Network America Lines, Inc. v. XPI Enterprise, Ltd.
Filing
63
MEMORANDUM ORDER granting 56 Motion for Default Judgment. For the foregoing reasons, Plaintiff's motion for default judgment as against XPI is granted. The Clerk of Court is directed to enter judgment against XPI Enterprise, Ltd., tradi ng as "X Port International," in the total amount of $27,013.00, comprising (i) $22,700.00 in damages; and (ii) $4,313.00 in prejudgment interest at eight percent for the period from March 15, 2017, to July 29, 2019, and to close this case. This Memorandum Order resolves docket entry no. 56. (Signed by Judge Laura Taylor Swain on 4/13/2020) (mro) Transmission to Orders and Judgments Clerk for processing.
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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NETWORK AMERICA LINES, INC.,
Plaintiff,
-v-
No. 17-CV-1910-LTS-SLC
XPI ENTERPRISE, LTD., trading as “X PORT
INTERNATIONAL,”
Defendant.
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MEMORANDUM ORDER
Plaintiff Network America Lines, Inc. (“Plaintiff” or “NAL”) moves for a default
judgment against Defendant XPI Enterprise, LTD. (“Defendant” or “XPI”), pursuant to Federal
Rule of Civil Procedure 55(b)(2) and S.D.N.Y. Local Civil Rule 55.2(b), on claims arising from
XPI’s alleged breach of contract. (Docket Entry No. 56.) Defendant has failed to appear
through counsel in this action, despite being afforded ample time and opportunity to do so. The
Court has jurisdiction of this action pursuant to 28 U.S.C. § 1333. The Court has reviewed
Plaintiff’s submissions carefully and, for the following reasons, Plaintiff’s motion for default
judgment is granted.
BACKGROUND
The following recitation of facts is drawn from Plaintiff’s Complaint (docket
entry no. 1 (“Compl.”)), as well as uncontroverted documentary evidence submitted by Plaintiff
in connection with the instant motion practice.
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NAL is a common carrier of containerized cargo by ocean vessel in the foreign
commerce of the United States. (Compl. ¶ 5.) NAL maintains a standard form bill of lading
contract that it issues in connection with each shipment accepted by NAL for carriage. (Compl.
¶ 7.) The standard form bill of lading contract contains terms and conditions that apply to each
shipment carried by NAL; they are printed on the back of every original bill of lading that NAL
issues, are available from NAL or any of NAL’s agents, upon request, and are also part of the
tariff that NAL maintains. (Id.)
Between March 28, 2014, and July 11, 2014, the parties entered into nine separate
bills of lading. (Compl. ¶¶ 10-72.) The bills of lading stated that they were governed by the
“law of U.S.A.” and that “any claim or dispute arising [ ] in connection [with the contracts] shall
be determined by the courts in NEW YORK, N.Y. and no other courts.” (Compl. at Exh. A.)
The bills of lading provided for the carriage of shipments from Savannah, GA to the port of
Benghazi, Libya; XPI was the named shipper and NAL was the carrier. (Compl. ¶¶ 10-72.)
NAL delivered each of the shipments to their destinations and fulfilled all of its contractual
obligations under the bills of lading. (Id.) Pursuant to the bills of lading, XPI was required to
pay ocean freight charges to NAL. (Id.) XPI was provided invoices for the freight charges it
owed, but XPI refused to pay NAL. (Id.) On each occasion, NAL provided written notices to
XPI demanding payment, but XPI did not pay the invoices. (Id.)
Procedural History
On February 23, 2018, counsel for XPI, Kent, Beatty & Gordon, LLP (“KBG”),
moved to withdraw from the representation. (Docket Entry No. 31.) On March 27, 2018,
Magistrate Judge Pitman issued an order granting KBG’s motion and finding that “it is
imperative that XPI retain new counsel” because Defendant is a corporation, which “can appear
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in an action only through counsel.” (Docket Entry No. 35.) Judge Pitman directed KBG “to
provide a copy of [his March 27, 2018,] Order to XPI and to explain it to XPI.” (Id.) Judge
Pitman also stated that, if XPI did not retain new counsel by April 27, 2018, Judge Pitman
“inten[ded] to recommend the entry of a default judgment against [XPI] on all claims.” (Id.)
