A surety company cannot collect a default judgment when co-defendants are still contesting the same…
Merchants Bonding Company Mutual v. Marsh Buggies Inc, et al.
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A surety company cannot collect a default judgment when co-defendants are still contesting the same…
Why it matters
In Merchants Bonding Company Mutual v. Marsh Buggies, Inc. et al., the U.S. District Court for the Eastern District of Louisiana denied the plaintiff surety company's motion for a default judgment against two non-appearing defendants, Denise Avery and the Succession of Geraldine Tassin Autin. The court denied the motion primarily because another defendant, Jamie Autin Creech, was actively contesting the same underlying claims, and entering a default judgment against some defendants while others dispute the same liability could produce conflicting results.
Who it affects
This ruling directly affects parties to indemnity and surety agreements who are sued alongside co-defendants, particularly when some defendants respond to the lawsuit and others do not. Surety companies and other plaintiffs seeking default judgments in multi-defendant cases should be aware that an active defense by any one co-defendant can block default judgments against the non-responding parties.
What happens next
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Decision issued Oct 7, 2026
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- Decision issued Oct 7, 2026
- Possible rehearingParties can ask the same court to reconsider.
- Possible appeal to the circuit court
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DEEPER READ
Merchants Bonding Company Mutual is a surety company that issues bonds on behalf of contractors. It issued two bonds for Marsh Buggies, Inc. after all defendants signed an indemnity agreement. When Marsh Buggies was terminated from one project for failing to pay subcontractors, and later failed to perform on a second project, the surety company paid out a combined total of hundreds of thousands of dollars to resolve the resulting claims. It then sued all the signatories to the indemnity agreement to recover those losses. Most defendants either did not respond or reached agreements with the plaintiff. However, one defendant, Jamie Autin Creech, filed an answer and is actively contesting the claims. The plaintiff sought a default judgment specifically against the two non-responding defendants, Avery and the Succession. The court denied the motion, relying on the legal principle that in cases with multiple defendants, a court may not enter a default judgment against one defendant if doing so would conflict with the position taken by a defendant who is still litigating. Because Creech is disputing the same core claims, entering judgment against Avery and the Succession could create inconsistent outcomes in the same case. The court described default judgment as a drastic remedy not favored by courts and only used in extreme situations. The court also noted its independent duty to verify that it has proper jurisdiction over both the subject matter and the parties, including whether the defaulting defendants were properly served, before entering any such judgment. The motion was denied without the court reaching those additional questions.
CITATION AND RECORD
Record source: CourtListener
UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA MERCHANTS BONDING COMPANY MUTUAL CIVIL ACTION VERSUS No. 26-721 MARSH BUGGIES, INC. ET AL. SECTION I ORDER AND REASONS Before the Court is plaintiff Merchants Bonding Company Mutual’s (“plaintiff”) motion1 for a default judgment against defendants Denise Avery (“Avery”) and the Succession of Geraldine Tassin Autin (“the Succession”). For the following reasons, the motion is denied. I. BACKGROUND Plaintiff “is in the business of issuing surety bonds, including payment bonds, performance bonds, supply bonds, and related construction security instruments.”2 Before issuing bonds on behalf of Marsh Buggies, Inc. (“Marsh Buggies”), plaintiff entered into an indemnity agreement with defendants Marsh Buggies, Perry Autin, Jamie Autin Creech (“Creech”), Avery, and Geraldine Tassin Autin3 (collectively, “defendants”).4 In reliance on the indemnity agreement, plaintiff issued two bonds on behalf of Marsh Buggies: one for the Island Road Terraces Phase II Project (“Island Road project”), awarded by Ducks Unlimited, Inc. (“Ducks Unlimited”), and a second 1 R. Doc. No. 29. 2 R. Doc. No. 1 ¶ 12. 3 Geraldine Tassin Autin is deceased. Her succession is a party to this action. Id. ¶ 6. 