ATLANTIC CAPES FISHERIES, INC. v. GRAVES & SCHNEIDER INTL, LLC et al

Filing 18

OPINION. Signed by Judge Jerome B. Simandle on 12/21/2018. (rtm, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

ATLANTIC CAPES FISHERIES,
INC.,

HONORABLE JEROME B. SIMANDLE

Plaintiff,
Civil Action
No. 17-11479 (JBS/KMW)

v.
GRAVES & SCHNEIDER INTL, LLC
and MATTHEW SCHNEIDER

OPINION

Defendants.
APPEARANCES:
Brian McEwing, Esq.
REEVES McEWING LLP
681 Townbank Road
Cape May, NJ 08204
Counsel for Plaintiff

SIMANDLE, District Judge:
INTRODUCTION
This matter comes before the Court by way of a motion for
default judgment filed by Plaintiff Atlantic Capes Fisheries, Inc.
(hereinafter

“Plaintiff”).

(See

Motion

for

Default

Judgment

(hereinafter “Pl.’s Mot.”) [Docket Item 9].) Default having been
entered as to both Defendants, Plaintiffs now seek default judgment
under Fed. R. Civ. P. 55(b). No opposition has been filed with
regards to Plaintiff’s present motion.
The Court heard oral argument and received testimony and
documentary evidence at a Proof Hearing held on December 7, 2018,

and supplemental submissions on December 14, 2018. After careful
consideration, Plaintiff’s Motion for Default Judgment will be
granted in part and denied in part without prejudice for the
reasons explained below. The following constitute the Court’s
findings of fact and conclusions of law upon Plaintiff’s Motion
for Default Judgment, pursuant to Federal Rule of Civil Procedure
52(a).
BACKGROUND
Plaintiff

filed

the

Complaint

herein

November

9,

2017,

alleging that Defendants Graves & Schneider Intl, LLC and Matthew
Schneider (hereinafter, collectively, “Defendants”) are liable for
negligence (Count I), breach of contract (Count II), violation of
the New Jersey Consumer Fraud Act (Count III), common law fraud
(Count IV), breach of fiduciary duty (Count V), and breach of
bailment duty (Count VI). (See Complaint [Docket Item 1].) The
Complaint seeks monetary damages, including “such other punitive,
anticipatory,

consequential

and

compensatory

damages,

and

reasonable attorneys’ fees and costs as this Court may deem fit
and proper.” (Id. at ¶¶ 61, 64, 69, 73; see also id. at ¶¶ 46,
53.)
Defendants

were

each

personally

served

with

process

on

December 8, 2017. (See Summons Returned Executed [Docket Items 5
& 6].) Neither Defendant filed an Answer or otherwise responded to

2

the Complaint within 21 days of service, as required by Rule 12(a),
Fed. R. Civ. P., and no Defendant has done so to date.
Plaintiff filed for Entry of Default against Defendants on
February 6, 2018. (See Motion for Entry of Default [Docket Item
7].) The Clerk of Court granted Plaintiff’s request for Entry of
Default on February 15, 2018. (See Clerk’s Entry of Default, Feb.
15, 2018.)
Plaintiff’s present motion was filed thereafter and sought
both partial default judgment for a sum certain and the scheduling
of a proof hearing with regards to other damages. (See Pl.’s Mot.
[Docket Item 9].) Plaintiff served a copy of this motion upon each
of the Defendants by mail [Docket Item 9-4, Certification of
Service].

A

Bellingham,

courtesy

copy

Washington

was

believed

also
to

sent

to

an

represent

attorney

them.

[Id.]

in
No

opposition or other response to the motion has been filed.
On October 24, 2018, the Court ordered Plaintiff to submit
supplementary
Memorandum

briefing

Opinion

and

and

scheduled

Order

[Docket

a

proof
Item

hearing.

10].)

(See

Plaintiff

submitted a supplementary brief on November 14, 2018. (See Pl.’s
Supp. [Docket Item 11].) On December 6, 2018, Plaintiff informed
the Court that it only wishes to proceed with respect to claims
for “compensatory and fraud damages.” (Letter [Docket Item 14],
1.) On December 7, 2018, the Court held a Proof Hearing, at which
time Plaintiff produced certain documents, which were entered into

3

evidence. Plaintiff further called Thorne Tasker as a witness, and
the Court heard his testimony. Following the hearing, the Court
granted

leave

to

Plaintiff

to

file

certain

affidavits

and

supplementary briefs by no later than December 14, 2018, including
the

Affidavit

of

Ronald

E.

Graves

[Docket

Item

17-2],

a

supplemental brief regarding choice of law [Docket Item 17-1], and
a supplemental brief regarding prejudgment interest and punitive
damages [Docket Item 17-3]. Further, Plaintiff seeks an award of
counsel fees and costs and submits the Affidavit of Brian McEwing,
Esq., in support of such an award. [Docket Item 17-4.]
STANDARDS FOR DEFAULT JUDGMENT
Federal Rule of Civil Procedure 55(b)(2) authorizes courts to
enter a default judgment against a properly served defendant who
fails to a file a timely responsive pleading. See FED. R. CIV. P.
55(b)(2); see also Chanel 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)). A party seeking
default judgment is not entitled to relief as a matter of right;
the Court may enter default judgment “only if the plaintiff’s
factual allegations establish the right to the requested relief.”
Ramada Worldwide Inc. v. Courtney Hotels USA, LLC, Case No. 11896, 2012 WL 924385, at *3 (D.N.J. Mar. 19, 2012) (internal
quotations and citation omitted). Thus, before granting default
judgment,

a

court

must

determine:

