Kahan v. Chase Bank

Filing 34

ORDER granting 31 Motion for Default Judgment; granting 28 Motion for Default Judgment; granting 29 Motion for Default Judgment. For the reasons stated in the attached Memorandum and Order, the court directs entry of judgment in favor of de fendant-counterclaimant Chase in the total amount of $8,563.31, plus post-judgment interest at the statutory rate pursuant to 28 U.S.C. § 1961. The court also dismisses Chase's alternate claim for unjust enrichment as duplicative. Th e Clerk of Court is respectfully requested to enter judgment in favor of Chase in accordance with this Order and to close this case. Chase is ordered to serve a copy of this Memorandum and Order on plaintiff-counterdefendant Kahan and file a declaration of service by March 21, 2012. Ordered by Judge Kiyo A. Matsumoto on 3/20/2012. (Chang, Emily)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
---------------------------------X
ABRAHAM KAHAN,
Plaintiff-Counterdefendant,
MEMORANDUM & ORDER
-againstCHASE BANK,

10-CV-335 (KAM)(RLM)

Defendant-Counterclaimant.
---------------------------------X
KIYO A. MATSUMOTO, UNITED STATES DISTRICT JUDGE:
On January 5, 2010, plaintiff-counterdefendant Abraham
Kahan (“Kahan”) commenced a civil action in the Civil Court of
the City of New York, Kings County, pursuant to the Fair Credit
Reporting Act, 15 U.S.C. § 1681 et seq.
of Removal ¶¶ 1,3.)

(See ECF No. 1, Notice

Kahan sought, inter alia, damages he

allegedly sustained because defendant-counterclaimant Chase Bank
(“Chase”) reported his credit limit to credit agencies.
¶ 2.)

(Id.

On January 27, 2010, Chase removed the action to this

court (see generally id.), which has federal-question
jurisdiction over plaintiff’s claim.

28 U.S.C. § 1441.

On February 23, 2010, Chase filed an amended answer
with counterclaims against Kahan for breach of contract and, in
the alternative, unjust enrichment with respect to unpaid credit
card debt.

(See ECF No. 6, Amended Answer With Counterclaims

(“Countercls.”) ¶¶ 10-20.)

By Memorandum and Order dated

1

February 25, 2011, the court dismissed Kahan’s claims with
prejudice and granted Chase leave to move for default judgment
or otherwise dismiss its counterclaims against Kahan by no later
than March 4, 2011.

(See ECF No. 26, Order Adopting In Part and

Modifying In Part Report and Recommendation.)
Upon Kahan’s failure to answer or respond to Chase’s
counterclaims, Chase moved for default judgment on March 4,
2011.

(ECF No. 31, Motion for Default Judgment by Chase.)

Although Chase served Kahan with its motion papers (see ECF No.
31-5, Declaration of Service dated 3/9/2011), Kahan did not
oppose or otherwise respond.

For the reasons set forth below,

the court grants Chase’s motion for default judgment with
respect to the breach-of-contract counterclaim, dismisses the
unjust enrichment counterclaim, and awards damages in the amount
of $8,563.31, and post-judgment interest at the statutory rate.
BACKGROUND
According to the counterclaims set forth in Chase’s
Amended Answer and a sworn affidavit filed in support of Chase’s
Motion for Default Judgment, Kahan entered into a credit
agreement with Chase on or about January 21, 2009, whereupon
Kahan agreed to comply with the terms of the Chase Account
Agreement (“Cardmember Agreement”).

(Countercls. ¶¶ 11-12; ECF

No. 31-2, Declaration of Michelle Masters (“Masters Decl.”)
¶ 4.)

As a result, he received the benefits of the use of a

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Chase credit card.

(Countercls. ¶ 13.)

Kahan failed to comply

with the terms of the Cardmember Agreement, however, by failing
to timely pay his outstanding balance.

(Id.)

Kahan has not

made any payments on his account since June 16, 2009, and his
account fell into delinquency on July 20, 2009.

(Masters Decl.

¶ 5.)
DISCUSSION
As a preliminary matter, this court has supplemental
jurisdiction over Chase’s counterclaims pursuant to 28 U.S.C.
§ 1367.
I. Liability
Rule 55(b)(2) of the Federal Rules of Civil Procedure
provides that the court may enter judgment against the
defaulting party when a counterclaimant moves for judgment
against an adverse party who has failed to answer or otherwise
appear in the action.

