Opinion
06 Civ. 2623 (KMW) (KNF).
January 18, 2007
REPORT RECOMMENDATION
I. INTRODUCTION
The plaintiff, Dialuck Corporation ("Dialuck"), brought this action against the defendant, Gulayar Group ("Gulayar"), to recover: (i) $1,167,246.92, for loose polished diamonds it sold to the defendant; (ii) interest on that amount at the rate of 24 percent per annum; (iii) costs it incurred through this action; and (iv) attorneys' fees. Before the Court is a motion by the plaintiff for a default judgment.
II. FACTUAL BACKGROUND
Upon the defendant's failure to file an answer or otherwise respond to the complaint, the plaintiff obtained a certificate from the Clerk of Court noting the defendant's default. Thereafter, the plaintiff made the instant motion for a default judgment. Subsequently, your Honor referred the matter to the undersigned for a report and recommendation on the plaintiff's application for a default judgment.
In support of its motion for a default judgment, the plaintiff submitted, in addition to a copy of the certificate noted above: (1) the affidavit of Eric C. Zabicki, Esq.; (2) a proposed order of judgment by default; (3) a copy of the summons and complaint; (4) proof of service of the summons and complaint; (5) copies of the invoices the plaintiff sent to the defendant, which are now due and owing; and (6) the affidavit of Anshul Gandhi ("Gandhi"), the president of Dialuck.
When a defendant defaults in an action, by failing to plead or otherwise defend against a complaint, the defendant is deemed to have admitted every well-pleaded allegation of the complaint except those relating to damages. 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). In addition, the plaintiff is entitled to all reasonable inferences from the evidence presented. See Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61, 65 (2d Cir. 1981). Based upon the submissions made by the plaintiff, the complaint filed in the instant action, and the Court's review of the entire court file in this action, the Court finds that the plaintiff is a corporation organized and existing under the laws of the state of New York. The defendant is, and at all times material herein, was, a corporation organized and existing under the laws of the Republic of Turkey, having an office and place of business at Nuruosmaniye Cad. No. 63 Cagaloglu, Istanbul, Turkey, 34120.
Between August 22, 2005, and September 13, 2005, at the defendant's request, the plaintiff sold and delivered loose polished diamonds to the defendant, with an agreed price and reasonable value of $1,439,722.85. Each delivery of loose polished diamonds made by the plaintiff to the defendant was accepted by the defendant without protest or objection. Moreover, each delivery was accompanied by an invoice and corresponding memorandum, the terms of which were accepted by the defendant without protest.
Between August 31, 2005, and February 1, 2006, the plaintiff issued numerous account credits in favor of the defendant, totaling $137,475.93. During that same period, the defendant remitted partial and periodic payments to the plaintiff totaling $135,000, for the loose polished diamonds the plaintiff furnished to the defendant. This left an unpaid balance owed by the defendant to the plaintiff of $1,167,246.92.
According to the complaint, based on the parties' written agreements, interest accrues at the rate of 24 percent per annum on the principal of each invoice that is not paid timely by the defendant.
III. DISCUSSION
On April 4, 2006, Dialuck commenced this action by filing the complaint with the Clerk of Court. However, according to the affidavit submitted by Eric C. Zabicki Esq., in support of the instant motion, and the text of a memorandum of consignment incorporated by reference into the body of each invoice Dialuck sent to Gulayar, the parties agreed that the courts of the state of New York would have exclusive jurisdiction over any litigation arising out of the diamond transactions evidenced by the invoices and, further, that New York law would govern the resolution of their dispute(s). The parties to a contract may make any agreement they wish absent a violation of law or transgression of strong public policy. See U.S. v. Bedford Assocs., 657 F.2d 1300, 1313 (2d Cir. 1981) (citing Rowe v. Great Atlantic Pacific Tea Co., 46 N.Y.2d 62, 67-68, 412 N.Y.S.2d 827, 830). This includes an agreement concerning the forum where any dispute between the parties must be resolved. See Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 591-92, 111 S. Ct. 1522, 1526 (1991).
The pertinent text from the memorandum of consignment follows. With respect to any litigation under this memorandum agreement, the parties agree to the exclusive jurisdiction of the courts of the State of New York and that this memorandum agreement, and any security agreement created hereunder, shall be governed and construed in accordance with the laws of the State of New York.
Based on the submissions made by Dialuck, in connection with its motion for judgment by default, it appears that this court is not the forum selected by the parties as the situs where litigation arising out of their diamond transactions is to be resolved. Therefore, the court would be warranted in honoring the parties' agreement to grant the courts of the state of New York the exclusive right to hear and determine their dispute(s). See Seward v. Devine, 888 F.2d 957, 962 (2d Cir. 1989); Rogen v. Memry Corp., 886 F. Supp. 393 (S.D.N.Y. 1995).
IV. RECOMMENDATION
For the reasons set forth above, I recommend that the motion for judgment by default made by the plaintiff be denied. Moreover, I recommend further that the plaintiff's complaint be dismissed, so that the parties can litigate in the forum they agreed would have the exclusive right to resolve their dispute(s).
V. FILING OF OBJECTIONS TO THIS REPORT AND RECOMMENDATION
Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure, the parties have ten (10) days from service of the Report to file written objections. See also Fed.R.Civ.P. 6. Such objections, and any responses to objections, shall be filed with the Clerk of Court, with courtesy copies delivered to the chambers of the Honorable Kimba M. Wood, United States District Judge, 500 Pearl St., Room 1610, New York, New York 10007, and to the chambers of the undersigned, 40 Centre St., Room 540, New York, New York 10007. Any requests for an extension of time for filing objections must be directed to Judge Wood. FAILURE TO FILE OBJECTIONS WITHIN TEN (10) DAYS WILL RESULT IN A WAIVER OF OBJECTIONS AND WILL PRECLUDE APPELLATE REVIEW. See Thomas v. Arn, 474 U.S. 140 (1985); IUE AFL-CIO Pension Fund v. Herrmann, 9 F.3d 1049, 1054 (2d Cir. 1993); Frank v. Johnson, 968 F.2d 298, 300 (2d Cir. 1992); Wesolek v. Candair Ltd., 838 F.2d 55, 57-59 (2d Cir. 1998); McCarthy v. Manson, 714 F.2d 234, 237-38 (2d Cir. 1983).