E-Alert Case Updates

In a Federal Default Judgment Case, Plaintiff Must Provide Documents to Support Damages Claimed

The Hartford Fin. Serv. Group, Inc. v. Meil
Case No.: WDQ-10-2720 (D. Md. 2011)
by Gregory L. Arbogast, Associate
Semmes, Bowen & Semmes (www.semmes.com)

In Hartford Financial Services Group, Inc. v. Meil, the United States District Court denied Hartford Financial Services Group, Inc.’s (“Hartford”) Motion for Default Judgment without prejudice and gave Hartford the right to resubmit the motion with additional detailed documents supporting their damages claim. The Court found that merely submitting one (1) affidavit without any documents supporting the affidavit’s calculations, was insufficient to support a damages claim on a Motion for Default Judgment.

Meil arose out of an agency contract between the Hartford Financial Services Group and Carl J. Meil, Jr. and Carl J. Meil, Jr., Inc. (collectively, “Defendants”), whereby Defendants agreed to sell insurance policies on behalf of Hartford and to collect premiums on those policies for Hartford. Beginning in October 2007, Defendants began failing to pay Hartford the insurance premiums. Hartford made repeated requests that Defendants supply the delinquent insurance premiums, but each time Defendants offered an excuse as to non-payment. As a result, Hartford terminated the agency agreement.

On November 17, 2009, based on Defendants’ failure to forward the insurance premiums to Hartford, Mr. Meil was indicted on fraud and misappropriation charges. On December 8, 2009, Mr. Meil pled guilty and agreed to make restitution payments to Hartford but none were made.

On September 30, 2010, Hartford filed suit against Defendants, alleging breach of contract, breach of fiduciary duty, and tortious interference with contract. Despite proper service, Defendants did not file an Answer or assert any defenses. Thereafter, Hartford moved for entry of default. Then, Hartford filed a Motion for Default Judgment, requesting $283,755.02 in damages.

Judge Quarles referred the case to Magistrate Judge Grimm for determination as to whether to grant Hartford’s Motion for Default Judgment. A failure to answer deems all of Hartford’s factual allegations admitted. A failure to answer, however, does not admit legal conclusions or damages. Therefore, Magistrate Judge Grimm analyzed the well-plead Complaint to assess whether Hartford could prevail on its causes of action and recover damages.

Magistrate Judge Grimm held that Hartford could recover on its breach of contract and tortious interference with contract claims, but not on its breach of fiduciary duty claim.

Magistrate Judge Grimm denied Hartford’s claim for damages. Damages can only be awarded on a Motion for Default Judgment where the damages are a sum-certain. In support of its claim for damages, Hartford submitted an Affidavit from its Financial Reporting and Collections Manager, Deborah Schmaltz. Ms. Schmaltz declared that, based on Hartford’s records, Hartford suffered $283,755.02 in damages. Ms. Schmaltz, however, did not attach any documents supporting her claim. Magistrate Judge Grimm held that an Affidavit, without any supporting documentation, was insufficient to establish a sum-certain amount of damages on a Motion for Default Judgment. Therefore, he denied Hartford’s motion.