UNITED COMMUNITIES, LLC v. HALLOWELL INTERNATIONAL, LLC et al
Filing
29
ORDER granting in part and denying in part Plaintiff's 23 Motion for Default Judgment. ORDERED that default judgment is entered against Defendant Hallowell International, LLC on Plaintiff's breach of warranty and fraud claims. ORDERED that the Court will conduct a hearing regarding Plaintiff's damages on 12/19/2012 at 1:30 pm in Courtroom 5C. ORDERED that the Final Pretrial Conference set for 11/27/2012 is ADJOURNED. Signed by Magistrate Judge Karen M. Williams on 11/21/2012. (TH, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
CAMDEN VICINAGE
UNITED COMMUNITIES, LLC,
Plaintiff,
Civil No. 11-2689-JHR-KMW
v.
HALLOWELL INTERNATIONAL, LLC,
et al.,
Defendants.
ORDER
THIS MATTER comes before the Court by way of motion of
Plaintiff United Communities, LLC seeking final judgment by default
against Defendant Hallowell International, LLC pursuant to Fed. R.
Civ. P. 55(b)(2).
No opposition to the motion has been filed.
The
Court has considered the submissions of the parties pursuant to
Federal Rule of Civil Procedure 78, and for the reasons set forth
below, and for good cause shown, Plaintiff's motion is granted in
part and denied in part.
I.
See Fed. R. Civ. P. 78.
Background
On May 11, 2011, Plaintiff filed a complaint against
Duane Hallowell and Hallowell International, LLC alleging breach of
warranty
against
Hallowell
International,
LLC
and
New
Jersey
Consumer Fraud Act and fraud claims against both defendants arising
out of a transaction wherein Plaintiff purchased 1,340 heat pumps
from Defendants. (Doc. No. 1).
On May 19, 2011, Plaintiff filed an
amended complaint setting forth the same causes of action against
the same defendants.
(Doc. No. 6).
Both Hallowell International,
LLC and Duane Hallowell were served a copy of the Summons and
Complaint in this matter on May 24, 2011.
(Doc Nos. 7 and 8).
Defendant Duane Hallowell filed an answer to the amended complaint
on June 13, 2011. (Doc. No. 9). Defendant Hallowell International,
LLC never filed an answer to the amended complaint.
on July 11, 2011, Plaintiff filed a request for default
against Hallowell International, LLC pursuant to Fed. R. Civ. P.
55(a).
(Doc. No. 11).
The Clerk of Court entered default against
Hallowell International, LLC for failure to plead or otherwise
defend pursuant to Fed. R. Civ. P. 55(a) on July 12, 2011.
On
February 22, 2012, the Court ordered this matter referred to Judge
Williams to conduct all proceedings and order the entry of a final
judgment in accordance to 28 U.S.C. § 636(c) and Fed. R. Civ. P. 73.
(Doc. No. 20).
Plaintiff now applies to this Court for final entry of
judgment in default against defendant Hallowell International, LLC
for damages in the amount of $1,377,800 through March 27, 2012 plus
reasonable attorney's fees and costs.
II.
Standard
Rule 55(b)(2) of the Federal Rules of Civil Procedure
authorizes the Court "to enter a default judgment against a properly
served defendant who fails to file a timely responsive pleading."
Chanel, Inc. v. Gordashevsky, 558 F. Supp. 2d 532, 535 (D.N.J. 2008)
(citing Anchorage Assoc. v. Virgin Is. Bd. of Tax Rev., 922 F.2d
168, 177 n.9 (3d Cir. 1990)).
"Prior to obtaining a default
judgment under either Rule 55(b)(1) or Rule 55(b)(2), there must be
entry of default as provided by Rule 55(a)."
Nationwide Mut. Ins.
Co. v. Starlight Ballroom Dance Club, Inc., 175 F. App'x 519, 521
n.1 (3d Cir. 2006).
"[B]efore granting a default judgment, the
Court must first ascertain whether the unchallenged facts constitute
a legitimate cause of action, since a party in default does not
admit mere conclusions of law."