On July 11, 2018, the Court found that, “[b]ecause XPI has not appeared in this
action through counsel or otherwise contacted [the Court]” XPI is in default. (Docket Entry No.
37.) As a result, the Court issued an order granting Plaintiff permission to make a motion for
default judgment. (Id.) On October 23, 2018, the Clerk of Court issued a certificate of default as
to XPI. (Docket Entry No. 42.) On July 29, 2019, NAL served its Supplemental Affirmation in
Support of Plaintiff’s Motion for Final Default Judgment against XPI, together with all
Supporting Documents. (Docket Entry No. 55.) On October 2, 2019, NAL moved for default
judgment against XPI. (Docket Entry No. 56.)
DISCUSSION
In determining whether to grant a motion for default judgment, courts within this
district engage in a two-step inquiry. First, courts consider whether default should be entered by
evaluating three factors: “(1) whether the defendant’s default was willful; (2) whether defendant
has a meritorious defense to plaintiff’s claims; and (3) the level of prejudice the non-defaulting
party would suffer as a result of the denial of the motion for default judgment.” Indymac Bank,
F.S.B. v. Nat’l Settlement Agency, Inc., No. 07 Civ. 6865 (LTS) (GWG), 2007 WL 4468652, at
*1 (S.D.N.Y. Dec. 20, 2007) (citation omitted); see also Guggenheim Capital, LLC v. Birnbaum,
722 F.3d 444, 455 (2d Cir. 2013) (applying these factors in review of lower court grant of a
default judgment).
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Here, the Court finds that the balance of these factors weighs in Plaintiff’s favor.
XPI’s failure to appear in this action through new counsel, despite having had ample opportunity
and clear direction from the Court to do so, is indicative of willful conduct. See Indymac, 2007
WL 4468652, at *1 (holding that non-appearance and failure to respond to a complaint or motion
for default judgment indicate willful conduct). Moreover, while XPI has answered Plaintiff’s
Complaint (docket entry no. 20), it has failed to “present evidence of facts that, if proven at trial,
would constitute a complete defense.” S.E.C. v. McNulty, 137 F.3d 732, 740 (2d Cir. 1998)
(internal quotation marks omitted). Instead, XPI has proffered only conclusory denials and
threadbare affirmative defenses in its answer to the Complaint. XPI has not introduced any
evidence to controvert the claims brought against it. Finally, the Court finds that Plaintiff will be
prejudiced and left with no alternative recourse if it is denied the ability to seek judgment by
default. If default is not entered, Plaintiff will be forced to continue incurring costs in this action.
Second, this Court must determine “whether the allegations in Plaintiff’s
Complaint are sufficiently pleaded to establish [XPI’s] liability.” Lenard v. Design Studio, 889
F. Supp. 2d 518, 528 (S.D.N.Y. 2012). Here, NAL seeks damages as a result of the breach of
contracts between NAL and XPI where XPI allegedly failed to pay NAL the ocean freight
charges for nine shipments under freighted bills of lading issued by NAL. To state a claim for
breach of contract under New York law, “the complaint must allege: (i) the formation of a
contract between the parties; (ii) performance by the plaintiff; (iii) failure of defendant to
perform; and (iv) damages.” Johnson v. Nextel Communications, Inc., 660 F.3d 131, 142 (2d
Cir. 2011). NAL’s Complaint alleges each of these elements: (i) contracts providing for the
carriage of shipments from Savannah, GA to Benghazi, Libya; (ii) Plaintiff’s performance of its
contractual obligations to ship the goods; (iii) Defendant’s failure to pay for the shipments under
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the terms of the bills of lading; and (iv) damages comprised of the payments Plaintiff should
have received but did not.