4

(1)

whether

the

plaintiff

produced

sufficient

jurisdiction,

(2)

proof
whether

of

valid

the

service

unchallenged

and
facts

evidence
present

of
a

sufficient cause of action, and (3) whether the circumstances
otherwise render the entry of default judgment “proper.” Teamsters
Health & Welfare Fund of Phila. v. Dubin Paper Co., No. 11–7137,
2012 WL 3018062, at *2 (D.N.J. July 24, 2012) (internal citations
omitted). A court must accept as true every “well-pled” factual
allegation of the complaint, but no presumption of truth applies
to

the

plaintiff’s

legal

conclusions

or

factual

assertions

concerning damages. Comdyne I. Inc. v. Corbin, 908 F.2d 1149 (3d
Cir. 1990); 10 C. Wright, A. Miller, & M. Kane, Federal Practice
and Procedure (2d ed. 1983), § 2688, at 444. The Court addresses
each element in turn.
DISCUSSION
A.

Whether Plaintiff Produced Sufficient Proof of Valid
Service and Evidence of Jurisdiction
1.

Defendant Graves & Schneider Intl, LLC was properly
served and is in default

The Complaint together with the summons were served upon
Defendant Graves & Schneider Intl, LLC on December 8, 2017 at 4220
22nd Ave. W., Suite 200, Seattle, Washington 98199. (See Summons
Returned Executed [Docket Item 5].) Defendant Graves & Schneider
Intl, LLC has never filed an Answer to Plaintiff’s Complaint, and
the Clerk of Court accordingly entered default against Defendant
Graves & Schneider Intl, LLC on February 15, 2018. Plaintiff’s

5

motion for default judgment against Defendant Graves & Schneider
Intl, LLC followed, to which Defendant Graves & Schneider Intl,
LLC has not filed a response. (See Motion for Default Judgment
[Docket Item 9].)
2.
The

Defendant Matthew Schneider was properly served and
is in default

Complaint

together

with

the

summons

were

personally

served upon Defendant Matthew Schneider on December 8, 2017 at
4220 22nd Ave. W., Suite 200, Seattle, Washington 98199. (See
Summons Returned Executed [Docket Item 6].) Defendant Schneider
has never filed an answer to Plaintiff’s Complaint, and the Clerk
of Court accordingly entered default against Defendant Schneider
on February 15, 2018. Plaintiff’s motion for default judgment
against Defendant Schneider followed, to which Defendant Schneider
has not filed a response. (See Motion for Default Judgment [Docket
Item 9].)
3.

Evidence of Jurisdiction

This Court has subject matter jurisdiction pursuant to 28
U.S.C. § 1332, since the parties are of diverse citizenship and
the dispute involved a sum exceeding $75,000.00.
In this case, Plaintiff has alleged that Defendant Graves &
Schneider Intl, LLC “is a limited liability company or similar
business organization organized and operating in the State of
Washington,” that Defendant Schneider is a resident of the State

6

of Washington, and that Plaintiff is a New Jersey corporation,
(see Complaint [Docket Item 1], ¶¶ 1-4), thereby satisfying the
diversity of citizenship requirement. Additionally, Plaintiff is
seeking a judgment against Defendants for actual damages the amount
of two hundred and ten thousand dollars ($210,000.00), as well as
additional statutory and punitive damages and attorney’s fees and
costs (see Complaint [Docket Item 1], ¶¶ 23, 46, 51, 53, 60-61,
64,

69,

73),

thereby

satisfying

the

amount

in

controversy

requirement.
Plaintiff also alleges admiralty jurisdiction under 28 U.S.C.
§ 1333 due to the maritime nexus of this dispute pertaining to the
sale and ownership of a commercial fishing permit which attaches
to a vessel and enables that vessel and its owner (here, the
Plaintiff) to engage in the permitted fishing operation; thus,
admiralty jurisdiction also exists.
B.

Findings of Fact

Plaintiff, Atlantic Cape Fisheries, Inc., of Cape May, New
Jersey, is a large commercial fishing company operating a fleet of
vessels, packing houses, and distribution centers, principally on
the east coast of the United States.
Defendant Graves & Schneider Intl, LLC (“GSI”) is a limited
liability company having two principals, namely, Defendant Matthew
Schneider of the State of Washington, and Ronald E. Graves, also
of Washington, a witness herein but not a defendant.

7

Plaintiff Atlantic Cape Fisheries was desirous of considering
the expansion of its business to the west coast waters of the
United States. Toward that end, the Plaintiff’s president, Daniel
Cohen, recently deceased, authorized Captain Thorne Tasker to
negotiate with GSI in 2006 for the purpose of finding and obtaining
a civil limited license groundfish permit to allow both fishing
and on-board processing of certain shellfish off the West Coast.
In 2006-2007, Defendant GSI was a well-established business
in Seattle, Washington serving as a broker for such commercial
fishing permits and listing them from time to time on its website,
according

to

Captain

Tasker’s

testimony.

Captain

Tasker

was

familiar with Defendant Matthew Schneider, but he generally worked
with Ronald Graves in serving the needs of Tasker’s own commercial
fishing ventures over the years.
Plaintiff Atlantic Cape Fisheries entered into a contract
with

GSI

entitled

“Agreement

to

Purchase

License

Limitation

Program Permit” [hereafter “Agreement,” Exhibit 1] on or about
October 20, 2006. Under the terms of the agreement, Plaintiff
purchased the License Limitation Program Permit for Groundfish,
License No. LLG3569 (“LLP Permit”), which is the subject of this
lawsuit. The agreed-upon purchase price was $210,000.00 [Exhibit
1 at ¶ 1]. The signatories to the agreement were Ronald Graves on
behalf of Defendant GSI and the late Daniel Cohen on behalf of
Plaintiff.

