The appeal arises from a dispute over a failed delivery of garage doors. After a default was entered against the subcontractor, it continued to oppose a motion for summary judgment filed by the general contractor, arguing that the default did not preclude it from contesting the amount of damages to which the general contractor was entitled.
Tormax USA, LLC v. Kennedy Contractors, Inc., arises from a payment dispute between a general contractor and subcontractor over garage doors. After the general contractor paid the subcontractor for the delivery of garage doors to a project, the subcontractor failed to perform. After the subcontractor refused to refund the money paid by the general contractor, the general contractor sued.
The subcontractor failed to respond to the complaint, and a default was entered. Eventually the subcontractor moved to set aside the default, and much motion practice and litigation ensued, including the filing of a summary judgment motion by the general contractor. Ultimately, the trial court denied the motion to set aside default and a motion for rehearing on that denial. The trial court also granted summary judgment in favor of the general contractor, and the subcontractor appealed.
The entire appellate opinion states as follows:
Appellee [general contractor] filed a breach of contract action against Appellant [subcontractor] in the county court. A clerk's default was subsequently entered against [subcontractor] for failure to serve or file any document in the action. [Subcontractor] moved to set aside the default based on excusable neglect. The county court denied the motion, as well as [subcontractor’s] motion for reconsideration.
[General contractor] moved for summary judgment, which the county court granted. The court entered final summary judgment in favor of [general contractor] for the $16,782.20 [general contractor] claimed in damages, plus attorney's fees, costs, and prejudgment interest.
As there was no abuse of discretion, we affirm the trial court's decision not to set aside the default. However, we reverse and remand for a trial on damages because there are issues of fact regarding damages awardable under the contract.
As you can imagine, most of the details in the opening paragraphs of this post were gleaned from the pleadings below. Critically, though, despite the default being entered, the subcontractor filed an opposition to the motion for summary judgment arguing that even though liability was settled in favor of the general contractor due to the default, it was still entitled to be heard in opposition to the motion for summary judgment as to damages. This was sufficient for the appellate court to determine that there were issues of fact as to damages that needed to be resolved at trial.
The key takeaway for contractors is to be diligent in responding to lawsuits that are filed against them. The subcontractor in this case may have had legitimate defenses, but no longer has the ability to argue those, and instead is stuck trying to limit the damages and attorneys’ fees it may ultimately be required to pay. It’s also notable that the subcontractor filed an opposition to the motion for summary judgment. Absent that, the result may also have been different.