Wizara, LLC v. Smartlink Commc'n, SpA

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WIZARA, LLC, Plaintiff, v. SMARTLINK COMMUNICATION, SPA, Defendant.

No. 5:17-CV-424 (LEK/TWD)

United States District Court, N.D. New York

March 6, 2023

MEMORANDUM-DECISION AND ORDER

UAWRBCE E. KAHN United States District Judge

I. INTRODUCTION

Plaintiff Wizara, LLC, removed this action against Defendant Smartlink Communication, SpA, from state court on April 14, 2017. Dkt No. 1 (“Notice of Removal”); see also Dkt. No. 2 at 1-7 (“Amended Complaint”). On June 20, 2017, Defendant filed an answer. Dkt. No. 14 (“Answer”). On June 22, 2023, the Court struck Defendant's Answer. Dkt. No. 95 (“June 2023 Order”). Now before the Court is Plaintiff's motion for default judgment, which was filed on July 7, 2023. Dkt. No. 89-9 (“Motion” or “Motion for Default Judgment”).

For the reasons that follow, Plaintiff's Motion is granted.

II. BACKGROUND

Plaintiff is a domestic limited liability company organized under the laws of the State of New York with its principal place of business located in Liverpool, New York. See Am. Compl. ¶ 1. Defendant is a foreign corporation incorporated under the laws of Algeria, with its principal place of business in Algiers, Algeria. See id. ¶ 2. On or about January 5, 2003, the parties entered into a contract to provide “goods, wares and services in the nature of hardware and installation relating to internet services, VOIP and wireless broadband in the country of Algeria.” Id. ¶¶ 3-4; see also Dkt. No. 2 at 9-41 (“CHASS Agreement”).

Plaintiff asserts that the combined value of the goods and services that it provided Defendant was $8,667,980.00, see Am. Compl. ¶¶ 8-9, and it provides correspondence from Defendant to this effect, see Dkt. No. 2 at 42-43 (“Extension Request”); Id. at 44-45 (“Commitment Letter”). However, in its now-stricken answer, Defendant has denied liability and asserted that Plaintiff's filings are fabricated. See Answer at 1-2.

From April 2017 through July 2022, the parties did not file any dispositive motions, despite seeking and received various extensions to do so. See, e.g., Dkt. Nos. 54, 55. On July 11, 2022, Defendant's counsel filed two motions to withdraw, see Dkt. Nos. 72, 73, citing difficulty communicating with their client and the long dormancy of this case, see Dkt. No. 73-1 at 2. On August 17, 2022, the Court granted these motions and ordered Defendant to obtain new counsel within sixty days, noting that “corporate parties may not appear pro se.” Dkt. No. 82 (“August 2022 Order”). Defendant has neither obtained new counsel nor otherwise appeared in this case since the August 2022 Order was filed.

On November 9, 2022, Plaintiff filed a motion to “impos[e] sanctions/and or a Default Judgment.” Dkt. No. 85. The Court denied this motion, noting that Plaintiff was required to include a memorandum of law with its request for sanctions. See Dkt. No. 87. On May 22, 2023, