Opinion
21-CV-5264 (PAE) (RWL)
12-05-2022
BEATICE BAMISHILE-RICHARDS and OLUWAFISAYO MESHIOYE, Plaintiffs, v. OLUBUNMI ADEOLA AKINTOYE, OLURANTI D. AKINTOYE, BUMAK AFRICAN STORES, AND DAMILOLA AKINTOYE, Defendants.
REPORT AND RECOMMENDATION TO HON. PAUL A. ENGELMAYER: DAMAGES INQUEST
ROBERT W. LEHRBURGER, UNITED STATES MAGISTRATE JUDGE.
This is a breach of contract case in which Plaintiffs Beatrice Bamishile-Richards and Oluwafisayo Meshioye (collectively, “Plaintiffs”) seek recovery of amounts due pursuant to three export loan agreements. By orders dated March 31, 2022, the Honorable Paul A. Engelmayer, U.S.D.J., granted default judgment against Defendants and referred this matter to me to conduct an inquest on damages. For the reasons set forth below, I recommend that the Court award Plaintiffs $1,494,063.56 in damages along with pre-judgment interest and post-judgment interest against Defendant Alubunmi Adeola Akintoye.
The facts are drawn from the Complaint (Dkt. 9) (“Compl.”); the Declaration of Beatrice Bamishile-Richards dated May 31, 2022 (Dkt. 67) (“Bamishile-Richards Decl.”); the Declaration of Oluwafisayo Meshioye dated May 31, 2022 (Dkt. 67-1) (“Meshioye Decl.”); and the Declaration of Oyeyemi Oke dated May 31, 2022 (Dkt. 67-2) (“Oke Decl.”); and their accompanying exhibits. Citations that appear after multiple sentences refer to each of those sentences. The three Declarations initially were filed without original signatures. Plaintiffs subsequently filed signed versions on November 28, 2022 (Dkts. 86, 86-1, and 86-2).
A. The Parties
Plaintiffs are citizens and residents of Nigeria. (Compl. ¶¶ 2-3.) Defendant Bumak African Stores (“African Stores”) is a business located at 455 Jackson Avenue in Bronx, New York. Neither the Complaint nor any evidence before the Court indicates that African Stores is a distinct corporate entity; to the contrary, it is alleged to be “an unregistered tradename or DBA”. (Compl. ¶ 5.) Defendant Olubunmi Adeola Akintoye (“Bunmi”) is a U.S. citizen residing or doing business from the African Stores location.(Compl. ¶ 4.) Defendant Oluranti D. Akintoye (“Oluranti”) is related to Bunmi (Compl. ¶ 6); the Complaint provides no information as to Oluranti's citizenship or residence; however, at the inquest hearing, Plaintiffs clarified that Oluranti and Defendant Damilola Akintoye (“Damilola”) are the same person, and the Complaint asserts that Damilola is a U.S. citizen residing in Maryland. (Compl. ¶ 8.) Similarly, former Defendant George K. Williams (“George”) was designated as a U.S. citizen residing in Maryland. (Compl. ¶ 7.) At the time the agreements at issue were entered into, Bunmi was also a resident of Maryland. (Compl. ¶ 12.)
Because of the shared common last name among three of the named Defendants, the Court adopts the Plaintiffs' naming convention for identifying the Defendants.
B. The Agreements
In 2018, Plaintiffs entered into a series of investment agreements with Defendant Bunmi by which Plaintiffs loaned Bunmi money to purchase goods in Nigeria for resale in the United States through Bunmi's business, Defendant African Stores (the “Agreements”). In return for the loans, Bunmi agreed to repay the loans, together with a specified return-on-investment, essentially guaranteeing Plaintiffs a portion of Bunmi's expected profits. (Compl. ¶¶ 12, 18; Bamishile-Richards Decl. ¶¶ 3-5 and Ex. A (Dkt. 673) §§ 2.1-2.3.) Bunmi's promise to pay was to be secured by assignment of interest in bank accounts owned and maintained by Bunmi. (Compl. ¶ 13; Bamishile-Richards Decl. Ex. A § 3.1, Ex. B (Dkt. 67-4) § 2.1.) The agreements were executed on July 30, 2018, August 7, 2018, and August 23, 2018, and promised payment in full by September 30, 2018, October 7, 2018, and October 23, 2018, respectively. (Compl. ¶¶ 14-16.)
