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Sushi Avenue, Inc. v. Philbrick's Fresh Market, LLC

United States District Court, D. New Hampshire

September 17, 2019

Sushi Avenue, Inc.
v.
Philbrick's Fresh Market, LLC

          REPORT AND RECOMMENDATION

          Andrea K. Johnstone United States Magistrate Judge

         The plaintiff, Sushi Avenue, Inc. (“Sushi Avenue”), brought suit against Philbrick's Fresh Market, LLC (“Philbrick's”) alleging claims arising from an unpaid debt. The debt relates to an agreement under which Sushi Avenue operated a sushi kiosk in a Philbrick's grocery store. On August 12, 2019, the Chief Deputy Clerk of Court entered default against Philbrick's for failure to retain new counsel within 21 days of its previous counsel's withdrawal from the case. See doc. no. 12. Before the court for Report and Recommendation is the plaintiff's motion for default judgment (doc. no. 14). See Fed.R.Civ.P. 55(b)(2). For the reasons that follow, the court recommends that the plaintiff's motion be granted in part and denied 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-Falcón v. Autoridad de Energía Electríca, 301 F.3d 1, 2 (1st Cir. 2002) (citing Quirindongo 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, 277 F.3d 59, 62-63 (1st Cir. 2002) (quoting Franco v. Selective Ins. Co., 184 F.3d 4, 9 n.3 (1st Cir. 1999)). 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). In short, “before entering default judgment, the court must determine whether the admitted facts state actionable claims.” United States v. Sullender, No. 16-cv-523-LM, 2018 WL 1368040, at *1 (D.N.H. Mar. 16, 2018).

         Background

         By virtue of its default, Philbrick's concedes the following facts alleged in the plaintiff's complaint. Sushi Avenue, a Minnesota corporation with its principal place of business in Minnesota, operates sushi kiosks out of grocery stores across the United States. See doc. no. 1 ¶¶ 1, 6. On or about August 2, 2017, Sushi Avenue entered into an agreement (the “Agreement”) with Philbrick's to operate a sushi kiosk in its Portsmouth, New Hampshire retail store. See doc. no. 1 ¶ 7; doc. no. 1-1. Under the Agreement, Sushi Avenue would provide sushi products and related services at the kiosk and Philbrick's would pay Sushi Avenue 75% of the actual retail sales of sushi products sold. See doc. no. 1 ¶ 8; doc. no. 1-1. These payments would be due on a weekly basis. See doc. no. 1-1. The Agreement required Philbrick's to provide Sushi Avenue a regular and accurate accounting of all sushi sales. See id.

         Between January 1, 2018 and March 11, 2018, [1] Philbrick's made only some of its required payments to Sushi Avenue. See doc. no. 1 ¶ 9. Between March 11, 2018 and August 19, 2018, [2] Philbrick's failed to make any payments to Sushi Avenue, while Sushi Avenue continued to provide products and services to Philbrick's. See doc. no. 1 ¶¶ 9, 17. On September 4, 2018, [3]Sushi Avenue sent a letter to Philbrick's demanding payment, pursuant to the Agreement, by September 10, 2018. See doc. no. 1 ¶ 11. It is undisputed that the outstanding balance was $80, 939.90. See doc. no. 1 ¶ 22. On September 6, 2018, Philbrick's sent a “good faith” payment of $5, 000 toward the $80, 939.90 balance but stated it could not make further payments. See doc. no. 1 ¶ 12. On September 13, 2018, Sushi Avenue indicated that the $5, 000 payment was insufficient and demanded payment in full or agreement to a payment plan. See doc. no. 1 ¶ 13. Sushi Avenue has not presented the “good faith” check for payment. See id.

         Discussion

         Sushi Avenue brings three claims against Philbrick's: (1) Breach of contract (Count I); (2) Account stated (Count II); and (3) Unjust enrichment (Count III). Sushi Avenue seeks $80, 939.90 in damages for the amount owed under the Agreement, plus interest. Sushi Avenue also seeks attorneys' fees and costs.

         I. Liability

         A. Breach of Contract (Count I)

         Under New Hampshire law, [4] “a breach of contract occurs when there is a failure without legal excuse to perform any promise which forms the whole or part of a contract.” BAE Sys. Info. & Elecs. Sys. Integration, Inc. v. SpaceKey Components, Inc., 941 F.Supp.2d 197, 213 (D.N.H. 2013), aff'd, 752 F.3d 72 (1st Cir. 2014) (quoting Axenics, Inc. v. Turner Constr. Co., 164 N.H. 659, 668 (2013)) (brackets and internal quotation marks omitted).

         Under the Agreement, Philbrick's was required to pay Sushi Avenue 75% of the actual retail sales for sushi products sold. See doc. no. 1 ¶ 8. In its complaint, Sushi Avenue alleges that Philbrick's breached the Agreement by making sporadic payments between January 1, 2018 and March 11, 2018, and no payments between March 11, 2018 and August 19, 2018, while Sushi Avenue continued to perform its contractual duties. See doc. no. 1 at ¶¶ 9, 16-17. Sushi Avenue's complaint asserts that these missed payments ...


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