United States District Court, D. Colorado
A. BRIMMER, United States District Judge
matter is before the Court on Defendant and Third-Party
Plaintiff Ames-Granite A Joint Venture's Motion for
Default Judgment Against Third-Party Defendants Aaron Barela
d/b/a Minority Contract Consulting and Lincoln Reserve Group,
Inc. [Docket No. 44]. The Court has jurisdiction pursuant to
28 U.S.C. § 1332.
of the Clerk of Court's entries of default, Docket Nos.
30, 41, the allegations in Ames-Granite A Joint Venture's
(“Ames/Granite”) third party complaint, Docket
No. 17, are deemed admitted. See Olcott v. Del. Flood
Co., 327 F.3d 1115, 1125 (10th Cir. 2003).
entered into a written contract with the Colorado Department
of Transportation for construction on U.S. Highway 36,
Contract No. NH 0361-093, Code 17516 (the “Prime
Contract”). Docket No. 17 at 3, ¶ 8-9.
Ames/Granite agreed to furnish labor, materials, and other
services in prosecution of the work provided for in the Prime
Contract and to perform all work for the construction.
about September 5, 2012, Ames/Granite subcontracted with
plaintiff K.N.J., Inc. for the performance of a portion of
the work under the Prime Contract. Docket No. 17 at 3, ¶
10-11. The subcontract required plaintiff to procure a
performance bond to guarantee its performance. Id.,
¶ 12. Plaintiff procured a performance bond from Aaron
Barela d/b/a Minority Contract Consulting
(“Barela”), Bond No. KNJ-1026-PP, with a penal
sum amount of $3, 885, 776.50. Id., ¶ 13. As
security for the bond, Barela procured an Institutional
Escrow Receipt, Certificate No. 09-0301-CCL 186, Book Entry
Form from Lincoln Reserve Group, Inc.
(“Lincoln”). Id. at 4, ¶ 15. The
escrow terms provide that, upon default by plaintiff, Lincoln
guarantees all of the obligations of Barela's personal
guarantee in the bond. Id., ¶ 16.
failed to meet its subcontract obligations, defaulted, and
has not remedied its defaults. Docket No. 17 at 4-5, ¶
21. Barela failed and refused to perform his obligations
under the bond in the event of default. Id. at 6,
¶ 31. Further, Lincoln has failed to remedy
plaintiff's defaults and has materially breached its
obligation to guarantee Barela's performance under the
Bond. Id. at 8, ¶ 47. As a result of these
defaults and failures, Ames/Granite alleges it has been
harmed in the amount of $1, 735, 001.17. Id. at 7-8,
¶¶ 41, 48.
may not simply sit out the litigation without consequence.
See Cessna Fin. Corp. v. Bielenberg Masonry Contracting,
Inc., 715 F.2d 1442, 1444-45 (10th Cir. 1983)
(“[A] workable system of justice requires that
litigants not be free to appear at their pleasure. We
therefore must hold parties and their attorneys to a
reasonably high standard of diligence in observing the
courts' rules of procedure. The threat of judgment by
default serves as an incentive to meet this standard”).
In order to obtain a judgment by default, a party must follow
the two-step process described in Federal Rule of Civil
Procedure 55. First, it must seek an entry of default from
the Clerk of the Court under Rule 55(a). Rule 55(a) provides
that “[w]hen a party against whom a judgment for
affirmative relief is sought has failed to plead or otherwise
defend, and that failure is shown by affidavit or otherwise,
the clerk must enter the party's default.”
Fed.R.Civ.P. 55(a). Second, after default has been entered by
the Clerk, the party must seek default judgment according to
the strictures of Rule 55(b). See Williams v.
Smithson, 1995 WL 365988, at *1 (10th Cir. June 20,
1995) (citing Meehan v. Snow, 652 F.2d 274, 276 (2d
consequence of default is that the well-pleaded allegations
in the complaint are deemed admitted. See Charles
Wright, Arthur Miller & Mary Kane, Fed. Prac. & Proc.
§ 2688 (3d ed. 2010). “Even after default,
however, it remains for the court to consider whether the
unchallenged facts constitute a legitimate cause of action,
since a party in default does not admit mere conclusions of
law.” Id. at 63. A court need not accept
conclusory allegations. Moffett v. Halliburton Energy
Servs., Inc. 291 F.3d 1227, 1232 (10th Cir. 2002).
Although “[s]pecific facts are not necessary” in
order to state a claim, Erickson v. Pardus, 551 U.S.
