Opinion
1:23-CV-00284-SPB-RAL
02-12-2024
LOGISTICS PLUS, INC., Plaintiff v. DMG CONSULTING & DEVELOPMENT, Defendant
RICHARD A. LANZILLO, CHIEF UNITED STATES MAGISTRATE JUDGE
REPORT AND RECOMMENDATION ON MOTION FOR DEFAULT JUDGMENT
ECF NO. 14
SUSAN PARADISE BAXTER, UNITED STATES DISTRICT JUDGE
I. Recommendation
Pending before the Court is Plaintiffs motion for an entry of default judgment against Defendant pursuant to Fed.R.Civ.P. 55(b)(1) or, alternatively, Fed.R.Civ.P. 55(b)(2). ECF No. 14. Defendant has yet to appear in this action and thus has not filed a brief in opposition to the motion. Id. It is respectfully recommended that the Court grant the motion and enter judgment in favor of Plaintiff and against Defendant in the amount of $450,384.00.
II. Report
A. Procedural History
On October 6, 2023, Plaintiff Logistics Plus, Inc. (“Logistics”) initiated this action by filing a heavily redacted Complaint and a motion for leave to file the redacted Complaint and Exhibits B-I under seal. See ECF Nos. 1 (motion), 2 (redacted Complaint). The redacted Complaint alleges three counts against Defendant DMG Consulting & Development d/b/a Gold Coast Logistics (“DMG”): a breach of contract claim (Count I), unjust enrichment claim (Count II), and account stated claim (Count III). See ECF No. 2. The Court granted Logistics' motion to seal to the limited extent that it sought leave to allow its Complaint to remain on the docket in redacted form pending in camera review in the presence of counsel for both parties. ECF No. 12.
Logistics bases this Court's subject matter jurisdiction upon 28 U.S.C. § 1332(a) because “[t]here is complete diversity of citizenship between Plaintiff and Defendant and the amount in controversy exceeds $75,000, exclusive of interest and costs.” ECF No. 2, ¶ 3.
Logistics served Gold Coast with the Complaint and Summons on November 22, 2023. See ECF No. 10. After Gold Coast failed to answer or otherwise respond to the Complaint by the December 13, 2023 deadline, Logistics filed a motion for default. ECF No. 11. The Court granted the motion to the extent Logistics sought an entry of default and directed the Clerk of Court to enter default as to DMG. See ECF Nos. 12, 13. On February 6, 2024, Logitics filed the instant motion for entry of default judgment for the claimed principal amount ($435,020.00) and attorney's fees ($15,364.00) owed to Logistics pursuant to the parties' Tri-Party Warehousing Agreement and Mutual Termination Agreement. See ECF No. 14-1, ¶ 5 (citing ECF No. 2, ¶¶ 31, 36). See also ECF No. 2, ¶ 11. In the motion, Logistics also “request[ed] this Court schedule a hearing to enter default based on the Sealed Complaint and Exhibits.” Id., ¶¶ 14, 16. Logistics additionally filed a brief in support of its motion and an affidavit attesting to attorney's fees and costs it seeks from DMG. ECF Nos. 15,14-1. The Court granted Logistics' motion to the extent it sought a hearing and deferred ruling on its request for an entry of default judgment. ECF No. 17. As of today, DMG has not responded to Logistics' motion and no appearance has been entered on its behalf.
B. Standard of Review
Federal Rule 55(b) provides for the entry of default judgment against a defendant who has not appeared and who is neither a minor nor an incompetent person, provided defendant's default has already been entered by the Clerk of Court. Fed.R.Civ.P. 55(a),(b). Under Fed.R.Civ.P. 55(b)(1), the Clerk of Court may enter a default judgment upon a plaintiffs request “[i]f the plaintiffs claim is for a sum certain or a sum that can be made certain by computation,” and the plaintiff has provided “an affidavit showing the amount due.” Fed.R.Civ.P. 55(b)(1).
Notably, the plaintiff “cannot satisfy the certainty requirements simply by requesting a specific amount.” Liberty Bell Equip. Corp. v. Coastal Tool Supply, LLC, 2018 WL 5885455, at *1 (E.D. Pa. Nov. 9, 2018) (quoting Butler v. Experian Information Solutions, 2016 WL 4699702, at * 1 n. 2 (E.D. Pa. Sept. 7, 2016) (quoting 10A Charles Alan Wright et al., Federal Practice and Procedure § 2683 (4th ed.))). Rather, the plaintiff must demonstrate “that the amount requested is reasonable under the circumstances.” Id. (quoting Holliday v. Cabreara & Associates, P.C., 2007 WL 30291, at * 1 (E.D. Pa. Jan. 4, 2007)).
Where the movant is not seeking default judgment for a sum certain, “the party must apply to the court for a default judgment.” Fed.R.Civ.P. 55(b)(2). Importantly, “[e]ntry of default does not entitle a claimant to default judgment as a matter of right.” Asendia USA, Inc. v. AdvancePost, Inc., 2013 WL 877132, at *1 (M.D. Pa. Mar. 8, 2013) (citing James Wm. Moore, et al., Moore's Federal Practice § 55.31 (Matthew Bender ed. 2010). Even when a plaintiff has satisfied the procedural steps for a default judgment, “[t]he entry of judgment by default pursuant to Fed.R.Civ.P. 55(b)(2) is within the discretion of the trial court.” Hritz v. Woma Corp., 732 F.2d 1178, 1180 (3d Cir. 1984). See also Asendia, 2013 WL 877132, at *1. And though default judgments serve “as deterrents to delay injudicial proceedings,” Byrd v. Keene Corp., 104 F.R.D. 10,11 (E.D. Pa. 1984)), “the Third Circuit Court of Appeals has repeatedly counseled that cases should be disposed of on the merits whenever practicable.” Liberty Bell, 2018 WL 5885455, at *1 (citing Catanzaro v. Fischer, 570 Fed.Appx. 162, 165 (3d Cir. 2014) (citing Hritz v. Woma Corp., 732 F.2d 1178, 1181 (3d Cir. 1984)). Moreover, “[m]atters involving large sums should not be determined by default judgments if it can be reasonably avoided.” ShamrockClean, Inc., 325 F.Supp.3d at 635 (citing Tozer v. Charles A. Krause Milling Co., 189 F.2d 242, 245 (3d Cir. 1951)).