Fed. R. Civ. P. 55(b)(2).

When a

notation of default is entered, the counterdefendant’s failure
to respond constitutes an admission of the well-pleaded factual
allegations in its counterclaims, except as to the allegations
relating to damages.

See Greyhound Exhibitgroup, Inc. v.

E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992).
respect to damages following the notation of a default, an

With

inquest by affidavit, without an in-person hearing, may be
conducted so long as the court can ensure “a basis for the

3

damages specified in the default judgment.”

Transatlantic

Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105,
111 (2d Cir. 1997) (quoting Fustok v. ContiCommodity Servs.,
Inc., 873 F.2d 38, 40 (2d Cir. 1989)).

Thus, the movant need

only show adequate support for the relief it seeks.

Greyhound,

973 F.2d at 158-59.
In accordance with the choice-of-law provision in the
Cardmember Agreement, the court applies Delaware law in the
instant motion.

(ECF No. 31-3, Cardmember Agreement at 4.)

In

order to establish a breach-of-contract claim under Delaware
law, Chase must show (1) a contractual obligation; (2) the
cardmember’s breach of that obligation; and (3) resulting damage
to Chase.

Accelecare Wound Ctrs., Inc. v. Bank of New York,

Nos. 08 Civ. 8351, 08 Civ. 11314, 2009 WL 1227487, at *3
(S.D.N.Y. May 5, 2009) (quoting H-M Wexford LLC v. Encorp, Inc.,
832 A.2d 129, 140 (Del. Ch. 2003)).

Chase alleges that the

parties entered into a Cardmember Agreement in which Chase
issued a credit card and credit line to Kahan in exchange for
payments in full for debts Kahan incurred by using the credit
card.

(Countercls. ¶¶ 11-12.)

Chase further alleges that

although Kahan made purchases with the credit card, he has
failed to pay the outstanding balance and has allowed his
account to fall delinquent.

(Id. ¶¶ 13-14.)

Accordingly, the

court finds that the facts alleged by Chase, which are admitted

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in light of Kahan’s default, are sufficient to state a claim for
breach of contract.
II. Damages
Unlike allegations pertaining to liability, those
pertaining to damages are not deemed admitted in the context of
a motion for default judgment.

Greyhound, 973 F.2d at 158.

Therefore, the movant must establish its entitlement to the
recovery of damages.

Id.

In certain cases, it may be necessary

for the court to hold an evidentiary hearing to assess damages.
Nevertheless, “where the [counterclaimant] has filed reasonably
detailed affidavits and exhibits pertaining to the damages
incurred and where the [counterdefendant] has failed to submit
papers on the damages issue, the Court can make an informed
decision regarding damages without an evidentiary hearing.”
United States v. Crichlow, No. 02-CV-6774, 2004 WL 1157406, at
*4 (E.D.N.Y. Apr. 9, 2004).
In support of its motion for default judgment, Chase
submits a copy of Kahan’s credit card account statement for the
period ending December 20, 2009.
Statement.)

(ECF 31-4, Kahan Account

The statement reflects an outstanding unpaid

balance of $8,563.31, including finance charges and accrued late
fees (id.), and the court has no reason to question the
authenticity or accuracy of Chase’s records.

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Accordingly, the

court finds that Chase has sustained $8,563.31 in damages due to
Kahan’s breach of contract. 1
CONCLUSION
For the foregoing reasons, the court directs entry of
judgment in favor of defendant-counterclaimant Chase in the
total amount of $8,563.31, plus post-judgment interest at the
statutory rate pursuant to 28 U.S.C. § 1961.

The court also

dismisses Chase’s alternate claim for unjust enrichment as
duplicative.

The Clerk of Court is respectfully requested to

enter judgment in favor of Chase in accordance with this Order
and to close this case.

Chase is ordered to serve a copy of

this Memorandum and Order on plaintiff-counterdefendant Kahan
and file a declaration of service by March 21, 2012.

SO ORDERED.
Dated:

Brooklyn, New York
March 20, 2012

___________/s/_______________
KIYO A. MATSUMOTO
United States District Judge
Eastern District of New York

1

Although Chase alleges in its Amended Answer that Kahan owes “$8,763.66 plus
interest” (see Countercls. ¶¶ 14, 20), Chase has not established its
entitlement to the recovery of damages in that amount.

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