8

Plaintiff paid the agreed-upon purchase price to GSI or its
intermediary, Kim Marine Trust. Those checks are in evidence at
Exhibit A, showing that the agreed-upon price of $210,000.00 was
paid in full.
The Agreement also provided that the transaction would be
governed by the laws of the State of Washington. [Exhibit 1 at
¶ 6].
The

parties

agreed

to

an

“Amendment

to

the

Agreement”

[“Amendment,” attached to Exhibit 1] on or about March 7, 2007,
between GSI as the Seller and Atlantic Cape Fisheries, Inc. as the
Buyer. Under the Amendment, the parties agreed that the “LLP
Permit” would be held in escrow by GSI because it was possible
that Plaintiff might need to assign its rights under the Agreement
to a third party prior to the transfer of the LLP Permit, awaiting
an

interpretation

of

applicable

guidelines

from

the

National

Marine Fisheries Service. [Amendment to Agreement at ¶ B.]
Under the Amendment to Agreement, the parties agreed that the
intermediary, Kim Marine Documentation, Inc., is instructed to
release the purchase price funds to the Seller, GSI. The parties
agreed that the LLP Permit would be held by the Seller, GSI, which
“shall not use the LLP Permit, designated vessel, pledge or
transfer any interest in the LLP Permit to any party other than as
directed by Buyer [Atlantic Cape Fisheries, Inc.] and shall keep
the

LLP

Permit

free

and

clear

9

of

all

claims,

liens,

and

encumbrances and shall indemnify, defend, and hold Buyer, its
assigns, and the LLP Permit harmless from the same.” [Amendment to
Agreement at ¶ 2 (emphasis added).] The Amendment to Agreement was
again signed by Ronald Graves on behalf of GSI and by the late
Daniel Cohen, President of Atlantic Cape Fisheries, Inc.
Thus, GSI agreed that the LLP Permit was indeed purchased and
paid for by Atlantic Cape Fisheries, Inc., and GSI agreed to hold
the LLP Permit pending instructions from Atlantic Cape regarding
transfer of title to either Atlantic Cape Fisheries or to a
designated third party. The obligation was clear and unequivocal
that GSI was not entitled to use or sell or encumber plaintiff’s
LLP Permit, and also that GSI would follow Atlantic Cape Fisheries’
instructions regarding the paperwork for transferring Atlantic
Cape Fisheries’ LLP Permit.
As a result of the Plaintiff’s purchase of the LLP Permit,
both Defendant Schneider and Mr. Graves received their respective
cash distributions from GSI as their portions of the proceeds from
GSI’s sale of the LLP Permit to plaintiff. The records in evidence
show that Schneider received $105,000 (Exhibit F; Graves Aff. ¶¶
23-24).
The following year, on or about August 5, 2008, Mr. Cohen
instructed Kim Marine that Captain Tasker would handle further
discussions about the license, including instructing as to the
proper titling of the license. [Exhibit B].

10

Captain Tasker never

instructed GSI or Schneider to dispose of the LLP Permit. It is
quite clear that Schneider was aware of this transaction both as
a

principal

in

GSI

and

as

a

principal

receiving

a

sizeable

distribution from the sale. In addition, Schneider received extra
monthly compensation as the bookkeeper and recordkeeper duties he
performed for GSI. (Exhibit F; Graves Aff. at ¶¶ 6-8.)
Indeed, it was Matthew Schneider who performed and handled
all of GSI’s bookkeeping and accounting, including meeting with
GSI’s accountant every month, for which he received additional
compensation.

[Graves

Aff.

at

¶¶

6,7,

and

8.]

Mr.

Graves

acknowledges that GSI was the title owner of License LLG 3569 (the
LLP Permit). [Id. at ¶ 10.]
In the GSI office, this transaction was placed into its own
transaction folder, and it was Matthew Schneider who maintained
control of all active transaction files in his office, including
this transaction. [Id. at ¶ 13.]
he

handled

the

negotiations

Graves further acknowledges that

for

the

sale

of

this

permit

to

plaintiff and that he kept Matthew Schneider advised as the
negotiations progressed, and Schneider was aware of the final sale
price and agreed to it and the relevant documents were placed into
the transaction file. [Id. at ¶¶ 15-18.]
Schneider was also aware that Graves executed the Transferor
section of the LLP Permit in question, which Schneider also
approved. [Id. at ¶ 20.] The physical LLP Permit was then placed

11

in the transaction file, with Graves’ signature in the Transferor
section,

and

this

physical

document

as

noted

remained

in

Schneider’s possession.
Graves left the GSI business, ceasing doing business as a
partner and shareholder, because he had strong differences with
Schneider, in or about 2007 or early 2008. [Id. at ¶¶ 3, 4, 5, and
25.]
Ronald Graves describes this particular LLP Permit as being
quite valuable, because such licenses were rare and “no additional
licenses of that type [were] being issued,” and he expected the
value would only increase after 2007 [Id. at ¶ 28.] This confirmed
the testimony of Captain Tasker who indicated that the license was
very unusual and therefore attractive to the Plaintiff because it
permitted an opportunity for shrimp fishing in Alaskan waters and
permitted processing of the catch on board, which is true of only
about two percent of such permits.
Captain Tasker and the Plaintiff made the decision to let the
LLP Permit sit for an extended period of time for several reasons.
Captain Tasker testified that so long as such a permit is in
escrow, one doesn’t have to pay fees related to the permit until
it is removed from escrow and assigned to a vessel; secondly,
Captain

