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US Foods, Inc. v. EBA Trust, Inc.

United States District Court, D. New Hampshire

July 18, 2018

US Foods, Inc.
v.
EBA Trust, Inc. D/B/A Everything But Anchovies and Maureen D. Bogosian

          REPORT AND RECOMMENDATION

          Andrea K. Johnstone United States Magistrate Judge

         US Foods, Inc. (“US Foods”) brought suit against EBA Trust, Inc. d/b/a Everything But Anchovies (“EBA”) and Maureen Bogosian seeking to recover money for goods and services it provided to EBA under the terms of an agreement. On September 6, 2017, the Clerk of Court entered default against the defendants. Before the court for a Report and Recommendation is U.S. Foods' motion for default judgment pursuant to Federal Rule of Civil Procedure 55(b)(2).[1] For the reasons that follow, the court recommends that the district judge grant the motion in part and deny it in part.

         Standard of Review

         After default is entered and when the amount at issue is not a sum certain, “the party must apply to the court for a default judgment.” Fed.R.Civ.P. 55(b)(2); see also KPS & Assocs., Inc. v. Designs by FMC, Inc., 318 F.3d 1, 19 (1st Cir. 2003). Before entering a default judgment, the court “may examine a plaintiff's complaint, taking all well-pleaded factual allegations as true, to determine whether it alleges a cause of action.” Ramos-Falcon v. Autoridad de Energia Electrica, 301 F.3d 1, 2 (1st Cir. 2002) (quoting Guirindongo Pacheco v. Rolon Morales, 953 F.2d 15, 16 (1st Cir. 1992)). The defaulted party is “taken to have conceded the truth of the factual allegations in the complaint . . . .” Ortiz-Gonzalez v. Fonovisa, 227 F.3d 59, 62-63 (1st Cir. 2002) (internal quotation marks and citation omitted). The defaulted party does not, however, “admit the legal sufficiency of those claims.” 10 James Wm. Moore, Moore's Federal Practice § 55.32[1][b] (3d ed. 2013). Therefore, before entering default judgment, the court must determine whether the admitted facts state actionable claims. See Hop Hing Produces Inc. v. X & L Supermarket, Inc., No. 12-cv-1401-AFF-MDG, 2013 WL 1232919, at *2 (E.D.N.Y. Mar. 4, 2013); E. Armata, Inc. v. 27 Farmers Market, Inc., No. 08-cv-5212-KSH, 2009 WL 2386074, at *2 (D.N.J. July 31, 2009).

         Background

         By virtue of its default, the defendants concede the following facts alleged in the complaint: U.S. Foods, a Delaware Corporation with its principal place of business in Illinois, is a food service distributor to various restaurants, healthcare and hospitality facilities, government operations, and educational institutions. On or about July 19, 2012, U.S. Foods entered into a Customer Account Application and Agreement (the “Credit Agreement”) with EBA, a limited liability company from New Hampshire, to supply it with various food-related products and services in return for payment for such products and services.[2] In addition, Maureen Bogosian, a Vermont resident, signed the Credit Agreement as guarantor of EBA's obligations under the Agreement. See doc. no. 1-1 at 3.

         Pursuant to the Credit Agreement, U.S. Foods provided goods and services to EBA. Despite invoicing EBA for its goods and services, U.S. Foods did not receive payment. When EBA failed to pay, Bogosian, as guarantor, was required to satisfy EBA's debt. She failed to do so.

         Discussion

         US Foods brings four claims against EBA and one claim against Bogosian: (1) Breach of contract against EBA (Count I); (2) Breach of contract against Bogosian (Count II); (3) “Statement on Account” against EBA (Count III); (4) ”Goods Sold” against EBA (Count IV); and (5) Unjust Enrichment against EBA (Count V).[3] U.S. Foods seeks $137, 604.32 in damages for the outstanding amount owed to it by the defendants under the Credit Agreement, plus an additional award of $12, 384.39 in interest, which it asserts represents a rate of 1.5% per month from May 2017 through October 30, 2017, the date U.S. Foods filed its motion for default judgment. U.S. Foods also seeks an award of $11, 291.14 in attorneys' fees and costs, as well as interest from October 31, 2017 until the date it collects on the amount the defendants owe.

         I. Breach of Contract against EBA (Count 1)

         Under Delaware law, [4] the elements of a claim for breach of contract are: (1) the existence of a contract between the parties, whether express or implied; (2) a breach of an obligation imposed by the contract; and (3) resulting damage to the plaintiff. Micro Focus (US), Inc. v. Ins. Serv. Office, Inc., 125 F.Supp.3d 497, 500 (D. Del. 2015). Upon review of U.S. Foods' complaint and the incorporated Credit Agreement, the court concludes that U.S. Foods has adequately alleged each of these elements in the present case.

         (1) Valid Contract

         Under Delaware law, a valid and enforceable contract requires: “(1) the intent of the parties to be bound; (2) sufficiently definite terms; and (3) consideration.” Kyle v. Apollomax, LLC, No. 12-152-RGA, 2013 WL 5954782, at *2 (D. Del. Nov. 1, 2013) (citing Otto v. Gore, 45 A.3d 120, 138 (Del. 2012)). U.S. Foods has adequately pled the existence of a binding contract between itself and EBA. In its complaint, U.S. Foods alleges that the Credit Agreement between itself and EBA constitutes a valid and binding contract. Pursuant to the language of the Credit Agreement, U.S. Foods agreed to supply various food and food-related products and services to EBA. In return, EBA agreed to be bound by the terms of the Credit Agreement and pay all charges invoiced for such goods and services. The Credit Agreement was signed and executed by EBA on July 19, 2012. Based on the record before the court, the Credit Agreement became a valid and binding contract at that time. Thus, the district judge should find that the first element of a breach of contract claim is satisfied as to EBA.

         (2) Breach

         US Foods has also adequately pled that EBA breached the Credit Agreement. As mentioned above, EBA agreed to be bound by the terms of the Credit Agreement and pay all charges set forth in each invoice. U.S. Foods asserts that it supplied goods and services to EBA and rendered invoices to EBA for the delivery of said goods and services. EBA failed to pay U.S. Foods the outstanding balance owed on such invoices. When accepting these allegations as true, U.S. Foods has pled sufficient facts to establish that EBA committed ...


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