Opinion
Civil Action 19 Civ. 11512 (AJN) (SLC)
12-16-2021
ASESORAL BUSINESS PARTNERS, LLC, Plaintiff, v. SEATECH WORLDWIDE CORPORATION, ALLIANCE FISHERIES, INC., and JESUS DELGADO, Defendants.
TO THE HONORABLE ALISON J. NATHAN, United States District Judge:
REPORT AND RECOMMENDATION
SARAH L. CAVE, United States Magistrate Judge.
I. INTRODUCTION
Plaintiff Asesoral Business Partners, LLC (“Asesoral”) commenced this action against defendants Seatech Worldwide Corporation (“Seatech”), Alliance Fisheries, Inc. (“Alliance”), and Jesus Delgado (“Delgado, ” together with Seatech and Alliance, “Defendants”), seeking damages arising from, inter alia, (i) Seatech's breach of a settlement agreement with Asesoral (the “Settlement Agreement”) and (ii) Seatech's failure to pay for goods sold and delivered, as evidenced by invoices that Asesoral issued to Seatech in May 2019 (the “Invoices”). (ECF No. 1). After Defendants failed to appear and the Clerk of Court entered certificates of default against them (ECF Nos. 23-25), Asesoral moved for default judgment (ECF No. 28 (the “Motion”)). The Honorable Alison J. Nathan partially granted the Motion as to Seatech (ECF No. 36) and referred the case to me to conduct an inquest (the “Inquest”) and issue a Report and Recommendation concerning damages. (ECF No. 37).
For the reasons set forth below, I respectfully recommend that Asesoral be awarded damages against Seatech as follows: (i) $371,268.00 in compensatory damages for Seatech's breach of the Settlement Agreement, plus pre-judgment interest on that amount at a rate of 9% per annum, calculated from May 31, 2019 to the date judgment is entered; (ii) $185,053.00 in compensatory damages for the amount of the unpaid Invoices, plus pre-judgment interest on that amount at a rate of 9% per annum, calculated from June 16, 2019 to the date judgment is entered; and (iii) post-judgment interest calculated pursuant to 28 U.S.C. § 1961.
II. BACKGROUND
A. Factual Background
The factual background is drawn from Asesoral's allegations in its First Amended Complaint (“FAC”) (ECF No. 11), the affidavit of Asesoral's authorized representative, Fernando Martinez (“Martinez”) (ECF No. 45-1 (the “Martinez Affidavit”)), a supplemental affidavit from Martinez (ECF No. 51 at 2 (the “Supplemental Affidavit”)), the Settlement Agreement (ECF No. 31-1), the Invoices (ECF No. 31-2), and a trademark assignment agreement between Asesoral and Seatech (ECF No. 31-3 (the “Assignment”)). Because Judge Nathan has already determined Seatech's lability (ECF No. 36), the Court sets forth only those facts pertinent to the Inquest.
Asesoral is a “broker providing seafood to retail stores, restaurants and distributors.” (ECF No. 11 ¶ 5). Seatech “is a commercial wholesaler of seafood to retail stores, restaurants and distributors.” (Id. ¶ 6). Alliance is a “processor, seller, and distributor of canned tuna fish to retail stores, restaurants and distributors.” (Id. ¶ 7). Delgado is “a principal, owner, majority shareholder, officer and/or director, and President of” Seatech and Alliance. (Id. ¶ 8).
1. The Settlement Agreement
On or about February 28, 2019, Asesoral and Seatech entered into the Settlement Agreement “as a result of Seatech's previous failure to timely deliver three containers of product(s) which Asesoral had purchased from Seatech for $247,360.00.” (ECF No. 11 ¶ 9).Specifically, the Settlement Agreement reflected that, “between March 2018 and July 2018, ” Asesoral paid Seatech for “three containers . . . of Van Ecuador Tuna, which is a brand owned by” Seatech, and that Seatech failed to deliver the containers. (ECF No. 31-1 at 1). The Settlement Agreement also reflected that, “as a result of outstanding invoices, ” Seatech owed Asesoral “the additional sum of US$94,269 plus interest.” (Id.) To resolve these matters, the Settlement Agreement provided that Seatech was required to:
The Settlement Agreement indicates that Asesoral paid Seatech $274,360.00 for the three undelivered containers, not $247,360.00 as alleged in the FAC. (Compare ECF No. 31-1 at 1 with ECF No. 11 ¶ 9). In response to a Court order seeking clarification of this discrepancy, Martinez affirmed that “Asesoral paid $247,360.00 for the three containers of products that Asesoral had contracted to purchase from Seatech.” (ECF No. 51 at 2) (emphasis added). Accordingly, the Court adopts the amount to which Martinez has attested under oath, $247,360.00.