C. Defendants Failure To Pay
Plaintiffs performed under the Agreements, loaning the prescribed amounts to Bunmi. (See Compl. ¶¶ 14-16 (“whereby the Plaintiffs ... advanced to Defendant Bunmi”); ¶ 19 (“Bunmi used the purchase money loans”).) Bunmi, however, did not cooperate to perfect the assignments. (Compl. ¶ 13.) Nor did Bunmi pay all money due under the Agreements. In response to Plaintiffs' demands for payment, Bunmi produced forged letters from banks purporting to have blocked accounts holding Plaintiffs' money, and falsely represented that the Internal Revenue Service was investigating potential tax liabilities. (Compl. ¶¶ 20-24.)
On December 20, 2020, Plaintiffs, through Nigerian counsel, sent Bunmi an email (to bumakfoods.ny@gmail.com) stating that a total of $1,494,063.56 remained due and owing to Plaintiffs under the Agreements and demanding payment no later than January 19, 2021. (Oke Decl. ¶ 1 and Ex. F at Dkt. 67-8.) That amount is comprised of $937,870.32 in principal and $556,193.34 in rate of return. (Compl. ¶¶ 29-30.) By email dated the same day, Bunmi responded to and acknowledged receipt of the December 20, 2020 statement of amounts due and owning and did not dispute the amount. (Oke Decl. ¶ 1 and Ex. F at Dkt. 67-8.) The amount due, however, remains unpaid.
The Complaint alleges, on information and belief, that Defendants George and Damilola assisted Bunmi with secreting his assets to avoid collection on a money judgment. (Compl. ¶¶ 27-28.) The Complaint asserts no allegations as to Oluranti.
D. The Other Federal Action Against Defendants
The instant action is not the only one filed against Bunmi and the other Defendants for failure to pay contractual amounts due. Several months after the Complaint in this case was filed, another plaintiff filed a similar action naming the same Defendants for similar misconduct. Adewale v. Olubunmi Adola Akintoye, et al., No. 21-CV-9485. The Defendants defaulted in that action as well, and the Court received a similar email to that received in this action from purported Nigerian counsel professing Defendants' interest in defending their case. (Adewale Dkt. 54 at 4-5.) As here, nobody appeared for Defendants at any subsequent point. (Id. at 15-16.) On August 16, 2022, the Court in that case granted default judgment against Bumni for breach of contract in the amount of $4,146,782.05, plus pre- and post-judgment interest. (Adewale Dkt. 52.)
JURISDICITON AND PROCEDURAL HISTORY
The Court has subject matter jurisdiction because there is complete diversity of citizenship between the parties and the amount in controversy exceeds $75,000 (exclusive of interest and costs). (Compl. ¶¶ 2-9); see 28 U.S.C. § 1332. The Court has personal jurisdiction over at least Defendant Bunmi by virtue of his agreement that any dispute concerning the Agreements are to be resolved by New York courts. (Bamishile-Richards Decl. Ex. A § 14.) The Court need not assess personal jurisdiction with respect to the other Defendants because, as explained below, Bunmi is the only liable Defendant.
Plaintiff commenced this action on June 14, 2021. The Complaint asserted seven causes of action, including conversion, aiding and abetting conversion, conspiracy to commit conversion, breach of contract, unjust enrichment, constructive trust, and fraud. (Compl. ¶¶ 31-62.) On July 13, 2021, Plaintiffs served the Complaint and summons on Defendants Bunmi and Oluranti. (Dkts. 21-22.) Those two Defendants initially did not answer, and Plaintiffs filed for default judgment against them on September 30, 2021. (Dkt. 29-30.) On October 21, 2021, however, counsel appeared on behalf of all Defendants except George (Dkt. 33), and on November 30, 2021, those Defendants filed an Answer. (Dkt. 35.) On December 1, 2021, the Court dismissed Defendant George at Plaintiffs' request because Plaintiffs lacked sufficient information to locate and serve him with the Complaint and summons. (See Dkts. 32-1, 36.)
The Court entered a scheduling order on January 14, 2022. (Dkt. 40.) On March 11, 2022, Defendants' attorney filed a letter seeking to withdraw as counsel because of his clients' failure to communicate and to respond to counsel's varied attempts to obtain their cooperation. (Dkt. 45.) On March 14, 2022, the Court ordered defense counsel to submit a declaration explaining whether he had informed his clients of the consequences of failing to participate in the litigation. (Dkt. 46.) Defense counsel did so the following day, confirming that he had on several occasions informed his clients of the consequences of failing to comply with discovery or otherwise participate in the litigation. (Dkt. 47.)
