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CDS Air Freight, Inc. v. North American Training and Logistics, Inc.

United States District Court, D. New Hampshire

September 10, 2018

CDS Air Freight, Inc.
v.
North American Training and Logistics, Inc. and William E. Gifford

          REPORT AND RECOMMENDATION

          ANDREA K. JOHNSTONE UNITED STATES MAGISTRATE JUDGE

         CDS Air Freight, Inc. (“CDS”) brought suit against North American Training and Logistics, Inc. (“NATL”) and William Gifford seeking to recover money for freight forwarding and shipping services it provided to NATL under the terms of an agreement. On June 18, 2018, the Clerk of Court entered default against the defendants. Before the court for a Report and Recommendation is CDS's 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: CDS, a Virginia corporation with its principal place of business in Virginia, is a global logistics service provider that offers freight forwarding services such as air freight, ocean freight, motor carrier services, customs brokerage and inventory management. On or about March 30, 2010, CDS entered into an Application for Business Credit (the “Credit Agreement”) with NATL, a New Hampshire company, to provide certain freight forwarding and shipping services for the transportation of goods from the United States to foreign countries. In addition, William Gifford, a New Hampshire resident, signed the Credit Agreement on behalf of NATL as its President and CEO.

         Pursuant to the Credit Agreement and the Terms and Conditions set forth therein, CDS provided freight and shipping services to NATL on four occasions between December 2014 and April 2015. CDS invoiced NATL separately for each shipment. Other than a partial payment of the first invoice, NATL has failed to pay the amount due. Under the terms of the Credit Agreement, “each signer hereof by such signature, hereby is personally liable and individually responsible for payment of all amounts due” under the invoices. See doc. no. 1 at 4. Therefore, as a signatory to the agreement, Gifford is personally liable for the amounts due and owing under the Credit Agreement. Gifford has failed to make any payments to CDS.

         Discussion

         CDS brings two claims against NATL and one claim against Gifford: (1) Breach of contract against NATL (Count I); (2) Quantum Meruit against NATL (Count II); and (3) “Personal Guaranty” against Gifford (Count III). CDS seeks $133, 127.95 in damages for the outstanding amount owed to it by the defendants under the four invoices, plus an additional award of $78, 365.32 in interest, which it asserts represents a rate of 1.5% per month as applied to each invoice from December 2014 through June 30, 2018. CDS also seeks an award of $11, 291.14 in attorneys' fees and costs.

         I. Breach of Contract against NATL (Count 1)

         CDS has adequately alleged a breach of contract claim against NATL. CDS alleges in its complaint that it entered into a valid Credit Agreement with NATL, pursuant to which CDS would provide shipping services in exchange for payment from NATL. CDS provided its services pursuant to the Credit Agreement and invoiced NATL for each of its four shipments. Other than a partial payment for the first invoice, NATL has failed to pay the amount due as required by the Credit Agreement. These allegations sufficiently make out a breach of contract claim against NATL, and the court recommends that the district judge grant CDS's motion for default judgment as to Count I.

         II. Quantum Meruit against NATL (Count II)

         In its complaint, CDS alleges that it may recover for shipping and freight forwarding services provided to NATL under a claim of quantum meruit. “A valid claim in quantum meruit requires [that] . . . (1) services were rendered to the defendant by the plaintiff; (2) with the knowledge and consent of the defendant; and (3) under circumstances that make it reasonable for the plaintiff to expect payment.” Gen. Insul. Co. v. Eckman Constr., 159 N.H. 601, 612 (2010). However, quantum meruit is “not available if the parties' relationship is controlled by an express contract.” Androscoggin Valley Reg'l Refuse Disposal Dist. v. R.H. White Constr. Co., Inc., No. 15-cv-434-LM, 2017 WL 1906612, at *4 (D.N.H. May 8, 2017) (citing Turner v. Shared Towers VA, LLC, 167 N.H. 196, 202 (2014)). Here, CDS entered into a Credit Agreement with NATL to provide shipping and freight forwarding services and provided its services pursuant to that agreement. Because a valid contract exists between CDS and NATL and the court recommends granting default judgment as to the breach of contract claim, the court recommends that the district judge deny default judgment as to CDS's claim of quantum meruit in Count II.

         III. Breach of Contract against ...


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