4 Id. ¶ 13; see R. Doc. No. 29-3, at 53–61 (indemnity agreement). for a project awarded by the North Lafourche Conservation, Levee and Drainage District (“the Levee District”).5 Plaintiff alleges that, on July 30, 2021, Ducks Unlimited terminated Marsh Buggies from the Island Road project for failure to pay its subcontractors.6 As a result, plaintiff contends that it had to pay $262,745.62 to resolve the unpaid subcontractors’ claims on the bond, as well as $12,098.48 to cover the completion of the project.7 On February 11, 2022, the parties executed an “acknowledgement and agreement” in which defendants acknowledged plaintiff’s losses on the Island Road project bond and agreed to repay plaintiff $210,118.41 through a promissory note.8 According to plaintiff, defendants defaulted on the acknowledgement and agreement and the promissory note in June 2022.9 In addition, plaintiff contends that the Levee District submitted a claim on the second bond, alleging that Marsh Buggies did not perform its obligations for the project and failed to pay its vendors.10 To resolve these claims, plaintiff alleges that it paid $200,000 to the Levee District.11 Plaintiff filed this action on April 7, 2026, alleging four claims against defendants: (1) breach of the indemnity agreement, (2) breach of the 5 R. Doc. No. 1 ¶ 16. 6 Id. ¶¶ 22–24; R. Doc. No. 29-3, at 62 (termination letter from Ducks Unlimited). 7 R. Doc. No. 1 ¶ 27; R. Doc. No. 29-3, at 67 (tender agreement between plaintiff and the completing contractor); id. at 73–76 (plaintiff’s payments to the subcontractors). 8 R. Doc. No. 1 ¶¶ 28–29; R. Doc. No. 29-3, at 85–92 (acknowledgment and agreement); id. at 93–99 (promissory note). 9 R. Doc. No. 1 ¶ 35. 10 Id. ¶¶ 37–38; R. Doc. No. 29-3, at 77–78 (claim from the Levee District). 11 R. Doc. No. 1 ¶¶ 38–40; R. Doc. No. 29-3, at 80 (payment to the Levee District). acknowledgement and agreement, (3) breach of the promissory note, and (4) a claim for attorney’s fees and costs.12 On August 11, 2026, the Court ordered plaintiff to show cause why the case should remain on its docket.13 Plaintiff then moved for an entry of default against Avery and the Succession and the entry of a consent judgment against Marsh Buggies and Perry Autin.14 On August 25, 2026, the Clerk of Court entered the default,15 and, on August 26, 2026, the Court entered the consent judgment.16 Only one defendant, Creech, has contested plaintiff’s claims. She answered the complaint on August 27, 2026.17 On September 24, 2026, plaintiff filed the present motion for default judgment against Avery and the Succession. II. LEGAL STANDARDS The two-step procedure for the entry of a default judgment is governed by Federal Rule of Civil Procedure 55. First, “the plaintiff must petition the clerk for an entry of default, which is simply ‘a notation of the party’s default on the clerk’s record of the case.’” Hillman v. S. Insulators, LLC, No. 23-659, 2023 WL 8113621, at *1 (E.D. La. Nov. 22, 2023) (Africk, J.) (quoting Trahan v. PLC Fin., Inc., No. 18-859, 2018 WL 10758657, at *1 (E.D. La. Mar. 29, 2018) (Barbier, J.)). This requires the plaintiff to “show ‘by affidavit or otherwise’ that the defendant ‘has failed to plead or otherwise 12 R. Doc. No. 1 ¶¶ 55, 61, 67, 72. 13 R. Doc. No. 12. 14 R. Doc. Nos. 16, 17. 15 R. Doc. No. 19. 16 R. Doc. Nos. 21–23. 17 R. Doc. No. 25. defend.’” Id. (quoting Fed. R. Civ. P. 55(a)). Once the plaintiff has done so, “an entry of default may be made by the clerk without any action being taken by the court.” 10A Wright & Miller’s Federal Practice & Procedure § 2682 (4th ed. 2026). After the entry of default, the plaintiff may apply for a default judgment. N.Y. Life Ins. Co. v. Brown, 84 F.3d 137, 141 (5th Cir. 1996). “If the plaintiff’s claim is for a sum certain and the defendant has not made an appearance in court, the clerk may enter a default judgment.” Hillman, 2023 WL 8113621, at *2 (citing Fed. R. Civ. P. 55(b)(1)). Otherwise, the plaintiff must apply to the court. Fed. R. Civ. P. 55(b)(2). A plaintiff “is not entitled to a default judgment as a matter of right, even where the defendant is technically in default.” Lewis v. Lynn, 236 F.3d 766, 767 (5th Cir. 2001) (per curiam) (quoting Ganther v. Ingle, 75 F.3d 207, 212 (5th Cir. 1996) (per curiam)). A default judgment is “a drastic remedy, not favored by the Federal Rules and resorted to by courts only in extreme situations.” Id. (quoting Sun Bank of Ocala v. Pelican Homestead & Sav. Ass’n, 874 F.2d 274, 276 (5th Cir. 1989)). “The role of a district court in adjudicating a motion for default judgment is limited.” Escalante v. Lidge, 34 F.4th 486, 492 (5th Cir. 2022). However, “a district court has the duty to assure that it has the power to enter a valid default judgment.” Sys. Pipe & Supply, Inc. v. M/V Viktor Kurnatovskiy, 242 F.3d 322, 324 (5th Cir. 2001). Before entering a default judgment against a non-appearing party, the Court must “look into its jurisdiction both over the subject matter and the parties.” Id. (quoting Williams v. Life Sav. & Loan, 802 F.2d 1200 (10th Cir. 1986) (per curiam)). This includes determining whether the plaintiff properly served the defaulting party. Espinoza v. Humphries, 44 F.4th 275, 276 (5th Cir. 2022). “When a case involves multiple defendants, courts may not grant default judgment against one defendant if doing so would conflict with the position taken by another defendant.” Escalante, 34 F.4th at 495. Otherwise, a court risks enteri
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