United States District Court, E.D. New York
NINGBO YANG VOYAGE TEXTILES CO., LTD., a Chinese Limited Company, Plaintiff,
SAULT TRADING, A/K/A SALUT TRADING INC, a New York Business Corporation, Defendant.
REPORT AND RECOMMENDATION
L. TISCIONE UNITED STATES MAGISTRATE JUDGE
Ningbo Yang Voyage Textiles Company (“Ningbo
Yang”) sues Defendant Sault Trading to recover the
unpaid balance of a contract for the sale of goods. Ningbo
Yang makes a claim under the United Nations Convention on
Contracts for the International Sale of Goods
(“CISG” or the “Convention”), Apr.
11, 1980, S. Treaty Doc. No. 98-9 (1983), 19 I.L.M. 668; it
also asserts claims for state law breach of contract, account
stated, unjust enrichment, and declaratory judgment.
See Complaint (“Compl.”), Dkt. No. 1,
¶ 22-42. Sault Trading did not respond to the
Complaint in any fashion. The Clerk of Court entered default
pursuant to Rule 55(a) of the Federal Rules of Civil
Procedure. See Clerk's Entry of Default, Dkt.
No. 8. On October 15, 2018, Ningbo Yang filed a Motion for
Default Judgment. See Dkt. No. 9. Judge Allyne R.
Ross referred the Motion to me for a report and
recommendation. For the reasons stated below, I recommend
that the Motion be GRANTED in part and DENIED in part.
Yang is a Chinese company that specializes in the
manufacturing of silk products. Compl. ¶ 3. Ningbo Yang
entered into an alleged agreement with Sault Trading, a New
York corporation, for the sale of 55, 560 pieces of silk
polyester curtain products for the purchase price of $103,
341.60. Compl. ¶¶ 4, 9. The invoice allows for a
variance of five-percent, either more or less, of the actual
quantity of pieces ordered. Compl. ¶ 9. After receiving
a deposit in the amount of $10, 109.00, Ningbo Yang shipped
56, 760 pieces of silk curtain products on July 27, 2017 for
a total price of $105, 773.60. Compl. ¶ 12. Ningbo Yang
has not received any payment on the contract following its
shipment in July 2017. Compl. ¶ 15.
March 31, 2018, Ningbo Yang filed suit alleging five causes
of action for the alleged breach of contract. See
Compl. Two days later, on April 2, 2018, the Court issued a
Summons notifying Sault Trading that a suit had been filed
against it, and informing it that it had twenty-one days
after service of the Summons to file an answer to the
Complaint or file a motion under Rule 12 of the Federal Rules
of Civil Procedure. See Summons in a Civil Action,
Dkt. No. 4. Sault Trading received service of the Summons on
May 29, 2019 through its authorized agent, the Secretary of
State of the State of New York. See Affidavit of
Service - Secretary of State, Dkt. No. 6. To date, Sault
Trading has not responded to the Complaint, nor otherwise
appeared in this action.
September 26, 2018, Ningbo Yang requested that the Court
enter a default against Sault Trading for failure to appear
or otherwise defend the action. See Request for
Certificate of Default, Dkt. No. 7. The Clerk of Court
entered default on September 28, 2018. See
Clerk's Entry of Default, Dkt. No. 7. On October 15,
2018, Ningbo Yang filed a Motion for Default Judgment.
See First Motion for Default Judgment, Dkt. No. 9.
Attached to the Motion was an Affirmation in Support stating
the facts in support of the claims in the underlying
complaint. See Id. ¶ 6. On January 30, 2019,
Ningbo Yang submitted a Memorandum of Law in Support of
Default Judgment. See Dkt. No. 13. On May 1, 2019,
in response to orders issued by this Court, Ningbo Yang
submitted evidence that its counsel had attempted to serve
its Motion for Default Judgment on Sault Trading at its last
known address in compliance with Local Rule 55.2(c).
See Dkt. Nos. 14-15.
Subject Matter Jurisdiction
reaching the merits, this Court must first examine the
asserted basis for jurisdiction. Federal courts have limited
jurisdiction to hear disputes under the Constitution or as
authorized by Congress. Cty. of Nassau, N.Y. v.
Hotels.com, LP, 577 F.3d 89, 91 (2d Cir. 2009). Thus, a
claim that does not state a basis for the court's subject
matter jurisdiction must be dismissed, see Jenkins v.
Murphy, 356 Fed.Appx. 500 (2d Cir. 2009), even if a
party has not raised the issue before the court. See
Durant, Nichols, Houston, Hodgson & Cortese-Costa P.C. v.
