CHEN v. AAA RECYCLE MANAGEMENT LLC et al
Filing
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OPINION. Signed by Judge Madeline Cox Arleo on 11/30/2018. (gl, )
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
CAI FENG CHEN,
Plaintiff,
Civil Action No. 17-8754
v.
OPINION
AAA RECYCLE MANAGEMENT, LLC
d/b/a ADVANCED GREEN SOLUTIONS
and LINING CHEN, an individual,
Defendants.
THIS MATTER comes before the Court on Plaintiff Cai Feng Chen’s (“Plaintiff”) motion
for default judgment against Defendants Lining Chen and AAA Recycle Management, LLC d/b/a
Advanced Green Solutions (“AGS” and, collectively, “Defendants”) pursuant to Federal Rule of
Civil Procedure 55(b)(2). ECF No. 7. For the reasons set forth herein, the motion is GRANTED
in part and DENIED in part.
I.
BACKGROUND
On April 19, 2016, Plaintiff and Defendants entered into a Settlement and Release
Agreement (the “Agreement”) to resolve all claims in a previously instituted action in this district.
Compl. ¶¶ 6-7; id., at Ex. A. The Agreement requires Defendants to pay Plaintiff a total of
$171,000.00 in sixty monthly installments. Id. ¶ 10. The Agreement also contains an acceleration
clause that permits Plaintiff to seek the full principle amount in the event of Defendants’ default.
Id. ¶ 11. The Agreement permits Defendants to cure a default within ten days of receiving notice
thereof. Id. ¶ 13.
Along with the Agreement, Defendant Lining Chen, who is the owner of AGS, also signed
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an Affidavit of Confession of Judgment (“Confession of Judgment”) that authorizes immediate
and uncontested entry of judgment against Defendants in the event of any breach of the Agreement.
See id., at Ex. A. Upon such breach, the Confession of Judgment also authorizes entry against
Defendants of: (1) statutory costs pursuant to 28 U.S.C. §§ 1920, 1921, 1923, 1924; (2) reasonable
attorneys’ fees incurred in entering and enforcing the judgment; and (3) interest on the judgment
pursuant to 28 U.S.C. § 1961. Id. ¶ 3.
Defendants failed to make the August 2017 and September 2017 installment payments
required under the Agreement, and they did not cure their default after Plaintiff provided notice
thereof. Compl. ¶¶ 14-23. On October 7, 2017, Plaintiff’s counsel gave notice of acceleration of
the outstanding principal balance of $156,000.06. Id. ¶¶ 25-26. On October 19, 2017, Plaintiff
filed the instant Verified Complaint, seeking the full balance. ECF No. 1. On February 13, 2018,
Plaintiff filed a Certificate of Service certifying that Defendants were served on February 7, 2018.
ECF No. 5. On April 5, 2018, the Clerk of Court entered default. On April 19, 2018, Plaintiff
filed the instant motion for default judgment against Defendants. ECF No. 7. The motion is
unopposed.
II.
LEGAL STANDARD
“The district court has the discretion to enter default judgment, although entry of default
judgments is disfavored as decisions on the merits are preferred.” Animal Sci. Prods., Inc. v. China
Nat’l Metals & Minerals Imp. & Exp. Corp., 596 F. Supp. 2d 842, 847 (D.N.J. 2008). Before
entering default judgment the court must: (1) determine it has jurisdiction both over the subject
matter and parties; (2) determine whether defendants have been properly served; (3) analyze the
Complaint to determine whether it sufficiently pleads a cause of action; and (4) determine whether
the plaintiff has proved damages. See Chanel, Inc. v. Gordashevsky, 558 F. Supp. 2d 532, 535-36
(D.N.J. 2008); Wilmington Savings Fund Soc., FSB v. Left Field Props., LLC, No. 10-4061, 2011
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WL 2470672, at *1 (D.N.J. June 20, 2011). Although the facts pled in the Complaint are accepted
as true for the purpose of determining liability, the plaintiff must prove damages. See Comdyne
I, Inc. v. Corbin, 908 F.2d 1142, 1149 (3d Cir. 1990).
