American Empire Surplus Lines Insurance Company v. Uplift Elevator of NY Inc.

Background

American Empire Surplus Lines Insurance Company sued Uplift Elevator of NY Inc., Jermaine Hickson, and Hamilton Heights Cluster Associates, L.P. The complaint alleged that Uplift failed to pay $1,542,306 in additional premiums under a 2018 commercial general liability insurance policy and failed to permit audits under 2017 and 2019 policies. The opinion states that Hickson and Hamilton Heights were named only as nominal defendants to the extent their interests could be affected by the claims.

Under the policies, premiums were based on Uplift’s gross receipts. American Empire audited Uplift’s business for the 2018 policy and determined that Uplift owed the additional premium. American Empire alleged that Uplift had not paid it and had not cooperated with audits for the 2017 and 2019 policies.

Procedural History

The court entered an order of default against all defendants on October 30, 2020, after they did not respond to the request for default judgment, the court’s order to show cause, or the hearing. The court referred the case to Magistrate Judge Kevin Nathaniel Fox for an inquest, which is a proceeding to determine the relief owed after a default.

Judge Fox issued a report and recommendation proposing that American Empire receive $1,542,306 in damages against Uplift, prejudgment interest at 9% per year from January 29, 2020, and $515 in costs. He also recommended declarations that American Empire could examine Uplift’s business records to determine whether additional premiums were owed under the 2017 and 2019 policies and that Uplift had to provide relevant records by a specified date. He recommended denying American Empire’s request for attorney fees. No party objected.

Ruling

Because no objections were filed, the court reviewed the report and recommendation for clear error on the face of the record. Judge Paul G. Gardephe found it thorough, well reasoned, and free of clear error, and adopted it in its entirety.

The court directed the Clerk to enter judgment and close the case. The resulting relief was $1,542,306 in damages against Uplift, prejudgment interest at 9% per year from January 29, 2020, and $515 in costs against Uplift. The court also approved the audit-related declarations and denied American Empire’s request for attorney fees. Under the classification convention, this is a procedural order because the judgment followed the defendants’ nonappearance and default rather than an adversarial decision testing the claims on the merits.