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E. Armata, LLC v. Brachs Five Towns, LLC

United States District Court, S.D. New York

January 18, 2017

E. ARMATA, LLC, Plaintiff,
v.
BRACHS FIVE TOWNS, LLC AND JACK B. BRACH, Defendants.

          MEMORANDUM DECISION AND ORDER

          GEORGE B. DANIELS, United States District Judge:

         Plaintiff E. Armata, LLC brought this action against Defendants Brachs Five Towns, LLC ("Brach's Supermarket") and Jack B. Brach ("Brach") alleging violations of the trust provisions of the Perishable Agricultural Commodities Act ("PACA"), 7 U.S.C. § 499a etseq., and breach of contract. (Compl., (ECF No. 1).) Plaintiff, a produce wholesaler, alleged that Defendants accepted but failed to pay for $33, 992.30 worth of produce by the dates specified on Plaintiffs invoices. (Id. ¶¶ 7-8.) After this Court issued a Preliminary Injunction Order requiring Defendants to pay Plaintiff $33, 992.30, Plaintiff notified this Court that he had received a check for $33, 992.30 from the Defendants, "represent[ing] the principal amount demanded in the [C]omplaint." (ECF No. 10, atl.)

         On May 25, 2016, Plaintiff moved for default judgment against all Defendants in the amount of $15, 583.41 in accrued interest and attorneys' fees and costs. (PL's Mot. Default J., ECF No. 15.)[1] Plaintiff alleged that Defendants were jointly and severally liable for failing to pay accrued interest on the earlier payment for produce, which was untimely. (Id.)

         Before this Court is Magistrate Judge Debra C. Freeman's November 23, 2016 Report and Recommendation ("Report, " (ECF No. 23)), recommending that a default judgment be entered against both Defendants, holding them jointly and severally liable to Plaintiff for $15, 583.41 in accrued interest, attorneys' fees, and costs.[2] (Id., at 22.) This Court adopts that recommendation.

         I. LEGAL STANDARDS

         This Court "may accept, reject, or modify, in whole or in part, the findings or recommendations" set forth within a magistrate judge's report. 28 U.S.C. § 636(b)(1). The Court must review de novo the portions of a magistrate judge's report to which a party properly objects. Id. Portions of a magistrate judge's report to which no or merely perfunctory objections have been made are reviewed for clear error. See Edwards v. Fischer, 414 F.Supp.2d 342, 346-47 (S.D.N.Y. 2006). Clear error is present only when "upon review of the entire record, [the court is] left with the definite and firm conviction that a mistake has been committed." Brown v. Cunningham, No. 14-CV-3515, 2015 WL 3536615, at *4 (S.D.N.Y. June 4, 2015) (internal citations omitted).

         Magistrate Judge Freeman advised the parties that failure to file timely objections to the Report would constitute a waiver of those objections on appeal. (Report, at 22-23.) No objection to the Report has been filed.

         Under Rule 55(a), default occurs "[w]hen a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend." Fed.R.Civ.P. 55(a). Where a defendant has defaulted, the district court must accept as true the well-pleaded allegations of the complaint. Finkel v. Romanowicz, 577 F.3d 79, 84 (2d Cir. 2009). Nonetheless, the court is still '"required to determine whether the [plaintiffs] allegations establish [the defendant's] liability as a matter of law.'" City of N.Y.v. Mickalis Pawn Shop, LLC, 645 F.3d 114, 137 (2d Cir. 2011) (quoting Finkel, 577 F.3d at 84). To determine the amount of damages that should be awarded on a default judgment, Rule 55(b)(2) "leaves the decision of whether a hearing is necessary to the discretion of the district court." Fustokv. ContiCommodity Servs., Inc., 873 F.2d 38, 40 (2d Cir. 1989); see also Lenardv. Design Studio, 889 F.Supp.2d 518, 527 (S.D.N.Y.2012).

         II. DEFAULT JUDGMENT, PACA LIABILITY, AND DAMAGES

         As the Report notes, Defendants have never appeared in this action, responded to Plaintiffs Complaint[3] or to the motion for a default judgment, [4] or otherwise contacted this Court to request an extension to submit any responses. (Report, at 4.) Nor have Defendants filed any objections to the Report.[5] Accordingly, this Court finds that a default judgment is appropriate in this action.

         The Report properly determined that Plaintiffs allegations establish Defendants' liability as a matter of law. First, taking Plaintiffs well-pleaded allegations as true, the Report correctly found that Plaintiff has sufficiently pleaded the elements required to recover PACA trust proceeds from Defendants. (Id. at 9-10 (citing 7 U.S.C. § 499e).) Second, the Report also correctly found that Plaintiffs allegations are sufficient to establish Defendants' joint and several liability. (Id. at 10-11.)

         The Report also properly determined that a hearing on damages is not required because Plaintiffs submissions establish its damages to a reasonable degree of certainty. (Id. at 11.) As to the amount of damages, the Report correctly determined that an award of accrued interest is proper in this case. (Id. at 12-14.) Further, the Report reasonably concluded that Plaintiff should be awarded interest calculated at 18% per annum, as stated in the sales invoices Defendants received, yielding a total accrued interest award of $5, 190.54. (Id. at 14-16.)

         III. ATTORNEYS' FEES AND COSTS

         The Report correctly determined that Plaintiff should be awarded $10, 392.87 in attorneys' fees and costs. (Id. at 16.) As the Report notes, the sales invoices that Plaintiff provided to Defendants explicitly stated that Plaintiff would seek to recover reasonable attorneys' fees and costs "[i]n the event of enforcement of our trust claim, " and included a notice that Defendants agreed to pay Plaintiffs reasonable attorneys' fees and costs "[i]f overdue accounts are referred to an attorney." (Id. at 17.) Further, the Report ...


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