In addition, prior to granting default judgment, the Court must make explicit factual
findings as to: (1) whether the party subject to the default has a meritorious defense; (2) the
prejudice suffered by the party seeking default judgment; and (3) the culpability of the party
subject to default. Doug Brady, Inc. v. N.J. Bldg. Laborers Statewide Funds, 250 F.R.D. 171, 177
(D.N.J. 2008).
III.
ANALYSIS
A. Jurisdiction & Service
The Court has both subject matter jurisdiction over this dispute and personal jurisdiction
over Defendants. The Court has subject matter jurisdiction by virtue of diversity jurisdiction under
28 U.S.C. § 1332 because Plaintiff and Defendants are citizens of different states and there is an
amount in controversy exceeding $75,000. See Compl. ¶¶ 1-5. The Court has personal jurisdiction
over Defendants because Defendants consented to exclusive jurisdiction in this district in Section
12 of the Agreement. See Agreement ¶ 12; Olde Homestead Golf Club v. Elec. Transaction Sys.
Corp., 714 F. App’x 186, 188 (3d Cir. 2017).
The Court is also satisfied that Defendants were properly served. On February 7, 2018,
Magistrate Judge Leda D. Wettre issued an order permitting service to Defendants via electronic
mail to the address lee.ags@gmail.com, based on: (1) Plaintiff’s demonstrated attempts to serve
process at Defendants’ stated address; and (2) the email address having been provided by
Defendants in the Agreement for receipt of notice. See ECF No. 4. Plaintiff served Defendants at
this email address pursuant to Judge Wettre’s order, which is permitted under the Federal Rules of
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Civil Procedure and the New Jersey Rules of Court. See Fed. R. Civ. P. 4(e)(1); N.J. Ct. R. R.
4:4-5.
B. Liability
As Defendants have not filed an Answer or otherwise responded to the Complaint, the
Court must accept the truthfulness of Plaintiff’s well pled allegations as to liability. The Court is
satisfied that Plaintiff has adequately pled a claim against Defendants for breach of contract.
To state a claim for breach of contract in New Jersey, a plaintiff must allege: (1) the
existence of a valid contract between the parties; (2) that Defendant breached the contract; and (3)
that Plaintiff suffered damages due to the breach. See AT&T Credit Corp. v. Zurich Data Corp.,
37 F. Supp. 2d 367, 370 (D.N.J. 1999). Plaintiff has alleged that: (1) there was a contractual
relationship with Defendants based on the Agreement, see Compl. ¶¶ 7-10; (2) Defendants
breached the Agreement by failing to make required payments, see id. ¶¶ 14-23; and (3) that
Plaintiff suffered damages as a result of the breach, see id. ¶¶ 24-26. Therefore, Plaintiff has
sufficiently alleged that Defendants are liable for breach of the Agreement. 1
C. Appropriateness of Default Judgment
Next, the Court must consider: (1) whether the party subject to the default has a meritorious
defense; (2) the prejudice suffered by the party seeking default judgment; and (3) the culpability
of the party subject to default. Doug Brady, 250 F.R.D. at 177. The Court concludes that in the
absence of any responsive pleading and based upon the facts alleged in the Verified Complaint,
Defendants do not have a meritorious defense. See Ramada, 2012 WL 924385, at *5. Second, the
Court finds that Plaintiff will suffer prejudice absent entry of default judgment as it would have
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Because the Court finds that Plaintiff has established a valid cause of action and is entitled to its
requested damages under its breach of contract claim, the Court need not assess Plaintiff’s
alternative theories of liability.
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no other means of obtaining relief. Finally, the Court finds that Defendants acted culpably as they
have been served with the Verified Complaint, are not infants or otherwise incompetent, and are
not presently engaged in military service. See Nationwide Mut. Ins. Co. v. Starlight Ballroom
Dance Club, Inc., 175 F. App’x 519, 523 (3d Cir. 2006) (holding that a defendant’s failure to
respond to communications from the plaintiff and the court can constitute culpability).
D. Monetary Damages
Plaintiff seeks a default judgment comprised of: (1) $156,000.06 in damages under the
Agreement; (2) $3,129.24 in prejudgment interest; (3) $814.47 in costs of suit; and (4) $3,585.00
in attorneys’ fees. Plaintiff’s Memorandum in Support of Motion for Default Judgment at 4-5
(“Pl.’s Br.”), ECF No. 7.6.