89, 93 (2007) (per curiam) (quoting Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007)), the well-pleaded
facts must “permit the court to infer more than the
mere possibility of misconduct.” Ashcroft v.
Iqbal, 556 U.S. 662, 679 (2009) (internal quotation and
alteration marks omitted). Thus, even though modern rules of
pleading are somewhat forgiving, “a complaint still
must contain either direct or inferential allegations
respecting all the material elements necessary to sustain a
recovery under some viable legal theory.” Bryson v.
Gonzales, 534 F.3d 1282, 1286 (10th Cir. 2008)
(quotation and citation omitted).
decision to enter default judgment is “committed to the
district court's sound discretion.”
Olcott, 327 F.3d at 1124 (citation omitted). In
exercising that discretion, the Court considers that
“[s]trong policies favor resolution of disputes on
their merits.” Ruplinger v. Rains, 946 F.2d
731, 732 (10th Cir. 1991) (quotation and citations omitted).
“The default judgment must normally be viewed as
available only when the adversary process has been halted
because of an essentially unresponsive party.”
Id. It serves to protect a plaintiff against
“interminable delay and continued uncertainty as to his
rights.” Id. at 733. When “ruling on a
motion for default judgment, the court may rely on detailed
affidavits or documentary evidence to determine the
appropriate sum for the default judgment.” Seme v.
E&H Prof'l Sec. Co., Inc., No.
08-cv-01569-RPM-KMT, 2010 WL 1553786, at *11 (D. Colo. Mar.
19, 2010). “[A] court may not enter a default judgment
without a hearing unless the amount claimed is a liquidated
sum or one capable of mathematical calculation.”
Venable v. Haislip, 721 F.2d 297, 300 (10th Cir.
1983). The Court need not conduct a fact-intensive inquiry,
but must ensure that there is “a basis for the damages
specified in the default judgment.” Transatlantic
Marine Claims Agency, Inc. v. Ace Shipping Corp., Div. of Ace
Young Inc., 109 F.3d 105, 111 (2d Cir. 1997).
Court finds that Ames/Granite's allegations sufficiently
state claims against both Barela and Lincoln. “[A]
party attempting to recover on a claim for breach of contract
must prove the following elements: (1) the existence of a
contract; (2) performance by the plaintiff or some
justification for nonperformance; (3) failure to perform the
contract by the defendant; and (4) resulting damages to the
plaintiff.” W. Distrib. Co. v. Diodosio, 841
P.2d 1053, 1058 (Colo. 1992) (internal citations omitted).
Ames/Granite's third-party complaint alleges specific
facts regarding the formation and terms of the subcontract,
bond, and escrow agreements. Docket No. 17 at 3-4
¶¶ 10-12, 15-16. It also alleges substantial
performance on its part. Id. at 7, 8, ¶ 39, 45.
Regarding breach, Ames/Granite alleges specific factual
circumstances that resulted in a material breach of the
subcontract, id. at 4-5, ¶ 21, and material
breach of the related bond and escrow agreements.
Id. at 6, 8, ¶¶ 30-31, 46-47.
the measure of damages for a breach of contract is the loss
in value to the injured party of the other party's
performance caused by its failure or deficiency, plus any
other incidental or consequential loss caused by the breach,
less any cost or other loss that the injured party has
avoided by not having to perform.” Gen. Ins. Co. of
Am. v. City of Colorado Springs, 638 P.2d 752, 759
(Colo. 1981) (citing Restatement (Second) of Contracts,
§ 347 (1981)). The third-party complaint alleges damages
in the amount of $1, 735, 001.17. Docket No. 17 at 7-8,
¶¶ 41, 48. Am es/Granite's motion asks for an
additional $130, 000, i.e., $1, 865, 001.17, supported by a
conclusory affidavit. Docket No. 44-1 at 2, ¶¶ 8,
11. No explanation is provided for the additional amount. See
Docket Nos. 44, 44-1. Nor does plaintiff provide any
indication of how either amount was determined. See
Docket Nos. 17, 44, 44-1. The Court cannot “just accept
[Ames/Granite's] statement of the damages.”
Transatlantic Marine Claims Agency, Inc., 109 F.3d
at 111. Rather, a detailed affidavit or documentary or
testimonial evidence is necessary for the Court to determine
whether the claimed damages are appropriate. Id.
Because the Court cannot determine the appropriate amount of
damages, the Court will enter default judgment on the issue
of liability, but not damages. Id. (finding