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Builder Services Group, Inc. v. Topshelf Builder Specialties, Inc.

United States District Court, S.D. Georgia, Savannah Division

August 20, 2019

BUILDER SERVICES GROUP, INC. d/b/a GALE CONTRACTOR SERVICES, Plaintiff,
v.
TOPSHELF BUILDER SPECIALTIES, INC., and RICHARD L. QUARLES, JR., Defendants.

          ORDER

          WILLIAM T. MOORE, JR. UNITED STATES DISTRICT COURT JUDGE.

         Before the Court is Plaintiff's Motion for Default Judgment. (Doc. 30.) In its motion, Plaintiff Builder Services Group, Inc. ("BSG") requests that this Court enter default judgment against Defendant Richard Quarles, Jr. because he has failed to file any responsive pleadings in this case. (Id.) In response to Plaintiffs motion, Defendant Quarles, has filed an answer (Doc. 32), which this Court liberally construes as a motion to set aside default. After careful consideration, Defendant's motion is DENIED, and Plaintiff s Motion for Default Judgment is GRANTED.[1]

         I. MOTION TO SET ASIDE DEFAULT

         On April 8, 2019, the Clerk entered default against Defendant Quarles. (Doc. 18.) To set aside an entry of default, this Court must consider whether Defendant Quarles has established "good cause." Fed.R.Civ.P. 55(c); see also Sealey v. Branch Banking and Tr. Co., 2:17cv7 8 5-MHT-SMD, 2019 WL 14340 65, at *1 (N.D. Ala. Feb. 21, 2019) ("After the clerk enters default, but before entry of default judgment, the court may exercise its discretion to set aside an entry of default for good cause." (internal quotation omitted)). Courts considering whether a party has demonstrated good cause have noted that the good cause standard is a "liberal one" and often "var[ies] from situation to situation." Compania Interamericana Export-Import, S.A. v. Compania Dominicana de Aviacion, 88 F.3d 948, 951 (11th Cir. 1996). Under this discretionary standard, courts often

consider whether the default was culpable or willful, whether setting it aside would prejudice the non-moving party, and whether the defaulting party may have a meritorious defense. Depending on the circumstances, courts have also considered factors such as whether the public interest was implicated, whether there was significant financial loss to the defaulting party, and whether the defaulting party acted promptly to correct the default.

Perez v. Wells Fargo H.A., 774 F.3d 1329, 1337 n.7 (11th Cir. 2014) (internal citations and quotations omitted).

         In this case, the Court finds that Defendant Quarles has failed to demonstrate good cause to set aside default. (See Doc. 32.) On May 6, 2019, this Court excused Defendant Quarles's failure to file any responsive pleading in another case Plaintiff BSG filed against Defendant Quarles. (CV418-160, Doc. 35.) In that order, the Court provided that Defendant Quarles should be given "the benefit of the doubt" because he was acting pro se and may have been confused about the dismissal of another defendant in that case. (Id.) The Court, however, warned that "Defendant Quarles is put on notice that his pro se status is no excuse to avoid this action or the rules of this Court." (Id.)

         Despite this Court's leniency and warning to Defendant Quarles in a nearly identical case, Defendant Quarles failed to file any responsive pleading in this case until July 2, 2019-nearly four months after the complaint was filed. (Doc. 32.) The Clerk entered default against Defendant Quarles in this case on April 8, 2019. (Doc. 18.) In the related case, this Court provided its warning to Defendant Quarles on May 6, 2019. (CV418-160, Doc. 35.) Given the ample filings in this case and the warnings provided in Plaintiff's other case, there is simply no excuse for Defendant's failure to file a timely response. Moreover, Defendant has not provided any sufficient basis in his answer for this Court to set aside the entry of default. Accordingly, this Court will not set aside the entry of default against Defendant Quarles.

         II. MOTION FOR DEFAULT JUDGMENT

         Because this Court has found that Defendant Quarles failed to file a timely responsive pleading in this case, the Court will now consider the merits of Plaintiff's Motion for Entry of Default Judgment (Doc. 30) . Under Federal Rule of Civil Procedure 55, a party can only obtain default judgment through a two-step process. First, "[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 cleric must enter the party's default." Fed.R.Civ.P. 55(a). After a clerk's entry of default, the moving party may request an entry of default judgment. Fed.R.Civ.P. 55(b). "[B]efore entering a default judgment for damages, the district court must ensure that the well-pleaded allegations in the complaint, which are taken as true due to the default, actually state a substantive cause of action and that there is a substantive, sufficient basis in the pleadings for the particular relief sought." Tyco Fire & Sec, LLC v. Alcocer, 218 F. App' x 860, 863 (11th Cir. 2007).

         As previously established, the Clerk entered default against Defendant Quarles on April 8, 2019. (Doc. 18.) Accordingly, this Court must now consider whether there is a sufficient basis in Plaintiff's complaint to warrant an entry of default judgment. In its complaint, Plaintiff asserts six substantive causes of action against Defendant Quarles. These claims include: (1) breach of contract, (2) tortious interference with contractual, customer, and business relations, (3) misappropriation of trade secrets under 18 U.S.C. § 1831, (4) misappropriation of trade secrets under O.C.G.A. § 10-1-760, (5) violations of the Georgia Computer Systems Protection Act, O.C.G.A. § 16-9-90, and (6) breach of fiduciary duty. (Doc. 1.) The Court will review each of these claims in turn.

         First, Plaintiff asserts that Defendant Quarles breached a confidentiality agreement that he signed while employed with Plaintiff BSG. (Doc. 1 at ¶¶ 97-115.) Under O.C.G.A. § 13-8-53, non-competition agreements are enforceable against employees who "[c]ustomarily and regularly engage in making sales or obtaining orders" provided that the "restrictions are reasonable in time, geographic area, and scope of prohibited activities." In this case, Plaintiff has sufficiently alleged that Defendant Quarles was a sales representative who "was responsible for selling insulation, fireplaces, garage doors, gutters, mirrors, shelving, and shower doors." (Doc. 1 at ¶ 33.) Additionally, the complaint provides that Defendant Quarles signed a confidentiality agreement which prohibited him from soliciting BSG customers or competing with BSG in the Savannah area during his employment and 18 months after the end of his employment. (Id. at ¶¶ 16-2 9.) Finally, the complaint provides that Defendant Quarles violated this agreement by contacting Plaintiff BSG's customers and soliciting business after his termination. (Id. at ¶¶ 59-83.) Based on these allegations, that are deemed admitted through Defendant's default, the Court finds that default judgment should be entered with respect to Plaintiffs breach of contract claim against Defendant Quarles.

         In its complaint, Plaintiff also alleges that Defendant Quarles committed tortious interference with contractual, customer and business relations. (Id. at ¶¶ 116-23.) "Georgia law permits recovery in tort for a third party's interference, without legal justification or privilege, with another's contractual or business relations." U.S. Capital Funding VI, Ltd. v. Patterson Bankshares, Inc., 137 F.Supp.3d 1340, 1370 (S.D. Ga. 2015). To recover under this claim, a plaintiff must establish

(1) improper action or wrongful conduct by the defendant without privilege; (2) the defendant acted purposely and with ...

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