536.
Chanel, Inc., 558 F. Supp. 2d at
"Once a plaintiff has met the prerequisites for default
judgment -- entry of default and proof of damages -- the question of
whether or not to enter a default judgment is left primarily to the
discretion of the district court." Malik v. Hannah, 661 F. Supp. 2d
485, 490 (D.N.J. 2009).
Further, prior to entering default judgment against a
defendant who failed to file a responsive pleading, the Court must
also
consider
the
following
three
factors:
(1)
whether
the
plaintiff will be prejudiced if default is not granted, (2) whether
the defendant has
a meritorious
defense,
and
(3)
whether
defendant's delay was the result of culpable misconduct.
the
Emcasco
Ins. Co. v. Sambrick, 834 F.2d 71, 73 (3d Cir. 1987); see also
Chanel, Inc., 558 F. Supp. 2d at 537.
III.
Discussion
A.
Breach of Warranty, New Jersey Consumer Fraud Act and
Fraud Causes of Action and Emcasco Factors
Plaintiff's Amended Complaint sets forth claims against
Defendant Hallowell International, LLC, the party against whom
Plaintiff
seeks
a
default
judgment,
for
breach
of
warranty,
violations of New Jersey's Consumer Fraud Act and fraud.
i.
Breach of Warranty
In order to plead a breach of warranty claim with respect
to an express warranty under New Jersey law, a plaintiff must allege
"(1) a contract between the parties; (2) a breach of that contract;
(3) damages flowing therefrom; and (4) that the party stating the
claim performed its own contractual obligations." Cooper v. Samsung
Elecs. Am., Inc., 374 F. App'x 250, 253 (3d Cir. 2010).
Plaintiff's Amended Complaint alleges that each of the
heat pumps purchased from Hallowell International, LLC "was subject
to a five (5) year warranty from the date the last [heat pump] was
installed" and that Plaintiff "did everything it was required to do
to install and maintain the [heat pumps]."
No. 6).
Compl. ¶¶ 60-61 (Doc.
According to the Amended Complaint, the "first documented
failure [of the heat pumps] occurred on or about June 27, 2008 only
seven months after the first [pump] was delivered on November 9,
2007[,]" well within the five year time period of the warranty.
Compl. ¶ 21 (Doc. No. 6).
The Amended Complaint alleges that "[a]ll
Hallowell International heat pumps installed at the Military Housing
Project [were] still under warranty" as of the filing of the Amended
Complaint.
Compl. ¶ 52 (Doc. No. 6).
Further, the Amended
Complaint alleges that "Hallowell International refused to properly
replace and/or fix the failing [heat pumps] as required by the
warranty."
Compl. ¶ 62 (Doc. No. 6).
Pursuant to the allegations
of the Amended Complaint, Plaintiff suffered damages as a result of
Hallowell International, LLC's breach of the five-year warranty.
Compl. ¶ 63 (Doc. No. 6).
Therefore, Plaintiff has set forth a
legitimate cause of action for breach of warranty.
ii.
New Jersey Consumer Fraud Act
In order to prove a New Jersey Consumer Fraud Act claim,
a plaintiff must show three elements:
"1) unlawful conduct by
defendant; 2) an ascertainable loss by plaintiff; and 3) a causal
relationship between the unlawful conduct and the ascertainable
loss."
Bosland v. Warnock Dodge, Inc., 964 A.2d
2009).
The New Jersey Consumer Fraud Act provides that "[t]he act,
use or employment
741, 749 (N.J.
by any person of any . . . fraud, . . .
misrepresentation, or the knowing, concealment, suppression, or
omission of any material fact with intent that others rely upon such
concealment, suppression or omission, in connection with the sale .
. . of any merchandise . . . is declared to be an unlawful
practice."
N.J. Stat. § 56:8-2.
The term "merchandise" is defined
by the statute as "any objects, wares, goods, commodities, services
or anything offered, directly or indirectly to the public for sale."
N.J. Stat. § 56:8-1(c) (emphasis added).
