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Foley v. Wilson

United States District Court, S.D. New York

January 2, 2020

BENJAMIN FOLEY, Plaintiff,
v.
PETER WILSON AND KPC, LLC, Defendants.

          MEMORANDUM OPINION & ORDER

          RONNIE ABRAMS, United States District Judge

         Plaintiff Benjamin Foley, a lawyer proceeding pro se, [1] filed this action against Defendants Peter Wilson and KPC, LLC for breach, of contract, unjust enrichment, and fraud under New York state law.[2] Although Defendant Wilson, also proceeding pro se, eventually filed an Answer (over fifteen months after the Complaint was filed), Defendant KPC has not yet appeared in this action, and Defendant Wilson has failed to comply with several Court orders or otherwise indicate that he intends to defend this action since the filing of his Answer. Now before the Court is Plaintiffs motion for default judgment against both Defendants for failure to comply with the Court's orders under Federal Rule of Civil Procedure 37(b)(2)(A), and for failure to defend this action under Federal Rule of Civil Procedure 55(a). For the reasons that follow, Plaintiffs motion is granted in part and denied in part.

         BACKGROUND

         I. Facts[3]

         Plaintiff, a resident of Florida, and Wilson, a resident of California, entered into an agreement in February 2012, whereby Wilson agreed to purchase stock on behalf of Plaintiff from a company named Uniloc. Compl. ¶¶ 3, 5, 7. Since Wilson was a "large shareholder" of Uniloc and "purchasing more shares," he allegedly offered to purchase shares for Plaintiff and to then transfer those shares to him. Id. ¶ 8. According to Plaintiff, prior to their investment agreement, Wilson and Plaintiff met on "at least two occasions" for dinner in Manhattan, New York, and Wilson visited Plaintiffs "place of business" in Manhattan on "at least one occasion." Foley Amended Aff, Dkt. 15 ¶ 5. Plaintiff and Wilson also allegedly "discussed Uniloc and the investment opportunity" on "several occasions" while in New York. Id. Plaintiff asserts that Wilson "traveled from California to New York," where Plaintiff has a business, "to solicit" the funds for his "fraudulent investment scheme." Id.

         Plaintiff also alleges that Wilson's son, Clayton, who was a New York resident and an employee of Plaintiff s business at the time, participated in the agreement and solicitation of funds from Plaintiff by acting as "an agent" for his father. See Id. ¶¶ 4, 6. Plaintiff further asserts that he worked "daily side by side" with Clayton during this time, and that he, Clayton, and Wilson "discussed the potential investment over dinner, on the phone, and via email." Id. ¶ 6.

         Although "many of the details of the agreement were oral," Plaintiff alleges that "key elements" of the agreement, such as the purchase price, were "memorialized in email." Compl. ¶ 9. Specifically, on February 7, 2012, Wilson emailed Plaintiff with the "terms" of the deal, stating "400k @ $40 per share or better....confirmed. Doc tomorrow or the next day." See Id. ¶ 10; Compl. Ex. C. In that same email, Wilson provided Plaintiff with wire instructions, in which he directed Plaintiff to wire the money to a bank account titled "KPC, lie."[4] See Compl. ¶ 11; Compl. Ex. C. Plaintiff alleges that he "promptly accepted said offer" and wired $400, 000 from his New York business account, which was "established in a New York bank," to Wilson's "KPC, LLC" account. Compl. ¶ 12. At the very least, it appears that Plaintiff expected to receive a certain amount of stock in Uniloc in exchange for the $400, 000 that he transferred to Wilson. It is undisputed that Plaintiff never received those or any other shares.

         Plaintiff alleges that in the weeks following the agreement, Wilson "represented" that "Uniloc and Microsoft had entered into a large, confidential settlement." Id. ¶ 15. Wilson subsequently sent Plaintiff a text message on March 6, 2012, stating "U owe me," to which Plaintiff replied "Haaaaa, agreed." See Id. ¶ 15; Compl. Ex. B.

         According to Plaintiff, Wilson also "made assurances" on several occasions that "performance of his obligation [under the agreement] had been perfected and evidence was forthcoming." Id. ¶ 14. Plaintiff asserts, however, that in 2017, Wilson "admitted the shares had not been transferred due to a previously undisclosed shareholder restriction of transfer." Id. ¶ 16.

         Plaintiff alleges that Defendants have failed to deliver the "full purchase price" of the shares to him, "despite years of assurances that said interest would be delivered," id. ¶ 6, and that to date, he has received "no consideration for the $400, 000 wire sent as directed by the contract between" himself and Wilson, id. ¶ 17. In his Answer, Wilson avers that the shares at issue "reside in KPC lie as per the agreement." Answer ¶ 6.

         II. Procedural History

         Plaintiff commenced this action on January 19, 2018, asserting claims for breach of contract, unjust enrichment, and fraud under New York state law, and seeking repayment of the $400, 000 that he wired to Wilson in February 2012, as well as interest at the "statutory rate of 9%" under N.Y. C.P.L.R. § 5001. Dkt 1.

         Defendants were served with a Summons and Complaint on January 23, 2018, according to affidavits of service that Plaintiff filed on January 30, 2018. See Dkts. 5, 6. According to those affidavits, Defendants had been served by "sub-serv[ing] the summons on Pat Palazuelos, owner of The UPS Store at 3334 E. Coast Hwy, Corona del Mar, CA 92925." Dkts. 5, 6. The server told Ms, Palazuelos that she "was serving legal papers on [each Defendant] and she said she would put them in mailbox #412." Id. Thereafter, copies of the documents were apparently mailed "to the same address" for each Defendant. Id. Plaintiff also avers that a "courtesy copy" of the Summons and Complaint was emailed to Wilson on February 5, 2018. See Foley Amended Aff., Dkt. 15, Ex. C.

         On February 27, 2018, Plaintiff filed a "Request for Entry of Default," addressed to the Clerk of Court. Dkt. 7. On May 11, 2018, the Clerk of Court issued Certificates of ...


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