United States District Court, S.D. New York
HONORABLE VINCENT L. BRICCETTI, UNITED STATES DISTRICT JUDGE
REPORT AND RECOMMENDATION
E. DAVISON UNITED STATES MAGISTRATE JUDGE
November 18, 2016, Plaintiff Plus Enterprises LLC doing
business as Plus Funding Group ("Plaintiff or "Plus
Enterprises") commenced this action against Defendants
Debra Sands, Spectra Worldwide, LLC ("Spectra"),
Sun Trading International, LLC ("Sun Trading"), and
Glenn Sands (collectively, "Defendants"), Dkt. 1
(Complaint ("Compl, ")), seeking damages for
Defendants' breach of the factoring and security contract
("Factoring Agreement"), breach of the Continuing
Guaranty, account stated, and constructive trust claims. Dkt,
1, The operative complaint was filed on December 2, 2016
("Am. Comp."). Dkt. 8. Defendants did not respond.
On February 8, 2017, Plaintiff filed its request to enter a
default judgment against Defendants. Dkt. 18. On February 15,
2017, Defendants' default was certified by the Clerk of
the Court. Dkt. 20. On April 11, 2017, the Court ordered
Defendants to show cause for why a default judgment should
not be entered. Dkt. 21. On May 9, 2017, the Court entered a
default judgment against Defendants, Dkt. 26, and referred
the matter to me for a damages inquest. Dkt. 25.
before me are Plaintiffs proposed findings of fact and
conclusions of law, ("P. Mem."), and accompanying
exhibits. Dkt. 32. Defendants did not respond to this
submission. Plaintiff seeks $246, 391.56 from Defendants in
compensatory damages as well as attorneys' fees and
costs. P. Mem. at 7.
completed the inquest, and for the reasons set forth below, I
respectfully recommend that the Court enter judgment against
Defendants Sun Trading and Debra Sands only in the total
amount of $202, 566.44. This award consists of $186, 587.64
for Plaintiffs unreimbursed advances on Defendant Sun
Trading's invoices, $14, 564.50 in attorneys' fees,
and $1, 414.30 in costs.
9, 2016, 1 issued a Scheduling Order for Damages Inquest,
Dkt. 27, ("Scheduling Order"), directing Plaintiff
to file and serve proposed findings of fact and proposed
conclusions of law, and providing time for Defendant to file
and serve a response thereto. The Scheduling Order further
The Court hereby notifies the parties that it may conduct
this inquest based solely upon the written submissions of the
parties. See Fustok v. ContiCommodity Servs., Inc.,
873 F.2d 38, 40 (2d Cir. 1989). To the extent that any party
seeks an evidentiary healing on the issue of damages (or
other monetary relief), such party must set forth in its
submission the reason why the inquest should not be conducted
based upon the written submissions alone, including a
description of what witnesses would be called to testify at a
hearing and the nature of the evidence that would be
7, 2017, Plaintiff filed its Proposed Findings of fact and
conclusions of law, affidavits, and accompanying exhibits.
Dkt. 32. Plaintiff did not request an evidentiary hearing.
Defendant did not respond.
Plaintiffs Amended Complaint and Inquest Submission
following facts are drawn from my review of Plaintiffs
amended complaint and supported by Plaintiffs inquest
submissions and are deemed established for the purpose of
determining Plaintiffs damage award.
and Defendant Sun Trading entered into the Factoring
Agreement on December 9, 2014 for an initial term for twelve
months. Am. Comp., ¶¶ 16-19; P. Mem. at 3 (citing
Factoring Agreement). The Factoring Agreement provided for
its automatic renewal for successive six month periods. Am.
Comp,, ¶¶ 16-19; P. Mem., ¶¶ 15, 18
(citing Factoring Agreement). Under the Factoring Agreement,
Plaintiff provided Defendant Sun Trading funding by
purchasing Defendant Sun Trading's unpaid invoices. In
exchange for the funding from Plaintiff, Defendant Sun
Trading agreed to (i) reimburse Plaintiffs advances in the
event Defendant Sun Trading's debts were not collectable,
(ii) pay fees on Plaintiffs advances, and (iii) cover
Plaintiffs attorneys' fees, costs and disbursements
expended to recover any unreimbursed advances. Am. Comp.