First, the Court agrees that Plaintiff is entitled to the full balance owed under the
Agreement—$156,000.06—based upon Defendants’ default and the acceleration of judgment
provision in the Agreement. Compl. ¶¶ 7-23; Certification of Christian Oehm, Esq. in Support of
Default Judgment ¶¶ 12-19, ECF No. 7.1.
Second, while Plaintiff is entitled to prejudgment interest, the Court disagrees as to the
amount. Under New Jersey law, the award of prejudgment interest for contract claims is subject
to the Court’s discretion. Cooper Distrib. Co., Inc. v. Amana Refrigeration, Inc., 63 F.3d 262, 284
(3d Cir. 1995) (citing Meshinsky v. Nichols Yacht Sales, Inc., 110 N.J. 464, 478 (1988)). “[T]he
purpose of an award of prejudgment interest is ‘to indemnify the claimant for the loss of what the
moneys due him would presumably have earned if the payment had not been delayed.’” Id.
(quoting Ellmex Constr. Co., Inc. v. Republic Ins. Co., 202 N.J. Super. 195, 212-13 (App. Div.
1985)). “The basic consideration is that the defendant has had the use, and the plaintiff has not, of
the amount in question[.]” Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 505
(1974).
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Here, Plaintiff asserts that prejudgment interest should be calculated from August 1, 2017
based on the full $156,000.06 amount due under the contract, see Pl.’s Br. at 4-5, but this
calculation is not supported by the facts. First, under the Agreement, the August 2017 and
September 2017 payments did not become due until August 10, 2017 and September 10, 2017,
respectively. See Agreement ¶ 2. The Agreement also provides for a cure period of ten business
days, however, and presumably no cause of action for breach would have accrued until that cure
period expired. See id. ¶ 4. Moreover, the full, accelerated amount of $156,000.06 was not due
to Plaintiff until October 7, 2017—the date Plaintiff provided notice to Defendants that the balance
was being accelerated and was owed in full. See id. ¶ 5. Thus, Plaintiff is not entitled to
prejudgment interest beginning on August 1, 2017, but the Court will allow Plaintiff to re-apply
for prejudgment interest calculated from the dates on which the amounts awarded hereunder
actually became due and owing. 2
Finally, the Court finds that Plaintiff is entitled to costs and attorneys’ fees as requested
because: (1) Section 3 of the Confession of Judgment expressly provides that Plaintiff is entitled
to costs and reasonable attorneys’ fees in the event of Defendants’ default under the Agreement,
see Confession of Judgment ¶ 3; (2) Plaintiff’s counsel has provided a certification of the costs
and attorneys’ fees incurred in this matter, which includes a breakdown of filing, service, and
postage/printing costs as well as detailed entries memorializing the work undertaken in the case,
see Certification of Christian Oehm, Esq. in Support of Default Judgment ¶¶ 3-9, ECF No. 7.4;
and (3) the attorneys’ fees are reasonable and do not appear to be “excessive, redundant, or
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The Court notes that the Confession of Judgment provides for interest under 28 U.S.C. § 1961,
but this provision addresses post-judgment interest—not prejudgment interest—and thus does not
bear on the Plaintiff’s entitlement to prejudgment interest. See Confession of Judgment ¶ 3; 28
U.S.C. § 1961.
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otherwise unnecessary[,]” see Interfaith Cmty Org. v. Honeywell Intern., Inc., 426 F.3d 694, 711
(3d Cir. 2005).
IV.
CONCLUSION
For the reasons set forth herein, Plaintiff’s motion for default judgment is GRANTED in
part and DENIED in part. Judgment is entered for $156,000.06 in damages, $814.47 in costs,
and $3,585.00 in attorneys’ fees. Plaintiff may move within 30 days for an amended judgment,
calculating prejudgment interest in accordance with this Opinion.
An appropriate Order
accompanies this Opinion.
Dated: November 30, 2018
/s Madeline Cox Arleo__________
Hon. Madeline Cox Arleo
United States District Judge
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