Plaintiff's
Amended
Complaint
alleges
that
Defendant
Hallowell International, LLC, through Defendant Hallowell, made
certain material misrepresentations regarding their heat pumps with
knowledge that such material misrepresentations were false, in order
sell the heat pumps to Plaintiff. However, based on the allegations
in the Amended Complaint, the Court cannot conclude that the goods
offered
to
the
plaintiff,
the
heat
pumps
at
issue,
were
"merchandise" as defined by the Consumer Fraud Act, as the Amended
Complaint does not allege that the heat pumps were offered "to the
public for sale," as required by the statute.
N.J. Stat. § 56:8-
1(c) (emphasis added); see Marketvision/Gateway Research, Inc. v.
Carter, No. 10-1537, 2012 U.S. Dist. LEXIS 29157, at *3 (D.N.J. Mar.
6,
2012)
(denying
a
motion
for
default
judgment
as
to
the
plaintiff's Consumer Fraud Act claim since the amended complaint did
not adequately plead that defendants "offered services directly or
indirectly to the public for sale"); cf. Princeton Healthcare Sys.
v. Netsmart New York, Inc., 29 A.3d 361, (N.J. Super. Ct. App. Div.
2011) (holding that a contract between plaintiff and defendant for
installation
and
implementation
of
a
computer
system
did
not
constitute a purchase of "merchandise" as defined by the Consumer
Fraud Act because the computer system was not offered to the public
for sale). Therefore, because Plaintiff has not plead that the heat
pumps were offered to the public for sale, Plaintiff has failed to
set forth a legitimate cause of action pursuant to the New Jersey
Consumer Fraud Act.
iii.
Fraud
Under New Jersey law, "[t]he five elements of common-law
fraud are: (1) a material misrepresentation of a presently existing
or past fact; (2) knowledge or belief by the defendant of its
falsity; (3) an intention that the other person rely on it; (4)
reasonable reliance thereon by the other person; and (5) resulting
damages." Gennari v. Weichert Co. Realtors, 691 A.2d 350, 367 (N.J.
1997).
The
Amended
Complaint
alleges
that
defendants
"intentionally used deception, false promises, misrepresentation and
knowingly concealed, suppressed and omitted material facts with the
intent that [plaintiff] rely upon them in connection with Hallowell
International's sale of [heat pumps] to [plaintiff.]"
Compl. ¶ 66).
(Amend.
Among the misrepresentations alleged in the Amended
Complaint are that the heat pumps "(1) possessed unsurpassed high
energy efficiency; (2) used easily replaceable off the shelf parts
and (3) were more reliable than other models of heat pumps from
other manufacturers."
(Amend. Compl. ¶ 13).
Plaintiff's Amended
Complaint further alleges that Plaintiff began installing heat pumps
purchased from Defendants based on the misrepresentations made by
Defendants.
Plaintiff also alleges damages suffered as a result of
Hallowell International LLC's fraud.
Therefore, based on the
unchallenged facts alleged in the Amended Complaint, Plaintiff has
set forth a legitimate cause of action for fraud.
iv.
Emcasco Factors
In addition to evaluating the Plaintiff's claims to ensure
that Plaintiff has set forth legitimate causes of action against the
defendant, "[p]rior to entering default judgment, the Court must
also consider three factors:
(1) whether the plaintiff will be
prejudiced if default is not granted, (2) whether the defendant has
a meritorious defense, and (3) whether the defendant's delay was the
result of culpable misconduct."
Chanel, Inc., 558 F. Supp. 2d at
537 (citing Emcasco Ins. Co. v. Sambrick, 834 F.2d 71, 73 (3d Cir.
1987)).
"Although these factors are generally more pertinent where
the defendant appears to contest the entry of default," the factors
in
this
case
weigh
in
Plaintiff's
favor.
Chanel,
Inc.
v.
Gordashevsky, No. 05-5270, 2007 U.S. Dist. LEXIS 6576, at *13
(D.N.J. Jan. 29, 2007).
