Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-alnd-2_19-cv-01273/USCOURTS-alnd-2_19-cv-01273-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Contract Dispute

---

UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ALABAMA

SOUTHERN DIVISION

WESTERN SURETY COMPANY,

Plaintiff,

v.

DELISA M. HURST,

Defendant.

}

}

}

}

}

}

}

}

}

Case No.: 2:19-cv-01273-MHH

MEMORANDUM OPINION AND ORDER

Plaintiff Western Surety Company has filed a motion asking the Court to enter 

default judgment against defendant Delisa Hurst. (Doc. 12). Western Surety filed 

this action to enforce Ms. Hurst’s alleged contractual obligation to indemnify 

Western Surety as the guarantor of a bond that Western Surety paid to the Limestone 

County Probate Court. (Doc. 1). The summons notifying Ms. Hurst of this case was 

executed on September 3, 2019 and returned to this court on September 6, 2019. 

(Doc. 5).1

 Ms. Hurst has not responded to the complaint. 

 1 The return on service indicates that the summons and complaint were served on Christopher 

Hurst, a person of suitable age and discretion residing in the defendant’s usual place of abode. Mr. 

Hurst’s address is given as 2416 Powerly Avenue SW, Birmingham, AL 35241. (Doc. 1, p. 9; 

Doc. 5).

FILED

 2020 Feb-04 PM 02:34

U.S. DISTRICT COURT

N.D. OF ALABAMA

Case 2:19-cv-01273-MHH Document 15 Filed 02/04/20 Page 1 of 10
On October 3, 2019, more than 21 days following the execution of the 

summons, Western Surety moved for entry of default against Ms. Hurst. (Doc. 8). 

The Clerk made an entry of default against Ms. Hurst on October 3, 2019. (Doc. 9). 

On October 21, 2019, Western Surety moved for the entry of a default judgment 

against Ms. Hurst. (Doc. 12). In support of its motion for default judgment, Western 

Surety has filed copies of Ms. Hurst’s bond application, the probate court orders 

assessing Ms. Hurst’s and Western Surety’s liability, and an affidavit describing the 

damages sought. (Docs. 1-1, 1-2, 1-3, 12-1). Western Surety also has provided 

documentation to support its claim for damages under the indemnity agreement and 

a calculation of interest. (Doc. 14-1). For the reasons explained below, the Court 

grants Western Surety’s motion and enters default judgment against Ms. Hurst.

I. STANDARD OF REVIEW

Federal Rule of Civil Procedure 55 establishes a two-step procedure for 

obtaining a default judgment. First, when a defendant fails to plead or otherwise 

defend a lawsuit, as in this case, the clerk of court may enter a clerk’s default. FED.

R. CIV. P. 55(a). Second, after entry of the clerk’s default, if the defendant is not an 

infant or an incompetent person, a court may enter a default judgment against the 

defendant because of the defendant’s failure to appear or defend. FED. R. CIV. P.

55(b)(2). “A default judgment must not differ in kind from, or exceed in amount, 

what is demanded in the pleadings.” FED. R. CIV. P. 54(c). 

Case 2:19-cv-01273-MHH Document 15 Filed 02/04/20 Page 2 of 10
“A motion for default judgment is not granted as a matter of right.” Pitts ex 

rel. Pitts v. Seneca Sports, Inc., 321 F. Supp. 2d 1353, 1356 (S.D. Ga. 2004) (internal 

footnote omitted). After a clerk enters a default pursuant to Rule 55(a), a district 

court must review the sufficiency of the complaint and its underlying substantive 

merits to determine whether a moving party is entitled to default judgment. 

Chudasama v. Mazda Motor Corp., 123 F.3d 1353, 1370 n.41 (11th Cir. 1997). A 

district court must ensure that the well-pleaded allegations in the complaint state a 

substantive cause of action and that a sufficient basis exists in the pleadings for the 

relief sought. Cotton v. Mass. Mut. Life Ins. Co., 402 F.3d 1267, 1278 (11th Cir. 

2005). In addition to the pleadings, a district court may consider evidence presented 

in the form of an affidavit or declaration. Frazier v. Absolute Collection Serv., Inc., 

767 F. Supp. 2d 1354, 1362 (N.D. Ga. 2011). A defaulting defendant “admits the 

plaintiff’s well-pleaded allegations of fact” for purposes of liability. Buchanan v. 

Bowman, 820 F.2d 359, 361 (11th Cir. 1987) (quoting Nishimatsu Constr. Co., Ltd. 

v. Houston Nat’l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975) (internal quotation 

marks omitted)).

II. FACTUAL ALLEGATIONS

In August 2015, the Probate Court of Limestone County issued Delisa Hurst 

letters of guardianship and conservatorship over the Estate of Clarence H. McDaniel, 

Sr., an incapacitated person. (Doc. 1, p. 2). To secure the conservatorship, Ms. 

