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Seagate Logistics, Inc. v. Angel Kiss

March 26, 2010

SEAGATE LOGISTICS, INC., PLAINTIFF,
v.
ANGEL KISS, INC., DEFENDANT.



The opinion of the court was delivered by: Matsumoto, United States District Judge

MEMORANDUM AND ORDER

Presently before the court is plaintiff, Seagate Logistics, Inc.'s ("plaintiff" or "Seagate Logistics") motion for default judgment against defendant Angel Kiss, Inc. ("defendant" or "Angel Kiss") for alleged breach of contract for failure to pay for services associated with four international air shipments of women's woven pants from Vietnam to Los Angeles, California. (See generally Doc. No. 4, Mot. for Default J. ("Default Mot."); Doc. No. 1, Compl.) Plaintiff seeks to recover the amount owed for the four unpaid shipments, plus interest, costs, and disbursements.*fn1 (See generally Default Mot.) Because the court finds that it lacks subject matter jurisdiction over for default judgment is denied and the complaint is dismissed.

BACKGROUND

A. Factual Background

The following facts are taken from plaintiff's complaint and motion for default judgment. Plaintiff is an international air freight forwarder and indirect air carrier incorporated in the state of New York. (Compl. at ¶ 3.) At all relevant times, defendant was an importer of textile goods and incorporated in the state of California. (Id. at ¶ 4.)

On or about July 15, 2008, the parties agreed that defendant would pay plaintiff for the freight, transportation fees, handling fees, and ISC charges for shipments of textile goods from Vietnam to Los Angeles, California. (Id. at ¶¶ 5-6.) Defendant agreed to make all payments to plaintiff at its offices in Jamaica, New York. (Id. at ¶ 7.) Defendant made four purchases of women's woven pants in Vietnam in July 2008. (Id. at ¶¶ 9, 15, 21, 27.) After each purchase, plaintiff would accept delivery in Vietnam and issue a waybill number that identified the chargeable weight of the shipment. (Id. at ¶¶ 10-11, 16-17, 22-23, 28-29.) Defendant did not object to the waybills. (Id. at ¶¶ 11, 17, 23, 29.) Plaintiff then delivered each shipment to defendant in Los Angeles, California in good condition. (Id.) Plaintiff alleges that defendant failed to pay plaintiff for the four shipments made in July 2008. (Id. at ¶ 38; Default Mot., Decl. of Peter Cheung in Supp. of Default J. at ¶ 5.)

B. Procedural History

Plaintiff commenced this action in this court on February 26, 2009 against defendant for alleged breach of contract. (Compl. at ¶ 1.) Defendant was served on March 3, 2009 and its answer was due on March 23, 2009. (Doc. No. 2.) Defendant has not appeared or opposed plaintiff's default judgment motion, despite receiving notice and an opportunity to do so. (Doc. No. 6, Clerk's Notation of Default.)

In an order dated December 2, 2009, the court directed plaintiff to file a letter brief addressing: (1) the basis for this court's subject matter jurisdiction over plaintiff's claims; and (2) the basis for venue in the Eastern District of New York. (12/2/09 Order.) Plaintiff submitted its letter brief on December 18, 2009, expounding on one of the jurisdictional bases included in the complaint and adding an additional basis not alleged in the complaint. (Doc. No. 7, 12/18/09 Letter Br. ("Letter Br.") at 1-3.) Specifically, plaintiff offered case law for the proposition that federal common law provides federal question jurisdiction, and introduced the Montreal Convention*fn2 as an additional basis for subject matter jurisdiction. (Id.) Plaintiff also offered evidence as to why venue was proper. (Id. At 3.)

DISCUSSION

At the request of one of the parties, the court may grant a judgment against the adverse party who has failed to answer or otherwise appear in an action. Fed. R. Civ. P. 55(b). A party's default is considered an admission of all well-pleaded allegations of liability, with the exception of damages. Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992); Artemis Marketing Corp. v. Rooms 2 Go Furniture, Inc., No. 09-CV-2413, 2010 WL 335459, at *2 (E.D.N.Y. Jan. 22, 2010).

Before addressing the merits of plaintiff's motion for default judgment, the court raises, sua sponte, the threshold question of whether the court has subject matter jurisdiction over this proceeding. See Fed. R. Civ. P. 12(h)(3). "Without jurisdiction the court cannot proceed at all in any cause. Jurisdiction is power to declare the law, and when it ceases to exist, the only function remaining to the court is that of announcing the fact and dismissing the cause." Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 94 (1998) (internal quotations and citation omitted).

At the outset, the court notes that, although the parties are diverse, in that they are incorporated in different states, because the amount in controversy does not exceed $75,000, there is no basis for diversity jurisdiction in this case. See 28 U.S.C. § 1332(a) (limiting diversity jurisdiction to "civil actions where the matter in controversy exceeds ... $75,000"). Furthermore, as the plaintiff only alleges one claim against the defendant, there is no basis for supplemental jurisdiction under 28 U.S.C. § 1367. Therefore, in order to survive dismissal based on lack of subject matter jurisdiction, the plaintiff must demonstrate its breach of contract claim arises "under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331.

"The presence or absence of federal-question jurisdiction is governed by the 'well-pleaded complaint rule,' which provides that federal jurisdiction exists only when a federal question is presented on the face of the plaintiff's properly pleaded complaint." Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987). Here, plaintiff proffers three sources of federal question jurisdiction pursuant to 28 U.S.C. § 1331 for its breach of contract claim: (1) the Airline Deregulation Act, 49 U.S.C. § 41713(b)(1); (2) federal common law; and (3) the Montreal Convention. (Letter Br. at 1-3.) As none of these ...


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