(a) deliver three containers of “Van Ecuador Tuna” (the “Containers”), with shipment of each container due by March 30, May 30, and July 30, 2019, respectively;
(b) wire a total of $123,908.00 to Asesoral's bank account, with $26,982.00 to be wired by March 30, 2019 and the remaining $96,926.00 due by June 30, 2019 (the “Payments”);
(c) transfer 30 percent of its ownership interest in the Van Ecuador brand, “including all its brand products, trademarks, and revenues, ” to Asesoral; and
(d) provide Asesoral with “a written accounting of all revenue generated by Van Ecuador” (the “Accounting”), and wire 30% of the net revenue generated by the sale of Van Ecuador products (the “Revenue”), within ten days of the end of each calendar month.(Id.) Martinez signed the Settlement Agreement on behalf of Asesoral, and Delgado signed on behalf of Seatech. (Id. at 2). In the Assignment-also dated February 28, 2019 and signed by Martinez and Delgado-Seatech assigned to Asesoral 30% of “all right, title and interest in and to” the Van Ecuador trademark and “of all future income and royalties” arising from it. (ECF No. 31-3 at 2-3; see ECF No. 45-1 ¶ 7).
Seatech breached the Settlement Agreement by failing to deliver the Containers, make the Payments, or provide the Accounting and Revenue. (ECF No. 45-1 ¶ 13).
2. The Invoices
Asesoral continued to sell goods to Seatech despite its breach of the Settlement Agreement. (ECF No. 11 ¶ 12). “As was regular practice between the parties, simultaneously with its shipment of goods, [Asesoral] transmitted an ‘Invoice' to [] Seatech” that “confirmed the identity, quantity, and price of the product shipped.” (Id. ¶ 13). “Pursuant to the terms of the Invoices and the payment terms (net 21), [] Seatech's payment for each shipment became due to [Asesoral], either immediately or within 21 days of receipt of shipment . . . .” (Id. ¶ 15).
Between May 8 and May 16, 2019, Asesoral issued the Invoices to Seatech relating to the sale of $185,053.00 worth of tuna and other products. (ECF Nos. 31-2, 45-1 ¶ 5). Martinez affirmed that “[t]he Invoices accurately identify the date of delivery (the invoice date), the quantity and amount of product, price of each good shipped, and Seatech's acceptance of same, as evidenced by the signature of [a] Seatech representative.” (ECF No. 45-1 ¶ 20 (citing ECF No. 31-2)).
Martinez attested that “Seatech accepted delivery of [the] goods shipped pursuant to the Invoices without objecting to either the conformity of those goods or their purchase terms, ” and that “Seatech retained the unpaid Invoices for unreasonable lengths of time without asserting any objections to their entries.” (ECF No. 45-1 ¶¶ 21-22). After accepting delivery and failing to reject the goods within a reasonable time period, “Seatech failed to pay [Asesoral] on any of the Invoices.” (Id. ¶ 23). According to Martinez, “[p]ursuant to the terms of the parties' agreement and the Invoices, ” past-due payments were subject to a monthly 1.5% interest penalty. (Id. ¶ 24; see ECF No. 31-2 (“All invoices paid later than 30 days after received date will have a 1.5% interest charge.”)).
B. Procedural Background
On December 16, 2019, Asesoral filed the Complaint. (ECF No. 1). On January 6, 2020, in response to an order questioning whether the Court had subject matter jurisdiction (ECF No. 9), Asesoral filed the FAC. (ECF No. 11). Asesoral asserted twelve claims in the FAC: (i) breach of contract against Seatech and Delgado arising from Seatech's breach of the Settlement Agreement and failure to pay under the Invoices; (ii) “goods sold and delivered” against Seatech and Delgado arising from the unpaid Invoices; (iii) “account stated” against Seatech and Delgado arising from the unpaid Invoices; (iv) violation of New York General Obligations Law § 11-104 against all Defendants arising from a bad check that Seatech issued to Asesoral; (v) personal liability under Uniform Commercial Code (“UCC”) § 3-403 against Delgado relating to the bad check; (vi) fraud and fraudulent inducement against all Defendants; (vii) unjust enrichment all Defendants; (viii) breach of the covenant of good faith and fair dealing against all Defendants; (ix) promissory estoppel against all Defendants; (x) accounting against Seatech; (xi) punitive damages against all Defendants; and (xii) interest and attorneys' fees. (Id. ¶¶ 21-91). Asesoral sought, inter alia, damages of “no less than $583,321.00” and “pre-judgment and post-judgment interest on all causes of actions [sic] where allowable.” (Id. at 15 ¶¶ A, D). Between January 28 and January 30, 2020, Asesoral served Defendants with the summons and FAC. (ECF Nos. 14-16).