Case 2:19-cv-01273-MHH Document 15 Filed 02/04/20 Page 3 of 10
Hurst executed a bond application with Western Surety. (Doc. 1, p. 2). As part of 

the bond application, Ms. Hurst signed an indemnity agreement in which she agreed 

“to completely INDEMNIFY the Company from and against any liability, loss, cost, 

attorneys’ fees and expenses whatsoever which the Company shall at any time 

sustain as surety or by reason of having been surety on this bond . . . or for 

enforcement of this agreement.” (Doc. 1, p. 3). Ms. Hurst agreed to pay interest on 

any payment that Western Surety made under the bond. (Doc. 1, p. 5).

When Mr. McDaniel died, the probate court conducted an accounting and 

found that Ms. Hurst had misappropriated, improperly disbursed, or otherwise failed 

to account for certain estate assets. (Doc. 1-2). On July 15, 2019, the probate court, 

by amended order, entered judgment against Ms. Hurst and Western Surety in the 

amount of $324,831.10. (Doc. 1-3, p. 3). Western Surety satisfied the judgment.

(Doc. 12-1, p. 5; Doc. 14-1, p. 51). As of July 1, 2019, Western Surety had incurred 

$22,550.39 in attorneys’ fees and costs in the investigation and defense of claims 

against Ms. Hurst. (Doc. 1, p. 5; Doc. 14-1, pp. 53-55). 

III. DISCUSSION

a. Subject Matter Jurisdiction

Before a district court enters a default judgment, the court first must ensure 

that it has subject matter jurisdiction over the case. Smarter Every Day, LLC v. 

Nunez, 2017 WL 1247500, at *2 (N.D. Ala. Apr. 5, 2017) (citing Sys. Pipe & Supply, 

Case 2:19-cv-01273-MHH Document 15 Filed 02/04/20 Page 4 of 10
Inc. v. M/V Viktor Kurnatovskiy, 242 F.3d 322, 324 (5th Cir. 2001)). Western Surety

contends that this Court has jurisdiction to hear this case pursuant to 28 U.S.C. § 

1332. (Doc. 1, pp. 1–2). 

In its complaint, Western Surety asserts that Ms. Hurst is liable for contractual 

damages of at least $324,831.10, the amount of the probate court judgment. (Doc. 

1, p. 6). Based on this factual allegation, the Court is satisfied that more than $75,000 

is in controversy.

As to the requirement of complete diversity between the parties, Western 

Surety alleges that it is a corporation organized and existing under the laws of South 

Dakota with its principal place of business in Sioux Falls, South Dakota. (Doc. 1, p. 

1). Delisa Hurst is a citizen and domiciliary of Alabama. (Doc. 1, p. 1). After 

reviewing the complaint, the Court determines that the parties are completely 

diverse, and the Court therefore has subject matter jurisdiction over this case

pursuant to § 1332.

b. Personal Jurisdiction

To enter a valid default judgment, a district court also must determine that it 

has personal jurisdiction over the defendant. Oldfield v. Pueblo De Bahia Lora, S.A., 

558 F.3d 1210, 1217 (11th Cir. 2009). Under Rule 4 of the Federal Rules of Civil 

Procedure, “[s]erving a summons or filing a waiver of service establishes personal 

Case 2:19-cv-01273-MHH Document 15 Filed 02/04/20 Page 5 of 10
jurisdiction over a defendant . . . who is subject to the jurisdiction of a court of 

general jurisdiction in the state where the district court is located.” FED. R. CIV. P.

4(k)(1)(A). Western Surety alleges that Ms. Hurst is a competent, adult citizen of 

Alabama not a member of the United State military. (Doc. 1, p. 1; Doc. 8-1, p. 2). 

The record indicates that Western Surety served Christopher Hurst, Ms. Hurst’s 

husband, at her usual place of abode, 2416 Powderly Avenue SW, Birmingham, AL 

35241. (Doc. 5, p. 1; Doc. 8-1, p. 2). Therefore, the Court is satisfied that it has 

personal jurisdiction over the in-state defendant, Ms. Hurst.

c. Liability for Breach of Contract

Western Surety asserts two theories of recovery—Ms. Hurst’s breach of the 

indemnity agreement and Western Surety’s equitable right to exoneration, 

indemnification, and reimbursement for losses sustained as surety under the bond. 

(Doc. 1, pp. 6-7). Western Surety has submitted copies of the original bond 

application, including the signed indemnity agreement. (Doc. 1-1). “A federal court

in a diversity case is required to apply the laws, including principles of conflict of 

laws, of the state in which the federal court sits.” O'Neal v. Kennamer, 958 F.2d 

1044, 1046 (11th Cir. 1992). “Alabama applies the traditional doctrine[] of lex loci 

contractus to contract claims . . . . Th[is] doctrine states that a contract is governed 

by the laws of the state where it is made except where the parties have legally 

contracted with reference to the laws of another jurisdiction.” Colonial Life & Acc. 

Case 2:19-cv-01273-MHH Document 15 Filed 02/04/20 Page 6 of 10
Ins. Co. v. Hartford Fire Ins. Co., 358 F.3d 1306, 1308 (11th Cir. 2004) (internal 

quotations omitted). Here, the parties specified that their agreement would “be 

governed in all respects by the laws of the State of South Dakota . . . .” (Doc. 1-1,

p. 2). Therefore, the Court evaluates Western Surety’s claim for breach of contract 

under South Dakota law.

