Just Because the Defendant Defaults the Court Still has Discretion

By Barry Zalma on January 16, 2026

Even With a Default the Plaintiff Needs Evidence

Post number 5262

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In Chesapeake Employers’ Insurance Company v. SCD Premier Staffing Agency, LLC, et al., No. 1840-2024, Court of Special Appeals of Maryland (January 6, 2026) dealt with a complaint in the Circuit Court for Worcester County against SCD Premier Staffing Agency, LLC (“SCD”) and its owner, Suze Cadet, alleging fraud, intentional misrepresentation, negligent misrepresentation, and breach of contract, and seeking both compensatory and punitive damages.

FACTUAL BACKGROUND

SCD is or was a Maryland limited liability company owned by Cadet, and CEIC provides workers’ compensation insurance to Maryland employers.

In December 2021, SCD applied for workers’ compensation insurance with CEIC, stating it had thirty employees and a total payroll of $100,000. CEIC approved the application and set an annual premium of $2,944. However, an audit conducted in January 2023 revealed that SCD actually had 53 employees and $201,476 in payroll for the relevant policy term. The Defendants failed to respond to the complaint, resulting in an order of default.

CEIC moved for a default judgment on all counts, but the circuit court only granted judgment on breach of contract and awarded compensatory damages. Requests for judgment on the fraud and misrepresentation counts, as well as for punitive damages, were denied. CEIC’s subsequent motion to alter or amend was also denied.

LEGAL ISSUES

On appeal, CEIC challenged the circuit court’s denial of default judgment on the additional claims. The Court of Special Appeals clarified that while the Order of Default established the Defendants’ liability as a matter of law on all claims, entry of judgment by default on each claim is discretionary for the court, not mandatory. Therefore, the circuit court had the authority to decline entering judgment on the disputed claims. Moreover, even if the court had erred in not entering judgment by default on those claims, any such error was deemed harmless. As a result, the appellate court affirmed the circuit court’s judgment.

DISCUSSION

CEIC contended that the circuit court abused its discretion in failing to enter a judgment by default against the respective Defendants as to the claims of fraud, intentional misrepresentation, and negligent misrepresentation.

ANALYSIS

The Appeals Court held that the circuit court did not err or abuse its discretion in refusing to enter a judgment by default on CEIC’s claims for fraud, intentional misrepresentation, and negligent misrepresentation based on the unvacated Order of Default. Even though an order of default establishes liability and enables a court to enter a judgment by default, a court is not required to enter a judgment by default. Maryland statutes state that on default the court: “may enter a judgment by default[.]” (Md. Rule 2-613(f).

The use of the word “may” clearly indicates that the decision to enter a judgment by default is discretionary.

While Maryland Rule 2-613 permits a court to enter a judgment by default based solely on an unvacated order of default and without any investigation into the validity of the underlying claim, the Rule does not require it. The appellate court, therefore, rejected CEIC’s claim that the circuit court lacked the discretion to make a liability determination.

Aside from the bald allegations contained in the Complaint, CEIC presented no compelling evidence to suggest that either SCD or Cadet acted with the requisite malice to justify an award of punitive damages.

In sum, the appellate court held that the court was not required to find the Defendants liable and to enter a judgment by default on CEIC’s claims for fraud, intentional misrepresentation, and negligent misrepresentation based on the unvacated order of default.

ZALMA OPINION

Maryland Rule granted the court the discretion to enter a judgment by default, and that discretion included the authority to make a determination regarding liability. The judgment of the circuit court for Worcester county was affirmed because it exercised its discretion. If CEIC wanted the punitive damages it should have presented the court with evidence supporting that charge.

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