Sushi Ave., Inc. v. Philbrick's Fresh Mkt.

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

Case No. 19-cv-428-JD

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

September 17, 2019

REPORT AND RECOMMENDATION

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. SushiAvenue, 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, 2018,²Philbrick'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 totaled $80,939.90. See doc. no. 1 at ¶ 17. Accepting these allegations as true, Philbrick's breached its obligations under the Agreement.

B. Other Claims (Counts II - III)

Because Sushi Avenue has adequately alleged its breach of contract claim and each count seeks identical damages, the court recommends the district judge deny Counts II and III.

II. Damages

"In the case of defaulting defendants, allegations of damages are not deemed admitted in the context of a default judgment, and it is the plaintiff's burden to establish any entitlement to recovery." Joe Hand Promotions, Inc. v. Rajan, No. 10-40029-TSH, 2011 WL 3295424, at *3 n.2 (D. Mass. July 28, 2011) (internal quotation marks and citation omitted). Sushi Avenue seeks to recover damages for (1) the amounts due underthe Agreement, plus interest and (2) attorneys' fees and costs.⁵

A. Contractual damages and interest

The Agreement provides that "[c]lient will pay Vendor 75% of the actual retail sales (excluding taxes) of the pre-packed sushi products sold." Doc. no. 1-1. It further states that "[p]ayments shall be due and owing every week from Monday through Sunday." Id.

In its complaint, Sushi Avenue seeks $80,939.90 in unpaid charges for goods and services provided under the Agreement. In its motion for default judgment, however, Sushi Avenue seeks to recover $88,568.79 for those amounts. In support of its motion, Sushi Avenue includes an affidavit from its president stating that $88,568.79 represents the amount due and a table listing each of the outstanding amounts due and the total due. See doc. no. 14-2 at ¶ 5.

"A default judgment must not differ in kind from, or exceed in amount, what is demanded in the pleadings." Fed. R. Civ. P. 54(c). "Thus, where a complaint specifies the amount of damages sought, the plaintiff is limited to entry of a default judgmentin that amount." Trustees of the Nat'l Automatic Sprinkler Indus. Welfare Fund v. Sheehe, No. DKC 11-0365, 2011 WL 5034830, at *2 (D. Md. Oct. 21, 2011); see also Outram v. Outram, No. 08-3437 (ADS)(ETB), 2010 WL 1222935, at *2 (E.D.N.Y. Mar. 4, 2010) (holding that in the context of a motion for default judgment, the "plaintiff may not recover money damages in excess of that pleaded in her Amended Complaint"), report and recommendation adopted, No. 08-CV-3437(ADS)(ETB), 2010 WL 1222893 (E.D.N.Y. Mar. 23, 2010); Jackson v. Vogt, No. 09-4569, 2009 WL 3756563, at *3 n.1 (E.D. La. Nov. 5, 2009) (awarding the plaintiff the amount alleged in her complaint despite evidence submitted with her motion for default judgment showing she may have been entitled to an additional $138).

Sushi Avenue does not address the discrepancy between the damages figure in its complaint and the amount it seeks in its motion for default judgment. Based on the court's reading, it appears that Sushi Avenue may have added missed payments for the period between August 19, 2018 and September 9, 2018 to its damages calculation. However, Sushi Avenue is limited to the damages alleged in its complaint,⁶ and the court recommends thatthe district judge award damages in the amount of $80,939.90, plus interest.⁷

B. Attorneys' fees and costs

"The party seeking the [fee] award has the burden of producing materials that support the request." Hutchinson ex rel. Julien v. Patrick, 636 F.3d 1, 13 (1st Cir. 2011) (citing Hensley v. Eckerhart, 461 U.S. 424, 433 (1983)). Sushi Avenue has requested attorneys' fees and costs but does not provide any basis for such an award. See doc. no. 14. Instead, Sushi Avenue seeks permission to submit a separate affidavit regarding attorneys' fees within ten days of the default judgment order. See id. The court therefore recommends that the district judge deny Sushi Avenue's request for attorneys' fees and costs without prejudice to filing a motion seeking such relief, with supporting documentation, within ten (10) days of the date of the district judge's order approving or rejecting this Report and Recommendation.

Conclusion

For the foregoing reasons, the court recommends that the district judge: (1) grant Sushi Avenue's motion for default judgment (doc. no. 14) on Count I; (2) deny the motion for default judgment as to Counts II and III; (3) award Sushi Avenue $80,939.90, plus interest; and (4) deny Sushi Avenue's request for attorneys' fees and costs without prejudice to filing a motion seeking such relief within ten (10) days of the date of the district judge's order on this Report and Recommendation. In light of the foregoing, the damages hearing scheduled for September 30, 2019 is cancelled.

Any objection to this Report and...