Truong v. Huynh

1

HIEP TRUONG, Plaintiff, v. STACEY HUYNH, individually and in her capacity as the Organizer and Managing Member of Pavillion Nail Lounge Nationwide LLC, and each of its related entities and/or subsidiaries; THAN “TIM” HUYNH, individually and in his capacity as a Member of Pavillion Nail Lounge Nationwide LLC, and each of its related entities and/or subsidiaries; and PAVILLION NAIL LOUNGE NATIONWIDE LLC, Defendants.

No. 3:21-cv-00015

United States District Court, M.D. Tennessee, Nashville Division

November 19, 2021

MEMORANDUM

ALETA A. TRAUGER, UNITED STATES DISTRICT JUDGE.

Hiep Truong has filed a Motion for Final Default Judgment Against Pavillion^[1] Nail Lounge Nationwide LLC (“Pavillion”) (Doc No. 19), to which no party has filed a response. For the reasons set out herein, the motion will be granted in part and denied in part, and the court will order an evidentiary hearing on damages.

I. BACKGROUND^[2]

Truong is a resident of Hernando, Mississippi. The individual defendants in this case, Tim and Stacey Huynh, live or lived in Canton, Georgia-although as the court will discuss, physically locating the Huynhs has apparently proven to be difficult. (Doc. No. 1 ¶¶ 9-11.) Pavillion is a “holding company” owned and controlled by the Huynhs “for the purposes of building out independent limited liability companies, related entities, subsidiaries, and/or other joint ventures with” individuals with whom the Huynhs have decided to go into business. (Id. ¶ 13.)

In September of 2019, Truong and Stacey Huynh executed an agreement entitled “Deposit Agreement for the Purchase of 33.3% Shares of a Nail Salon Business Located at ‘Town Centre' Shopping Center at Murfreesboro, TN.” (Doc. No. 1-1.) The agreement identified Truong as the “Buyer” and identified his counterparty, the “Seller, ” as “STACEY HUYNHPAVILLION NAIL LOUNGE LLC.” (Id. at 2 (formatting in original).) Pursuant to the contract, Truong agreed “to pay One Hundred Thousand ($100, 000.00) [to the Seller] as a deposit . . . toward the purchase of 33.33% shares of a nail salon business (‘Business'), located at Towne Centre in the city of Murfreesboro, TN.” (Id.) The contract required that “[t]he completion of the build-out of the Business and the furnishing of it with the required equipment and fixtures shall be done by November 1st, 2019” and provided that, if that condition was not satisfied, “then this Agreement and the Purchase Agreement are deemed to be voided and the Seller agrees to return the total Deposit to the Buyer.” (Id.) The contract included a choice-of-law provision stating that Georgia law would apply to “[a]ny and all matters affecting the interpretation of” the contract. (Id.)

Truong paid the $100, 000 to Stacey Huynh, who confirmed receipt. (Doc. No. 1 ¶ 17.) The build-out of the salon location, however, was not completed by November 1, 2019. (Id. ¶ 18.) Truong states that he “granted to Defendants, and Defendants accepted from Plaintiff, a one-time waiver to Plaintiff's right to demand a refund of the Deposit by allowing Defendants to meet their obligations to perform the build-out by the end of 2019.” (Id. ¶ 19.) The project, however, was still not completed by January of 2020, and Truong requested a refund of his deposit from Tim Huynh, who at first gave the impression that the refund would be forthcoming. (Id. ¶ 21.) Soon, however, the Huynhs stopped responding to Truong's messages, despite the fact that Pavillion still owed him a refund. (Id. ¶¶ 22-23.)

Truong continued to press the Huynhs for his money to no avail, leading Truong to hire an attorney and begin threatening litigation. After Truong escalated his efforts, Tim Huynh became somewhat responsive to text messages, but that responsiveness did not translate to Pavillion's actually returning the deposit. The Huynhs did not openly refuse to return the deposit or argue that Truong was not entitled to it; indeed, Mr. Huynh's texts eventually included a letter acknowledging Truong's right to the funds and promising to refund it in installments. Nevertheless, such payment never occurred, and Mr. Huynh instead continued to stall and explain that the situation was, at least in part, attributable to personal and family problems on the Huynhs' end, including Mr. Huynh's being hospitalized for COVID-19, as well as supposed logistical obstacles related to transferring the funds. (Id. ¶¶ 22-32.)