As to the first factor, Plaintiff will be prejudiced if
default is not granted since Hallowell International, LLC's failure
to file any responsive pleadings or otherwise appear in this matter
has left Plaintiff without a recourse regarding Plaintiff's claims.
The
Court
is
unable
to
determine
whether
defendant
Hallowell
International, LLC has a meritorious defense or whether Hallowell
International, LLC's delay was the result of its own culpable
misconduct since Hallowell International, LLC failed to file any
responsive pleadings in this matter or otherwise appear to explain
the delay.1
Therefore, Plaintiff is entitled to default judgment.
1. Defendant Duane Hallowell, the Chief Operating Officer of
Hallowell International, LLC, is proceeding pro se in this matter.
Mr. Hallowell informed the Court that he was unable to afford counsel
due to his financial situation as a result of Hallowell
International, LLC going out of business. Courts have granted
default judgment against companies under similar circumstances where
an individual defendant with a relationship to the corporate
(continued...)
B.
Damages
Plaintiff seeks $1,377,800 damages through March 27, 2012
from
Defendants,
plus
attorney's
fees
and
reasonable
costs.
(Motion to Enter Final Judgment on Default ¶ 4, Doc. No. 23). In
support of Plaintiff's Motion to Enter Final Judgment on Default,
Plaintiff submitted an affidavit of Matthew Haydinger, a principal
of Plaintiff United Communities, LLC, itemizing Plaintiff's damages.
(Doc. No. 23). At the Court's direction, Plaintiff submitted to the
Court a supplemental affidavit providing proof of damages on October
8, 2012 affirming that Plaintiff has incurred damages in the amount
of $1,163,026.39, itemizing the damages, and purporting to attach
evidence in the form of invoices and other documents proving such
damages.
(Doc. No. 26).
However, the evidence of damages fails to
adequately prove to the Court that Plaintiff has suffered damages in
the amount claimed, $1,163,026.39.
In particular, the invoices and
documentation provided do not, on their face, support the amount of
1. (...continued)
defendant appears pro se in the matter and the company fails to
secure counsel or appear. See Rose Containerline, Inc. v. Omega
Shipping Co., Inc., No. 10-4345, 2011 WL 1564637 (D.N.J. Apr. 25,
2011) (granting plaintiff's motion for default judgment against
corporate defendant where individual defendants, one of which
accepted service on behalf of the corporate defendant, filed answers
pro se but the company failed to respond to the complaint); Days Inn
Worldwide, Inc. v. Hartex Ventures, Inc., No. 10-336, 2011 Wl 1211353
(D.N.J. Mar. 28, 2011) (granting plaintiff's motion for default
judgment against corporate defendant where an individual defendant
filed a pro se answer on behalf of himself, the two individual
defendants, who were principals of the corporate defendant, were well
aware of the matter, and where the corporate defendant failed to
appear or respond to the complaint).
damages claimed by the Plaintiff.
Therefore, as the evidence that
has been submitted to the Court is confusing and insufficient,
Plaintiff has failed to submit sufficient evidence to the Court to
prove the damages claimed in the Motion to Enter Final Judgment on
Default.
Therefore, the Court will conduct a hearing at which
Plaintiff shall present evidence of Plaintiff's damages to the
Court.
IV.
Conclusion
For the reasons set forth above, and for good cause shown,
it is hereby:
ORDERED that Plaintiff's Motion to Enter Final Judgment
on Default is GRANTED in part and DENIED in part; and it is further
ORDERED that default judgment is entered against Defendant
Hallowell International, LLC on Plaintiff's breach of warranty and
fraud claims; and it is further
ORDERED that the Court will conduct a hearing regarding
Plaintiff's damages on December 19, 2012 at 1:30 p.m. in Courtroom
5C; and it is further
ORDERED
that
the
Final
Pretrial
Conference
set
November 27, 2012 is hereby adjourned.
s/ Karen M. Williams
KAREN M. WILLIAMS
United States Magistrate Judge
cc:
Hon. Joseph H. Rodriguez
for
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?