On March 18, 2022, the Court entered an order by memo endorsement directing defense counsel to file a letter stating that defendants had either met or failed to meet all then-existing discovery deadlines. The order further stated that “[i]f, by March 31, 2022, defendants have failed to do so, the Court will grant [defense counsel]'s request to withdraw and hold defendants in default.” (Dkt. 48.) Defense counsel filed proofs of service of the Court's order on Defendants Bunmi, Oluranti, and Damilola. (Dkt. 49-51.)
On March 30, 2022, defense counsel filed a letter stating that none of the existing discovery deadlines had been met by Defendants despite several additional attempts to obtain their cooperation. (Dkt. 52.) On March 31, 2022, the Court granted defense counsel's request to withdraw, held Defendants in default, and referred the matter to me for an inquest on damages. (Dkt. 53-54.)
The following day, the Court issued an order requiring Plaintiffs to submit Proposed Findings of Fact and Conclusions of Law by April 29, 2022 and requiring any answering papers from Defendants to be filed by May 27, 2022. (Dkt. 55.) Plaintiff mailed a copy of the order to all remaining Defendants. (Dkt. 59.) On May 18, 2022, the Court issued an order extending the time for Plaintiffs' inquest submission to May 27, 2022 and the time for Defendants to respond to June 14, 2022. The Court directed Plaintiffs to serve Defendants with a copy of the order. (Dkt. 63.) Plaintiffs subsequently requested an additional short extension for their submissions to June 6, 2022, and the Defendants' response, if any, to June 20, 2022, which the Court granted. (Dkt. 65.) The Clerk of Court was directed to and did mail copies of the order to the Defendants. (ECF entry June 1, 2022.) The mailings to Defendants Bunmi and African Stores were returned to sender. (ECF entries June 8, 2022.)
Plaintiffs filed their Proposed Findings of Fact and Conclusions of Law on May 31, 2022, along with declarations from Plaintiffs and other supporting exhibits. (Dkt. 66-68.) The Proposed Findings and Conclusions seek entry of default judgment against only two Defendants: Bunmi and Oluranti. Following multiple orders from the Court, Plaintiffs belatedly served those documents on Defendants on July 29, 2022. (Dkts. 70-72.)
At the inquest hearing held on November 22, 2022, Plaintiffs' counsel confirmed that default judgment is sought against only Defendants Bunmi and Oluranti.
In the interim, on June 17, 2022, the Court received an email purporting to be from Olalekan Abiodun, “a qualified solicitor and counselor in the supreme court of Nigeria” (the “Nigerian Email”). Mr. Abiodun indicated that he represented the Defendants in Nigeria and asserted that Plaintiffs had initiated legal proceedings against Defendants in Nigeria. The email further asserted that “Defendants are desirous of defending the suit against the plaintiffs,” that Defendants had refunded the borrowed money, along with interest, to Plaintiffs, that the transactions were executed in Nigeria, and that the dispute “should be subject primarily to the Nigerian Judicial System.” The email acknowledged that Defendants' “absence” from the instant action and that Plaintiffs “may obtain the Default Judgment in the absence of the Defendant.” (Dkt. 69.)
On June 22, 2022, the Court entered the Nigerian Email on the docket and ordered Plaintiffs to file a response by June 27, 2022. (Dkt. 69.) Plaintiffs' counsel failed to do so, prompting the Court to enter another order directing Plaintiffs to file a responding letter by August 15, 2022. (Dkt. 73.) On August 12, 2022, Plaintiffs filed the requisite letter. In their letter, Plaintiffs noted that the author of the email was neither an attorney licensed to practice law in this District, nor admitted pro hac vice. Plaintiffs also asserted that they learned from publications that Nigerian officials have arrested and indicted Defendant Bunmi on charges of fraud. (Dkt. 74.)
Having received the Nigerian Email, the Court entered an order on September 30, 2022, scheduling a hearing on damages for October 18, 2022. The order required that “[t]he parties, including Defendants, must appear in person or by counsel admitted to practice in this Court or admitted pro hac vice,” stated that “corporate defendants may not represent themselves and can only appear by counsel,” and warned that “[a]bsent appearance by Defendants at the hearing, the Court will proceed to resolve the inquest on the existing record.” The order directed Plaintiffs to serve a copy of the order on Defendants as well as by email to the author of the Nigerian Email. (Dkt. 75.) On October 18, 2022, Plaintiffs' counsel appeared for the inquest hearing; no one appeared on behalf of any of the Defendants.
