Argonaut Insurance Company v. Big Interior Construction, Inc.

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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ARGONAUT INSURANCE COMPANY
a/s/o HERITAGE II, LLC,
Plaintiff, 	REPORT AND
RECOMMENDATION
-against- 	23 CV 2708 (RER)(RML)
BIG INTERIOR CONSTRUCTION, INC.,
Defendant.
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LEVY, United States Magistrate Judge:
By order dated May 7, 2025, the Honorable Ramon E. Reyes, Jr., United States
District Judge, referred plaintiff’s motion for default judgment to me for report and
recommendation. For the reasons stated below, I respectfully recommend that the motion be
granted.
B ACKGROUND AND FACTS
Plaintiff Argonaut Insurance Company (“plaintiff”), as subrogee of Heritage II,
LLC (“Heritage”), commenced this case on April 11, 2023 against defendant Big Interior
Construction, Inc. (“defendant”), a New York corporation with its principal place of business in
Queens, New York, seeking to recover costs incurred as a result of defendant’s alleged
negligence in creating hazardous conditions that led to a fire on April 25, 2022. (Complaint,
filed Apr. 11, 2023 (“Compl.”), Dkt. No. 1, ¶¶ 1, 2, 7-12.) Plaintiff is a California corporation
with its principal place of business in Illinois. (Id. ¶ 1.) Heritage was the owner of the property
at 71 Eighth Avenue, New York, New York (the “property”). (Id. ¶ 3.) Defendant was
performing work as a contractor at the property when a fire ignited on April 25, 2022, allegedly
due to defendant’s employees’ negligent acts in leaving “rags, stain, and combustible materials”
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on the property “in an unsafe and negligent manner and without necessary ventilation.” (Id. ¶¶
8-9.) As a result of the fire allegedly caused by defendant’s negligence, plaintiff paid claims
totaling $408,934.50 pursuant to the insurance policy issued to Heritage. (Declaration of Kefira
Yisrael-Radcliffe, dated May 16, 2024, Dkt. No. 16-12 (“Yisrael-Radcliffe Decl.”), ¶ 7.)
Defendant was served with the summons and complaint on November 16, 2023.
(See Affidavit of Service of James Perone, sworn to Nov. 16, 2023, Dkt. No. 8.) Defendant did
not answer or move with respect to the complaint, and on April 3, 2024, the Clerk of the Court
noted defendant’s default. (Clerk’s Certificate of Default, dated Apr. 3, 2024 (“Clerk’s Cert.”),
Dkt. No. 11.) Plaintiff now moves for a default judgment pursuant to Rule 55 of the Federal
Rules of Civil Procedure.
DISCUSSION
A. Legal Standard
Federal Rule of Civil Procedure 55 “provides a ‘two-step process’ for the entry of
judgment against a party who fails to defend.” City of New York v. Mickalis Pawn Shop, LLC,
645 F.3d 114, 128 (2d Cir. 2011) (citation omitted). First, the party seeking default judgment
must obtain an entry of default against the party who has failed to defend under Rule 55(a), as
plaintiff has done here. (Clerk’s Cert.) Second, the moving party must petition the court for an
entry of default judgment pursuant to Rule 55(b)(2). See Priestley v. Headminder, Inc., 647 F.3d
497, 505 (2d Cir. 2011). In deciding a motion for default judgment, a court accepts as true the
plaintiff’s well-pleaded factual allegations, except those relating to damages. Greyhound
Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992); see also Au Bon
Pain Corp. v. Artect, Inc., 653 F.2d 61, 65 (2d Cir. 1981). “The plaintiff bears the burden of
alleging specific facts, rather than mere labels and conclusions or a formulaic recitation of the
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elements, so that a court may infer a defendant’s liability.” Dunston v. Babushka LLC, No. 24
CV 2969, 2024 WL 5164694, at *3 (E.D.N.Y. Dec. 19, 2024) (marks and citations omitted).
B. Standing
Standing is “a threshold matter of justiciability.” Tavarez v. Moo Organic
Chocolates, LLC, 623 F. Supp. 3d 365, 370 (S.D.N.Y. 2022). If a plaintiff lacks standing, then
the court must dismiss his claim for lack of subject matter jurisdiction. See Cent. States Se. &
Sw. Areas Health & Welfare Fund v. Merck-Medco Managed Care, L.L.C., 433 F.3d 181, 198
(2d Cir. 2005).
Subrogation—the equitable doctrine that allocates responsibility for a loss to the
person who in equity and good conscience ought to pay it—“arises by operation of law when the
insurer makes payment to the insured.” N. Star Reins. Corp. v. Cont’l Ins. Co., 624 N.E.2d 647,
653 (N.Y. 1993) (citing 16 Crouch, Insurance 2d § 61:4 (rev. ed.)). Thus, in insurance cases
brought under New York law, “[i]t is the very essence of subrogation that a subrogee stands in
the shoes of the subrogor and is entitled to all of the latter’s rights, benefits and remedies.”