On March 18, 2020, following Defendants' non-appearance, Asesoral requested certificates of default, which the Clerk of Court entered that same day. (ECF Nos. 18-20, 23-25).
On June 24, 2020, Asesoral filed the Motion, which was served on Defendants. (ECF Nos. 28, 33).
On March 10, 2021, Judge Nathan partially granted the Motion as to Seatech. (ECF No. 36 (the “March 10 Order”)). Specifically, Judge Nathan found Seatech liable for breach of contract under New York State law for violating the terms of the Settlement Agreement. (Id. at 5-6).Judge Nathan also found Seatech liable for the unpaid Invoices under theories of “goods sold and delivered” and “account stated.” (Id. at 6-9). Finally, Judge Nathan found that Seatech was liable to Asesoral for an accounting of the revenues from the Van Ecuador brand. (Id. at 15). Judge Nathan denied the Motion as to each of the remaining claims (id. at 9-17)and, on March 11, 2021, referred this matter for the Inquest into damages. (ECF No. 37).
Although Asesoral did not raise this issue in the Motion, the Court notes that the Settlement Agreement contains a “Governing Law” clause providing that it “shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to conflict of laws provisions.” (ECF No. 31-1 at 2). “The elements of a claim for breach of contract are the same in New York and in Delaware, ” however, and application of Delaware law would not have led to a different result. Cooper v. Gottlieb, No. 95 Civ. 10543 (JGK), 2000 WL 1277593, at *3 n.4 (S.D.N.Y. Sept. 8, 2000), aff'd, 12 Fed.Appx. 28 (2d Cir. 2001); see Avaya Inc., RP v. Telecom Labs, Inc., 838 F.3d 354, 389 (3d Cir. 2016) (“In Delaware, the elements of a breach of contract claim are: ‘[1] the existence of the contract, whether express or implied; [2] the breach of an obligation imposed by that contract; and [3] the resultant damage to the plaintiff.'”) (quoting VLIW Tech., LLC v. Hewlett-Packard Co., 840 A.2d 606, 612 (Del. 2003)); id. (“Under New York law, the elements of a breach of contract claim are similar to Delaware's: ‘[1] the existence of a contract, [2] the plaintiff's performance pursuant to the contract, [3] the defendant's breach of his or her contractual obligations, and [4] damages resulting from the breach.'”) (quoting Neckles Builders, Inc. v. Turner, 117 A.D.3d 923, 986 N.Y.S.2d 494, 496 (2d Dep't 2014)). “Where there is no significant difference between the laws of the two states in question, the Court need not reach the choice of law issue.” Am. Cas. Co. of Reading, Pa. v. Morgan-White Underwriters, Inc., No. 02 Civ. 931 (WHP) (DF), 2003 WL 23374768, at *6 n.4 (S.D.N.Y. Sept. 30, 2003) (applying New York law to agreement containing Illinois choice-of-law clause where the relevant “laws of Illinois and New York . . . appear[ed] to be substantially similar”). Moreover, “[w]hen neither party raises the issue of choice of law, it can be said that they have consented to the application of the forum state's law.” Chung v. Sano, No. 10 Civ. 2301 (DLI), 2011 WL 1303292, at *7 (E.D.N.Y. Feb. 25, 2011) (internal quotation and citation omitted) (applying New York law despite applicability of New Jersey law where the plaintiff had “not taken any position” on the issue and the defendant had defaulted).
Judge Nathan denied the Motion as to the following claims: New York General Obligations Law and UCC claims arising from the bad check; fraud; fraudulent inducement; unjust enrichment; breach of the covenant of good faith and fair dealing; promissory estoppel; and requests for punitive damages, costs, and attorneys' fees. (ECF No. 36 at 9-17).
On June 4, 2021, Asesoral filed its proposed Findings of Fact and Conclusions of Law as to Damages (the “Damages Submission”). (ECF No. 45). On June 7, 2021, the Court directed Defendants to respond to Asesoral's Damages Submission by June 25, 2021. (ECF No. 46 (the “June 7 Order”)). That same day, Asesoral served Defendants with the June 7 Order. (ECF No. 47). On November 16, 2021, the Court directed Asesoral to submit the Supplemental Affidavit from Martinez clarifying the amount it paid for the Containers. (ECF No. 50). The Court directed Asesoral to serve the Supplemental Affidavit on Seatech and to file proof of service on the docket, and directed Seatech to submit its response, if any, by December 14, 2021. (Id. at 2). On November 23, 2021, Asesoral filed the Supplemental Affidavit, in which Martinez confirmed that Asesoral paid $247,360.00 for the Containers. (ECF No. 51). On November 24, 2021, Asesoral served the Supplemental Affidavit on Defendants. (ECF No. 52). To date, Defendants have not responded to the Damages Submission or Supplemental Affidavit, or otherwise appeared in this action.
