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STS CARGO SERVICES CO. v. FORTUNE FABRICS INTERNATIONAL

September 14, 2004.

STS CARGO SERVICES CO., LTD., Plaintiff,
v.
FORTUNE FABRICS INTERNATIONAL, LTD., Defendant.



The opinion of the court was delivered by: KEVIN FOX, Magistrate Judge

MEMORANDUM AND ORDER

I. INTRODUCTION

The plaintiff, STS Cargo Services Company, Ltd. ("STS" or "plaintiff"), brought this action for breach of contract and account stated against Fortune Fabrics International, Ltd. ("Fortune" or "defendant"). Upon the defendant's failure to: (i) appear for deposition; or (ii) serve a written response to the plaintiff's request for inspection, the Clerk of Court was directed to enter a default against Fortune, pursuant to Fed.R.Civ. P. 37(d) and Fed.R. Civ. P. 37(b)(2)(C).

  Thereafter, the Court directed STS to serve and file proposed findings of fact and conclusions of law, and an inquest memorandum setting forth its proof of damages, costs of this action, and attorneys fees. The defendant was directed to file and serve any opposing memoranda, affidavits and exhibits, as well as any alternative findings of fact and conclusions of law it deemed appropriate. In support of its request for damages, STS submitted the declaration of Kenneth Lin ("Lin Declaration"), the president of STS. Attached to the Lin Declaration were, inter alia, copies of: 1) a purchase order documenting the defendant's purchase of fabric from Jiangyin Hongxing Group Import/Export Company, Ltd. ("Jiangyin") in China; 2) an undated e-mail sent by Ravi Malhotra, an employee of Fortune, to Wu Yan, an employee of Jiangyin, acknowledging that Fortune was aware of unpaid air freight charges of $128,658.55; and 3) seven invoices, which, according to the Lin Declaration, were all sent to the defendant, in the amounts of: $7,184.60; $37,863.00; $14,185.00; $40,871.00; $10,049.10; $14,264.25; and $4,346.60 ("invoices").

  The plaintiff's submissions aver that it is entitled to damages of $128,763.45, as well as interest from June 4, 2002, attorney fees, and costs. Fortune has made no submission in opposition to the plaintiff's application for damages.

  For the reasons set forth below, STS is awarded damages in the amount of $128,763.55, with prejudgment interest to be computed in the manner described below. The plaintiff's application for attorney fees and costs is denied.

  II. BACKGROUND AND FACTS

  Based on the submissions by the plaintiff — the factual allegations of which, perforce of the defendant's default, must be accepted as true, except as they relate 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) — and this Court's review of the entire court file in this action, the following findings of fact are made:

  STS is a corporation organized and existing under the laws of China, with an office and place of business in Shanghai, China. STS is engaged in the business of international freight forwarding. Fortune is a New York corporation with a place of business located within this judicial district. Fortune is engaged in the business of importing, exporting and trading fabrics.

  In May and June of 2002, Fortune retained STS to arrange for the air transportation, from China to El Salvador and Guatemala, of seven shipments of fabric that the defendant had purchased from Jiangyin. Thereafter, STS invoiced the defendant for each of the seven shipments. The aggregate air freight and other charges reflected on the invoices is $128,763.55.*fn1 According to the complaint, Fortune has not paid any of these charges.

  STS filed this action on September 16, 2003, seeking to recover the unpaid freight and other charges, as well as prejudgment interest, attorney fees, and the costs it incurred in bringing this action.

  III. CONCLUSIONS OF LAW

  As noted above, upon the entry of a defendant's default in an action, that defendant is deemed to have admitted all factual allegations in the complaint, except as they relate to damages. See Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61, 65 (2d Cir. 1981). However, a court has discretion to determine whether the facts alleged in a complaint state a legally sufficient cause of action. See, e.g., In re Crazy Eddie Sec. Litig., 948 F. Supp. 1154, 1160 (E.D.N.Y. 1996). Additionally, the amount of damages must be established by the plaintiff in a post-default inquest, "unless the amount is liquidated or susceptible of mathematical computation." Flaks v. Koegel, 504 F.2d 702, 707 (2d Cir. 1974). In conducting an inquest, a court need not hold a hearing "as long as it [has] ensured that there was a basis for the damages specified in the default judgment." Transatlantic Marine Claims Agency, Inc. ...


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