Tasker

indicated

that

the

value

of

the

permit

was

increasing and that it would benefit Plaintiff to hold on to the

12

permit for later resale or use. Captain Tasker’s testimony was
highly credible, and the Court accepts it.
Instead of holding the LLP Permit safely in escrow, there
came a time in the year 2016 when Defendant Schneider conveyed the
license to a commercial fisherman, Robert Desautel, who thereafter
resold or assigned the license to Dona Martita, LLC. Plaintiff,
Captain Tasker, and Mr. Graves were all unaware of this transfer
when it occurred in 2016 and had no idea that GSI and Schneider
sold the LLP Permit without the knowledge of the rightful owner,
Atlantic Cape Fisheries. It was Captain Tasker who first became
aware of the transfer when, in 2017, he was contemplating the
titling of the LLP Permit. He visited and obtained printouts from
the Juneau, Alaska office of the National Oceanic and Atmospheric
Administration (“NOAA”) for the years 2015 and 2016 [Exhibit E].
Those printouts from the NOAA website listed this specific LLP
Permit as being titled to GSI as of December 2015, which was
technically correct, because it had never been officially retitled
to the Plaintiff. For 2016, however, the NOAA website showed that
the license had been transferred to a different owner: Dona Martita
LLC. When Captain Tasker discovered this indication of the 2016
transfer, he first thought it had to be an error, because Plaintiff
owned the permit and because the permit had now been transferred
to a significantly larger vessel than the permit would actually

13

authorize. He also called the NOAA office in Juneau, Alaska and
confirmed the transfer to the Dona Martita.
Captain Tasker also spoke to Mr. Desautel, who had purchased
the permit from Schneider. Desautel spoke with Tasker about this
permit for about five minutes and acknowledged purchasing it from
Schneider for a price that Desautel indicated was only $30,000.00,
which Tasker does not believe because the actual permit cost
$210,000 and has a considerably higher value.
Four or five months after discovering the sale, Tasker spoke
with Defendant Matthew Schneider. Plaintiff had hired a lawyer on
the West Coast and Tasker went to Schneider’s office in Seattle
and told him why he was there. Tasker asked Schneider what had
happened regarding the permit transfer. Schneider first said that
the permit had never been sold to Atlantic Capes. Then he blamed
Ronald Graves for selling the permit to the third party. These
were lies by Schneider who was well aware that Plaintiff had
purchased it and was the true owner, and also well aware that he
sold it to Mr. Desautel. Again, the Court fully credits Captain
Tasker’s testimony.
When Captain Tasker told Schneider that Plaintiff would start
legal action and that Plaintiff wanted to be made whole, defendant
Schneider simply said: “You can’t get blood from a stone. Good
luck.” Captain Tasker, who did not want to be confrontational,
left the meeting with those words ringing in his ears.

14

Captain

Tasker

testified

that

Desautel

told

him

about

Schneider’s role in the 2016 sale. Desautel explained that he was
originally looking for an LLP for fishing on the East Coast, and
that he called Schneider who continued the commercial fishing
permit brokerage business. Desautel owns a processing plant in New
Bedford, Massachusetts. Desautel purchased the West Coast permit
instead and told Captain Tasker: “Your problem is with Matt
Schneider.” Desautel said that he bought it from Schneider and
believed it was Schneider’s to sell.
Captain

Tasker

also

testified

he

spoke

with

Matthew

Schneider’s lawyer who said that the purchase price was $30,000.00,
confirming what Schneider had said to Tasker.
In his dealings with Captain Tasker, Defendant Schneider
exhibited arrogance, no remorse, and shocking behavior. Schneider
knowingly sold the Plaintiff’s LLP to a third party. Schneider’s
totally unrepentant attitude, and his false attempt to deflect
blame,

are

further

aggravating

circumstances

that

take

his

misconduct beyond the realm of a mere breach of contract or breach
of fiduciary duty, as will be explained below.
Although there is good evidence that the value of the LLP
Permit by the present time had risen to a multiple of the original
$210,000.00 price due to the permit’s desirability and the fact
that no new permits had been created since 1998 in the West Coast
fishery

for

groundfish,

the

loss

15

to

plaintiff

attributed

to

Schneider’s

actions,

may

well

be

a

multiple

of

$210,000.00.

Plaintiff, however, is seeking recovery of its original purchase
price, adjusted by interest, enhanced by fraud damages and/or other
punitive

damages,

plus

attorney’s

fees.

Plaintiff’s

counsel

indicated Plaintiff does not seek consequential damages at this
time [Docket Item 14].
Finally,

since

Schneider

was

continuing

in

business

and

continued to use the offices and the assets, including this LLP
Permit, titled in the name of Graves & Schneider Intl, LLC,
Defendant GSI is also deemed to have acted through its principal,
Defendant

Schneider.

Schneider

continues

According
in

to

Captain

business

and

Tasker,

presently

Defendant
may

have

approximately 100 vessels listed in its inventory in Seattle,
Washington.
C.

Conclusions of Law

This Court has subject matter jurisdiction under 28 U.S.C. §
1332

(diversity

(admiralty).

of

citizenship)

and

under

28

U.S.C.