III. LEGAL STANDARD
As Judge Nathan explained in the March 10 Order, “Federal Rule of Civil Procedure 55 sets out a two-step procedure to be followed for the entry of judgment against a party who fails to defend: the entry of a default, and the entry of a default judgment.” (ECF No. 36 at 4) (citing New York v. Green, 420 F.3d 99, 104 (2d Cir. 2005)). Here, the Clerk of Court has entered certificates of default against Defendants (ECF Nos. 23-25), and Judge Nathan has determined Seatech's liability as to Asesoral's claims for breach of contract, goods sold and delivered, account stated, and accounting. (ECF No. 36 at 5-15).
Once liability has been established, the court must “‘conduct an inquiry in order to ascertain the amount of damages with reasonable certainty.'” Am. Jewish Comm. v. Berman, No. 15 Civ. 5983 (LAK) (JLC), 2016 WL 3365313, at *3 (S.D.N.Y. June 15, 2016), adopted by, 2016 WL 4532201 (S.D.N.Y. Aug. 29, 2016) (quoting Credit Lyonnais Sec. (USA), Inc. v. Alcantara, 183 F.3d 151, 155 (2d Cir. 1999)). The plaintiff “bears the burden of establishing [its] entitlement to recovery and thus must substantiate [its] claim with evidence to prove the extent of damages.” Dunn v. Advanced Credit Recovery Inc., No. 11 Civ. 4023 (PAE) (JLC), 2012 WL 676350, at *2 (S.D.N.Y. Mar. 1, 2012). The plaintiff must demonstrate that the compensation it seeks “‘relate[s] to the damages that naturally flow from the injuries pleaded.'” Am. Jewish Comm., 2016 WL 3365313, at *3 (quoting Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 159 (2d Cir. 1992)).
Where the damages are “not susceptible to simple mathematical calculation, Federal Rule of Civil Procedure 55(b)(2) gives courts discretion to determine whether an evidentiary hearing is necessary or whether to rely on detailed affidavits or documentary evidence.” Am. Jewish Comm., 2016 WL 3365313, at *4 (citation omitted). If the documents the plaintiff has submitted provide a “sufficient basis from which to evaluate the fairness of” the requested damages, the court need not conduct an evidentiary hearing. Fustok v. ContiCommodity Servs. Inc., 873 F.2d 38, 40 (2d Cir. 1989); see Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., Div. of Ace Young Inc., 109 F.3d 105, 111 (2d Cir. 1997) (court may determine appropriate damages based on affidavits and documentary evidence “as long as [the court has] ensured that there [is] a basis for the damages specified in the default judgment”) (citation omitted).
IV. DISCUSSION
Because Judge Nathan determined Seatech's liability, the only remaining questions are whether Asesoral has provided sufficient evidence to support its claim for damages, and if so, the amount of damages Asesoral to be awarded. Transatlantic Marine, 109 F.3d at 111; Bleecker v. Zetian Sys., Inc., No. 12 Civ. 2151 (DLC), 2013 WL 5951162, at *6 (S.D.N.Y. Nov. 1, 2013). Asesoral's Damages Submission (ECF No. 45) is supported by the Martinez Affidavit (ECF No. 451), the Supplemental Affidavit (ECF No. 51 at 2), and documentary evidence, including the Settlement Agreement (ECF No. 31-1) and the Invoices (ECF No. 31-2). The Court finds that Asesoral has met its evidentiary burden and that a hearing is unnecessary because its submissions constitute a “sufficient basis from which to evaluate the fairness of” its damages request. Fustok, 873 F.2d at 40; see Bos. Sci. Corp. v. N.Y. Ctr. for Specialty Surgery, No. 14 Civ. 6170 (RRM), 2015 WL 13227994, at *3 (E.D.N.Y. Aug. 31, 2015). From this evidence, the Court will next analyze the appropriate amount of compensatory damages as well as pre- and post-judgment interest.
A. Compensatory Damages
“The general rule for measuring damages for breach of contract . . . is the amount necessary to put the plaintiff in the same economic position he would have been in had the [d]efendant fulfilled his contract.” Bos. Sci., 2015 WL 13227994, at *4 (citation omitted). “Under New York law, in the event of a default in payment, a seller may recover the contract price of its goods upon a showing that they were ordered, received, and accepted by a purchaser who did not subsequently reject them within a reasonable period of time.” Sony Music Ent. Inc. v. Pedestal Prods., Inc., No. 01 Civ. 4033 (RLC) (FM), 2002 WL 1226861, at *2 (S.D.N.Y. Apr. 9, 2002).
