportation, LLC; Buchanan Hauling & Rigging Inc.; Master Trucking, LLC; J.C.’s Xpress Transport Solutions, LLC; Graval Corporation; AD Trucking Inc.; University Towing & Transport, Inc.; Road King Unlimited Inc.; Admiral Merchants Motor Freight, Inc.; Werner, LLC; Northern Lights Specialized, LLC; E and V Services, Inc.; Zen Transport, Inc.; Samuel J. Wallis d/b/a Wallis Flats, Inc.; B S L Express, Inc.; Maximum Speed Transportation Inc.; Sammons Transportation lnc.; J.H. Sims Trucking Company, Inc.; Pro–Trans Logistics Inc.; Apex Capital Corporation; Baxter, Bailey & Associates, lnc.; Comdata Network, Inc .; Sunbelt Finance, LLC; and First Bank & Trust d/b/a Firstline Funding Group.

Pursuant to Federal Rule of Civil Procedure 5(a)(2), “[n]o service [of an amended pleading] is required on a party who is in default for failing to appear” unless the amended pleading “asserts a new claim for relief against [the defaulting party].” Fed.R.Civ.P. 5(a)(2).

The Court has independently reviewed all of the executed summons and has confirmed valid service.

Federal Rule of Civil Procedure 54(b) provides that “the court may direct entry of a final judgment as to one or more, but fewer than all, claims or parties only if the court expressly determines that there is no just reason for delay.” Fed.R.Civ.P. 54(b).