§

1333

Any objection to venue of this case in the District

of New Jersey is waived, as the Defendants were duly served and
failed to interpose timely objection (or any objection) to venue,
electing instead to default. 28 U.S.C. § 1406(b).
This

Court

has

personal

jurisdiction

over

each

of

the

Defendants. This Court exercises “specific jurisdiction” where the
cause of action is “related to or arises out of the defendant’s

16

contacts with the forum,” IMO Industries, Inc. v. Kiekert AG, 155
F.3d 254, 259 (3d Cir. 1998) (citing Helicopteros Nacionales de
Colombia, S.A. v. Hall, 466 U.S. 408, 414 n. 8 (1984)). The twopart test for exercising specific jurisdiction is whether the
defendant has constitutionally sufficient “minimum contacts” with
the forum, id. (citing Burger King Corp. v. Rudzewicz, 471 U.S.
462, 474 (1985), and second “that to do so would comport with
‘traditional notions of fair play and substantial justice.’” Id.
(citations omitted). Since this case arises from the transaction
surrounding the Agreement and the Amendment, this Court exercises
specific jurisdiction. Both elements of the exercise of specific
jurisdiction are met. The underlying contracts were negotiated and
ratified between New Jersey and Washington. Payments came from New
Jersey to Washington. The property at issue belonged to the New
Jersey corporate Plaintiff. This New Jersey business property was
held by the Washington Defendants who continued to have duties to
obey the contracts and faithfully discharge their responsibilities
owed to the New Jersey Plaintiff. Defendants’ contacts with New
Jersey were sufficient. Second, it does not offend fair pay or
substantial justice to summon these Defendants to New Jersey to
respond to this Complaint and to the default judgment motion. Since
the required response by Defendants could have included a defense
of lack of personal jurisdiction, but Defendants made no response,
it is also clear that any objection to personal jurisdiction by

17

either Defendant has been waived upon default, see Rule 12(h)(1),
Fed. R. Civ. P. (defense of lack of personal jurisdiction is waived
by failing to make it by motion under Rule 12(b)(2) or to include
in a responsive pleading); see also 5B Wright & Miller, Federal
Practice & Procedure § 1351 at 272 et seq. (3d ed. 2004).
The

dispute

is

governed

by

the

laws

of

the

State

of

Washington. The parties chose to apply Washington law in their
Agreement and Amendment to Agreement (Exhibit 1). The Court applies
the New Jersey’s choice-of-law rules to determine the state having
the most significant relationship to the transactions and parties.
See e.g., P.V. v. Camp Jaycee, 197 N.J. 132, 142-43 (2008). The
general New Jersey choice-of-law paradigm is altered, however,
where the dispute arises out of a transaction governed by the
parties’

choice-of-law

agreement.

See

e.g.,

Instructional

Systems, Inc. v. Computer Curriculum Corp., 130 N.J. 324, 341
(1992). As a rule, “[o]rdinarily, when parties to a contract have
agreed to be governed by the laws of a particular state, New Jersey
courts will uphold the contractual choice if it does not violate
New Jersey’s public policy, id. at 341. In such a case, New Jersey
applies Section 187 of the Restatement (Second) of Conflicts of
Laws, which provides that the law of the state chosen by the
parties will apply, unless either:
(a)

the chosen state has no substantial
relationship to the parties or the
transaction and there is no other

18

reasonable basis for the parties’ choice,
or
(b)

application of the law of the chosen
state would be contrary to a fundamental
policy of a state which has a materially
greater interest than the chosen state in
the determination of the particular issue
and which * * * would be the state of the
applicable law in the absence of an
effective choice of law by the parties.

Id. at 342, 614 A.2d 124 (citing Restatement (Second of Conflicts
of Law § 187); Portillo v. National Freight, Inc., 323 F. Supp. 3d
646, 651-52 (D.N.J. 2018).
In the present case, the Agreement contains a “Governing Law”
provision which states: “This Agreement, and all transactions
contemplated hereby, shall be governed by, construed and enforced
in

accordance

with

the

laws

of

the

State

of

Washington.”

[Agreement, Ex. 1 at ¶ 6.] The Amendment to Agreement memorialized
a

similar

choice-of-law

Construction

and

provision,

enforcement

of

stating:

this

“Governing

Amendment

shall

Law.
be

in

accordance with the laws of the state of Washington, exclusive of
its choice of law provisions.” [Amendment to Agreement, Ex. 1 at
¶ 5.] The latest agreement selects Washington’s substantive law
and

excludes

consideration

of

Washington’s

choice

of

law

provisions, and the latter Amendment to Agreement is also the
parties’

creation

of

the

escrow

duties

that

give

rise

to

Plaintiff’s present clams. Under Restatement § 187(a), supra, the
chosen state -- Washington -- has a substantial connection to the

19

transactions at issue, and under Restatement § 187(b) no state has
a materially greater interest in the application of its law than
does the chosen state of Washington, where the subject LLP Permit
was sold and held in safekeeping, and where the LLP Permit was
then impermissibly resold. Accordingly, Washington law will apply.
The Complaint, as noted, contained six counts. Count I alleged
negligence; Count II alleged breach of contract; Count III alleged
violation of the New Jersey Consumer Fraud Act, and subsequently
the Washington Consumer Protection Act, as discussed below; Count
IV alleged common law fraud; Count V alleged breach of fiduciary
duty; and Count VI alleged breach of bailment duty. In this motion
for default judgment, Plaintiff has pressed its claims under Count
II (breach of contract); Count III (NJCFA or WCPA); and Count IV
(common law fraud). Accordingly, the Court will not address Counts
I, V, and VI which, for reasons that will become plain, are
extraneous to the recoveries obtained on Counts II and III.
Count II: Breach of Contract. Under Washington law, a party
asserting breach of contract must show “an agreement between the
parties, a party’s duty under the agreement, and a breach of that
duty.” Fidelity & Dep. Co. of Md. v. Dally, 148 Wash. App. 739,
745 (2009) (citing Lehrer v. Dept. of Social & Health Servs., 101
Wash. App. 509, 516 (2000) (additional citation omitted)). Here
Plaintiff has proved the existence of the Agreement and the
Amendment to the Agreement. Plaintiff has easily proved that

