United States District Court, Southern District of New York
July 2, 2003
INTER-OCEAN INDUSTRIES, INC., PLAINTIFF,
NABIL B. NASSER D/B/A NABIL CENTER S.R.L. AND NABIL CENTER S.R.L., DEFENDANTS.
The opinion of the court was delivered by: Ronald Ellis, United States District Magistrate Judge
REPORT AND RECOMMENDATION
This matter was referred for an inquest on damages on April 29, 2003, following a motion for judgment by default as to Nabil Center S.R.L. ("Nabil") filed on March 3, 2003. Based on the following facts presented to the Court by plaintiff Inter-Ocean Industries, Inc. ("Inter-Ocean"), the Court recommends Inter-Ocean be awarded $457,958.40 against Nabil through July 1, 2003, plus interest of $93.70 per day until the entry of judgment. Inter-Ocean should also receive interest of nine percent on the amount of the judgment until the judgment is satisfied.
On or about March 21, 2001, Inter-Ocean, at the special instance and request of defendants, sold and delivered goods to Nabil, all in good order and condition. The cumulative value of the goods was in excess of $380,000. See Motion for Judgment by Default ("Pl. Mot.") at ¶ 9. Nabil B. Nasser ("Nasser") of Nabil Center S.R.L. personally guaranteed payment jointly and severally to induce the extension of credit. Id. at ¶ 10. The guaranty explicitly stipulates that New York law shall govern any contract disputes. See Pl. Mot. at Exhibit A ("Exh."). Only a portion of the amount owed has been remitted, leaving a balance of $380,000. Id.
Inter-Ocean made oral and written demands for payment of the outstanding balance from Nasser and Nabil, but no payment has been made, nor has the amount been disputed. See id. at ¶ 12. On May 13, 2002, Nasser acknowledged in writing via e-mail that he owed Inter-Ocean $380,000. See id. On October 24, 2002, Inter-Ocean filed a complaint alleging breach of contract. Specifically, Inter-Ocean alleged that Nabil failed to pay for goods sold and delivered, and owes Inter-Ocean $380,000 plus interest and costs. See Complaint ("Compl.") at ¶¶ 5-11. Pursuant to Federal Rule of Civil Procedure 4(h)(2), Nabil was served with the summons and complaint by registered mail with return receipt requested on November 8, 2002, but failed to file an answer. See Clerk's Certificate at 1. On March 3, 2003, Inter-Ocean filed an affidavit for judgment by default, and Nabil was served notice of this motion by mail on March 19, 2003. See Pl. Mot.
A. Standard of Default Judgments
Following a default judgment, all well-pled factual allegations of the complaint, except those relating to damages, are accepted as true. See Cotton v. Slone, 4 F.3d 176, 181 (2d Cir. 1993); Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61, 65 (2d Cir. 1981). A factual allegation will be deemed not well-pled only in "very narrow, exceptional circumstances." Trans World Airlines, Inc. V. Hughes, 308 F. Supp. 679, 683 (S.D.N.Y. 1969), modified on other grounds, 449 F.2d 51 (2d Cir. 1971), rev'd on other grounds, 409 U.S. 363 (1973).
Except for the formal entry of judgment, Nabil has been adjudged in default and the case has been referred for a determination of damages.
B. Breach of Contract
Inter-Ocean seeks to recover monies from a breach of contract for the sale of goods. Under New York law, to prove a claim for breach of contract, a party must show: "`(1) a contract; (2) performance of the contract by one party; (3) breach by the other party; (4) damages.'" Banda v. Haro, 2001 WL 1702205 *2 (S.D.N.Y. 2001) (quoting Rexnord Holdings, Inc., v. Biderman, 21 F.3d 522, 525 (2d Cir. 1994)). According to Inter-Ocean's uncontested complaint, and the guaranty whereby "Nabil B. Nasser of Nabil Center S.R.L." absolutely and unconditionally promised prompt payment of all sums due, a contract existed between Inter-Ocean and Nabil, Nabil was a guarantor of the contract, Inter-Ocean duly performed, and Nabil breached when it failed to remit full payment upon delivery of goods, and upon subsequent demand by Inter-Ocean. See Compl. at ¶¶ 5-11; Exh. A.
C. Damages for Non-payment of Goods Received
Damages for breach of contract are measured by the "amount necessary to put the plaintiff in the same economic position he would have been in had the defendant fulfilled his contract." Adams v. Lindblad Travel, Inc., 730 F.2d 89, 92 (2d Cir. 1984). Under New York law, a seller may recover the contract price of goods in the event of a default in payment by showing that they were ordered, received, and accepted by a purchaser who did not subsequently reject them in a timely fashion. Sony Music Entertainment Inc. v. Pedestal Productions, Inc., 2002 WL 1226861 *2 (S.D.N.Y. 2002).
Inter-Ocean sold and delivered goods, at the request of Nabil, on or about March 21, 2001, and Nabil has since defaulted on payment. See Compl. at ¶¶ 5, 8. Moreover, there is no indication of timely rejection and Nasser, in fact, acknowledged via e-mail that his company owes Inter-Ocean $380,000. See Pl. Mot. at Exh. B. Therefore, Inter-Ocean is entitled to recover damages against Nabil in the amount of $380,000.
1. Pre-judgment Interest
Pursuant to New York Civil Practice Law and Rules §§ 5001-5004 ("C.P.L.R.") "a party in a contract action for liquidated damages is entitled to interest as a matter of law and right from the date the cause of action arose." Banda 2001 WL 1702205 at *2; see also Spector v. Mermelstein, 485 F.2d 474, 481 (2d Cir. 1973) (finding that the inclusion of pre-judgment interest in damages calculations for breach of contract cases at law is mandatory, as opposed to the discretionary nature of pre-judgment interest damages in cases at equity).
Accordingly, interest is computed from March 21, 2001, the date upon which payment was due, to July 1, 2003 at the statutory interest rate of nine percent per annum. C.P.L.R. § 5004 (McKinney 2003). The pre-judgment interest computed at $93.70 per day ($380,000 x .09 = $93.70), for 832 days is $77,958.40. See Sony 2002 WL 1226861 at *3.
2. Post-judgment Interest
Every monetary judgment bears interest from the date it is entered until its payment. Banda 2001 WL 1702205 at *3 (citing C.P.L.R. § 5003 (McKinney 1992)). The statutory interest rate of nine percent per annum should be applied to the amount ultimately entered as judgment.
Based on the foregoing, this Court recommends that Inter-Ocean be awarded $457,958.40 in damages against Nabil, calculated through July 1, 2003, plus interest of $93.70 per day after July 1, 2003, until the date of judgment. Inter-Ocean should also receive post-judgment interest of nine percent on the amount of the judgment.
Pursuant to Rule 72, Federal Rules of Civil Procedure, the parties shall have ten (10) days after being served with a copy of the recommended disposition to file written objections to this Supplemental Report and Recommendation. Such objections shall be filed with the Clerk of the Court and served on all adversaries, with extra copies delivered to the chambers of the Honorable Robert L. Carter, 500 Pearl Street, Room 2220, and to the chambers of the undersigned, Room 1970. Failure to file timely objections shall constitute a waiver of those objections both in the District Court and on later appeal to the United States Court of Appeals. See Thomas v. Arn, 474 U.S. 140, 150 (1985); Small v. Secretary of Health and Human Services, 892 F.2d 15, 16 (2d Cir. 1989) (per curiam); 28 U.S.C. § 636(b)(1) (West Supp. 1995); Fed.R.Civ.P. 72, 6(a), 6(e).
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