Asesoral seeks $371,268.00 in damages for Seatech's failure to deliver the Containers and make the Payments under the Settlement Agreement. (ECF No. 45 at 4 ¶ 8). To support this request, Martinez attested that Asesoral paid $247,360.00 for the Containers. (ECF No. 45-1 ¶ 11; ECF No. 51 at 2). The Settlement Agreement specified the dates by which Seatech was required to ship the Containers and to make the Payments, which totaled $123,908.00. (ECF No. 31-1 at 1). Martinez, who signed the Settlement Agreement and authenticated the copy submitted to the Court, affirmed that Seatech did not deliver the Containers or make the Payments by the specified dates. (ECF No. 45-1 ¶¶ 8, 13).
In addition, Asesoral requests $185,053.00 in damages for Seatech's failure to pay the Invoices. (ECF No. 45 at 4-5 ¶ 12). The Invoices reflect that Seatech owed Asesoral $185,053.00 for the sale of tuna and other products between May 8 and May 16, 2019. (ECF Nos. 31-2, 45-1 ¶ 5). Martinez affirmed that “[t]he Invoices accurately identify the date of delivery (the invoice date), the quantity and amount of product, price of each good shipped, and Seatech's acceptance of same, as evidence by the signature of [a] Seatech representative.” (ECF No. 45-1 ¶ 20 (citing ECF No. 31-2)). Martinez further stated that “Seatech accepted delivery of [the] goods shipped pursuant to the Invoices without objecting to either the conformity of those goods or their purchase terms, ” “retained the unpaid Invoices for unreasonable lengths of time without asserting any objections to their entries[, ]” and then “failed to pay [Asesoral] on any of the Invoices.” (ECF No. 45-1 ¶¶ 21-23).
The evidence Asesoral has submitted is sufficient to establish that $556,321.00 ($247,360.00 + $123,908.00 + $185,053.00) “is the amount necessary to put [Asesoral] in the same economic position [it] would have been in had [Seatech] fulfilled” its obligations under the Settlement Agreement and Invoices. Bos. Sci., 2015 WL 13227994, at *4; see BNP Paribas v. Kurt Orban Partners LLC, No. 19 Civ. 9616 (ALC) (SLC), 2021 WL 4312484, at *3 (S.D.N.Y. July 14, 2021), adopted by, 2021 WL 3537202 (S.D.N.Y. Aug. 11, 2021) (awarding compensatory damages in the amount of unpaid invoice); Precise Leads, Inc. v. Nat'l Brokers of Am., Inc., No. 18 Civ. 8661 (RA) (SLC), 2020 WL 736918, at *5 (S.D.N.Y. Jan. 21, 2020), adopted as modified, 2020 WL 729764 (S.D.N.Y. Feb. 13, 2020) (same); Time Inc. Retail v. Newsways Servs., Inc., No. 16 Civ. 9479 (VSB) (JLC), 2018 WL 316995, at *4 (S.D.N.Y. Jan. 8, 2018) (finding that affidavit and copies of invoices were sufficient to establish the plaintiff's entitlement to damages for breach of contract), adopted by, 2018 WL 2332067 (S.D.N.Y. May 22, 2018).
Accordingly, the Court recommends that Asesoral be awarded $556,321.00 in compensatory damages, comprised of $371,268.00 for Seatech's failure to deliver the Containers and make the Payments under the Settlement Agreement, and $185,053.00 for Seatech's failure to pay the amounts due under the Invoices.
B. Pre-Judgment Interest
In this diversity action, “state law governs the award of pre-judgment interest.” Sung Taek Kwon v. Leg Res., Inc., No. 15 Civ. 9658 (RWL), 2018 WL 2316630, at *4 (S.D.N.Y. May 7, 2018) (citing Schipani v. McLeod, 541 F.3d 158, 164 (2d Cir. 2008)). “Under New York choice of law principles, which apply in this diversity action . . ., ‘the allowance of prejudgment interest is controlled by the law of [the state] whose law determined liability on the main claim.'” Conceria Vignola SRL v. AXA Holdings, LLC, No. 09 Civ. 6684 (GBD) (DF), 2010 WL 3377476, at *4 (S.D.N.Y. Aug. 3, 2010) (quoting Entron, Inc. v. Affiliated FM Ins. Co., 749 F.2d 127, 131 (2d Cir.1984)), adopted by, 2010 WL 3385260 (S.D.N.Y. Aug. 23, 2010). Accordingly, because Judge Nathan applied New York law to determine Seatech's liability on the claims for which the Court is recommending an award of damages (ECF No. 36 at 5-9), New York law governs Asesoral's entitlement to prejudgment interest as to those claims.
