United States District Court, N.D. Texas, Dallas Division
Lindsay, United States District Judge.
the court is Plaintiff CompuCom Systems, Inc.'s Motion
for Entry of Default Judgment (“Motion”) (Doc.
47), filed October 9, 2015; and Plaintiff CompuCom Systems,
Inc.'s Expedited Motion to Release or Reduce Preliminary
Injunction Bond (Doc. 52), filed January 20, 2017. On June
21, 2016, Magistrate Judge Paul D. Stickney entered the
Findings, Conclusions and Recommendation of the United States
Magistrate Judge (“Report”) (Doc. 50),
recommending that the court grant in part and deny in part
the Motion. Specifically, the magistrate judge recommended
that the court grant the Motion as to liability with respect
to Plaintiff's breach of contract claim but deny the
Motion with respect to its request for declaratory relief and
deny as moot the Motion with respect to its request for an
accounting.[*]The magistrate further recommended
that the court defer ruling on the amount of damages that
Plaintiff is entitled to for its contract claim until after
Plaintiff submits supplemental briefing establishing the
reasonableness of the attorney's fees requested.
8, 2016, Plaintiff CompuCom Systems, Inc.
(“Plaintiff” or “CompuCom”) filed
objections regarding the Report's recommendation as to
its request for declaratory relief and attorney's fees.
After considering the motions, Plaintiff's pleadings and
evidence, the Report, and conducting a de novo review of that
portion of the Report to which objection was made, the court,
for the reasons herein explained, accepts as modified the
Report, overrules Plaintiff's objections, and denies
without prejudice Plaintiff's Motion (Doc. 47), except
for Plaintiff's contract claim based on WJ Global's
failure to pay its subcontractors, which is denied. Further,
the court denies without prejudice Plaintiff CompuCom
Systems, Inc.'s Expedited Motion to Release or Reduce
Preliminary Injunction Bond (Doc. 52).
Standard of Review
magistrate judge's determination regarding a dispositive
matter is reviewed de novo if a party timely objects. 28
U.S.C. § 636(b)(1)(C); Fed.R.Civ.P. 72(b). A magistrate
judge's determination regarding a nondispositive matter
is reviewed under the “clearly erroneous or contrary to
law” standard. 28 U.S.C. § 636(b)(1)(A);
Fed.R.Civ.P. 72(a). As explained by the court in Arters
v. Univision Radio Broadcasting TX, L.P., No.
3:07-CV-0957-D, 2009 WL 1313285 (N.D. Tex. May 12, 2009):
The clearly erroneous standard applies to the factual
components of the magistrate judge's decision. The
district court may not disturb a factual finding of the
magistrate judge unless, although there is evidence to
support it, the reviewing court is left with the definite and
firm conviction that a mistake has been committed. If a
magistrate judge's account of the evidence is plausible
in light of the record viewed in its entirety, a district
judge may not reverse it. The legal conclusions of the
magistrate judge are reviewable de novo, and the district
judge reverses if the magistrate judge erred in some respect
in [his] legal conclusions. [T]he abuse of discretion
standard governs review of that vast area of choice that
remains to the [magistrate judge] who has properly applied
the law to fact findings that are not clearly erroneous.
Id. at *2 (citations and internal quotation marks
omitted). As Plaintiff's request for entry of a default
judgment against Defendant is dispositive, the court will
conduct a de novo review of the Report.
Motion for Default Judgment
Standard for Default Judgment
magistrate judge set forth the correct legal standard for
entry of default judgment pursuant to Federal Rule of Civil
Procedure 55(b). Accordingly, the court need not repeat that
legal standard for purposes of ruling on CompuCom's
Motion and objections to the Report.