Under South Dakota law, “the elements of a breach of contract are (1) an 

enforceable promise; (2) a breach of the promise; and (3) resulting damages.” Bowes 

Construction, Inc. v. South Dakota Dept. of Transp., 793 N.W.2d 36, 43 (S.D. 2010). 

Western Surety supports its allegations of a binding indemnity agreement with Ms. 

Hurst by attaching a copy of the signed bond application, which includes the 

indemnity agreement. (Doc. 1-1, p. 2). In exchange for Western Surety posting a 

$250,000 bond and acting as surety, Ms. Hurst promised to “completely 

INDEMNIFY the Company from and against any liability, loss, cost, attorneys’ fees 

and expenses whatsoever which the Company shall at any time sustain as surety or 

by reason of having been surety on this bond.” (Doc. 1-1, p. 2; see also Doc. 1, p. 

3). Additionally, Ms. Hurst promised to “[u]pon demand by the Company for any 

reason whatsoever, to deposit current funds with the Company in an amount 

sufficient to satisfy any claim against the Company by reason of such suretyship.” 

(Doc. 1-1, p. 2; see also Doc. 1, p. 3). 

Case 2:19-cv-01273-MHH Document 15 Filed 02/04/20 Page 7 of 10
Western Surety pleaded facts that satisfy the element of breach by alleging 

that as of the date of the complaint in this matter, Ms. Hurst had failed to indemnify 

Western Surety. (Doc. 1, p. 6). Western Surety has incurred $324,831.10 in actual 

damages—the amount of the judgment against Ms. Hurst for misappropriating the 

assets of Mr. McDaniel’s estate, and Western Surety has incurred $22,550.39 for 

attorneys’ fees and expenses. (Doc. 1, p. 5). Thus, the Court finds that Western 

Surety has adequately pleaded a claim for breach of contract against Ms. Hurst under 

South Dakota law.2

d. Damages

Although a defaulted defendant admits well-pleaded allegations of liability, 

“allegations relating to the amount of damages are not admitted by virtue of default.” 

PNCEF, LLC v. Hendricks Bldg. Supply, LLC, 740 F. Supp. 2d 1287, 1292 (S.D. 

Ala. 2010). When assessing damages, a district court must “assure that there is a 

legitimate basis for any damage award it enters.” Anheuser Busch, Inc. v. Philpot, 

317 F.3d 1264, 1266 (11th Cir. 2007). An evidentiary hearing may be necessary to 

determine the amount of damages, but if the record is sufficient, a district court may 

determine damages without a hearing. See Sec. & Exch. Comm’n v. Smyth, 420 F.3d 

1225, 1232 n.13 (11th Cir. 2005). 

 2 Because Western Surety is entitled to a default judgment on its breach of contract claim, the 

Court does not have to evaluate Western Surety’s alternative request for equitable relief.

Case 2:19-cv-01273-MHH Document 15 Filed 02/04/20 Page 8 of 10
To support its claim for damages, Western Surety has provided the affidavit 

of Nancy Leibel, a Western Surety claims analyst. Ms. Leibel states that the

judgment entered against Ms. Hurst and Western Surety, paid by Western Surety,

and now owed by Ms. Hurst under the indemnity agreement, is $324,831.10. (Doc. 

14-1, p. 7). In addition, Western Surety seeks $ 22,550.39 in attorney’s fees and 

costs incurred in the investigation and defense of claims against Ms. Hurst. (Doc. 

14-1, p. 8). Because the indemnity agreement specifies that Ms. Hurst will 

completely indemnify Western Surety “from and against any liability, loss, cost, 

attorneys’ fees and expenses whatsoever which the Company shall at any time 

sustain as surety,” Western Surety is entitled to recover the requested damages, 

attorney’s fees, and expenses.

Additionally, Western Surety asserts that as of January 22, 2020, there was 

unpaid prejudgment interest in the amount of $8,970.68. (Doc. 14, p. 4). The 

indemnity agreement provides that “[in] the event of any payment” by Western 

Surety, Ms. Hurst agrees to “pay the Company interest on such amounts at the 

highest legal rate from the date such payments are made.”3 Thus, Western Surety is 

entitled to recover $8,970.68 for the interest accrued between the satisfaction of the 

probate court judgment and January 22, 2020.

 3 Western Surety has calculated prejudgment interest according to Alabama law and has applied

Alabama’s 6 % maximum rate. (Doc. 14, p. 4); Ala. Code § 8-8-1. 

Case 2:19-cv-01273-MHH Document 15 Filed 02/04/20 Page 9 of 10
IV. CONCLUSION

Accordingly, the Court grants Western Surety’s motion for default judgment 

against Delisa Hurst. (Doc. 8). Per Western Surety’s motion, the Court awards 

Western Surety $347,381.49 in damages and $8,970.68 in interest. The Court will 

enter a separate final judgment closing this case.

DONE and ORDERED this February 4, 202020.

 _________________________________

 MADELINE HUGHES HAIKALA

 UNITED STATES DISTRICT JUDGE

Case 2:19-cv-01273-MHH Document 15 Filed 02/04/20 Page 10 of 10