Fidelity Deposit Company of Maryland v. Amaazz Construction Group LLC

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF OHIO

EASTERN DIVISION

FIDELITY DEPOSIT COMPANY OF

MARYLAND,

Plaintiff,

Civil Action 2:21-cv-4384

v. Judge Edmund A. Sargus, Jr.

Magistrate Judge Chelsey M. Vascura

AMAAZZ CONSTRUCTION GROUP,

LLC, et al.,

Defendants.

REPORT AND RECOMMENDATION

This matter is before the undersigned for a Report and Recommendation following the

failure of Defendants SMS Construction Southeast LLC and SMS Construction Group LLC

(collectively, “SMS”) to comply with multiple Court Orders. For the following reasons, it is

RECOMMENDED that, if this case is reopened, the Court DIRECT the Clerk to enter default

against SMS. (ECF No. 77.)

I. Background

In October 2023, the Court granted a joint motion to administratively close this case but

stated that it “may be reopened upon a motion from any of the Parties.” (ECF No. 76.) In

February 2025, Plaintiff moved to reopen the case. (ECF No. 77.) After no timely responses in

opposition were filed, the Court ordered Defendants to file a Notice indicating if they intended to

oppose Plaintiff’s Motion to Reopen. (ECF No. 79.) Instead of filing such a Notice, counsel for

SMS successfully moved to withdraw as SMS’s counsel. (ECF Nos. 80, 83.)

In the June 30, 2025 Order granting the motion to withdraw as SMS’s counsel, SMS was

ordered to retain new trial counsel and to have new counsel enter an appearance on the docket

within 30 days. (ECF No. 83.) The Court reminded SMS that as corporations, they could only

proceed in this Court through licensed counsel, and that pleadings by corporations that are not

signed by an attorney are treated as unsigned for purposes of Federal Rule of Civil Procedure

11(a). (Id.) The Court additionally warned SMS that noncompliance might result in an entry of

default against SMS if the case was reopened. (Id.)

When that June 30, 2025 Order was returned as undeliverable, the Court, on July 14,

2025, directed the Clerk to serve it again on SMS via email using addresses obtained from

SMS’s former counsel. (ECF No. 85.) The Court also extended SMS’s deadline to have new

counsel enter an appearance to August 13, 2025, and reiterated its warning that noncompliance

might result in entry of default if the case was reopened. (Id.)

After new counsel for SMS did not make an appearance by the extended deadline, the

Court issued a Show Cause Order on August 15, 2025, ordering SMS to show cause why default

should not be entered against SMS contemporaneous with the reopening of this case as a

sanction for failing to comply with the Court’s June 30 and July 14, 2025 Orders. (ECF No. 86.)

SMS was again advised that SMS needed to retain counsel to appear in this Court. (Id.) SMS had

14 days, or until August 29, 2025, to respond to that August 15, 2025 Show Cause Order. (Id.)

To date, however, new counsel has not appeared for SMS.

II. Law and Analysis

A district court has the inherent power to sanction a party when that party exhibits bad

faith. Chambers v. NASCO, Inc., 501 U.S. 32, 43–50 (1991). The “imposition of inherent power

sanctions requires a finding of bad faith,” First Bank of Marietta v. Hartford Underwriters Ins.

Co., 307 F.3d 501, 517 (6th Cir. 2002), or conduct “tantamount to bad faith,” Roadway Express,

Inc. v. Piper, 447 U.S. 752, 767 (1980). Bad faith includes refusal to comply with a court order.

Brown v. Tellermate Holdings, Ltd., No. 2:11-cv-1122, 2015 WL 4742686, at *6 (S.D. Ohio

Aug. 11, 2015) (quoting Youn v. Track, Inc., 324 F.3d 409, 420 (6th Cir. 2003)).

A district court’s inherent authority to sanction derives from its power to impose respect

in its presence, control the litigants before it, and guarantee the integrity of the courts. See

Chambers, 501 U.S. at 43–44. Due to “their very potency, inherent powers must be exercised

with restraint and discretion.” Id. at 44 (citing Roadway Express, 447 U.S. at 764). “A primary

aspect of that discretion is the ability to fashion an appropriate sanction for conduct which abuses

the judicial process.” Id. at 44–45. Although dismissal of a lawsuit is a particularly severe

sanction, it is nevertheless within the Court’s discretion. Id. at 45 (citing Roadway Express, 447

U.S. at 765.) It follows that the Court’s inherent powers authorizes the imposition of less severe

sanctions as well.

Here, on June 30, 2025, the Court ordered SMS to have new trial counsel make an

appearance within 30 days. (ECF Nos. 83.) On July 14, 2025, the Court reissued that order and

extended the compliance deadline to August 13, 2025. (ECF No. 85.) When SMS still failed to

comply, the Court issued a Show Cause Order on August 15, 2025, again advising SMS that it

must appear through counsel and setting an August 29, 2025 compliance deadline. (ECF No. 86.)

New counsel for SMS has yet to make an appearance.

The undersigned concludes that these repeated failures to comply with clear Orders—

despite extended deadlines and explicit warnings—constitute bad faith and warrant sanctions.

See Mitan v. Int’l Fidelity Ins. Co., 23 F. App’x 292, 294–95, 298–99 (6th Cir. 2001) (affirming

sanctions against plaintiff whose “history of forum shopping and abusing the legal process”

included failure to respond to three show cause orders).

Moreover, the undersigned further concludes that in light of SMS’s continued

noncompliance, directing the Clerk to enter default against SMS if this case is reopened is an

appropriately calibrated sanction. It will guarantee the integrity of judicial proceedings, protect

the Court’s authority, and implement the very consequence that the Court repeatedly warned

might follow.

III. Disposition

For all these reasons, if this case is reopened (ECF No. 77), it is RECOMMENDED that

the Clerk be DIRECTED to make an entry of default against SMS as a sanction for failing to

comply with the Court’s June 30, July 14, and August 15, 2025 Orders.

PROCEDURE ON OBJECTIONS

If any party objects to this Report and Recommendation, that party may, within fourteen

(14) days of the date of this Report, file and serve on all parties written objections to those

specific proposed findings or recommendations to which objection is made, together with

supporting authority for the objection(s). A District Judge of this Court shall make a de novo

determination of those portions of the Report or specified proposed findings or recommendations

to which objection is made. Upon proper objections, a District Judge of this Court may accept,

reject, or modify, in whole or in part, the findings or recommendations made herein, may receive

further evidence or may recommit this matter to the Magistrate Judge with instructions. 28

U.S.C. § 636(b)(1).

The parties are specifically advised that failure to object to the Report and

Recommendation will result in a waiver of the right to have the District Judge review the Report

and Recommendation de novo, and also operates as a waiver of the right to appeal the decision of

the District Court adopting the Report and Recommendation. See Thomas v. Arn, 474 U.S. 140

(1985); United States v. Walters, 638 F.2d 947 (6th Cir. 1981).

/s/ Chelsey M. Vascura

CHELSEY M. VASCURA

UNITED STATES MAGISTRATE JUDGE