Xerox Corporation v. Everest Business Services, LLC

Filing 10

-CLERK TO FOLLOW UP-ORDER granting 8 Motion for Default Judgment and default judgment is granted to Xerox against Everest on its claims sounding in contract. Xerox is awarded damages for breach of contract in the amount of $2,330,209.20, plu s prejudgment interest, calculated at the rate of 9% per annum from January 25, 2013 (a "reasonable intermediate date" with respect to the accrual of the claims), to the date of entry of this Order. See N.Y. CPLR §§5001, 500 4; Marfia v. T.C. Ziraat Bankasi, 147 F.3d 83, 91 (2d Cir. 1998) (where contractual damages arose on many occasions over time, Court may opt to fix a "reasonable intermediate date" from which to calculate prejudgment interest). Such intere st adds up to $139,812.56, for a total compensatory damages figure of $2,470,021.76. Xerox's request for an additional award of $350.00 in costs is granted pursuant to Fed. R. Civ. Proc. 54(d) ("[u]nless a federal statute, these rules, or a court order provides otherwise, costs... should be allowed to the prevailing party"). Xerox is accordingly awarded total damages of $2,470,371.76.. Signed by Hon. David G. Larimer on 9/24/13. (EMA)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
_______________________________________________
XEROX CORPORATION,

Plaintiff,
DECISION AND ORDER
13-CV-6058L
v.
EVEREST BUSINESS SERVICES, LLC,

Defendant.
________________________________________________
INTRODUCTION
Plaintiff Xerox Corporation (“Xerox”) commenced this action alleging breach of contract and
conversion against defendant Everest Business Services, LLC. (“Everest”). Xerox seeks a money
judgment against Everest for failure to pay monies due, or to return rented equipment,1 pursuant to
thirteen different equipment lease finance agreements and a maintenance agreement. (Dkt. #1). On
February 8, 2013, the Summons and Complaint was personally served upon Everest’s owner and
Chief Executive Officer, Joseph Makarewicz. Proof of service was filed on February 27, 2013.
(Dkt. #5). Everest has failed to appear or to answer the complaint.
An initial Entry of Default was entered by the Clerk on April 18, 2013. (Dkt. #7).
Plaintiff now moves for a default judgment pursuant to Fed. R. Civ. P. 55(b)(2), seeking a
judgment of $2,330,209.20 in damages, plus $350.00 in disbursements, against Everest. (Dkt. #8).
For the reasons set forth below, that motion is granted.

1

It appears from Xerox’s submissions that the equipment at issue was returned at some
point between the filing of this action and the present motion for default judgment. Xerox’s
damages calculations include a credit to Everest for the fair market value of equipment which
was returned.

FACTUAL ALLEGATIONS IN THE COMPLAINT
According to the complaint, between June 15, 2010 and July 23, 2012, Everest executed
thirteen equipment lease agreements and one maintenance agreement with Xerox. Each of the leases
was considered a “finance lease,” and gave Everest the option to purchase the leased equipment from
Xerox the end of the lease term. The lease agreements and the maintenance agreement further
provided that in the event of Everest’s default, the equipment was to be returned to Xerox and
Everest would immediately be required to pay, as liquidated damages and not as a penalty, the total
of all amounts then due under the lease, plus interest, as well as the remaining payments due for the
remainder of the term, the applicable purchase option, and all applicable taxes. Each agreement
further stated that in the event of default, Everest would be responsible for Xerox’s reasonable
resultant costs, including attorneys fees.
Xerox duly delivered all of the agreed-upon equipment and rendered the agreed-upon
maintenance services. However, Everest defaulted on its payments under each of the agreements.
The complaint and the instant motion seek damages for breach of contract, representing the
total of: (1) unpaid “amounts due” under the leases; and (2) accelerated balances for the remainder
of certain lease’s terms; minus (3) repossession credits to Everest representing the market value of
the leased equipment which was returned to Xerox. Xerox also seeks its costs and taxable
disbursements spent in connection with the instant lawsuit.