In undertaking a Rule 55(b)(2) evaluation, the district court must first “ascertain whether the unchallenged facts constitute a legitimate cause of action since the defaulting party has not admitted to mere conclusions of law” or allegations relating to the amount of damages. Liberty Bell, 2018 WL 5885455, at *1 (quoting Phoenix Ins. Co. v. Small, 307 F.R.D. 426, 433 (E.D. Pa. 2015)). If so, “[t]hree factors control whether a default judgment should be granted: (1) prejudice to the plaintiff if default is denied, (2) whether the defendant appears to have a litigable defense, and (3) whether defendant's delay is due to culpable conduct.” Masciantonio v. United States, 2022 WL 6702102, at *2 (3d Cir. Oct. 11, 2022) (per curium) (quoting Chamberlain v. Giampapa, 210 F.3d 154, 164 (3d Cir. 2000) (citing United States v. $55,518.05 in U.S. Currency, 728 F.2d 192, 195 (3d Cir. 1984))). But where, like here, “a defendant fails to appear,” “the district court or its clerk is authorized to enter a default judgment based solely on the fact that the default has occurred,” at least until the defendant moves to lift the default under Rule 55(c) or Rule 60(b). Anchorage Assocs. v. V.I Bd. of Tax Review, 922 F.2d 168, 177 n. 9 (3d Cir. 1990). See also Asendia, 2013 WL 877132, at *1 (“when a defendant has failed to appear or respond in any fashion to the complaint, this analysis is necessarily one-sided; entry of default judgment is typically appropriate in such circumstances at least until the defendant comes forward with a motion to set aside the default judgment under Rule 55(c).”)
C. Discussion
On February 12, 2024, the Court held a hearing on Logistics' motion for the entry of default judgment against DMG to determine whether in camera review of the unredacted Complaint supported a “sum certain” such that the Court could enter a default judgment under Fed.R.Civ.P. 55(b)(1) or it needed to “conduct an accounting” pursuant to Fed.R.Civ.P. 55(b)(2) (“The court may conduct hearings or make referrals ... when, to enter or effectuate judgment, it needs to: (A) conduct an accounting; (B) determine the amount of damages; (C) establish the truth of any allegation by evidence; or (D) investigate any other matter.”). As more thoroughly explained on the hearing record, the Court determined that the Complaint and its Exhibits B-I supported Logistics' request for damages in the principal amount of $435,020.00 and attorney's fees of $15,364.00 as a sum certain. See ECF No. 18. The record thus warrants the entry of default judgment against DMG pursuant to Fed.R.Civ.P. 55(b)(1).
At the hearing, the Court granted Logistics' oral motion to seal the portion of the hearing record relating to the redacted Complaint and sealed Exhibits, and permitted these documents remain sealed on the record. See ECF No. 18.
In the alternative, the Court finds that the hearing record weighs in favor of granting default judgment against DMG pursuant to Fed.R.Civ.P. 55(b)(2). See id. Accepting as true the “well-pleaded factual allegations in [Logistics' C]omplaint, except those relating to damages, as though they were admitted or established by proof,” the Court finds that the Complaint states a viable breach of contract claim against DMG. Hill v. Udren L. Offs., P.C., No. CV 13-419, 2020 WL 6785537, at *3 (W.D. Pa. Nov. 18, 2020) (quoting Joe Hand Promotions, Inc. v. Yakubets, 3 F.Supp.3d 261, 270 (E.D. Pa. 2014)). It is also evident that the Chamberlain factors support Logistics' entitlement to default judgment. Chamberlain, 210 F.3d at 164. Denying default judgment would be prejudicial to Logistics because, inter alia, DMG owes it hundreds of thousands of dollars. DMG has not appeared on the record and thus, has not set forth any litigable defense. And the record provides no other explanation for DMG's default than its own conduct. Additionally, the Court concluded on the hearing record that Logistics' had met its burden of proving that its requested attorney's fees are reasonable. See Asendia, 2013 WL 877132, at *2. See also Maldonado v. Houstoun, 256 F.3d 181, 184 (3d Cir. 2001). As such, the entry of default pursuant to Fed.R.Civ.P. 55(b)(2) is supported by the record.
III. Conclusion
For the foregoing reasons, and as further explained on the February 12, 2024 hearing record, the Court should grant Logistics' motion (ECF No. 14) for entry of default judgment against DMG in the amount of $450,384.00.
IV. Notice
In accordance with 28 U.S.C. § 636(b)(1) and Fed.R.Civ.P. 72, the parties may seek review by the district court by filing Objections to the Report and Recommendation within fourteen (14) days of the filing of this Report and Recommendation. Any party opposing the objections shall have fourteen (14) days from the date of service of objections to respond thereto. See Fed.R.Civ.P. 72(b)(2). Failure to file timely objections may waive appellate rights. See Brightwell v. Lehman, 637 F.3d 187, 194 n.7 (3d Cir. 2011); Nara v. Frank, 488 F.3d 187 (3d Cir. 2007).