On October 27, 2022, the Court determined that Plaintiffs had not filed any proof of service of the September 30, 2022 order and issued an order directing Plaintiffs to address the matter. (Dkt. 79.) In response, Plaintiffs' counsel filed a letter representing that they had failed to serve the September 30, 2022 order as directed by the Court. (Dkt. 80.) In light of Plaintiff counsel's neglect, the Court issued an order on October 28, 2022 similar to the order it issued on September 30, 2022. The order newly scheduled an inquest hearing for November 22, 2022; required that “[t]he parties, including Defendants, must appear in person or by counsel admitted to practice in this Court or admitted pro hac vice”; stated that “corporate defendants may not represent themselves and can only appear by counsel”; and warned that “[a]bsent appearance by Defendants at the hearing, the Court will proceed to resolve the inquest on the existing record.” (Dkt. 81.) Plaintiffs filed the requisite proof of service on October 31, 2022. (Dkt. 82.)
As can be gleaned from the procedural background, Plaintiffs' counsel failed to abide by court orders at least four times - twice in regard to serving and filing proof of service, and twice in regard to responding to the Nigerian Email. The Court does not attribute any intent to Plaintiff counsel's failures. However, there can be no excuse for such repeated neglect, which violates rules governing attorney conduct and wastes judicial resources by requiring the Court to issue duplicative orders and hold duplicative hearings. Plaintiffs' counsel's firm would do well to review and improve its calendaring practices.
The Court held the inquest hearing on November 22, 2022. Plaintiffs' counsel appeared by telephone. No one appeared on behalf of Defendants.
LEGAL STANDARDS
When a defendant defaults, all well-plead facts alleged in the complaint, except those relating to the amount of damages, must be accepted as true. City of New York v. Mickalis Pawn Shop, LLC, 645 F.3d 114, 137 (2d Cir. 2011) (“It is an ancient common law axiom that a defendant who defaults thereby admits all well-pleaded factual allegations contained in the complaint”) (internal quotations marks omitted); Finkel v. Romanowicz, 577 F.3d 79, 84 (2d Cir. 2009) (trial court is “required to accept all of [the plaintiff's] factual allegations as true and draw all reasonable inferences in its favor”). “This principle applies regardless of whether default is entered as a discovery sanction or for failure to defend.” Walpert v. Jaffrey, 127 F.Supp.3d 105, 129 (S.D.N.Y. 2015). The court may also rely on factual allegations pertaining to liability contained in affidavits and declarations submitted by the plaintiff. See, e.g., Tamarin v. Adam Caterers, Inc., 13 F.3d 51, 54 (2d Cir. 1993); Fustok v. ContiCommodity Services, Inc., 873 F.2d 38, 40 (2d Cir. 1989). Nonetheless, the court “must still satisfy itself that the plaintiff has established a sound legal basis upon which liability may be imposed.” Shld, LLC v. Hall, No. 15-CV-6225, 2017 WL 1428864, at *3 (S.D.N.Y. April 20, 2017) (internal quotation marks omitted); see also Finkel, 577 F.3d at 84.
Once liability has been established, a plaintiff must provide admissible evidence establishing the amount of damages with reasonable certainty. Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., Division of Ace Young Inc., 109 F.3d 105, 111 (2d Cir. 1997) (District Court “could not just accept [Plaintiff's] statement of damages” at “face value” without satisfying “the court's obligation to ensure that the damages were appropriate”); see also Lenard v. Design Studio, 889 F.Supp.2d 518, 527 (S.D.N.Y. 2012) (in an inquest following a default, “[a] plaintiff must ... substantiate a claim with evidence to prove the extent of damages”).
To assess whether the plaintiff has established a sufficient basis for damages, a court has the discretion, but is not required, to hold a hearing. See Fed.R.Civ.P. 55(b)(2); Fustok 873 F.2d at 40. An inquest into damages may be conducted on the papers, without an evidentiary hearing, where there is a sufficient basis on which to make a calculation. See Bricklayers & Allied Craftworkers Local 2, Albany, New York Pension Fund v. Moulton Masonry & Construction, LLC, 779 F.3d 182, 189 (2d Cir. 2015); Tamarin 13 F.3d at 53-54; Maldonado v. La Nueva Rampa, Inc., No. 10-CV-8195, 2012 WL 1669341, at *2 (S.D.N.Y. May 14, 2012). There is sufficient basis to do so here; no party has requested an evidentiary hearing; and the Court has determined that none is needed in addition to the non-evidentiary hearing already held.