MOTION FOR DEFAULT JUDGMENT
Initially, in order to secure a default judgment, a party must first secure the clerk’s entry of
default by demonstrating, by affidavit or in some other manner, that the opposing party is in default.
See Fed. R. Civ. Proc. 55(a); J&J Sports Prods. v. Bimber, 2008 U.S. Dist. LEXIS 39174 at *2
(W.D.N.Y. 2008). Once a default has been entered, the Court will accept as true the allegations of
the complaint that establish the defendant’s liability, and will carefully scrutinize those relating to

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the amount of damages. Id., 2008 U.S. Dist. LEXIS 39174 at *3-*4 (citing Greyhound Exhibitgroup,
Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992)).
The Clerk has entered Everest’s default and Xerox has shown that it is entitled to judgment
against Everest, based on its decision not to respond to the complaint. However, the Court cannot
merely accept at face value that Xerox is entitled to the particular relief it seeks. Rather, “judgment
against a defaulting party should be granted only after careful examination of the moving party’s
claim by the district court. . . . Indeed, a defendant’s default does not in itself warrant a court in
entering a default judgment because there must be a sufficient basis in the pleadings for the judgment
entered.” Bianco v. Seaway Indus. Services, Inc., 2004 WL 912916, *1 (W.D.N.Y. Apr. 01, 2004)
(internal citations and quotations omitted); see also Enron Oil Corp. v. Masonori Diakuhara, 10
F.3d 90, 95-96 (2d Cir.1993). Furthermore, the Second Circuit cautions that “defaults are generally
disfavored and are reserved for rare occasions,” and when there is doubt as to the propriety of default
relief, “the doubt should be resolved in favor of the defaulting party.” Enron Oil Corp., 10 F.3d at
96. The Court, therefore, must evaluate the merits of Xerox’s claims and the relief it seeks. See
Wagstaff-el v. Carlton Press Co., 913 F.2d 56, 57 (2d Cir.1990).
I have reviewed the allegations in the complaint, as well as the terms of the underlying lease
and maintenance agreements, in detail. I accept as true Xerox’s allegations that Everest contracted
with it to lease and maintain equipment, and that Everest defaulted in its payment obligations under
those leases. I have examined Xerox’s supporting documentary evidence in support of its claims,
including copies of the agreements, purchase orders, invoices, and fair market value tables, all of
which represent damages totaling $2,330,209.20. Although the amount of damages sought is
substantial, the damages appear to have been calculated accurately according to the terms of each
of the subject agreements, and I have no reason to question the authenticity or accuracy of Xerox’s
business records. See Dkt. #8 and exhibits thereto; Nwagboli v. Teamwork Transp. Corp., 2009 U.S.
Dist. LEXIS 121893 at *6 (S.D.N.Y. 2009) (breach of contract damages may be awarded without
a hearing where the damages amount is “susceptible to mathematical computation”). In fact, the
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Court notes that Xerox has requested less than the full measure of damages it might otherwise have
claimed under the agreements, by not requesting an award of attorneys fees. I am convinced that
Xerox has established its claims that Everest breached the agreements at issue, and that Xerox is
entitled to default judgment on those claims.

CONCLUSION
Plaintiff’s motion for default judgment (Dkt. #8) is granted, and default judgment is granted
to Xerox against Everest on its claims sounding in contract. Xerox is awarded damages for breach
of contract in the amount of $2,330,209.20, plus prejudgment interest, calculated at the rate of 9%
per annum from January 25, 2013 (a “reasonable intermediate date” with respect to the accrual of
the claims), to the date of entry of this Order. See N.Y. CPLR §§5001, 5004; Marfia v. T.C. Ziraat
Bankasi, 147 F.3d 83, 91 (2d Cir. 1998) (where contractual damages arose on many occasions over
time, Court may opt to fix a “reasonable intermediate date” from which to calculate prejudgment
interest).

Such interest adds up to $139,812.56, for a total compensatory damages figure of

$2,470,021.76. Xerox’s request for an additional award of $350.00 in costs is granted pursuant to
Fed. R. Civ. Proc. 54(d) (“[u]nless a federal statute, these rules, or a court order provides otherwise,
costs . . . should be allowed to the prevailing party”). Xerox is accordingly awarded total damages
of $2,470,371.76.
IT IS SO ORDERED.

_______________________________________
DAVID G. LARIMER
United States District Judge
Dated: Rochester, New York
September 24, 2013.

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