ELITE HOME PRODUCTS, INC. v. HANUNG TOYS AND TEXTILES LTD. et al

Filing 54

OPINION & ORDER denying without prejudice Plaintiff's 52 Motion for Default Judgment. Signed by Judge William H. Walls on 7/10/17. (cm, )

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

ELITE HOME PRODUCTS, INC.,
OPINION AND ORDER

Plaintiff,
:

v.

Civ. No. 15-6435 (WHW)(CLW)

HANUNG TOYS AND TEXTILES LTD.,
ALLAHABAD BANK LTD., and JOHN
DOE #1,
Defendants.

Walls, Senior District Judge

Plaintiff Elite Home Products (“Elite”) moves under fed. R. Civ. P. 55 for default
judgment against Defendant Allahabad Bank. On March 23, 2017, this Court granted Defendant
Hanung Toys and Textiles (“Hanung”)’s motion to enforce a settlement agreement between Elite
and Hanung. Under the terms of this settlement, Elite was ordered to pay Hanung a sum of
$665,000, plus interest, in order to settle an outstanding debt owed on textiles shipped to Elite
from Hanung. ECF No. 53. Defendant Allahabad Bank, an Indian bank, is the holder of eight
banker’s acceptances (the “Acceptances”) issued on Elite’s behalf by M&T Bank as security for
the textile shipment.
Elite brought suit on August 26, 2015, seeking declaratory relief. In their Complaint,
Elite stated that they were ready and willing to pay the $665,000 they owed to Hanung but had
not done so because the Acceptances issued to Allahabad Bank remained outstanding. ECF No.
1. Elite was unwilling to make payments directly to Hanung under the settlement agreement until
it received confirmation that the outstanding Acceptances had been cancelled, so as to avoid

NOT FOR PUBLICATION
being twice liable for payment. Elite amended their Complaint on February 5, 2016, to add
Allahabad Bank as a defendant. ECF No. 13. Allahabad Bank has failed to respond to summons
served upon it or otherwise defend this action. An entry of default was entered against Allahabad
Bank on April 5, 2017. ECF No. 50. Elite now moves for default judgment against Allahabad
Bank.
Rule 55 of the Federal Rules of Civil Procedure allows the Court to enter a judgment of
default where a party against whom a judgment for affirmative relief is sought has failed to plead
or otherwise defend an action against it. Three factors are considered when evaluating a motion
for default judgment under Fed. R. Civ. P. 55: (1) whether there is “prejudice to the plaintiff if
default is denied,” (2) “whether the defendant appears to have a litigable defense,” and (3)
“whether defendant’s delay is due to culpable conduct.” Chamberlain v. Giampapa, 210 F.3d
154, 164 (3d Cir. 2000).
As a threshold matter, Elite does not seek any type of affirmative relief against Allahabad
Bank. Elite’s motion for default judgment states that they are seeking declaratory relief against
Allahabad Bank, but does not specify what this relief would look like. Elite has stated on the
record that they would like Allahabad Bank to cancel the outstanding Acceptances, but this is not
a remedy that this Court can provide, much less over an Indian entity.
Furthermore, Elite has failed to demonstrate that they will suffer prejudice if default is
denied. Elite has not alleged that Allahabad Bank has sought payment from them on the
outstanding Acceptances, nor have they pointed to any other ways in which they would be
prejudiced if default was denied. When, and if, Allahabad Bank seeks payment from Elite, Elite
may have a litigable claim against them. Until then, this motion is premature. Plaintiffs motion
for default judgment is DENIED, without prejudice.

NOT FOR PUBLICATION

DATE:/i

William H. Walls
Senior United States District Court Judge