United States District Court, S.D. New York
MEMORANDUM AND ORDER
NAOMI REICE BUCHWALD, District Judge.
On July 26, 2013, plaintiff Saint Tropez Inc. ("plaintiff") filed this action against defendants Ningbo Maywood Industry and Trade Co., Ltd. ("Ningbo") and Retro Fox New York LLC ("Retro Fox") to obtain damages and various equitable relief as a result of Ningbo's failure to properly manufacture and deliver certain trademarked apparel identified in two purchase order contracts. The Complaint alleges that roughly 41 percent of the goods identified in the contracts were never delivered to plaintiff, and that those goods that were delivered arrived late and were nonconforming. In order to mitigate its claimed damages, plaintiff moved by order to show cause for seizure of the undelivered goods, which had been shipped to Retro Fox, Ningbo's New York-based consignee. On August 8 and 22, 2013, the Court ordered the goods seized. On October 10, 2013, after neither defendant had made an appearance in the case, the Court permitted plaintiff to sell the seized goods, and ordered that the proceeds be held in escrow.
Retro Fox has not responded to the Complaint and has not appeared in this action by counsel. Ningbo appeared on October 28, 2013 for the limited purpose of opposing the jurisdiction of the Court and moving to dismiss the Complaint. Thus, presently before the Court is Ningbo's motion to dismiss the Complaint pursuant to Federal Rule of Civil Procedure ("Rule") 12(b)(5) for insufficient service of process, Rule 12(b)(2) for lack of jurisdiction, and Rule 12(b)(6) for failure to state a claim upon which relief can be granted. Also before the Court is plaintiff's cross-motion for default judgment against Retro Fox. For the reasons set forth below, Ningbo's motion to dismiss the Complaint is denied and plaintiff's cross-motion for default judgment against Retro Fox is denied without prejudice.
I. The Purchase Order Contracts
Plaintiff is an apparel manufacturing, importing, and marketing company incorporated in Delaware with a principal place of business in Miami Beach, Florida. Compl. ¶ 1. On January 16 and February 28, 2013, plaintiff entered into two purchase order contracts with Ningbo, a Chinese clothing manufacturer, for the manufacture and delivery of goods labeled with plaintiff's trademarked "Black Ice" logo. Id . ¶ 13. The contracts listed the goods to be delivered and provided the following relevant information: (1) Ningbo, with an address in China, was identified as the vendor; (2) plaintiff was identified as the buyer, and the address listed under its name was 214 West 39th Street in Manhattan, which is the address of plaintiff's exclusive sales and operations agent, Commonwealth Licensing Corporation ("Commonwealth") (Jacklone Aff. ¶ 1); (3) in the "Ship To" field, the contracts simply stated, "TBA"; (4) the contracts also stated that the goods were to be "LDP - NJ" and "In warehouse" by "6/6/2013" and "6/18/2013"; and (5) the total price for the contracts was listed at approximately $954, 000. Compl., Exs. A, B.
II. The Negotiation of the Contracts
Dean Jacklone, an officer and principal of Commonwealth, stated in an affidavit that, while working on behalf of plaintiff, he negotiated the contracts in New York with two individuals who represented Ningbo: Steven Ki, Ningbo's sales agent, and Yafei Ge, Ningbo's CEO. Jacklone Aff. ¶¶ 5, 8. In addition to meeting with Ki and Ge in New York on several occasions, Jacklone stated that he also negotiated with Ge's business partner Helen, who was in China. Id . ¶ 5. According to Jacklone, the parties agreed that the goods were to be delivered to New York. Id . ¶¶ 5, 14.
Ki submitted affidavits corroborating these assertions. See 2013 Ki Aff.; Jan. 2014 Ki Aff. Specifically, he stated: (1) that he managed Ningbo's sales and customer relationships in New York; (2) that he helped Ningbo secure the purchase order contracts with plaintiff; (3) that Ge and Helen directed him not to accept prices lower than certain amounts or agree to delivery schedules without their consent; (4) that Ningbo had agreed to pay him a commission for his work; (5) that he had several meetings with Ge and Jacklone in New York regarding the contracts with plaintiff; (6) that Ge was frequently in New York for business, including Ningbo's business with plaintiff, and was in New York for a multi-month period when plaintiff's purchase orders were generated and in process; and (7) that when Ge was in New York, she worked out of an office in Manhattan's Garment District. See 2013 Ki Aff.; Jan. 2014 Ki Aff.; March 2014 Ki Aff. Attached to one of Ki's affidavits were emails between Ki, Ge, and Helen which supported Ki's statements regarding Ge's presence in New York and Ki's work as a commissioned sales agent for Ningbo. See Jan. 2014 Ki Aff., Exs. A-G.
Ge, in her affidavit, acknowledged that she did travel to New York and at least once spoke to Ki in person. Jan. 2014 Ge Aff. ¶ 14. However, she claimed that all negotiations regarding the contracts with plaintiff were conducted via email. 2013 Ge Aff. ¶¶ 10-12; Jan. 2014 Ge Aff. ¶ 18. She also argued that Ki, who "often facilitated communications" between Ningbo and plaintiff, was neither an employee nor an agent of Ningbo. Jan. 2014 Ge Aff. ¶¶ 6, 17, 19.
III. Ningbo's Alleged Breach and the Instant Suit
According to the Complaint, 59 percent of the goods were delivered to plaintiff, albeit late and with numerous defects. Compl. ¶ 8. The other 41 percent, which were shipped but not delivered, were held in warehouses, consigned to Retro Fox. Id . ¶ 9. Plaintiff had arranged to sell the goods to a customer in New York at a profit of $341, 250. Id . ¶¶ 24, 28; Jacklone Aff. ¶ 5. However, because of Ningbo's failure to timely delivery non-defective goods, plaintiff's customer canceled its order. Compl. ¶ 28. Consequently, plaintiff alleges damages of $341, 250 in lost profits plus an additional $12, 000 in warehouse charges and other expenses. Id . ¶ 24.
On July 26, 2013, plaintiff sued Ningbo for breach of contract and conversion of goods, and Retro Fox for interference with contract, and requested an order of replevin or for specific performance so that it could obtain and sell the undelivered goods. Also on July 26, plaintiff moved by order to show cause for seizure of the goods. Later that day, another District Judge, sitting in Part I, signed the order to show cause.
IV. Service of Process
Plaintiff served Retro Fox on July 29, 2013 via UPS overnight mail (ECF No. 12), and again on August 2, 2013 by "nail and mail" service (ECF No. 8). Plaintiff attempted to effectuate service on Ningbo by mailing a copy of the summons and complaint to Ningbo at its address in China and to Retro Fox's address in New York (under the theory that Retro Fox could accept service on Ningbo's behalf).
In addition, on July 29, 2013, Jacklone provided a copy of the summons, complaint, and order to show cause to Ki. Jacklone Aff. ¶¶ 19, 20; 2013 Ki Aff. ¶ 22. Ki stated that he gave these documents to Ge later that day in an office on West 37th Street in Manhattan where Ge frequently worked when she was in New York. March 2014 Ki Aff. ¶ 2. Ki also helped Ge find an attorney in Flushing, New York to represent Ningbo. 2013 Ki Aff. ¶ 22. At a hearing on May 20, 2014,  the attorney, Terrence Worms, testified that he had spoken with Ki on the phone and had met with Ge on two occasions in August 2013 to discuss the possibility of representing Ningbo. Tr. 5, 9, 13-15. Worms further testified that Ge had given him a copy of the summons and ...