“Under New York law, ‘a plaintiff who prevails on a claim for breach of contract is entitled to prejudgment interest as a matter of right.'” Midwood Junction v. Puerto del Sol Int'l Inv., S.A., No. 15 Civ. 5181 (RA) (SN), 2016 WL 8905357, at *4 (S.D.N.Y. Dec. 5, 2016) (quoting U.S. Naval Inst. v. Charter Commc'ns, Inc., 936 F.2d 692, 698 (2d Cir. 1991)); see N.Y. C.P.L.R. § 5001(a) (providing that “[i]nterest shall be recovered upon a sum awarded because of a breach of performance of a contract, or because of an act or omission depriving or otherwise interfering with title to, or possession or enjoyment of, property”). “The intent of awarding prejudgment interest under CPLR § 5001 is to compensate an aggrieved party for damages due to the loss of the use of money or its equivalent, or a loss of the opportunity to realize a fair return on that money.” McCoy v. Goldberg, 810 F.Supp. 539, 547 (S.D.N.Y. 1993).
The applicable statutory pre-judgment interest rate is nine percent per annum. See N.Y. C.P.L.R. § 5004. Where, however, “the applicable contract ‘provides a rate at which interest is to be calculated, then the contractual rate, rather than the statutory rate . . . governs.'” Adar Bays, LLC v. 5Barz Int'l, Inc., No. 16 Civ. 6231 (NRB), 2018 WL 3962831, at *12 (S.D.N.Y. Aug. 16, 2018) (quoting Bank of Am., N.A. v. Brooklyn Carpet Exch., Inc., No. 15 Civ. 5981 (LGS) (DF), 2016 WL 8674686, at *5 (S.D.N.Y. May 13, 2016)). “In order to prevail at a rate higher than the statutory 9% per annum, the contract itself must clearly specify the rate to be charged.” Microban Prod. Co. v. API Indus., Inc., No. 14 Civ. 41 (KPF), 2014 WL 1856471, at *19 (S.D.N.Y. May 8, 2014) (citation omitted).
“Interest shall be computed from the earliest ascertainable date the cause of action existed, except that interest upon damages incurred thereafter shall be computed from the date incurred.” N.Y. C.P.L.R. § 5001(b). “Where such damages were incurred at various times, interest shall be computed upon each item from the date it was incurred or upon all of the damages from a single reasonable intermediate date.” Id. “[S]ection 5001 grants courts wide discretion in determining a reasonable date from which to award pre-judgment interest.” Conway v. Icahn & Co., 16 F.3d 504, 512 (2d Cir. 1994). Pre-judgment interest is computed as the “per diem” interest (principal*(0.09/365)) multiplied by the number of days in the pre-judgment interest period. See Eurosteel Corp. v. M/V KOGGEGRACHT, No. 01 Civ. 7731 (DLC) (FM), 2003 WL 470575, at *4 (S.D.N.Y. Jan. 20, 2003), adopted by, 2003 WL 1872652 (S.D.N.Y. Apr. 11, 2003).
Asesoral seeks separate pre-judgment interest awards for its damages relating to the Settlement Agreement and the Invoices. (ECF No. 45 at 7 ¶¶ 24-28, 30-31). The Court addresses each request in turn.
1. Pre-Judgment Interest Relating to the Settlement Agreement Damages
With respect to the $371,268.00 in damages stemming from Seatech's breach of the Settlement Agreement, Asesoral claims that it is entitled to prejudgment interest at New York's statutory 9% rate, calculated from March 31, 2019 to June 1, 2021 and amounting to $72,397.27. (ECF No. 45 at 7 ¶ 27). To support the March 31, 2019 accrual date, Asesoral claims that “[t]he Settlement Agreement required Defendant Seatech to deliver product on March 30, 2019, but Seatech failed to do so and thus materially breached the Settlement Agreement as of that date.” (Id. at 7 n.3).
The Court agrees with Asesoral that it is entitled to prejudgment interest at New York's 9% statutory rate on its damages stemming from Seatech's breach of the Settlement Agreement. See Back Nine Indoor Golf Ltd. v. Infinity Golf & Sports Simulators LLC, No. 19 Civ. 1395 (VB) (PED), 2019 WL 5722382, at *6 (S.D.N.Y. Aug. 16, 2019) (“Under New York law, interest shall be recovered upon a sum awarded because of a breach of performance of a contract, up until and including the date of judgment, at nine percent per annum.”) (internal citations and alterations omitted); see also N.Y. C.P.L.R. §§ 5001(a), 5004.