20

Defendant GSI has breached the Agreement and the Amended Agreement
which it entered into. Among other things, GSI sold the LLP Permit
to Plaintiff, received full payment under the Agreement, promised
to hold the LLP Permit while awaiting instructions from Plaintiff
for titling the LLP Permit, and breached the Agreement and Amended
Agreement by reselling the LLP Permit, without knowledge or consent
of Plaintiff, to an unrelated third party. Plaintiff was deprived
of the benefit of its bargain, namely, ownership and titling of
the LLP Permit. Plaintiff has proved damages equal to the amount
it paid for the LLP Permit plus prejudgment interest from the time
of breach in 2016 to the present date in accordance with Washington
law. Such judgment will be entered on Count II in favor of
Plaintiff and against both Graves & Schneider Intl., LLC and
Matthew Schneider.
Defendant

Schneider,

although

not

a

signatory

to

the

Agreement or Amendment to the Agreement, has been shown to be the
alter ego of Graves & Schneider Intl., LLC, prior to the year and
including 2016, when Schneider committed the breach on behalf of
GSI. Schneider was also the physical custodian of Plaintiff’s LLP
Permit and used that authority to improperly sell the LLP Permit
by titling it into the name of the new third-party buyer and
retaining the proceeds of the sale. Further, GSI as an entity in
2007

and

Schneider

as

a

principal

of

GSI

received

ample

consideration in 2007 to carry out these continuing duties, which

21

Schneider breached both individually and as the alter ego for GSI
in 2016.
We turn next to consider whether an award of prejudgment
interest should be made. Under Washington law,
[p]rejudgment interest is allowed in civil
litigation at the statutory judgment interest
rate, [WASH. REV. CODE §] 4.56.110, [WASH. REV.
CODE §] 19.52.020, when a party to the
litigation retains funds rightfully belonging
to another and the amount of the funds at issue
is liquidated, that is, the amount at issue
can be calculated with precision and without
reliance on opinion or discretion.
Mahler v. Szucs, 957 P.2d 632, 649 (Wash. 1998) (citing Prier v.
Refrigeration Eng’g Co., 442 P.2d 621 (Wash. 1968)). Neither the
Agreement nor the Amendment in this case provides for a specific
rate of interest, nor does the judgment in this case relate to
unpaid child support, tortious conduct, or to unpaid student loan
debt. But this is a contractual case in which the funds were fixed
at $210,000 and the LLP Permit was to be held in the temporary
possession of Defendants unchanged in form and thus calculable
with precision. Plaintiff does not seek recovery at the present
time for increase in the value of the LLP Permit from 2007 to the
present time, so no discretionary finding or opinion regarding
value of the LLP Permit is brought into play. Therefore, interest
is

calculated

from

WASH. REV. CODE

§ 19.52.020.

§ 4.56.110. Under WASH. REV. CODE § 19.52.020(1),

22

WASH. REV. CODE

[a]ny rate of interest shall be legal so long
as the rate of interest does not exceed the
higher of: (a) Twelve percent per annum; or
(b)
four
percentage
points
above
the
equivalent coupon issue yield (as published by
the Board of Governors of the Federal Reserve
System) of the average bill rate for twentysix week treasury bills as determined at the
first bill market auction conducted during the
calendar month immediately preceding the later
of (i) the establishment of the interest rate
by written agreement of the parties to the
contract, or (ii) any adjustment in the
interest rate in the case of a written
agreement permitting an adjustment in the
interest rate. No person shall directly or
indirectly take or receive in money, goods, or
things in action, or in any other way, any
greater interest for the loan or forbearance
of any money, goods, or things in action.
WASH. REV. CODE § 19.52.020(1).
An award of prejudgment interest will be made from the time
of the breach until the present date. The date of breach will be
deemed to be January 1, 2016, since the precise date of Defendants’
conversion and sale is not known, but the evidence proves it
occurred between 2015 and 2016. Under Washington law, the rate of
prejudgment

interest

is

set

at

12

percent,

WASH. REV. CODE

§

4.56.110; WASH. REV. CODE § 19.52.020(1). To award interest running
back to the signing of the Agreement in 2006 or the Amendment in
2007 might confer an unwarranted windfall to Plaintiff because the
breach at issue occurred in 2016, and Plaintiff attempted to make
no use of the LLP Permit until 2017. The product of interest upon
$210,000 from January 1, 2016 to present, calculated at twelve

23

percent (12%) simple interest, is $74,909.59. This sum will be
added to Plaintiff’s recovery for breach of contract, for a total
of $210,000.00 plus $74,909.59, which is $284,909.59.
Count III: New Jersey Consumer Fraud Act (alternatively,
Washington

Consumer

Protection

Act).

In

Count

III,

Plaintiff

sought to obtain recovery under the New Jersey Consumer Fraud Act,
N.J.S.A. 56:8-1, et seq., because the prospect of recovery to a
successful

plaintiff

is

more

generous

than

the

corresponding

Washington Consumer Protection Act, WASH. REV. CODE § 19.86.010, et
seq. (“WCPA”). However, as determined above, the NJCPA does not
apply here because of New Jersey’s recognition of the parties’
election of Washington’s law in their choice of law provisions.
Plaintiff was therefore granted leave to seek recovery under the
analogous WCPA, and supplemental briefing [Docket Items 17-1 and
17-3] addresses the WCPA, inter alia.
The WCPA was adopted to protect the public from unfair or
deceptive acts or practices in trade or commerce and is to be
liberally construed. Deegan v. Windermere Real Est./Ctr.-Isle,
Inc., 391 P.3d 582, 587 (Wash. App. Div. 1, 2017). The WCPA differs
from

traditional

common

law

standards

of

fraud

and

misrepresentation and replaced the standard of caveat emptor with
the standard of fair and honest dealing. Id. Under § 19.86.020,
the WCPA provides: “Unfair methods of competition and unfair or
deceptive acts or practices in the conduct of any trade or commerce

