Opinion
01 Civ. 4033 (RLC)(FM)
April 9, 2002
REPORT AND RECOMMENDATION
I. Introduction
This contract action was brought by plaintiff Sony Music Entertainment Inc. ("Sony") against defendants Pedestal Productions, Inc. ("Pedestal") and Robert E. Mann ("Mann") to recover $236,928.10 for goods sold and delivered, plus prejudgment interest, costs, and attorney fees. After the defendants failed to answer the Complaint, the matter was referred to me to determine the reasonable damages. Thereafter, by order dated September 25, 2001, I directed Sony to serve papers setting forth its damages, including any fees and costs, by October 24, 2001, with the defendants to respond by November 7, 2001. Although Sony's papers were timely filed, the defendants did not file any opposition papers.
On February 15, 2002, after receiving Sony's initial submissions, I directed that further information be supplied concerning Sony's damages and attorney fees. Sony timely complied with this order by submitting two additional affidavits.
As set forth below, after reviewing the Complaint and Sony's inquest papers, I recommend that judgment be entered against Pedestal in the principal amount of $236,728.10, together with prejudgment interest calculated at a rate of $58.37 per day from April 26, 2001, and $170.00 in taxable costs. I further recommend that judgment be entered against Mann for the same amount, plus $12,246.20 in attorney's fees and $1,349.62 for disbursements.
II. Facts
In light of the defendants' default, Sony's well-pleaded allegations concerning issues other than damages must be accepted as true. See Cotton v. Slone, 4 F.3d 176, 181 (2d Cir. 1993); Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992); Time Warner Cable v. Barnes, 13 F. Supp.2d 543, 547 (S.D.N.Y. 1998) (Motley, J.); Cablevision Sys. New York City Corp. v. Lokshin, 980 F. Supp. 107, 111 (E.D.N.Y. 1997). On the basis of the Complaint and the inquest papers, I find that the facts are as follows:
Sony is a corporation organized under the laws of Delaware, with its principal place of business in New York, engaged in the business of selling recorded music. (Compl. ¶¶ 2, 7). Pedestal is a corporation incorporated under the laws of New Jersey, and Mann is a citizen of New Jersey. (Id. ¶¶ 3-4).
On or about January 25, 2001 Pedestal opened an account with Sony and agreed to pay for goods purchased and delivered. (Id. ¶ 10). At the same time, Mann, who is the owner of Pedestal, entered into an absolute and unconditional guaranty of all of Pedestal's obligations to Sony. (Id. ¶ 11 Ex. B). Approximately three weeks later, Mann entered into a second such guaranty. (Id. ¶ 12 Ex. C). In both agreements, Mann guaranteed the prompt payment of Pedestal's obligations to Sony. In addition, in the event of Pedestal's default, Mann agreed to pay "all reasonable court costs, attorney's fees and other expenses paid . . . in [the] enforcement" of Sony's rights. (Id. Exs. A, C). Both guaranties provided that they would be governed by the laws of the state of New York. (Id.).
Following the opening of Pedestal's account, in eighty-four separate transactions, Sony sold and delivered to Pedestal goods with a total contract price of $236,728.11. (Compl. ¶ 13; Aff. of Pasquale Ferrara, sworn to on Feb. 28, 2002 ("Ferrara Aff."), ¶ 2 Ex. A). In a letter dated April 26, 2001 sent to Mann as owner of Pedestal, Sony demanded payment of the then-delinquent amount of $133,082.34 by May 8, 2001. (Compl. ¶ 14 Ex. E). The demand letter also noted that the total outstanding balance for the goods sold and delivered to Pedestal by Sony was $236,728.10. (Id.). Although that total balance is now overdue, Sony has not received payment from Pedestal or Mann for its goods, despite due demand therefor. (Compl. ¶¶ 14-17; Ferrerra Aff. ¶¶ 2, 13, 17 Ex. E; Aff. of Thomas J. Kavaler, Esq., sworn to on Oct. 24, 2001 ("Kavaler I"), ¶ 3).
In addition to the price of the goods, pursuant to N.Y. C.P.L.R. §§ 5001-5004, Sony seeks to recover prejudgment interest at the statutory rate of nine percent per annum, or $58.37 per day, from the April 26, 2001 date of its demand letter through the date judgment is entered. Sony also seeks $322.50 in taxable costs from both defendants, consisting of the Court's $150.00 filing fee, the $20.00 statutory docketing fee pursuant to 28 U.S.C. § 1923, and $152.50 for the cost of serving the summons and complaint after the defendants apparently failed to accept mail service. (Sony Mem. at 4, Kavaler I ¶ 3). Finally, pursuant to the guaranties, Sony seeks $12,246.20 in attorney's fees and $1,499.62 in disbursements from Mann. (Kavaler I ¶ 4).