LIABILITY
The Complaint asserts seven causes of action. Plaintiffs, however, seek default judgment based solely on one claim not alleged in the Complaint: account stated. (Dkt. 66 at 2-3.) Although the Complaint does not plead an account stated claim, the facts establish such a claim. In any event, accepting the well-pled allegations of the Complaint as true, Plaintiff has established liability for breach of contract. Under either theory, however, the only liable Defendant is Bunmi.
Generally, a plaintiff may not maintain claims for both breach of contract and account stated where the damages sought for both claims are duplicative, as they are here. See, e.g., Arch Specialty Insurance Co. v. TDL Restoration, Inc., No. 18-CV-6712, 2021 WL 1225447, at *10 (S.D.N.Y. March 31, 2021) (“It is well-established ... that an account stated claim may not be utilized simply as another means to attempt to collect under a disputed contract”) (collecting cases). Here, the Court merely finds that liability has been established under either theory. See Wachtel & Masyr LLP v. Brand Progression LLC, No. 11-CV-7398, 2012 WL 523621, at *1 (S.D.N.Y. Feb. 15, 2012) (finding that a “common sense reading” of the complaint suggested claims of breach of contract, account stated, and quantum meruit were pleaded in the alternative, and holding that defendant cannot be liable on both account stated and breach of contract in connection with the same allegations of failure to pay moneys owed).
A. Breach of Contract
To prevail on a breach of contract claim under New York law (made applicable by the Agreements), a plaintiff must establish four elements: (1) the existence of a contract; (2) the plaintiff's performance of that contract; (3) the defendant's breach of that contract; and (4) that the plaintiff suffered damages as a result of the breach. Terwilliger v. Terwilliger, 206 F.3d 240, 246 (2d Cir. 2000). All four elements are readily met here. Plaintiffs entered into the Agreements with Defendant Bunmi. Plaintiffs performed by loaning the requisite funds to Bunmi. Bunmi did not fully pay Plaintiffs the amounts due under the Agreements, including principal and the prescribed return on investment. As a result, Plaintiffs incurred monetary losses. Plaintiff's well-pled allegations and supporting declarations thus establish liability for breach of contract. The only Defendant liable for breach of contract, however, is Bunmi. Bunmi is the only Defendant who signed the Agreements and is the only party that the Agreements purport to bind. Plaintiffs recognize as much, as Bunmi is the only Defendant they name in connection with the breach of contract claim. (See Compl. ¶ 45 (“Defendant Bunmi's inactions and non-performance ... constituted a material breach of [the Agreements]”).)
The only specific allegation in the Complaint and in Plaintiffs' declarations referencing conduct by Oluranti (a.k.a. Damilola) is that Oluranti has been assisting Defendant Bunmi with opening up bank accounts “in order to frustrate the Plaintiffs' attempts to freeze the assets and enforce any money judgment that may be awarded at the conclusion of any litigation.” (Compl. ¶ 27.) Even accepted as true, that conduct does not establish Oluranti's liability for breach of contract with respect to the Agreements.
B. Account Stated
As noted, the Complaint does not assert a claim for account stated. The undisputed evidence before the Court, however, establishes an account stated claim, and the Complaint may be deemed to be amended as conformed to the facts as they are. See Clomon v. Jackson, 988 F.2d 1314, 1323 (2d Cir.1993) (“the undisputed facts as presented on the summary judgment motion served as a basis to deem the complaint amended to conform with the proof pursuant to Fed.R.Civ.P. 15(b)”); Regent Insurance Co. v. Storm King Contracting, Inc., No. 06-CV-2879, 2008 WL 563465, at *13-14 (S.D.N.Y. Feb. 27, 2008) (amending plaintiff's claims at summary judgment to conform pleadings to additional evidence revealed through discovery).
