Opinion
2:23-cv-1510
06-17-2024
ANEX WAREHOUSE AND DISTRIBUTION COMPANY, Plaintiff, v. DMG CONSULTING & DEVELOPMENT, INC. d/b/a GOLD COAST LOGISTICS GROUP a/d/b/a GOLD COAST, INC., Defendant.
REPORT AND RECOMMENDATION
PATRICIA L. DODGE United States Magistrate Judge
I. Recommendation
It is respectfully recommended that Plaintiff's Motion for Default Judgment (ECF No. 14) be granted and that judgment be entered in favor of Plaintiff and against Defendant in the amount of $231,210.50.
II. Report
A. Procedural History
Plaintiff Anex Warehouse and Distribution Company (“Anex”) commenced this action in August 2023 by filing a Complaint which asserted claims for breach of contract and unjust enrichment against Defendant DMG Consulting & Development, d/b/a Gold Coast Logistics Group, a/d/b/a Gold Coast, Inc. After Defendant was served but failed to respond or otherwise plead to the Complaint, Anex requested that the Clerk of Court enter a default against it. The Clerk entered default on December 13, 2023 (ECF No. 6).
Anex then filed a Request for Default Judgment (ECF No. 7), which was denied without prejudice on January 24, 2024 (ECF No. 8). In its Order, the Court indicated that Anex could submit a renewed motion that provided all of the necessary evidence to support its claim, or could request an evidentiary hearing for the purpose of submitting such evidence. On April 9, 2024, Anex filed a motion requesting an evidentiary hearing (ECF No. 9). After a continuance requested by Anex was granted, an evidentiary hearing was held on May 17, 2024. Defendant was served but did not appear at the hearing, nor has it appeared in this action. At the May 17, 2024 hearing, Anex provided testimony from Matt Silvester, the CEO and President of Anex, and also introduced multiple exhibits. (Exhibits A through M.)
Anex now renews its motion for default judgment (ECF No. 14).
B. Factual Findings
On or about November 10, 2021, Anex, Dick's Merchandising & Supply Chain, Inc. (“DMSC”) and Defendant entered into a Warehouse Services Agreement (“WSA”) (Exhibit F)for the transfer and storage of DMSC's goods at warehouses operated by Anex.
All exhibits referenced herein were admitted into evidence during the May 17, 2024 hearing.
Under the WSA, Anex would receive containers that largely consisted of sporting goods that had been ordered by DMSC from China and stored them in its warehouse. It would then ship goods to DMSC when requested to do so. Payment for Anex's services flowed through the Defendant, who acted a “middleman” and took a fee or commission from payments by DMSC before it paid Anex.
After issues arose regarding payments to Anex, the parties entered into a Mutual Termination Agreement (“MTA”) (Exhibit G) that was effective April 18, 2023. Pursuant to its terms, the WSA was terminated by mutual agreement as of April 30, 2023. DMSC agreed to pay to Defendant all fees due under the WSA through April 20, 2023, and Defendant agreed to pay all warehouse fees to Anex in accordance with the payment terms in the WSA.
Anex performed its duties under the WSA and submitted multiple invoices to Defendant requesting payment for its services. (Exhibits H, I and J.) Defendant has not complained about the services rendered or disputed any of the invoices issued by Anex. When it was not paid promptly, Anex engaged in various communications with Defendant in an effort to receive payment for its services. At some point, however, Defendant stopped communicating with Anex.
Defendant failed to pay three invoices for services rendered by Anex: (1) a February 28, 2023 invoice in the amount of $82,765.00; (2) a March 31, 2023 invoice in the amount of $75,729.75; and (3) an April 30, 2023 invoice in the amount of $72,715.75. (Exhibit K.) Thus, the total amount of unpaid invoices is $231,210.50.
C. Standard of Review
Federal Rule of Civil Procedure 55 provides for the entry of default when a defendant has “failed to plead or otherwise defend” an action. Fed.R.Civ.P. 55(a). After a default has been entered by the Clerk of Court pursuant to Rule 55(a), a plaintiff may move for a default judgment pursuant to Rule 55(b). “In considering a motion for default judgment, a court must treat the allegations in the complaint as true.” Broadcast Music, Inc. v. George Moore Enterprises, Inc., 184 F.Supp.3d 166, 169 (W.D. Pa. 2016).
The Court need not accept allegations of damages as true. Comdyne I, Inc. v. Corbin, 908 F.2d 1142, 1150-51 (3d Cir. 1990).