24

are hereby declared unlawful.” WASH. REV. CODE § 19.86.020. The terms
“trade” and “commerce” include “the sale of assets or services,
and any commerce directly or indirectly affecting the people of
the state of Washington.” WASH. REV. CODE § 19.86.010. Further, a
“person” is defined to include “natural persons, corporations,
trusts, unincorporated assertions and partnerships,” WASH. REV. CODE
§ 19.86.010(1), and “assets” includes “any property, tangible or
intangible, real, personal, or mixed, and wherever situate, and
any other thing of value.” WASH. REV. CODE § 19.86.010(3).
Plaintiff invokes the private cause of action for those who
have suffered harm under the WCPA, as provided under WASH. REV. CODE
§ 19.86.090. In short, this statute provides: “Any person who is
injured in his business or property by a violation of WASH. REV.
CODE § 19.86.020 ... may bring a civil action in superior court ...
to recover the actual damages sustained by him or her ... together
with the costs of suit, including a reasonable attorney’s fee. In
addition, the court may, in its discretion, increase the award of
damages up to an award not to exceed three times the actual damages
sustained:

PROVIDED,

that

such

increased

damage

award

for

violation of WASH. REV. CODE § 19.86.020 may not exceed twenty-five
thousand dollars....” WASH. REV. CODE § 19.86.090.
Plaintiff qualifies as a “person” as it is a corporation.
Plaintiff was injured in its business and property by being
deprived of its LLP Permit, which it owned, and the rights to

25

conduct a fishing business for groundfish covered by that valuable
permit. This injury was the result of Defendants’ unfair or
deceptive acts or practices in connection with the sale and
safekeeping of Plaintiff’s LLP Permit. The WCPA does not define
“unfair or deceptive acts or practices,” but Washington’s courts
have held that “[i]mplicit in the definition of ‘deceptive’ under
the

CPA

is

the

understanding

that

the

practice

misleads

or

misrepresents something of material importance,” Nguyen v. Doak
Homes, Inc., 140 Wash. App. 726, 734 (2007) (quoting Holiday Resort
Cmty. Ass’n. v. Echo Lake Assocs., 134 Wash. App. 210, 226 (2006)).
Plaintiff

has

demonstrated

that

Defendant

Schneider,

individually and as alter ego for Graves & Schneider Intl, LLC,
carried forth the trade of brokering or trading in commercial
fishing permits, and he has knowingly committed a deceptive act or
practice in connection with both the sale and resale of Plaintiff’s
LLP Permit. Schneider held or otherwise controlled the LLP Permit
Plaintiff had purchased from GSI and paid for in 2007, wherein the
agreements required GSI and Schneider as a principal and later
alter ego of GSI to adhere to the promise of safekeeping of
Plaintiff’s license, as required by the Agreement and the Amendment
to Agreement. Defendant Schneider himself received one-half of
those proceeds from the 2007 sale to Plaintiff. Defendant Schneider
thereafter knowingly misrepresented, in Schneider’s unauthorized
secret resale of Plaintiff’s LLP Permit, that he had authority to

26

sell it in 2016, to set the price, retain the proceeds, and
transfer it to a new buyer, all unknown at the time to the
Plaintiff. Schneider not only misrepresented his ownership or
other authority to sell the Plaintiff’s LLP Permit, but he also
misrepresented the transaction when later questioned by Captain
Tasker

on

Plaintiff’s

behalf,

as

discussed

above.

Defendant

Schneider’s deceptive trade practice also included pretending to
safeguard Plaintiff’s LLP Permit when actually selling it as his
or GSI’s own property. He was in essence converting the property
that had been entrusted to him and disposing of it for his own
personal gain without authority from Plaintiff to do so, and
without even giving notice that he intended to do so for any
reason. Defendant Schneider thus failed to reveal numerous facts
of material importance in his conversion and resale of Plaintiff’s
business property. Deegan, supra, 391 P.3d at 587.
All of this conduct by Defendant Schneider violated WASH. REV.
CODE § 19.86.020 and caused damages to Plaintiff in the amount of
$210,000.1
Thus, Plaintiff has proved (1) an unfair or deceptive act or
practice (2) occurring in trade or commerce (3) affecting the
public interest, (4) injuring Plaintiff’s business or property,

1

Plaintiff does not pursue consequential damages at this time.
[Letter from Brian McEwing, Docket Item 14.]
27

(5) causing damages, see Behnke v. Ahrens, 294 P.3d 729 (Wash.
App. Div. 1, 2012).
In addition, the Court will impose the maximum additional
damages permitted by the WCPA, namely $25,000, due to the egregious
and unrepentant conduct to convert and sell Plaintiff’s property,
and to deter Defendant Schneider from misconduct in his trade or
business in the future.
In addition, the Court will again impose prejudgment interest
as permitted in Washington law for certain violations of the WCPA.
See e.g., Pelascini v. Pace-Knapp, 160 Wash. App. 1005 (2011)
(affirming award of WCPA prejudgment interest where damages were
“liquidated”).

