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Sea Hope Navigation, Inc. v. Novel Commodities SA

United States District Court, S.D. New York

October 21, 2013

SEA HOPE NAVIGATION INC, Petitioner,
v.
NOVEL COMMODITIES SA, Respondent

Page 334

For Sea Hope Navigation Inc., Petitioner: Kirk M.H. Lyons, Lyons & Flood, L.L.P., New York, NY.

For Novel Commodities SA, Respondent: Patrick F. Lennon, LEAD ATTORNEY, Lennon, Murphy, Caulfield & Phillips, LLC, New York, NY.

OPINION

Page 335

OPINION & ORDER

GABRIEL W. GORENSTEIN, United States Magistrate Judge.

Petitioner Sea Hope Navigation Inc. (" Sea Hope" ) filed the instant petition to enforce a foreign arbitral award against respondent Novel Commodities SA (" Novel" or " Novel Commodities" ). The Clerk entered Novel's default and Sea Hope moved for a default judgment. Novel's opposition to Sea Hope's motion asserted that it had never received notice of either the arbitration that resulted in the arbitral award or of the instant action. As explained below, this Court construes Novel's opposition to the motion for a default judgment as a motion to vacate the Clerk's entry of default pursuant to Rule 55(c) of the Federal Rules of Civil Procedure. For the reasons that follow, the default is vacated.[1]

I. BACKGROUND

Sea Hope commenced this action by filing a petition to recognize, confirm, and enforce a foreign arbitral award it obtained against Novel. See Verified Petition to Recognize, Confirm, and Enforce Foreign Arbitral Award, filed May 14, 2013 (Docket # 1) (" Petition" ). According to the petition, Novel chartered a vessel fro Sea Hope pursuant to a time charter party, but holders of bills of lading asserted claims against Sea Hope for cargo damaged by " stevedore negligence and rough handling." Petition ¶ ¶ 8, 11.[2] Sea Hope settled these claims and sought indemnification from Novel by commencing an arbitration in London. Id. ¶ ¶ 11-12. Novel, however, did not respond to the notice of appointment of Sea Hope's arbitrator, so the arbitration proceeded before a sole arbitrator, who ultimately rendered an award in Sea Hope's favor. Id. ¶ ¶ 13-14. About three weeks after the arbitral award was rendered, the arbitrator " posted a hard copy of the award" to Novel at an address in Geneva, but Novel failed to lodge an appeal within the time allowed under English law. Declaration of James Horn in Further Support of Sea Hope's Motion for Default Judgment, filed Sept. 20, 2013 (Docket # 20) (" Horn Decl." ) ¶ 9.

Sea Hope served Novel with the summons and petition in the instant matter by personal delivery to Corporation Services Corporation (" CSC" ), the entity listed with the New York Secretary of State as Novel's registered agent for service of process. See Affidavit of Service, filed May 17, 2013 (Docket # 2); Ex. A. to Petition. Novel's response to the petition was due on June 4, 2013, pursuant to Fed.R.Civ.P. 12(a)(1)(A)(i). At Sea Hope's request, the Clerk of the Court entered a default against Novel on June 7, 2013. See Declaration of Kirk M. Lyons in Support of Request for Clerk's Certificate of Default, filed June 7, 2013 (Docket # 4); Clerk's Certificate of Default, filed June 7, 2013 (Docket # 5). Sea Hope then filed a motion for a default judgment on July 29,

Page 336

2013.[3] The Court ordered Sea Hope to send a copy of its papers to the business address listed on Novel's website. See Order, dated July 31, 2013 (Docket # 11). The papers were sent on August 1, 2013, see Declaration of Kirk M. Lyons in Support of Proof of Transmittal, filed Aug. 6, 2013 (Docket # 12) ¶ 3, and Novel states that it received them on August 2, 2013, see Declaration of Njack Kane in Support of Opposition to Motion for Default Judgment, filed Sept. 6, 2013 (Docket # 17) (" Kane Decl." ) ¶ 6. Seventeen days later, on August 19, 2013, attorney Patrick F. Lennon filed a notice of appearance on behalf of Novel. See Notice of Appearance, filed Aug. 19, 2013 (Docket # 14). The same day, Mr. Lennon sent a letter to the Court stating that Novel had never received service in this action, and that Novel only became aware of its pendency when it received the papers relating to the motion for a default judgment. See Letter from Patrick F. Lennon, filed Aug. 19, 2013 (Docket # 15). On September 6, 2013, Novel filed its opposition to Sea Hope's motion for a default judgment, and Sea Hope thereafter filed its reply.[4]

II. LAW GOVERNING CONTESTED MOTIONS FOR A DEFAULT JUDGMENT

Rule 55(a) of the Federal Rules of Civil Procedure provides that " [w]hen a party against whom a judgment . . . is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise, the clerk must enter the party's default." Rule 55(c) provides that " [t]he court may set aside an entry of default for good cause, and ...


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