Prior to entering a default judgment, the Court must first satisfy itself that it has both subject matter jurisdiction over the action and personal jurisdiction over the defendant. Allaham v. Naddaf, 635 Fed.Appx. 32, 36 (3d Cir. 2015). The court must then determine whether the well-pleaded facts in the complaint state a cause of action against the defendant. Mercedes-Benz Fin. Servs. USA LLC v. Synergistiks, Inc., 2019 WL 481753, at *2 (W.D. Pa. Feb. 7, 2019). After making that determination, the Court then considers three factors to determine whether default judgment is warranted: “(1) prejudice to the plaintiff if default is denied, (2) whether the defendant appears to have a litigable defense, and (3) whether defendant's delay is due to culpable conduct.” Chamberlain v. Giampapa, 210 F.3d 154, 164 (3d Cir. 2000).
D. Discussion
1. Liability
Defendant did not respond or otherwise plead to the Complaint in this action, nor did it appear at the hearing to contest Anex's evidence. Therefore, all of the facts in the Complaint are deemed as admitted and true. Comdyne I, Inc. v. Corbin, supra. As stated in the Complaint, Anex is a Pennsylvania citizen and Defendant is an Illinois citizen and the amount in dispute exceeds $75,000.00. Therefore, the Court has subject matter jurisdiction in this action pursuant to 28 U.S.C. § 1332. Moreover, the Court further finds that personal jurisdiction exists because a substantial part of the events or omissions that gave rise to Anex's claim occurred in Pennsylvania.
Turning next to the merits of Anex's breach of contract claim, the well-pleaded allegations of the Complaint and the evidence presented at the hearing support its claim. Anex has shown that the parties, along with DMSC, entered into a Warehouse Services Agreement for the transfer and storage of DMSC's goods at warehouses operated by Anex. Payment for Anex's services flowed through the Defendant, who acted a “middleman” and received a fee taken from payments by DMSC before paying Anex. Thereafter, the parties entered into a Mutual Termination Agreement in order to terminate the Warehouse Services Agreement. After the MTA was executed, the only surviving term was related to payment of warehouse fees to Anex. Defendant has failed to fulfill its obligations to Anex by remitting the warehouse fees that were due, totaling $231,210.50. Based upon these uncontroverted facts, the Court finds that Defendant breached the MTA by failing to remit all fees due to Anex under the Warehouse Services Agreement through April 18 2023.
With respect to Anex's unjust enrichment claim, it has demonstrated that Defendant received payment from DMSC in full, which represents both Defendant's own fee as well as the fees owed to Anex for the warehouse services it provided. As Defendant has improperly retained a benefit that would be unjust to retain without payment to Anex, the Court finds that in the alternative, if a contract claim was not proven, Defendant has been unjustly enriched and is liable to Anex for the monies improperly withheld.
The Court will next turn to the three factors that must be examined in order to determine whether to grant a default judgment. Chamberlain, 210 F.3d at 164. A review of these factors supports the entry of a default judgment in favor of Anex.
First, Anex will be prejudiced if default is denied. Defendant failed to plead or otherwise respond despite being served with the Complaint, the request for entry of default and the hearing notice, and it failed to attend the hearing.
Second, the well-pleaded claims in the Complaint, as well as the evidence presented at the hearing, suggest that Defendant does not have a litigable defense. Further, Defendant has not appeared in this case in order to assert any defenses to Anex's claims. See Broadcast Music, 184 F.Supp.3d at 170; Innovelis, Inc. v. Auch, 2016 WL 2910076, at *2 (E.D. Pa. May 19, 2016) (“by failing to appear and participate in the litigation Defendants ‘have not asserted any defense to Plaintiffs' claims'”). As previously discussed, the allegations of the Complaint and the evidence adduced at the hearing present viable claims against Defendant, and it has offered no response.
Finally, given that Defendant was served and failed to respond in any manner, it must be concluded that its default is due to its own culpable conduct.
Therefore, the Court concludes that a default judgment as to liability should be entered in this case in favor of Anex. The Court will now turn to the damages claimed by Anex.
2. Damages
Anex claims damages in the sum of $231,210.50 for services rendered. In support of its claim, it submitted three exhibits (H, I and J) that represented a compilation of invoices owed, as well as an accounts receivable report (Exhibit K). These documents fully support Anex's entitlement to damages in the amount of $231,210.50.
III. Conclusion
For the reasons cited above, it is respectfully recommended that Anex's motion for default judgmentss (ECF No. 14) be granted and that judgment be entered in favor of Anex and against Defendant in the amount of $231,210.50.
Litigants who seek to challenge this Report and Recommendation must seek review by the district judge by filing objections by July 1, 2024. Any party opposing the objections shall file a response by July 15, 2024. Failure to file timely objections will waive the right of appeal.