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Chesapeake Bay Diving, Inc. v. Delta Demolition Group, Inc.

United States District Court, E.D. Virginia, Norfolk Division

December 12, 2014



HENRY COKE MORGAN, Jr., District Judge.

This matter comes before the Court on Plaintiff's Motion for Default Judgment ("Motion"), Doc. 17, as to Defendant Lee Chaklos only ("Defendant" or "Chaklos"). For the reasons stated herein, the Court GRANTS the Motion.

I. Factual Background and Procedural History

On November 18, 2013, Plaintiff Chesapeake Bay Diving, Inc. ("Plaintiff or "Chesapeake") filed a Verified Complaint alleging that Defendants Delta Demolition Group, Inc. ("Delta") and Chaklos (collectively "Defendants") breached a maritime contract by failing to pay for diving services in relation to a salvage operation for the barge BECKY THATCHER. Defendants were served on December 9, 2013. Am. Compl. ¶¶ 9-14. Neither Defendant filed an answer after being served. Accordingly, the Clerk entered default against the Defendants on February 11, 2014. Doc. 7.

Plaintiff filed its first Motion for Default Judgment on March 5, 2014. Doc. 8. Plaintiff then filed an Amended Complaint on May 7, 2014. Doc. 11. On May 8, 2014, the Court removed the entries of default and dismissed the first Motion for Default Judgment without prejudice. Doc. 12. The Clerk entered default against Defendant Chaklos on June 17, 2014.[1] Doc. 16. A second Motion for Default Judgment ("Motion"), against Defendant Chaklos only, was filed on June 24, 2014. Doc. 17. Chaklos has failed to respond, nor has he entered an appearance in this action.

The Amended Complaint alleges that Chaklos is the president and principal owner of Defendant Delta. Am. Compl. ¶ 4. Plaintiff alleges that Chaklos promised he would make certain that Plaintiff would get paid if Plaintiff would forgo legal action against Delta, as he was waiting for investor money. Id . ¶ 24. Plaintiff alleges these promises were made in a personal capacity. Id . ¶¶ 25, 28-30. Count One alleges a breach of maritime contract against both Defendants. Am. Compl. ¶¶ 15-19. Count Two alleges a breach of promise claim against Defendant Chaklos only. Id . ¶¶ 20-30.

II. Legal Standard

Federal Rule of Civil Procedure 55 sets forth a two-step process for obtaining a default judgment. Subsection (a) of Rule 55 calls for an entry of default when a party has failed to file a responsive pleading "or otherwise defend" the action within the applicable time limit. Fed.R.Civ.P. 55(a). The entry of default does not automatically entitle a party to a default judgment; rather, subsection (b)requires the court's final action following entry of default by the Clerk under subsection (a). Fed R. Civ. P. 55(b). The decision whether or not to grant a motion for default judgment rests in the sound discretion of the court. See Curtiss-Wright Corp. v. General Elec. Co., 446 U.S. 1, 8 (1980). Further, "[D]efendant, by his default, admits the plaintiff's well-pleaded allegations of fact[.]" Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780 (4th Cir. 2001) (quoting Nishimatsu Constr. Co., Ltd. v. Houston Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975)). However, the Court is still required to "determine whether the well-pleaded allegations in [the] complaint support the relief sought in this action." Ryan, 253 F.3d at 780.

III. Analysis

Plaintiff is asking the court to enter judgment against Defendant Chaklos in the amount of $40, 275.00, $50 in costs, and with post-judgment interest thereafter. Doc. 17 at 3.

In order for the Court to enter judgment it must have jurisdiction. As the amount in controversy in this matter is not sufficient to establish diversity jurisdiction, the contract in question must be a maritime contract. Contracts like the one in this case have routinely been held to be maritime contracts so as to implicate the Court's admiralty jurisdiction. See, e.g., Odyssey Marine Exploration. Inc. v. Unidentified Shipwrecked Vessel or Vessels, 636 F.3d 1338, 1340 (11th Cir. 2011) (finding contract to provide research to assist the recovery of a sunken vessel to be maritime); Williamson v. Recovery Ltd. P'ship, 542 F.3d 43, 49 (2nd Cir. 2008) (finding a contract related to the recovery of a shipwreck to be a maritime commercial venture); Cont'l Cas. Co. v. Canadian Universal Ins. Co., 605 F.2d 1340, 1343 (5th Cir. 1979) (finding a contract for diving services to be a maritime contract). Count Two, the breach of promise claim, is properly before the Court pursuant to the Court's supplemental jurisdiction. 28 U.S.C. § 1367(a).

a. Count One

Count One alleges a breach of contract against both Defendants. The Complaint states that Chaklos is the President and principal owner of Delta, and acts as the Chief Operating Officer. Am. Compl. ¶ 4. Count One contains no allegations that Chaklos acted outside of his scope as an officer of Delta. The invoices sent by Plaintiff are directed only to Defendant Delta. Id . Ex. A. Thus, it would appear that Chesapeake needs to pierce the corporate veil to hold Chaklos liable on the contract under Count One.

Under the alter ego doctrine, the corporate veil can be pierced to hold shareholders liable for the debts of the corporation. Dry Handy Inves., Ltd. v. Corvina Shipping Co. S.A., 988 F.Supp.2d 579, 582 (E.D. Va. 2013). Decisions to pierce the corporate veil must be taken cautiously. Id . The ...

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