The

Pelascini

court

explained

that

“[i]f

the

measure of damages does not require the exercise of discretion,
the claim is liquidated.” Id. (citing Egerer v. CSR W., L.L.C.,
116 Wash. App. 645, 653 (2003)). Thus in Pelascini, prejudgment
interest was permitted to be added to a WCPA recovery for “lost
equity damages” concerning the sale of a house, where those damages
were calculable by using facts regarding loss of value that were
not in dispute. Id. The present case, on the other hand, is a much
more straight-forward application of the prejudgment statute to a
WCPA

recovery

for

a

fixed

amount

requiring

no

exercise

of

discretion to determine, namely, $210,000.
Under the same logic and arithmetic set forth above (regarding
prejudgment interest on contractual recovery), the Court will

28

award prejudgment interest on this successful WCPA recovery in the
amount of $74,909.59.
The total WCPA award will thus be the sum of $235,000, plus
interest of $74,909.59, for a sum of $309,909.59, to which the
Court will add reasonable attorney’s fees and costs of suit,
addressed below.
D.

Common Law Fraud

Although Plaintiff seeks recovery in common law fraud, it
appears that the complaint and proofs presently fall short under
Washington law. The Supreme Court of Washington has defined common
law

fraud

as

having

nine

essential

elements,

which

must

be

established by clear, cogent, and convincing evidence:
(1) A representation of an existing fact; (2)
its materiality; (3) its falsity; (4) the
speaker’s
knowledge
of
its
falsity
or
ignorance of its truth; (5) his intent that it
should be acted on by the person to whom it is
made; (6) ignorance of its falsity on the part
of the person to whom it is made; (7) the
latter’s reliance on the truth of the
representation; (8) his right to rely upon it;
(9) his consequent damage.

Sigman v. Stevens-Norton, Inc., 70 Wash. 2d 915, 920 (1967) (quoted
in North Pacific Plywood, Inc. v. Access Road Builders, Inc., 29
Wash.

App.

228,

232-33

(1981)).

While

Defendant

Schneider’s

misconduct would easily appear to satisfy elements (1) through
(5), it is clear that Washington’s common law of fraud requires
that the misrepresentations be made to the person who relied on

29

the

representation

Schneider’s

and

suffered

misrepresentations

consequent
regarding

damage.
ownership

Here,
and

availability for sale of Plaintiff’s LLP Permit were made to the
third party to whom he sold the item -- Mr. Desautel -- and perhaps
also to NOAA’s Marine Fisheries Commission which reflected the
transfer and Desautel’s new ownership on its 2017 registry website,
above. But the deceptions were not made to Plaintiff, nor would
Plaintiff ever have relied upon such nonsense because it knew the
true fact that it owned the LLP Permit and had not authorized its
transfer to anyone else.
Therefore, default judgment as to common law fraud will be
denied without prejudice in the event Plaintiff elects to seek to
cure these deficiencies or otherwise revive this claim.
E.

Attorney’s Fees and Costs

Plaintiff is entitled to an award of reasonable counsel fees
and costs. The Court has examined the Affidavit of Brian McEwing
as to Counsel Fees and Costs [Docket Item 17-4] filed December 14,
2018, together with the attachments thereto, all submitted in
compliance with L. Civ. R. 54.2(a) & (b) (D.N.J.). Plaintiff has
itemized and explained all legal services rendered, for which
Plaintiff was or will be billed, in connection with pursuing this
successful case. Legal services were provided by attorneys Brian
McEwing, Lisa Reeves, and Michael Schleigh, and paralegal services
were rendered by Christine Nass. The total hours of legal services

30

incurred by Plaintiff through December 14, 2018, is 88.80 hours,
and the resulting fee is $18,363.00. The Court finds that this
time was efficiently and necessarily expended for the pre-drafting
research, drafting, and filing of the Complaint, preparation,
research and filing motions for default and for default judgment,
briefing

prior

to

and

subsequent

to

the

proof

hearing,

and

attendance at the proof hearing. Further, the Court finds that the
hourly rates of counsel are reflected in the written fee agreement
with the client and are reasonable, namely $210.00 per hour for
Michael Schleigh, $200.00 per hour for Brian McEwing, and $240.00
per hour for Lisa Reeves, as well as the paralegal rate of $110.00.
Thus, counsel fees are approved iin the amount of $18,363.00.
Plaintiff is entitled to recover costs of suit. These are
claimed in the McEwing Affidavit [Docket Item 17-4] in the sum of
$660.00, but there may be an omission since the itemized costs
[filing

fees

($400.00),

service

fee

($125.00),

and

parking

($10.00)] total only $535.00. Thus, the sum of $535.00 in costs
will be awarded.
The total award of fees and costs will be $18,898.00.
CONCLUSION
Accordingly,

it

is

the

Court’s

Verdict

that

Plaintiff,

Atlantic Capes Fisheries, Inc., is entitled to default judgment
against

Defendants

Graves

&

Schneider

31

Intl,

LLC

and

Matthew

Schneider, individually and as alter ego for Graves & Schneider
Intl, LLC, as follows:


On

Count

II,

for

breach

of

contract,

interest,

attorney’s fees and costs, the sum of $303,807.59.


On Count III, for breach of the Washington Consumer
Protection Act, including additional damages thereunder,
plus interest, plus attorney’s fees and costs, the sum
of $328,807.59.

Additionally,

default

judgment

has

been

denied

without

prejudice as to common law fraud under Washington law in Count IV.
Because these recoveries are duplicative, with two legal
theories redressing the same or similar conduct, Plaintiff cannot
recover

on

both

but

will

need

to

choose

its

remedy.

Assuming Plaintiff is electing the higher amount, Judgment will be
entered in favor of Plaintiff and against Defendants in the amount
of $328,807.59.
The accompanying Judgment will be entered.

December 21, 2018
Date

s/ Jerome B. Simandle
JEROME B. SIMANDLE
U.S. District Judge

32