Travelers Indem. Co. of Conn. v. Losco Grp., Inc., 136 F. Supp. 2d 253, 255 (S.D.N.Y. 2001)
(quoting Spier v. Erber, 759 F. Supp. 1024, 1027 (S.D.N.Y. 1991)); see also Fed. Ins. Co. v. CLE
Transp., Inc., No. 18 CV 11119, 2020 WL 1503455, at *2 n.3 (S.D.N.Y. Mar. 30, 2020)
(observing that the plaintiff insurer was “an insurer-subrogee and therefore [stood] in the shoes
of . . . its insured”); Everest Reins. Co. v. Collector’s Fantasy of Brooklyn, Inc., No. 09 CV 5015,
2012 WL 2953955, at *3 (E.D.N.Y. July 19, 2012) (holding that the plaintiff insurer had a
“viable subrogation claim, which vested when [the plaintiff’s predecessor] paid [the insured] for
its losses” in accordance with an insurance policy); Bankers Standard Ins. Co. v. R.C. Complete
Landscaping, No. 17 CV 4415, 2019 WL 2437160, at *2 (E.D.N.Y. Feb. 27, 2019) (granting
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default judgment for property damage in subrogation action). Having paid Heritage under the
insurance policy, and having the right to seek subrogation (Compl. ¶ 18), plaintiff has standing to
pursue its claim for reimbursement from defendant.
C. Negligence
To establish a claim for negligence, “a plaintiff must show ‘(1) the existence of a
duty on defendant’s part as to plaintiff; (2) a breach of this duty; and (3) injury to the plaintiff as
a result thereof.’” State Farm Fire & Cas. Co. v. Advanced Chimney, Inc., No. 13 CV 4608,
2014 WL 4438899, at *6 (E.D.N.Y. Aug. 11, 2014) (quoting Caronia v. Philip Morris USA, Inc.,
715 F.3d 417, 428 (2d Cir. 2013)), report and recommendation adopted, 2014 WL 4439102
(E.D.N.Y. Sept. 8, 2014). Plaintiff alleges that defendant was hired to stain and refinish flooring
at the property. (Compl. ¶¶ 7, 8; Yisrael-Radcliffe Decl. ¶ 5; Declaration of Paul Goldenberg,
dated Apr. 29, 2025 (“Goldenberg Decl.”), Dkt. No. 16-8, ¶¶ 3-5, Exs. 1, 2.) On April 25, 2022,
the New York City Fire Department was called to extinguish a fire at the property. (Yisrael-
Radcliffe Decl., Ex. 1.) According to the Fire Department’s Incident Report, issued on April 26,
2022, the fire was in a vacant apartment and was caused by workers who had been refinishing
the floors and had left “supplies and waste” on the premises, “including polyurethane cans,
denatured alcohol cans, oily rags, sawdust piled up and a buffer/sanding machine.” (Id. at 2.) In
addition, “[t]he office door and windows were closed allowing vapors to accumulate to create
conditions ripe for spontaneous combustion.” (Id.) As a result of damage from the fire, plaintiff
paid claims on behalf of Heritage, pursuant to the insurance policy in effect at that time.
(Goldenberg Decl. ¶ 12; Yisrael-Radcliffe Decl. ¶ 7.)
Plaintiff’s allegations, accepted as true, are sufficient to establish a cause of action
for negligence. See State Farm, 2014 WL 4438899, at *8 (holding that the plaintiff stated a
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claim for negligence where the plaintiff suffered damages as a result of a fire that the defendant
caused); Everest Reinsurance Co. v. PRBK, LLC, No. 09 CV 5607, 2010 WL 5490950, at *2
(E.D.N.Y. Dec. 10, 2010), report and recommendation adopted, 2011 WL 13924 (E.D.N.Y. Jan.
4, 2011) (granting motion for default judgment for negligence where the defendant directly and
proximately caused the plaintiff’s damages). Accordingly, I respectfully recommend that
defendant be found liable to plaintiff for the property damage caused by defendant’s negligence.
D. Damages
Once liability is established, the court must ascertain damages with “reasonable
certainty.” Hosking v. New World Mortg., Inc., 570 F. App’x 28, 31 (2d Cir. 2014); Team Air
Express, Inc. v. A. Heffco Techs., Inc., No. 06 CV 2742, 2008 WL 3165892, at * 3 (E.D.N.Y.
Aug. 6, 2008), report and recommendation adopted, 2008 WL 4790460 (E.D.N.Y. Oct. 28, 2008)
(“While a party’s default is deemed to constitute a concession of all well-pleaded allegations of
liability, it is not considered an admission of damages.” (marks and citation omitted)).
Accordingly, the court must assess whether plaintiff has produced sufficient evidence of the
damages it seeks. See Gutman v. Klein, No. 03 CV 1570, 2010 WL 4975593, at *1 (E.D.N.Y.