¶¶ 20, 21. In addition, Defendant Debra Sands
provided a Continuing Guaranty on December 9, 2014, whereby
she personally guaranteed Defendant Sun Trading's payment
P. Mem., ¶ 16; Am. Comp., ¶ 27.
Factoring Agreement provided that Defendant Sun Trading would
submit a Schedule of Invoices, and actual invoices to
Plaintiff seeking up to 80% of the face value of the
receivables listed. Plaintiff would then provide an advance
on those invoices. The Advance Rate of "[u]p to 80%
[was] in Purchaser's [Plaintiffs] discretion" and
Plaintiff was permitted to "in its sole credit and
business judgment, without notice to [Sun Trading], advance
any percentage of the Face Amount less than the indicated
Advance Rate." P. Mem., ¶¶ 19-22 (citing
Factoring Agreement §3 [Definitions] and § 2.1.4).
In other words, Plaintiff had discretion to decide whether to
advance any money, and how much money to advance on Defendant
Sun Trading's invoices. Id. (citing Factoring
Agreement, §§ 2.1.1-2, 1.4).
December 2014 through September 2016, Plaintiff made advances
on Defendant Sun Trading invoices and purchase orders. P.
Mem., ¶¶ 23-24. Plaintiffs inquest submission
identifies the following advances made to Defendant Sun
Trading that remain unreimbursed, ("Purchased
Accounts"): (i) $25, 000 on Invoice #023 for $72, 000
billed to Ross Stores, Inc.; (ii) $4, 490.84 on Invoice #030
for $5, 644.80 billed to Gabriel Bros., Inc.; (hi) $20, 160
on Invoice #031 for $25, 000 billed to Beall's Outlet;
(iv) $126, 000 on four invoices for a total of $183, 141
billed to Ross Stores, Inc.; and (v) $10, 936.80 on an
unnumbered invoice for $13, 702.25 billed to Ross Stores,
Inc. P. Mem., ¶¶ 14-28. All of the aforementioned
invoices went unpaid for . more than 90 days, which, under
the Factoring Agreement, triggered Defendant Sun
Trading's contractual obligation to repurchase the
invoices from Plaintiff. Factoring Agreement, § 24.
Defendant Sun Trading did not fulfill its contractual
inquest submission, Plaintiff requests $246, 391.56 in
damages, which includes $186, 587.64 as reimbursement for its
advances on Defendant Sun Trading's invoices, $21, 552.96
in "Accrued Fees, " and $38, 250.96 in "Earned
Fees." P. Mem., ¶¶ 43-44. Plaintiffs inquest
submission further requests varying amounts in attorneys'
fees, and $1, 414.30 in costs. P. Mem., ¶ 45 (citing
Habas Decl., 
well settled that, when a defendant defaults, the court must
accept all of Plaintiff s allegations as true, except those
pertaining to damages, Fed.R.Civ.P. 8(b)(6); see, e.g,
Finkel v. Romanowicz, 577 F.3d 79, 84 (2d Cir. 2009).
Proof of damages must be based upon admissible, authenticated
evidence. House v. Kent Worldwide Machine Works,
Inc., 359 Fed.Appx. 206, 207-08 (2d Cir. 2010) (summary
order). Plaintiff "bears the burden of establishing her
entitlement to recovery and thus must substantiate her claim
with evidence to prove the extent of damages." Dunn
v. Advanced Credit Recovery Inc., No. 11 Civ. 4023, 2012
U.S. Dist. LEXIS 27205, at *2 (S.D.N.Y. Mar. 1, 2012),
adopted by, 2012 U.S. Dist. LEXIS 47129 (S.D.N.Y.
Apr. 3, 2012) (citing Greyhound Exhibitgroup, Inc. v.