Dupont, 565 F.3d 56, 62 (2d Cir. 2009).
Court is authorized to hear the present dispute arising
between a U.S. Corporation and a Chinese company because it
“arises under” federal law. See 28
U.S.C. § 1331; U.S. Const. art. III. Ningbo Yang asserts
a claim under the United Nations Convention on Contracts for
the International Sale of Goods (“CISG”), an
international treaty. A treaty is a source of federal law
providing a basis for jurisdiction. See Hanwha Corp. v.
Cedar Petrochemicals, Inc., 760 F.Supp.2d 426, 430
(S.D.N.Y. 2011); see also Profi-Parkiet Sp. Zoo v. Seneca
Hardwoods LLC, No. 13-CV-4358 (PKC) (LB), 2014 WL
2169769, at *3 (May 23, 2014), adopted by 2014 WL
2765793 (E.D.N.Y. June 18, 2014). The Convention is a
self-executing multilateral treaty that governs the rights
and obligations of parties who enter into international sales
contracts. See id.; Filanto, S.p.A. v. Chilewich
Int'l Corp., 789 F.Supp. 1229, 1237 (S.D.N.Y. 1992).
“When two foreign nations are signatories to this
Convention . . . the Convention governs contracts for the
sale of goods between parties whose places of business are in
these different nations, absent a choice-of-law provision to
the contrary.” Claudia v. Olivieri Footwear
Ltd., No. 96-CV-8052 (HB) (THK), 1998 WL 164824, at *4
(S.D.N.Y. Apr. 7, 1998) (finding that the CISG applies to a
dispute between companies located in the United States and
Italy); see also Delchi Carrier SpA v. Rotorex
Corp., 71 F.3d 1024, 1027 n.1 (2d Cir. 1995). Here,
there is no evidence that the agreement between the parties
contained a choice-of-law provision, and the United States
and China are both signatories to the CISG; thus, the CISG
applies to the present dispute over an alleged contract for
the sale of goods. See CISG, art. 3 (listing both
the United States and China as signatories); Saint Tropez
Inc. v. Ningbo Maywood Indus. & Trade Co., No.
13-CV-5230 (NRB), 2014 WL 3512807, at *8 (S.D.N.Y. July 16,
2014) (noting both the United States and China are CISG
signatories); Weihai Textile Grp. Imp. & Exp. Co. v.
Level 8 Apparel, LLC, No. 11-CV-4405 (ALC) (FM), 2014 WL
1494327, at *6 (S.D.N.Y. Mar. 28, 2014) (same); see also
Profi-Parkiet Sp. Zoo, 2014 WL 2169769, at *3 (finding
that, even when state contract claims are interposed,
“federal district courts have subject matter
jurisdiction over . . . claims [made under the CISG]”)
Standard of Review
defending party who fails to adequately respond to a
complaint risks default. Courts are directed to engage in a
two-step process for the entry of a judgment against a party
who fails to defend: first, the Clerk of Court enters
default, and second, a judgment is entered on the default.
See City of New York v. Mickalis Pawn Shop, LLC, 645
F.3d 114, 128 (2d Cir. 2011). Rule 55(a) of the Federal Rule
of Civil Procedure sets forth the first step as follows:
When a party against whom a judgment for affirmative relief
is sought has failed to plead or otherwise defend, and that
failure is shown by affidavit or otherwise, the clerk must
enter the party's default.
Fed. R. Civ. P. 55(a). While a “typical” default
is entered “because a defendant failed to file a timely
answer[, ] . . . a district court is also empowered to enter
a default against a defendant that has failed to
‘otherwise defend.'” Mickalis Pawn
Shop, 645 F.3d at 129 (citing Fed.R.Civ.P. 55(a)) (other
citation and bracket omitted).
second step is the entry of default judgment. In this step,
the court “converts the defendant's admission of
liability into a final judgment that terminates the
litigation and awards the plaintiff any relief to which the
court decides it is entitled . . . .” Id. at
128. Following the clerk's entry of default, a court
considers as true all factual allegations in the complaint
relating to liability. See Cement & Concrete Workers
Dist. Council Welfare Fund v. Metro Found. Contractors
Inc., 699 F.3d 230, 234 (2d Cir. 2012). But the court
still must determine whether the factual allegations, taken
as true, establish the defendant's liability as a matter
of law. See Finkel v. Romanowicz, 577 F.3d 79, 84
(2d Cir. 2009) (following entry of default, the court is
“required to determine whether the [plaintiff's]
allegations establish [defendant's] liability as a matter
of law”). “[B]ecause defaults are generally