Pre-judgment interest is the one relevant area of law where New York and Delaware substantively differ. Like New York, “under Delaware law, ‘[p]re-judgment interest is awarded as a matter of right in a[n] action based on breach of contract or debt.'” Nasdaq, Inc. v. Exch. Traded Managers Grp., LLC, 431 F.Supp.3d 176, 275 (S.D.N.Y. 2019) (quoting Delphi Petroleum, Inc. v. Magellan Terminal Holdings, L.P., 177 A.3d 610, 2017 WL 6371162, at *2 (Del. 2017) (Table)). Unlike New York's 9% statutory rate, however, “[t]he Delaware prejudgment interest for such damages is 5% over the Federal Reserve discount rate, including any surcharge thereon.” Id. (citing 6 Del. C. § 2301). Accordingly, were the Court to apply Delaware law to Asesoral's claim for pre-judgment interest relating to Seatech's breach of the Settlement Agreement, an award of pre-judgment interest at a rate of 5% over the Federal Reserve discount rate, including any surcharge thereon, would be appropriate.
Asesoral's proposal to use March 31, 2019 as the date from which to calculate this prejudgment interest, however, is unreasonable. While March 30, 2019 was Seatech's contractual deadline to ship one of the three Containers and to make the first of the two Payments, the bulk of Seatech's obligations under the Settlement Agreement did not arise until months later. (ECF No. 31-1 at 1). Specifically, Seatech had until May 30, 2019 to ship the second Container, and until July 30, 2019 to ship the third. (Id.) And Seatech's second wire transfer- which comprised 78% of the total Payments amount ($96,926.00 of $123,908.00)-was not due until June 30, 2019. (Id.)
The Court finds that a calculating prejudgment interest from an intermediate date of May 31, 2019-the midpoint between March 30, 2019 and July 30, 2019, i.e., the period when Seatech's shipment and payment obligations arose under the Settlement Agreement-is more appropriate “to compensate [Asesoral] for damages due to the loss of the use of money or its equivalent” that it was entitled to under the Settlement Agreement. McCoy, 810 F.Supp. at 547; see Conway, 16 F.3d at 512 (noting that, under New York law, courts have “wide discretion” to determine “a reasonable date from which to award pre-judgment interest”); Jin v. Pac. Buffet House, Inc., No. 06 Civ. 579 (VVP), 2009 WL 2601995, at *9 (E.D.N.Y. Aug. 24, 2009) (“Since the bulk of the damages arose in the period from February 2001 to December 2002 . . ., the midpoint of that period, January 1, 2002, is the date from which prejudgment interest should be calculated.”); c.f. AboveNet Commc'ns, Inc. v. A&D Data Corp., No. 08 Civ. 6188 (RPP) (MHD), 2010 WL 235005, at *6 (S.D.N.Y. Jan. 19, 2010) (“Under New York law, pre-judgment interest on installment payments is calculated from the date that each installment became due.”).
Accordingly, the Court respectfully recommends that Asesoral be awarded prejudgment interest on its damages stemming from the Settlement Agreement at a rate of 9% per annum, i.e., $91.55 per day, from May 31, 2019 to the date judgment is entered.
$371,268.00*(.09/365).
2. Pre-Judgment Interest Relating to the Invoices
With respect to its $185,053.00 in damages stemming from the unpaid Invoices, Asesoral claims that it is entitled to prejudgment interest at a rate of “1.5% per month ($2,775.79) from June 16 through the date of entry of judgment.” (ECF No. 45 at 7 ¶ 30). To support this request, Martinez claims that, “[p]ursuant to the terms of the parties' agreement and the Invoices, ” past- due payments were subject to a monthly 1.5% interest assessment. (ECF No. 45-1 ¶ 24). Martinez claims that this interest “began accruing on or about June 16, 2019, one month after the last invoices were issued on May 16, 2019.” (Id.)