E.L. U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir.
is entitled to all reasonable inferences that can be made
from the evidence that is presented in support of its damages
claims. See, e.g., Au Bon Pain Corp. v. Artect, Inc., et
ah, 653 F.2d 61, 65 (2d Cir. 1981). However, "the
district court cannot simply rely on the Plaintiffs statement
of damages; there must be a basis upon which the court may
establish damages with reasonable certainty." House
v. Kent Worldwide Mack Worts, Inc., 359 Fed.Appx. 206,
207 (2d Cir. 2010) (summary order) (citing Transatlantic
Marine Claims Agency, Inc. v. Ace Shipping Corp., 109
F.3d 105, 111 (2d Cir. 1997)).
"[w]here an inquest is conducted following a default
judgment, it is generally necessary for the Court to
determine whether the allegations of the complaint, taken as
true, are sufficient to establish the defendant's
liability." Weiwei Gao v. Sidhu, No. 11 Civ.
2711, 2013 U.S. Dist. LEXIS 83446, at *6-7 (S.D.N.Y. June 12,
2013) (citing PSG Poker, LLC v. DeRosa-Grund, No. 06
Civ. 1104, 2008 U.S. Dist. LEXIS 59214, at *3 (S.D.N.Y. My
amended complaint asserted six claims, only three of which
are addressed in Plaintiffs inquest submission. Plaintiff
seeks damages from the Contracting Defendants for its breach
of contract, or, in the alternative, for its Account Stated
claim (asserted against Defendant Sun Trading, Defendant
Glenn Sands, and Defendant Debra Sands) or a Constructive
Trust claim (asserted against all four Defendants, including
Defendant Spectra). Specifically, Plaintiff requests $246,
391.56 in reimbursements and fees, including $186, 587.64 for
Plaintiffs advances on Defendant Sun Trading's invoices,
$21, 552.96 in Factoring Fees for "Accrued Fees, "
and $38, 250.96 in Factoring Fees for "Earned Fees"
under the Factoring Agreement. P. Mem. at 7. Plaintiffs
inquest submission further requests attorneys' fees, and
$1, 414.30 in costs. P. Mem. at 7 (citing Habas Decl., ¶
reasons that follow, I respectfully recommend that the Court
award Plaintiff $186, 587.64 in damages, $14, 564.50 in
attorneys' fees, and $1, 414.30 in costs (for a total of
Breach of Contract Claims
"To state a claim for breach of contract under New York
law, a plaintiff must allege (1) the existence of an
agreement, (2) adequate performance of the contract by the
plaintiff, (3) breach of contract by the defendant, and (4)
damages." Hudson & Broad, Inc. v. J.C,
Penney Corp., 553 Fed.App'x. 37, 38-39 (2d
Cir. 2014) (citing Harsco Corp. v. Segui, 91 F.3d
337, 348 (2dCir. 1996)).
has alleged (1) the existence of an agreement, here, the
Factoring Agreement, and, in the case of Debra Sands, the
Personal Guaranty, (2) adequate performance of the contract
by Plaintiff because it timely provided Defendant Sun Trading
with advances on its invoices as contemplated by the
Factoring Agreement and evidenced by the bank records and
invoices in evidence, (3) the Contracting Defendants'
breach of its contracts when Defendant Sun Trading failed to
repurchase its invoices from Plaintiff, and (4) Plaintiffs
damages because of its unreimbursed advances.
Plaintiffs allegations are sufficiently well pleaded to
establish the Contracting Defendants' liability on the
breach of contract claims.
result of the breach, Plaintiff seeks a total of $246, 391.56
in damages: (i) $186, 587.64 for reimbursement of its
advances on Defendant Sun Trading's invoices; (ii) $21,
552.96 in "Accrued Fees"; and (iii) $38, 250.96 in
"Earned Fees." P. Mem., ¶¶ 43-44.
reasons discussed below, I respectfully recommend $186,
587.64 damage award from the Contracting Defendants to
reimburse Plaintiff for its advances on Defendant Sun
Trading's invoices. The other categories of relief
requested, however, are insufficiently supported to warrant
an award of damages.
Defendant Sun ...