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GATX Corporation v. Aero Jet Corporate

United States District Court, S.D. New York

July 22, 2014

GATX CORPORATION, Plaintiff,
v.
AERO JET CORPORATE, Defendant.

REPORT AND RECOMMENDATION

GABRIEL W. GORENSTEIN, Magistrate Judge.

Plaintiff GATX Corporation ("GATX") brings this action against defendant Aero Jet Corporate ("Aero") to recover damages and costs stemming from Aero's breach of an agreement for the lease of an aircraft. A default has already been entered against Aero. The only remaining issue is the amount of damages GATX should be awarded.

I. BACKGROUND

GATX filed its complaint against Aero on June 25, 2013, see Complaint, filed June 25, 2013 (Docket # 1), and Aero filed an answer on September 13, 2013, see Answer, filed Sept. 13, 2013 (Docket # 18). On October 18, 2013, GATX filed an amended complaint, see Amended Complaint, filed Oct. 18, 2013 (Docket # 32) ("Am. Compl."), which was served on Aero on October 28, 2013, see Affidavit of Service of Summons and Amended Complaint, filed Dec. 24, 2013 (Docket # 46). Aero failed to respond to the amended complaint, and on January 10, 2014, GATX obtained a certificate of default. See Clerk's Certificate, filed Jan. 10, 2014 (Docket # 48). On February 18, 2013, Judge Koeltl granted GATX's motion for a default judgment pursuant to Fed.R.Civ.P. Rule 55(b), see Order, filed Feb. 18, 2014 (Docket # 53), and referred the matter to the undersigned for an inquest, see Order of Reference, filed Feb. 18, 2014 (Docket # 54).

On February 20, 2014, this Court issued an order directing GATX to submit proposed findings of fact and conclusions of law with supporting documentation as to its request for damages and other relief. See Scheduling Order for Damages Inquest, dated Feb. 20, 2014 (Docket # 55). The Order gave Aero until May 7, 2014, to oppose GATX's submissions. Id . ¶ 2. The Order also notified the parties that the Court would conduct the inquest based upon the written submissions of the parties unless a party sought an evidentiary hearing. Id . ¶ 3. A copy of the Order was mailed to Aero at its business address.

Because the default judgment entered in this case establishes Aero's liability, see Bambu Sales, Inc. v. Ozak Trading Inc. , 58 F.3d 849, 854 (2d Cir. 1995) (citation omitted), the only remaining issue is whether GATX has supplied adequate support for any relief it seeks, see Kuruwa v. Meyers , 823 F.Supp.2d 253, 256 (S.D.N.Y. 2011) aff'd, 512 F.App'x 45 (2d Cir. 2013); accord GAKM Res. LLC v. Jaylyn Sales Inc. , 2009 WL 2150891, at *2 (S.D.N.Y. July 20, 2009) ("A default judgment that is entered on the well-pleaded allegations in a complaint establishes a defendant's liability... and the sole issue that remains before the court is whether the plaintiff has provided adequate support for the relief it seeks.") (citations omitted). The Second Circuit has held that an inquest into damages may be held on the basis of documentary evidence alone "as long as [the court has] ensured that there was a basis for the damages specified in [the] default judgment." Fustok v. ContiCommodity Servs., Inc. , 873 F.2d 38, 40 (2d Cir. 1989); accord Action S.A. v. Marc Rich & Co., Inc. , 951 F.2d 504, 508 (2d Cir. 1991).

Neither party has requested an evidentiary hearing, and Aero has not made any submission to the Court. GATX's submissions include four declarations and documentary evidence.[1] These submissions seek damages based on Aero's breach of the lease agreement, prejudgment interest, attorney's fees, and costs. Because these submissions provide a basis for an award of damages, no hearing is required.

II. FINDINGS OF FACT AND CONCLUSIONS OF LAW

In light of Aero's default, GATX's properly-pleaded allegations, except those related to damages, are accepted as true. See, e.g., City of New York v. Mickalis Pawn Shop, LLC , 645 F.3d 114, 137 (2d Cir. 2011) ("It is an ancient common law axiom' that a defendant who defaults thereby admits all well-pleaded' factual allegations contained in the complaint.") (citing Vt. Teddy Bear Co., Inc. v. 1-800 Beargram Co. , 373 F.3d 241, 246 (2d Cir. 2004)); Finkel v. Romanowicz , 577 F.3d 79, 84 (2d Cir. 2009) ("In light of [defendant's] default, a court is required to accept all... factual allegations as true and draw all reasonable inferences in [plaintiff's] favor.") (citation omitted). The following findings of fact and conclusions of law are based on the allegations in GATX's amended complaint regarding liability and the admissible evidence regarding damages contained in its submissions.

A. Facts Relating to Liability

GATX is a New York corporation, which has its principal place of business in Chicago, Illinois. Am. Compl. ¶ 2. Aero is a French corporation, which has its principal place of business in Dommartin, France. Id . ¶ 3. On July 4, 2011, GATX and Aero executed an agreement (the "Agreement") by which GATX agreed to lease to Aero a Dassault Falcon 50 Aircraft (the "Aircraft") in exchange for a monthly rent of $25, 000 plus additional sums as specified in the Agreement. See id. ¶¶ 1, 7-8, 10. On July 8, 2011, GATX delivered and Aero accepted the Aircraft. Id . ¶ 9. Beginning in December 2012, Aero ceased paying rent to GATX, id. ¶ 11, which under Paragraph 15 of the Agreement constituted an "Event of Default" giving GATX the "right to terminate the Lease and repossess the Aircraft, " id. ¶ 12. Accordingly, GATX repossessed the Aircraft from Aero at Le Bourget Airport outside Paris, France. See id. ¶ 13. In repossessing the aircraft, GATX incurred various costs including those expended on "certain necessary repairs" and "all outstanding bills... for such items as storage and prior repairs." See id. ¶ 14. When GATX brought the Aircraft back to the United States, it discovered that further repairs were necessary because the Aircraft had apparently been damaged by a lightning strike in July 2012. See id. ¶¶ 16-18. Although it was contractually required to do so, Aero neither reported the lightning strike to GATX nor made the necessary repairs to the damage caused by the lightning. See id. ¶¶ 19-20. Aero's failure to make these repairs and to return the Aircraft to GATX in the "requisite condition" constituted an additional breach of the Agreement. Id . ¶ 20.

B. Claimed Damages

GATX seeks to recover from Aero damages in the amount of $658, 393.39 plus attorney's fees and costs. See Proposed Findings of Fact and Conclusions of Law ¶¶ 21-24. GATX contends that the total amount of damages consists of: "a. $130, 980.00 for outstanding payments owed under the Lease for unpaid rent, airframe reserves, and CAMP maintenance costs; b. $353, 688.27 for repossession and repair costs to the Aircraft; c. $81, 840.00 pursuant to the return provision of the Lease; and d. $140, 400.00 for the reduced sales price of the Aircraft." Id . ¶ 21. GATX has subtracted from this amount $48, 514.88 "for GATX's receipt of an insurance settlement in connection with damage resulting from the apparent lightning strike." Id . GATX also requests that the Court grant it "prejudgment interest pursuant to CPLR § 5001, et seq. starting on June 1, 2013 as the date on which Aero Jet's breach was ...


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