Aug. 19, 2010), report and recommendation adopted, 2010 WL 4916722 (E.D.N.Y. Nov. 24,
2010). “[T]he moving party bears the burden of providing a reasonable basis for determination
of damages[.]” 	In re Crazy Eddie Sec. Litig., 948 F. Supp. 1154, 1160 (E.D.N.Y. 1995) (citing
Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61, 65 (2d Cir. 1981)); see also Sullivan v. Marble
Unique Corp., No. 10 CV 3582, 2011 WL 5401987, at *2 (E.D.N.Y. Aug. 30, 2011), report and
recommendation adopted, 2011 WL 5402898 (E.D.N.Y. Nov. 4, 2011) (“On a motion for default
judgment, a plaintiff has the burden to prove damages to the Court with a ‘reasonable
certainty.’”); PRBK, 2010 WL 5490950, at *3 (in context of subrogation default judgment,
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finding documentation including, inter alia, itemized list of costs to repair building sufficient to
award damages without hearing).
Kefira Yisrael-Radcliffe, Subrogation Examiner for plaintiff’s third party
administrator, Brownstone Agency, Inc., has submitted a declaration itemizing in detail the
damages that total plaintiff’s claimed amount of $408,934.50, with corresponding
documentation. (Yisrael-Radcliffe Decl., ¶ 8, Exs. 2-9; see also Goldenberg Decl., Ex. 2.)
Having reviewed plaintiff’s documentation, I find the request for $408,934.50 adequately
supported, and I respectfully recommend that plaintiff be awarded that amount.
Plaintiff also requests reimbursement of the $402 filing fee and interest on the
principal amount of damages. (Attorney Certification of Richard L. Elem, Esq., dated May 6,
2025, Dkt. No. 16-1, ¶ 11.) Federal Rule of Civil Procedure 54(d)(1) directs that “[u]nless a
federal statute, these rules, or a court order provides otherwise, costs—other than attorney’s
fees—should be allowed to the prevailing party.” F ED . R. C IV . P. 54(d)(1). “Courts in this
district routinely award prevailing plaintiffs the cost of the filing fee.” N. Assur. Co. of Am. v.
Big Apple Logistics of NY Inc., No. 12 CV 375, 2012 WL 5493601, at *4 (E.D.N.Y. Oct. 2,
2012), report and recommendation adopted sub nom., N. Assur. Co. of Am. v. Big Apple
Logistics of N.Y. Inc., 2012 WL 5499948 (E.D.N.Y. Nov. 9, 2012) (citation omitted). I
recommend that plaintiff be awarded $402 in costs.
As jurisdiction in this matter is premised on diversity, New York state law governs
the award of prejudgment interest. See Baker v. Dorfman, 239 F.3d 415, 425 (2d Cir. 2000).
Under New York law, plaintiff is entitled to prejudgment interest in this case. St. Paul Fire &
Marine Ins. Co. v. Fox Insulation Co., No. 96 CV 502E(F), 1999 WL 782333, at *1 (W.D.N.Y.
Sept. 30, 1999) (“An award of statutory prejudgment interest is available as a matter of right on a
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judgment in a subrogation action brought by an insurance company to recover for negligent
injury to its insured’s property.” (citation omitted)). “Interest shall be computed from the earliest
ascertainable date the cause of action existed,” N.Y. C.P.L.R. § 5001(b), at the statutory rate of
nine percent per annum, id. § 5004. See also Mars Elecs. v. U.S.A. Direct, 28 F. Supp. 2d 91, 94
(E.D.N.Y. 1998). Thus, prejudgment interest accrues from the date the insurance company
makes payment. See Phoenix Ins. Co. v. Tapemaker Sales Co., No. 23 CV 8822, 2024 WL
5399239, at *2 (E.D.N.Y. Dec. 11, 2024) (calculating prejudgment interest from the date of
plaintiff’s payment to the insured); St. Paul Fire & Marine Ins. Co., 1999 WL 782333, at *1
(citing Am. Home Assurance Co. v. Morris Indus. Builders, Inc., 597 N.Y.S.2d 27, 28 (1st Dep’t
1993)) (same). Where damages are incurred at various times, “interest shall be computed upon
each item from the date it was incurred or upon all of the damages from a single reasonable
intermediate date.” Am. Home Assurance Co., 597 N.Y.S.2d at 28. Since most of the payments
in this matter were made on September 20, 2022 (see Yisrael-Radcliffe Decl., Ex. 7, Dkt. No. 16-
19), I recommend that plaintiff be awarded prejudgment interest at a rate of nine percent per
annum from September 20, 2022 to the date judgment is entered.
CONCLUSION
For the reasons stated above, I respectfully recommend that plaintiff’s motion for
default judgment be granted and that plaintiff be awarded $408,934.50 in damages, plus $402 in
costs and prejudgment interest at the rate of nine percent. Plaintiff’s counsel is directed to serve
a copy of this Report and Recommendation on defendant by regular mail at its last known
address, and to file proof of service with the court within ten days of the date of this Report and
Recommendation. Any objections to this Report and Recommendation must be filed
electronically within fourteen days. Failure to file objections within the specified time waives
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the right to appeal the district court’s order. See 28 U.S.C. § 636(b)(1); F ED. R. C IV. P. 72, 6(a),
6(d).
Respectfully submitted,
/s/
ROBERT M. LEVY
United States Magistrate Judge
Dated: Brooklyn, New York
December 17, 2025
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