III. Discussion
A. Damages for Nonpayment for Goods Received
A plaintiff seeking to recover damages against a defaulting defendant must prove its claim through the submission of evidence at an inquest. The Court need not hold a hearing for this purpose, however, as long as it has (i) determined the proper rule for calculating damages on the claim, see Credit Lyonnais Sec. (USA), Inc. v. Alcantara, 183 F.3d 151, 155 (2d Cir. 1999), and (ii) the plaintiff's evidence establishes, with reasonable certainty, the basis for the damages specified in the default judgment, see Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 111 (2d Cir. 1997); Fustok v. ContiCommodity Servs., Inc., 873 F.2d 38, 40 (2d Cir. 1989); see also Tamarin v. Adam Caterers, Inc., 13 F.3d 51, 53-54 (2d Cir. 1993) (inquest on damages without hearing improper where based upon "single affidavit only partially based upon real numbers"). In this case, Sony's damages are clearly governed by the New York Uniform Commercial Code, its affidavits and other documentary evidence establish its entitlement to the contract damages it seeks, and the defendants have failed to submit any opposition papers. Accordingly, no purpose would have been served by conducting a hearing.
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. See Shokai Far East Ltd. v. Energy Conservation Sys., Inc., 628 F. Supp. 1462, 1466 (S.D.N.Y. 1986) (Sweet, J.); Mount Vernon Mills, Inc. v. Murphy Textile Mills, 148 A.D.2d 389, 539 N.Y.S.2d 334 (1st Dep't 1989); N.Y. U.C.C. §§ 2-602(1), 2-703(e), 2-709(1)(a) (McKinney 1993). In that regard, the Complaint establishes that Sony shipped goods to Pedestal. (Compl. ¶ 13). Moreover, Sony has provided the Court with the affidavit of its regional credit manager, Pasquale Ferrara. Mr. Ferrara's affidavit establishes that the total contract price for the goods shipped to Pedestal by Sony is $236,928.10, no part of which has been paid. (Aff. of Pasquale Ferrara, sworn to on Feb. 28, 2002, ¶ 2). Sony's records of its shipments to Pedestal also do not indicate that any of the goods shipped were returned. (Id. Ex. A).
Sony therefore has proved its entitlement to recover contract damages against Pedestal in the amount of $236,928.10. In addition, by signing the personal guaranties, Mann has obligated himself to pay Sony this same amount. (Compl. ¶¶ 11, 12 Exs. A, C).
B. Prejudgment Interest
Sony is also entitled to interest. Under Sections 5001 and 5002 of the New York Civil Practice and Rules ("CPLR"), a party that prevails in a breach of contract action is entitled to prejudgment interest from the date that the breach occurred until the date of final judgment. When "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." See N.Y. C.P.L.R. § 5001(b) (McKinney 2001). See also City of New York v. Coastal Oil New York, Inc., 96 Civ. 8667, 2000 WL 648365, *2 (S.D.N.Y. May 18, 2000) (Patterson, J.) (setting reasonable intermediate date as February 15, 1993 where plaintiff had overpaid for deliveries between October 1992 and 1993); Oy Saimaa Lines Logistics Ltd. v. Mozaica-New York, Inc., 193 F.R.D. 87, 91 (E.D.N.Y. 2000) (calculating prejudgment interest from the midpoint of the outstanding invoices); Robert Half Int'l, Inc. v. Jack Valentine, Inc., 157 Misc.2d 318, 321, 596 N.Y.S.2d 955, 958 (Civ.Ct. 1993) (same).
Sony has suggested that prejudgment interest be calculated from the April 26, 2001 date of its written demand for payment. (Sony Mem. at 3). As of this date, only $133,082.34 of the debt was considered delinquent by Sony. (Compl. Ex. E). Nevertheless, because the latest due date for any of Pedestal's payments for its purchases was June 10, 2001, (see id. Ex. D at 5-6), this represents a "reasonable intermediate date" from which to calculate interest. Since Sony's contract damages total $236,728.10, prejudgment interest at the nine percent statutory rate amounts to $58.37 per day ($236,728.10 x .09 ÷ 365 = $58.37).
C. Taxable Costs
Sony also seeks to recover as taxable costs the $150.00 fee for filing this action, the statutory fee of $20.00 for docketing its judgment, and $152.40 for the cost of serving the summons and complaint. Rule 54(d) of the Federal Rules of Civil Procedure provides, insofar as relevant, that "costs other than attorneys' fees shall be allowed as of course to the prevailing party unless the court otherwise directs." These "costs" include only those taxable costs set forth in 28 U.S.C. § 1920 (1994). See Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 441, 107 S.Ct. 2494, 2497, 96 L.Ed.2d 385 (1987); Whitfield v. Scully, 241 F.3d 264, 269 (2d Cir. 2001). The filing fee and statutory fee, which are enumerated in that statute, consequently are taxable as costs of this action. See 28 U.S.C. § 1920(1), (3); Local Civ.R. 54.1(c)(10).