Breach of Contract
magistrate judge found that Plaintiff's pleadings
satisfied the requirements for its breach of contract claim
and recommended that the court grant Plaintiff's Motion
as to liability with respect to Plaintiff's breach of
contract claim. Although CompuCom did not object to this
finding or recommendation, the court believes this issue
warrants further discussion and rejects the
magistrate judge's finding that Plaintiff's pleadings
satisfy the requirements for its breach of contract claim
based on Defendant WJ Global, LLC's
(“Defendant” or “WJ Global”) breach
of the parties' contract. In its Motion, CompuCom seeks a
default judgment on its contract claim to recover damages
sustained for the following alleged material breaches by WJ
Global of the parties' contractual agreements: (1)
Defendant's failure to pay its subcontractors under the
Subcontractor Master Agreement (“Master
Agreement”) and related statements of work
(“SOW” or “SOWs”); (2)
Defendant's failure to indemnify CompuCom “when
presented with a claim or demand arising from an act or
omission in WJ Global's relationship with its
subcontractors”; (3) Defendant's failure to provide
CompuCom with a release of liens by WJ Global and its
subcontractors; and (4) Defendant's refusal or failure to
provide requested information timely regarding it
subcontractors and their claims at the request of CompuCom.
Pl.'s Br. 4.
correctly noted by the magistrate judge, the elements for
breach of contract under Texas law are as follows: “(1)
a valid contract; (2) the plaintiff performed or tendered
performance; (3) the defendant breached the contract; and (4)
the plaintiff was damaged as a result of that breach.”
Aquila Sw. Pipeline, Inc. v. Harmony Exploration,
Inc., 48 S.W.3d 225, 235 (Tex. App.-San Antonio 2001,
pet. denied). There are five elements of a contractual
indemnity claim under Texas law: (1) a contractual indemnity
agreement exists; (2) the indemnity agreement obligates one
party to indemnify the other for particular claims; (3) those
claims were made; (4) all conditions precedent for recovery
have occurred or been waived or excused; and (5) the party
seeking relief has been damaged. See Transamerica Ins.
Co. v. Avenell, 66 F.3d 715, 719 (5th Cir. 1995) (citing
Ford v. Aetna Ins. Co., 394 S.W.2d 693 (Tex.
App.-Corpus Christi 1965, writ ref'd n.r.e.)). The court
determines as a matter of law what the contract requires of
the parties. See Meek v. Bishop Peterson & Sharp,
P.C., 919 S.W.2d 805, 808 (Tex. App.-Houston [14th
Dist.] 1996, writ denied). When the terms of a contract are
clear and unambiguous, and the facts concerning breach or
performance are undisputed or conclusively established, the
issue of whether the facts show performance or breach is also
decided as a matter of law. Id. A breach of contract
also occurs when one party to a contract prevents another
party to the contract from performing its side of the
bargain. See Texas Nat'l Bank v. Sandia Mortg.
Corp., 872 F.2d 692, 699 (5th Cir.1989). The
“party seeking to recover under a contract bears the
burden of proving that all conditions precedent have been
satisfied.” Associated Indem. Corp. v. CAT
Contracting, Inc., 964 S.W.2d 276, 283 (Tex. 1998).
“A condition precedent is an act or event that must
take place before performance of a contractual obligation is
due.” Cedyco Corp. v. PetroQuest Energy, LLC,
497 F.3d 485, 488 (5th Cir. 2007); Centex Corp. v.
Dalton, 840 S.W.2d 952, 956 (Tex. 1992). “[T]o
determine whether a condition precedent exists, the intention
of the parties must be ascertained; and that can be done only
by looking at the entire contract.” Solar
Applications Eng'r, Inc. v. T.A. Operating Corp.,
327 S.W.3d 104, 109 (Tex. 2010); Criswell v. European
Crossroads Shopping Ctr., Ltd., 792 S.W.2d 945, 948
(Tex. 1990). Indemnity agreements are construed under the
normal rules of contract construction. Associated Indem.
Corp., 964 S.W.2d at 284.
of its default, Defendant is deemed to have admitted the
allegations set forth in the Plaintiff's Complaint
(“Complaint”). Nonetheless, the court must review
the pleadings to determine whether Plaintiff can establish a
viable claim for the relief sought. Nishimatsu Const. Co.
v. Houston Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir.
1975). Plaintiff's pleadings are sufficient to establish
the existence of valid contracts entered into between
CompuCom and WJ Global that include the Master Agreement and
several SOWs. In addition, the Master Agreement contains an
indemnity provision. The court's concern rests with the
remaining requirements for Plaintiff's contract claim.
Failure to Pay Subcontractors under Master ...