The Court declines to recommend an award of pre-judgment interest at Asesoral's requested rate of 1.5% per month, which would equate to 18% per annum (1.5%*12 months), or twice New York's statutory rate. As discussed above, “[i]n order to prevail at a rate higher than the statutory 9% per annum, the contract itself must clearly specify the rate to be charged.” Microban, 2014 WL 1856471, at *19. Here, the Invoices do not clearly specify that late payments were subject to a monthly 1.5% interest assessment; rather, they indicate only that “[a]ll invoices paid later than 30 days after received date will have a 1.5% interest charge.” (ECF No. 31-2). “Since the [Invoices are] ambiguous in this regard, and there is no extrinsic evidence to shed light on the parties' intent, this ambiguity should be construed against [Asesoral], which clearly drafted the form [Invoices] that [Seatech] signed.” Days Inns Worldwide, Inc. v. Hosp. Corp. of the Carolinas, No. 13 Civ. 8941 (JPO), 2015 WL 5333847, at *5 (S.D.N.Y. Sept. 14, 2015). “Accordingly, the [statutory] 9% per annum rate applies.” Treasure Chest Themed Value Mail, Inc. v. David Morris Int'l, Inc., No. 17 Civ. 1 (NRB), 2018 WL 3130601, at *5 (S.D.N.Y. June 26, 2018) (declining to award prejudgment interest above statutory rate where “the Contract [did] not ‘clearly specify' that the [requested] 1.5% per month rate applie[d] to the” damages at issue), aff'd, 785 Fed.Appx. 1 (2d Cir. 2019); Microban, 2014 WL 1856471, at *19 (awarding prejudgment interest at the statutory rate, notwithstanding invoices stating that a penalty of 1.5% per month applied if payment was not made in full within 30 days of delivery).
The Court finds that Asesoral's proposed accrual date of June 16, 2019-one month after the last Invoices were issued-is reasonable. “Calculating interest from this date would yield a smaller interest award than using numerous dates, in an invoice-by-invoice calculation; similarly, it would yield a smaller award than using a single mid-point date, as courts sometimes do.” Li & Fung (Trading) Ltd. v. Contemp. Streetwear, LLC, No. 11 Civ. 2022 (CM) (DCF), 2013 WL 3757080, at *9 (S.D.N.Y. June 6, 2013), adopted by, 2013 WL 3744119 (S.D.N.Y. June 28, 2013). “As [Asesoral] is thus proposing a conservative approach, which would yield less interest than that to which it is entitled, I recommend that its approach be adopted.” Id.; see Conceria Vignola SRL, 2010 WL 3377476, at *5 (adopting the “Plaintiff's calculation method [that] yield[ed] a smaller interest award than an invoice-by-invoice calculation would”).
Accordingly, the Court respectfully recommends that Asesoral be awarded prejudgment interest on its damages stemming from the unpaid Invoices at nine percent per annum, i.e., $45.63 per day, from June 16, 2019 to the date judgment is entered.
$185,053.00*(.09/365).
C. Post-Judgment Interest
Asesoral also requests post-judgment interest. (ECF No. 45 at 8 ¶¶ 34-35). In a diversity case such as this one, “‘postjudgment interest is governed by federal statute.'” Bleecker, 2013 WL 5951162, at *9 (quoting Schipani, 541 F.3d at 165); see 28 U.S.C. § 1961(a). Given that this civil case was filed in a federal district court, the Court finds Asesoral is entitled to post-judgment interest calculated according to the requirements of 28 U.S.C. § 1961(a).
V. CONCLUSION
For the reasons set forth above, I respectfully recommend that judgment be entered in favor of Asesoral and against Seatech as follows:
1) For the amounts Seatech owes under the Settlement agreement: (i) $371,268.00 in compensatory damages, plus (ii) pre-judgment interest on that amount at a rate of 9% per annum (i.e., $91.55 per day), calculated from May 31, 2019 to the date judgment is entered;
2) For the amounts Seatech owes under the Invoices: (i) $185,053.00 in compensatory damages, plus (ii) plus pre-judgment interest on that amount at a rate of 9% per annum (i.e., $45.63 per day), calculated from June 16, 2019 to the date judgment is entered;
3) Post-judgment interest calculated pursuant to 28 U.S.C. § 1961; and
4) Equitable relief in the form of an accounting by Seatech of all revenue generated from the Van Ecuador brand since February 28, 2019.
Asesoral is directed to serve a copy of this Report and Recommendation on Seatech and to file proof of service on the docket.
NOTICE OF PROCEDURE FOR FILING OBJECTIONS TO THIS REPORT AND RECOMMENDATION
The parties shall have fourteen (14) days (including weekends and holidays) from service of this Report and Recommendation to file written objections pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure. See also Fed.R.Civ.P. 6(a), (d) (adding three additional days when service is made under Fed.R.Civ.P. 5(b)(2)(C), (D) or (F)). A party may respond to another party's objections within fourteen (14) days after being served with a copy. Fed.R.Civ.P. 72(b)(2). Such objections, and any response to objections, shall be filed with the Clerk of the Court. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), (d), 72(b). Any requests for an extension of time for filing objections must be addressed to Judge Nathan.
FAILURE TO OBJECT WITHIN FOURTEEN (14) DAYS WILL RESULT IN A WAIVER OF OBJECTIONS AND WILL PRECLUDE APPELLATE REVIEW. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), (d), 72(b); Thomas v. Arn, 474 U.S. 140 (1985).