United States District Court, S.D. New York
E. ARMATA, LLC, Plaintiff,
BRACHS FIVE TOWNS, LLC AND JACK B. BRACH, Defendants.
MEMORANDUM DECISION AND ORDER
B. DANIELS, United States District Judge:
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.
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.) Plaintiff alleged that Defendants were
jointly and severally liable for failing to pay accrued
interest on the earlier payment for produce, which was
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. (Id., at
22.) This Court adopts that recommendation.
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).
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.
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
DEFAULT JUDGMENT, PACA LIABILITY, AND DAMAGES
Report notes, Defendants have never appeared in this action,
responded to Plaintiffs Complaint or to the motion for a
default judgment,  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. Accordingly, this Court finds that a
default judgment is appropriate in this action.
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
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.)
ATTORNEYS' FEES AND COSTS
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