Under New York law, a claim for account stated “requires an agreement between the parties to an account based upon prior transactions between them.” LeBoeuf, Lamb, Greene & MacRae, L.L.P. v. Worsham, 185 F.3d 61, 64 (2d Cir. 1999) (internal quotation marks and citation omitted); accord Manhattan Motorcars, Inc. v. Automobili Lamborghini, S.p.A., 244 F.R.D. 204, 216 (S.D.N.Y. 2007). To prevail on a claim for account stated, a plaintiff must establish the following elements: “(1) an account was presented; (2) it was accepted as correct; and (3) [the] debtor promised to pay the amount stated.. The second and third requirements ... may be implied if a party receiving a statement of account keeps it without objecting to it within a reasonable time or if the debtor makes partial payment.” Yiwu Lizhisha Accessories Co., Ltd. v. Jjamz, Inc., 336 F.Supp.3d 179, 183 (S.D.N.Y. 2018) (internal quotation marks and citations omitted); accord LeBoeuf, Lamb, Greene & MacRae, L.L.P., 185 F.3d at 64; IMG Fragrance Brands, LLC v. Houbigant, Inc., 679 F.Supp.2d 395, 411 (S.D.N.Y. 2009).
Here, Plaintiffs engaged in business transactions with Defendant Bunmi, having provided him with funds for financing exports in exchange for repayment of those funds plus a prescribed return on investment. Not having been paid, Plaintiffs presented Bunmi with a statement of account due for $1,494,063.56 on December 20, 2020. Bunmi acknowledged receipt of the statement but did not dispute it at any time until November 30, 2021, when Defendants filed an answer to the Complaint. A period of eleven months is more than reasonable, in the circumstances of this case, from which to imply Bunmi's acceptance of the account stated. See, e.g., First Bank & Trust v. Coventina Construction Corp., No. 18-CV-6648, 2019 WL 4120363, at *5 (E.D.N.Y. July 23, 2019) (10-month period), R&R adopted, 2019 WL 4089393 (E.D.N.Y. Aug. 26, 2019); Jim-Mar Corp. v. Aquatic Construction Ltd., 195 A.D.2d 868, 871, 600 N.Y.S.2d 790, 792 (3d Dep't 1993) (five-month period).
As with the breach of contract claim, the only Defendant liable for account stated is Bunmi. The transactions at issue were between Plaintiffs and Bunmi, and the email containing the account stated was directed solely to Bunmi. (See Bamishile-Richards Decl. Ex. F (addressed solely to “Ms. Akintoye” and referring only to “you” in connection with the Agreements and amount owed).) There is no basis to find liability on account stated as to any other Defendant.
DAMAGES
With Defendant Bunmi's liability having been established, the Court turns to evaluating damages and other relief. Plaintiffs seek damages in the amount of $1,494,063.56.
Plaintiffs acknowledge they are not entitled to attorney's fees. (Dkt. 66 at 3.)
In this case, the damages due Plaintiffs for breach of contract and account stated is the same. For the account stated, the amount due is simply that - the unpaid account stated, which Plaintiffs have established as a sum certain of $1,494,063.56. See Coventina Construction Corp., 2019 WL 4120363, at *7 (awarding damages for account stated in total amount of unpaid invoices); Abbas Corp. (PVT) Ltd. v. Michael Aziz Oriental Rugs, Inc., 820 F.Supp.2d 549, 553 (S.D.N.Y. 2011) (same); Lavely v. Redheads, Inc., No. 03-CV-7752, 2007 WL 5267679, at *5 (S.D.N.Y. Oct. 12, 2007) (R&R) (awarding $265,000 on account stated claim where plaintiff submitted amount certain that was unpaid but not awarding amounts that plaintiff failed to sufficiently establish as due and owing).
As for the contract claim, it is a “fundamental principle that damages for breach of contract should put the plaintiff in the same economic position he would have been in had the defendant fulfilled the contract.” Lucente v. International Business Machines Corp., 310 F.3d 243, 262 (2d Cir. 2002) (citing Indu Craft, Inc. v. Bank of Baroda, 47 F.3d 490, 495 (2d Cir. 1995)). As the Second Circuit has explained, “a plaintiff may seek two distinct categories of damages” in a breach of contract case, (1) “general or market damages; and (2) special or consequential damages.” Schonfeld v. Hilliard, 218 F.3d 164, 175 (2d Cir. 2000) (internal quotation marks omitted). “A plaintiff is seeking general damages when he tries to recover the value of the very performance promised[,]” whereas consequential damages “compensate a plaintiff for additional losses (other than the value of the promised performance) that are incurred as a result of the defendant's breach.” Id. at 175-76 (internal citations and quotations omitted).
