American Steamship Owners Mutual Protection & Indemnity Association v. Triumph…

Background

The American Steamship Owners Mutual Protection & Indemnity Association, Inc. (the “American Club”) brought a breach-of-contract action against Triumph Maritime Ltd. and Danmar Shipmanagement, Ltd. The American Club alleged that it provided marine insurance for the defendants, including insurance for the vessel M/V Triumph, from February 20, 2018, through May 13, 2018.

The American Club alleged that the defendants failed to pay required premiums. It calculated unpaid prorated and termination premiums of $29,654.79. The American Club also alleged that Triumph Maritime abandoned the vessel and its crew in Ensenada, Mexico, after the defendants failed to pay crew wages. The crew was later disembarked and repatriated, and the American Club paid claims for outstanding wages, repatriation costs, and related expenses totaling $350,074.63. The American Club alleged that the insurance contract required the defendants to reimburse those costs.

The defendants were served but did not answer or otherwise appear. Certificates of default were issued against both defendants. The American Club then moved for default judgment under Federal Rule of Civil Procedure 55(b). The complaint also asserted an account stated claim, but the court did not separately assess that claim because its damages were encompassed by the breach-of-contract claim.

Court’s Analysis

A defendant who fails to defend is in default, and well-pleaded factual allegations establishing liability are treated as admitted for purposes of a default judgment. Damages, however, are not automatically accepted as true. The court must determine the proper measure of damages and assess whether the evidence supports the requested amount with reasonable certainty.

The court concluded that it had federal admiralty jurisdiction because marine insurance contracts fall within federal admiralty jurisdiction. It also found personal jurisdiction based on a contract clause in which the defendants agreed to submit to the court’s jurisdiction. Applying New York law, the court found that the American Club adequately alleged the elements of breach of contract: a contract, the American Club’s performance, the defendants’ failure to perform, and damages.

The court determined that the American Club was entitled to $29,654.79 in unpaid premiums and $350,074.63 in unreimbursed wages, repatriation expenses, and related costs. The American Club sought an additional $1,916 for expenses paid after the complaint was filed, but the court refused to award that amount because Federal Rule of Civil Procedure 54(c) prohibits a default judgment from exceeding the amount demanded in the pleadings.

The court awarded contract interest at 1% per month rather than the 9% statutory rate requested in the motion. It awarded 1% monthly interest on $29,654.79 from May 18, 2018, and 1% monthly interest on $350,074.63 from July 9, 2018, in each instance through the date of judgment. The court found that the insurance contract allowed recovery of reasonable legal fees, collection expenses, and other recovery costs.

The court found the requested hourly rates reasonable but reduced the requested attorneys’ fees by 20% because the 66.6 hours claimed were greater than reasonable for a relatively straightforward contract case involving defendants who defaulted. The resulting fee award was $14,659.20. The court awarded the full requested $2,936.42 in costs, finding those costs reasonable in light of the expense of serving the defendants abroad.

Disposition

The court granted the American Club’s motion for default judgment. It directed the Clerk to enter judgment in favor of the American Club for: (1) $29,654.79, plus 1% monthly interest from May 18, 2018, through the date of judgment; (2) $350,074.63, plus 1% monthly interest from July 9, 2018, through the date of judgment; (3) $14,659.20 in attorneys’ fees; and (4) $2,936.42 in costs. Judge J. Paul Oetken also directed the Clerk to close the motion and the case.