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One Beacon Insurance Co. v. Enchante Accessories

October 31, 2008

ONE BEACON INSURANCE COMPANY AS SUBROGEE OF TIMING GROUP, LLC, PLAINTIFF,
v.
ENCHANTE ACCESSORIES, EDS2, SUTGO LOGISTICS, INC., EDS/SUTGO LOGISTICS, INC., LINDEN WAREHOUSE AND DISTRIBUTION COMPANY, INC., DEFENDANTS.



The opinion of the court was delivered by: Greenaway, Jr., U.S.D.J.

OPINION

This matter comes before this Court on the motion of One Beacon Insurance Company ("Plaintiff" or "One Beacon"), as subrogee of Timing Group, LLC ("Subrogor"or "Timing Group") for entry of default judgment against Sutgo Logistics, Inc., and EDS/Sutgo Logistics, Inc. (collectively, the "Defendants"), pursuant to FED R. CIV. P. 55(b).Plaintiff seeks recovery for the loss of 9,138 pairs of shoes (the "Cargo"), allegedly caused by Defendants' negligence .

I. FACTS

Timing Group owned the Cargo at the center of this dispute. (Aff. of Lawrence C. Glynn ("Glynn Aff.") at ¶ 4.) On or about November 2, 2006, Defendants received the Cargo for storage at their warehouse. (Id. ¶ 5.) On Friday, November 3, 2006, the Cargo remained within the container in an area of the warehouse's receiving dock. (Id. at ¶ 7.) The area of the warehouse's receiving dock in which the Cargo was left is an area that is regularly bypassed or left unsecured by the warehouse security system. (Amended Compl. ¶ 45.) The warehouse was closed on Saturday, November 4, 2006. (Glynn Aff. at ¶ 7.)

On Sunday, November 5, 2006, Edmund Erani, a principal of one or more of the Defendants, discovered that the entire shipment of shoes was missing from the premises. (Id. ¶¶ 8-9.) As of the date that the motion for default judgment was filed, the Cargo had not been located. (Id. at ¶ 10.)

Timing Group's insurance policy with One Beacon applied coverage which included consequential damages, and was based on "1) the selling price, less un-incurred expenses for goods that were sold, or 2) the CIF value plus 30% as an agreed upon mark up for lost profits for unsold goods." (Id. at 12; Decl. of Joseph Lodispoto ("Lodispoto Decl.") at 22; Fax Cover Sheet from Mary T. Dwan, Senior Claims Adjustor to General Inspection Co., attached as Ex. G to Lodispoto Decl.) The final adjustment for the Cargo loss was $209,433.82, and One Beacon issued two checks totaling $204,433.82 to Timing Group.*fn1 (Glynn Aff. at ¶ 14.)

Plaintiff alleges that Defendants failed to deliver the entire cargo and failed to care properly for the Cargo while it was in their possession. Plaintiff requests $240,005.41 in compensatory damages, which includes the full cost of the lost cargo to the insurance company, in addition to the $5,000 deductible paid by Timing Group, and pre-judgment interest, as well as $500,000.00 in punitive damages for Defendants' failure to secure the Cargo.

II. LEGAL STANDARD

Federal Rule of Civil Procedure 55(b)(2), which governs the entry of default judgment, states:

In all other cases, the party must apply to the court for a default judgment. A default judgment may be entered against a minor or incompetent person only if represented by a general guardian, conservator, or other like fiduciary who has appeared. If the party against whom a default judgment is sought has appeared personally or by a representative, that party or its representative must be served with written notice of the application at least 3 days before the hearing. The court may conduct hearings or make referrals--preserving any federal statutory right to a jury trial--when, to enter or effectuate judgment, it needs to:

(A) conduct an accounting;

(B) determine the amount of damages;

(C) establish the truth of any allegation by ...


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