Once the fact of damages is established, a plaintiff is entitled to the general damages that are the natural and probable consequence of the breach. Kenford Co., Inc. v. County of Erie, 73 N.Y.2d 312, 319, 540 N.Y.S.2d 1, 3 (N.Y. 1989). To collect consequential damages, however, a plaintiff must demonstrate that the parties contemplated those special damages as the probable result of the breach at the time of or prior to contracting. Id., 73 N.Y.2d. at 319, 540 N.Y.S.2d at 3-4. Further, “[i]t is settled Second Circuit law that in a breach of contract case, damages are calculated at the time of the breach.” Boyce v. Soundview Technology Group, Inc., 464 F.3d 376, 384 (2d Cir. 2006).
Plaintiffs' damages are readily calculated. Plaintiff seeks to recover damages based on the unpaid amounts due and owing under the Three Agreements, which amounts total $1,494,063.56. Those are general damages to which Plaintiffs are entitled, as they represent the very performance due from Bunmi.
PRE- AND POST-JUDGMENT INTEREST
Plaintiffs request, and should be awarded, both pre- and post-judgment interest. In a diversity case such as here, state law governs the award of prejudgment interest. Schipani v. McLeod, 541 F.3d 158, 164-65 (2d Cir. 2008). The Court thus applies New York law, which provides that that pre-judgment interest “shall be recovered upon a sum awarded because of a breach of performance of a contract.” N.Y. C.P.L.R. § 5001(a); see also U.S. Naval Institute v. Charter Communications, Inc., 936 F.2d 692, 698 (2d Cir. 1991) (“a plaintiff who prevails on a claim for breach of contract is entitled to prejudgment interest as a matter of right”). The statutory rate of pre-judgment interest prescribed by New York law is nine percent. N.Y. C.P.L.R. § 5004. As for the timeframe for calculating prejudgment interest, the New York rule directs that “[i]nterest shall be computed from the earliest ascertainable date the cause of action existed[.]” N.Y. C.P.L.R. § 5001(b). Here, the date designated by Plaintiffs is the date of the account stated, December 20, 2020. (Dkt. 66 at 3.) The Court agrees that is an appropriate date to use.
An alternative would be to use for each of the three Agreements the respective date for which payment was due, and apply those dates to the respective amount due under each Agreement. Plaintiffs' proposed date, which correlates with their main theory of liability, is more straight-forward and reasonable.
Whereas pre-judgment interest in a diversity case is governed by state law, postjudgment interest is governed by federal statute. Specifically, 28 U.S.C. § 1961(a) provides that “[i]nterest shall be allowed on any money judgment in a civil case recovered in a district court ... [and] shall be calculated from the date of the entry of the judgment.”
In light of the statute's imperative language, the Second Circuit has “consistently held that an award of post-judgment interest is mandatory.” Schipani, 541 F.3d at 165 (citing Westinghouse Credit Corp. v. D'Urso, 371 F.3d 96, 100 (2d Cir.2004)). Accordingly, postjudgment interest should be awarded in accordance with 28 U.S.C. § 1961.
CONCLUSION
For the foregoing reasons, I recommend that default judgment be entered against Defendant Bunmi awarding Plaintiffs $1,494,063.56, plus pre-judgment interest calculated at the New York C.P.L.R. statutory rate as of December 20, 2020, plus post-judgment interest at the federal statutory rate pursuant to 28 U.S.C. § 1961. Plaintiffs' claims against the remaining Defendants should be dismissed.
SERVICE
Within three days after entry, Plaintiffs shall serve this Report and Recommendation on Defendants through means previously approved by the Court. Within seven days after entry, Plaintiffs shall file proof of service.
OBJECTIONS AND RIGHT TO APPEAL
Pursuant to 28 U.S.C. § 636(b)(1) and Rules 72, 6(a), and 6(d) of the Federal Rules of Civil Procedure, the parties shall have fourteen (14) days to file written objections to this Report and Recommendation. Such objections shall be filed with the Clerk of the Court, with extra copies delivered to the Chambers of the Honorable Paul A. Engelmayer, United States Courthouse, 40 Foley Square, New York, New York 10007, and to the Chambers of the undersigned, United States Courthouse, 500 Pearl Street, New York, New York 10007. Failure to file timely objections will result in a waiver of objections and will preclude appellate review.