Finally, on January 1, 2021, Truong sued Pavillion and the Huynhs in this court. The Complaint identifies sixteen “counts, ” although some of the “counts” appear to refer, not to additional causes of action, but to types of damages or legal doctrines supporting recovery. Those counts are:

Count

Basis

Against

I

Breach of contract

All Defendants

II

Breach of fiduciary duty

All defendants

III

Fraud/fraud in the inducement

All defendants

IV

Constructive fraud

All defendants

V

Violation of the federal RICO statute

All defendants

VI

Violation of the Georgia RICO statute

All defendants

VII

Negligent misrepresentation

All defendants

VIII

Negligence

All defendants

IX

Res ipsa loquitur

All defendants

X

Conversion and trover

All defendants

XI

Breach of duty of good faith and fair dealing

All defendants

XII

Unjust enrichment

All defendants

XIII

Pre-judgment Attachment and Sequestration

All defendants

XIV

Attorney's fees

All defendants

XV

Personal liability as organizer

Stacey Huynh

XVI

Piercing of the corporate veil

All defendants

(Id. ¶¶ 33-138.) Truong seeks various forms of declaratory and injunctive relief; general and compensatory damages of at least $100, 000 plus interest special, consequential, and punitive damages; treble damages; and costs. (Id. at 33-35.)

Truong was required to serve his Complaint on each of the defendants within 90 days, unless he had good cause for failing to do so. Fed.R.Civ.P. 4(m). Effecting service, however, proved difficult-quite possibly because the Huynhs intended for it to be. On March 16, 2021, Truong filed a Declaration of Service recounting his efforts. (Doc. No. 8.) Truong explained that he hired Phoenix Legal Group LLC (“PLG”) to serve the defendants, and PLG's individual process server, Frank James, attempted to do so three times at the Huynhs' most recent known address. The first two times he tried, James found the house silent with no lights on, despite the fact that there were “several” vehicles in the driveway. On his final attempt, James found the house “empty with a key box on the door” and a paper card in the mailbox, indicating that the house was vacant and was no longer receiving pickups or deliveries from the United States Postal Service (“USPS”). (Id. at 1-2; Doc. No. 8-1 at 3.) Further investigation revealed that the Huynhs had put the house up for sale and quickly vacated the premises, just as Truong was making good on his promise to sue them if his deposit was not returned. (Doc. No. 8 at 2-3.)

Truong recognized that he was now faced with the unenviable task of serving three defendants-a business entity and the two individuals who ran it-despite having little idea where they had gone. With regard to Pavillion itself, Truong tried two strategies. First, he attempted to effect service by mail via a number of different addresses identified from corporate filings of Pavillion and other Pavillion-affiliated businesses. Some of those letters were successfully delivered, but the one actually addressed to Pavillion's own registered agent was returned with a notice that the recipient had moved and left no forwarding address. (Id. at 4-5.) Truong's second strategy for serving Pavillion, however, was both simpler and less vulnerable to the defendants' own evasions. He filed a Service of Process Request with the Georgia Secretary of State, which provided a Certificate of Acknowledgment in return. (Id. at 6.)

The option of effecting service through the Secretary of State, however, was not available with regard to the Huynhs, who are, of course, natural persons. Truong, therefore, tried to serve them at their last known address-the home at which James had failed to effect service directly. Perhaps surprisingly, he did receive return receipts-each indicating that the package was delivered “to an individual at the address at 2:00 pm on March 6, 2021 in CANTON, GA 30114.” (Id. at 4.) The return receipts, however, do not appear to have been physically signed by either Huynh. Each receipt has a set of boxes to be checked indicating whether the item was delivered to the “addressee” or to an “agent, ” and each one indicates it was delivered to an agent. (Doc. Nos. 8-3, 8-4.) Each signature block contains the following language, which, as the court will discuss, does not appear to be an actual signature:

(Image Omitted)

(Doc. No. 8-4 at 2; see also Doc. No. 8-3 at 2.)

On April 15, 2021, Truong filed a Request for Entry of Default as to all three defendants. (Doc. No. 13.) On May 25, 2021, the Clerk issued an Order granting the entry of default as to Pavillion but denying it with regard to the Huynhs on the ground that they have not yet been properly served. (Doc. No. 14.) The Clerk observed that the signature blocks on the return receipts for the Huynhs appear to reflect the following COVID-inspired USPS policy, posted on the USPS website:

To reduce health risks, we are temporarily modifying customer signature capture procedures. While maintaining a safe, appropriate distance, employees will request the customer's first initial and last name so that the employee can enter the information on the electronic screen or hard copy items such as return receipts, and PS Forms 3811 (Domestic Return Receipt) and 3829 (Registered Dispatch FollowUp). For increased safety, employees will politely ask the customer to step back a safe distance

...