Reported / Citable
Background
Employers Insurance Company of Wausau issued Texcon commercial workers’ compensation and employers’ liability coverage from March 2, 2023, through March 2, 2024. The policy’s initial premium was subject to a post-policy audit based on Texcon’s actual exposure, and Texcon agreed to pay any resulting balance.
After auditing Texcon’s records, Employers Insurance determined that Texcon owed $157,060 in additional premiums. It sued for a sworn account, breach of contract, and quantum meruit. Texcon’s registered agent was personally served but Texcon neither appeared nor responded, and the clerk entered default.
The Court’s Holding
The memorandum and recommendation concluded that default judgment was procedurally and substantively warranted. The court had diversity jurisdiction and personal jurisdiction because Texcon’s registered agent was properly served. Texcon’s nonappearance left no disputed factual issues, prejudiced the insurer, and provided no basis to find excusable neglect or to anticipate setting aside a judgment.
The allegations and supporting records established claims for a sworn account and breach of contract. The recommendation would award $157,060 in unpaid premiums, prejudgment interest from February 26, 2025, through the day before judgment, and post-judgment interest under 28 U.S.C. § 1961. It would deny quantum-meruit relief because a valid contract governed the dispute, limit attorneys’ fees to $2,019, and award only the $405 filing fee as costs.
Key Takeaways
- A properly served corporate defendant’s failure to appear can support default judgment when the pleadings establish liability.
- Audit records, policy terms, an account summary, and custodian testimony sufficiently established the overdue premium amount without an evidentiary hearing.
- Non-fee items, including private service and investigation expenses, could not be folded into attorneys’ fees or recovered as taxable costs here.
Why It Matters
The recommendation illustrates the evidentiary showing an insurer can use to obtain default relief for audit-adjusted premiums. It also distinguishes recoverable contractual damages and statutory interest from unrecoverable litigation expenses, even where the defendant defaults.