United States District Court, S.D. New York
HONORABLE VERNON S. BRODERICK, UNITED STATES DISTRICT JUDGE.
REPORT AND RECOMMENDATION
KATHARINE H. PARKER United States Magistrate Judge
JDF Capital Inc. commenced this action against Defendant
Apptigo International, Inc. for breach of contract or, in the
alternative, unjust enrichment. The Complaint seeks an award
of damages pursuant to a promissory note executed by the
parties, as well as costs, expenses, attorneys' fees, and
interest. Upon Plaintiff's application and in light of
Defendant's failure to appear in or otherwise defend
against this action, on November 17, 2017, the Honorable
Vernon S. Broderick granted Plaintiff's motion for a
default judgment. The matter was then referred to the
undersigned for an inquest on damages.
reasons stated below, I recommend that the Court enter
judgment for Plaintiff in the amount of $107, 011.33 for
Defendant's breach of contract. I further recommend that
the Court award $10, 880.00 in attorneys' fees and $1,
351.49 in costs.
well-settled that, in light of Defendant's default,
Plaintiff's allegations, with the exception of those
related to damages, are accepted as true. See Finkel v.
Romanowicz, 577 F.3d 79, 84 (2d Cir. 2009) (citing
Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61, 65
(2d Cir. 1981)). Accordingly, the following facts are
established as a result of Defendant's default:
• On or about May 22, 2015, Plaintiff and Defendant
executed a securities purchase agreement (the “Purchase
Agreement”) by which Plaintiff agreed to purchase from
Defendant certain convertible promissory note(s). (Doc. No.
1, Complaint (“Compl.”) ¶¶ 6-7.)
• Contemporaneous with the execution of the Purchase
Agreement, the parties executed a promissory note (the
“Note”) with a maximum face value of $110, 000
and a minimum face value of $55, 000. (Compl. ¶ 11.)
• Under the terms of the Note, Plaintiff possessed a
right to convert “any outstanding Principal Amount of
[the] Note plus accrued interest . . . into a number of fully
paid and nonassessable shares of [Defendant's] Common
Stock equal to the quotient of the elected outstanding
Principal Amount of the Note divided by the [applicable]
Conversion Price as described in” the Note. (Compl.
• On two occasions (February 17, 2016 and March 28,
2016), Plaintiff sought to convert certain portions of the
then-outstanding balance of the Note into shares of
Defendant's Common Stock, and Defendant honored
Plaintiff's requests without incident. (Compl.
• On April 11, 2016, however, Plaintiff again sought to
convert certain portions of the then-outstanding balance of
the Note into shares of Defendant's Common Stock, and
Defendant failed to honor Plaintiff's request. (Compl.
• On May 26, 2016 (the “Maturity Date”), the
Note's principal balance as well as all outstanding
interest accrued thereupon became due and owing. (Compl.
¶ 18.) As of the date that Plaintiff filed its
Complaint, Defendant had made no effort to pay any of the
outstanding amount due and owing to Plaintiff. (Compl. ¶
• On June 28, 2016, Plaintiff submitted a default notice
to Defendant setting forth the default status of the Note and
demanding payment of all outstanding funds due thereunder.
(Compl. ¶ 54.)
Conduct Of Hearing And Proof Of Damages
Rule 55 of the Federal Rules of Civil Procedure, a court may,
in order to effectuate a default judgment, “conduct
hearings . . . to determine the amount of damages.”
Fed.R.Civ.P. 55(b)(2). Plaintiffs bear the burden of
establishing their entitlement to recovery and thus must
substantiate their claims with evidence to prove the extent
of their damages. See Greyhound Exhibitgroup, Inc. v.
E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992).
This Court, after holding a telephone conference in this
matter on January 31, 2018, issued a briefing schedule and
scheduled a damages inquest hearing for March 12, 2018,
directing Plaintiff to serve Defendant with notice of the
same. Plaintiff filed papers supporting its request for
damages, including a memorandum of law and a declaration from
counsel attaching, inter alia, the relevant
contracts as well as documentation of fees and costs incurred
in this action. These papers also were served on Defendant.
On March 12, 2018, a damages inquest hearing was held.
Defendant neither appeared at the hearing nor submitted any
written opposition to Plaintiff's request for damages.
Accordingly, the Court will evaluate Plaintiff's damages
application without input from Defendant.
Damages For Breach Of Contract
seeks damages pursuant to Sections 2.2, 3.7, and 3.3 of the
Note stemming from Defendant's breach and/or default
under the Note. To establish a breach of contract under New
York law,  Plaintiff must demonstrate (1) the
existence of a contract, (2) Plaintiff's performance, (3)
Defendant's breach, and (4) resulting damages. See,
e.g., Terwilliger, 206 F.3d at 245-46. Each of these
requirements is satisfied here. The well-pleaded allegations
of Plaintiff's Complaint demonstrate that valid contracts
existed between the parties, that Plaintiff performed under
the contracts in all material respects, that Defendant
breached the contracts by, among other things, ...