Thus, the Court concludes that the allegations of the Complaint, which are
deemed admitted, along with NAL’s uncontroverted evidentiary proffers, are sufficient to
demonstrate that XPI failed to pay NAL ocean freight charges in connection with the carriage of
nine shipments under freighted bills of lading issued by NAL. As a result, NAL is entitled to
damages resulting from XPI’s breach of contract.
Damages
Plaintiff seeks damages in the amount of $22,700, the total sum of XPI’s unpaid
ocean freight invoices. Damages for breach of contract should put a plaintiff in the same
economic position he would have occupied had the breaching party performed the contract. 1
Process Am., Inc. v. Cynergy Holdings, LLC, 839 F.3d 125, 143 (2d Cir. 2016). Here, Plaintiff
delivered the shipments under the parties’ bills of lading, rendered the invoices for the shipments
to XPI, and sent XPI multiple written notices demanding payment, but did not receive any
payment from XPI. To put NAL in the same economic position it would have been in had XPI
paid the invoices, NAL is entitled to recover the total amount of unpaid invoices.
NAL’s proffered evidence in support of its motion for default judgment, including
copies of the bills of lading at issue, establish the damages figure with the requisite reasonable
certainty. According to the proffered bills of lading, the total amount of unpaid invoices is
$22,700. Additionally, the sworn declaration from Thomas Johns, the Vice President and House
1
The parties’ contracts do not specify the governing law, but rather state that they are
governed by the “laws of U.S.A.”, and require disputes arising in connection with the
contracts shall be decided in the courts of New York, NY. See Compl. at Exh. A. The
Court has applied New York state law in determining Plaintiff’s claims for damages and
pre-judgment interest.
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Counsel for NAL, attests to the accuracy of the unpaid amounts and authenticates the bills of
lading. (See Affidavit in Support of Plaintiff’s Request for Final Default Judgment, docket entry
no. 54.) Through this evidence, NAL has sufficiently demonstrated its right to recover damages
in the amount of $22,700. See Fustok v. ContiCommodity Servs. Inc., 873 F.2d 38, 40 (2d
Cir.1989) (finding plaintiff’s submissions, including an affidavit attesting to unpaid invoices
“provided a sufficient basis from which to evaluate the fairness of” plaintiff’s claimed damages).
Pre-Judgment Interest
Plaintiff’s Complaint seeks relief in the form of damages, together with “interest,
costs and the disbursements of this action.” (Compl. at 17.) Pre-judgment interest is normally
recoverable as a matter of right in breach of contract actions. Graham v. James, 144 F.3d 229,
239 (2d Cir. 1998). New York law permits an award of pre-judgment interest at a statutory rate
of nine percent per annum, calculated from the earliest ascertainable date on which the cause of
action existed. N.Y.C.P.L.R. §§ 5001, 5002, 5004.
NAL requests pre-judgment interest calculated at a rate of eight percent from
March 15, 2017, the date Plaintiff commenced this action, to July 29, 2019, the date Plaintiff
filed its initial motion for default judgment (docket entry nos. 52-54). The Court finds the relief
sought to be reasonable as to both the start date as well as the rate of interest.
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CONCLUSION
For the foregoing reasons, Plaintiff’s motion for default judgment as against XPI
is granted. The Clerk of Court is directed to enter judgment against XPI Enterprise, Ltd., trading
as “X Port International,” in the total amount of $27,013.00, comprising (i) $22,700.00 in
damages; and (ii) $4,313.00 in prejudgment interest at eight percent for the period from March
15, 2017, to July 29, 2019, and to close this case.
This Memorandum Order resolves docket entry no. 56.
SO ORDERED.
Dated: New York, New York
April 13, 2020
/s/ Laura Taylor Swain
LAURA TAYLOR SWAIN
United States District Judge
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