Under Rule 4(d) of the Federal Rules of Civil Procedure, if a defendant is served by mail and "fails to comply with a request for waiver made by a plaintiff . . ., the court shall impose the costs subsequently incurred in effecting service on the defendant unless good cause for the failure be shown." In this case, although Sony's memorandum of law and the statements for services rendered by its counsel both refer to an effort to effect service by mail, (see Aff. of Thomas J. Kavaler, Esq., sworn to on Feb. 28, 2002 ("Kavaler II") Ex. A; Sony Mem. at 4), Sony has not proffered any admissible evidence that the defendants failed to waive service. Accordingly, Sony is not entitled to recover the cost of service under Rule 4(d).
Sony should therefore be awarded a total of $170.00 as taxable costs against both defendants.
D. Attorney Fees and Related Costs
Finally, Sony seeks to enforce Mann's agreement to pay Sony's attorney fees and related expenses. Under New York law, when a contract provides for the payment of attorney's fees and expenses, the court must order the losing party to pay the amounts actually incurred by the prevailing party, "so long as those amounts are not unreasonable." See F.H. Krear Co. v. Nineteen Named Trustees, 810 F.2d 1250, 1263 (2d Cir. 1987). In this Circuit, a party seeking such an attorney's fee award must submit "contemporaneous time records specifying 'the date, the hours expended and the nature of the work done'" for each attorney involved. Pressman v. Estate of Steinvorth, 886 F. Supp. 365, 367 (S.D.N.Y. 1999) (Carter, J.) (quoting N.Y.S. Ass'n for Retarded Children v. Carey, 711 F.2d 1136, 1147-48 (2d Cir. 1983)). Alternatively, summaries of such records, accompanied by affidavits attesting that the summaries are accurate, may be submitted to reduce the burden on counsel. See id. (citing Cruz v. Local Union No. 3 of Int'l Bhd. of Elec. Workers, 34 F.3d 1148, 1160 (2d Cir. 1994)). See also Bankers Fed. Savings Bank FSB v. Off West Broadway Developers, 224 A.D.2d 376, 378, 638 N.Y.S.2d 72, 74 (1st Dep't 1996) ("award of fees must be predicated upon a proper and sufficient affidavit of services") (internal quotations and citations omitted).
Pursuant to the guaranties, Sony seeks to recover from Mann the $12,246.20 in attorney's fees and $1,499.62 in expenses that it actually incurred in prosecuting this action. (See Kavaler II ¶ 2). In accord with my February 15th order, Sony's counsel has provided the Court with copies of its monthly statements sent to Sony, which list the fees and expenses associated with this action. (Id. Ex. A). Those statements reflect the date services were rendered, the hours expended, and the nature of the work done by each time keeper. (Id.). In addition, counsel has averred that Sony was charged the "normal and customary rate" for this work. (Kavaler Aff. ¶ 4). This information is sufficient to satisfy the reasonableness requirement. See Norwest Financial, Inc. v. Fernandez, 121 F. Supp.2d 258, 262 (S.D.N.Y. 2000) (Scheindlin, J.) (copies of invoices along with declaration that firm charged its "usual and customary rates" sufficient to demonstrate reasonableness); Bacca Della Svizzera Italiana v. Cohen, 756 F. Supp. 805, 808 (S.D.N.Y. 1991) (Sweet, J.) (summary that reflected number of hours billed, nature of work performed, and averment that party was charged firm's "standard rate" enough to shows that fees were reasonable.).
In addition to the costs taxable against both defendants by statute, Sony is also entitled to recover from Mann the reasonable disbursements of its counsel. Nevertheless, to avoid double counting for amounts previously awarded as costs against both defendants, these expenses must be reduced by the $150.00 filing fee. (See Kavaler II Ex. A).
Accordingly, in addition to the sums awarded against both defendants, the judgment in this case should award Sony $12,246.20 in attorneys' fees and $1349.62 in expenses against Mann.
IV. Conclusion
Sony should be awarded judgment against defendants Pedestal and Mann in the principal amount of $236,728.10, together with $170.00 in costs, and prejudgment interest calculated at the rate of $58.37 per day from April 26, 2001. Additionally, Sony should be awarded judgment against Mann for an additional $12,246.20 in attorney's fees and $1,349.62 in expenses.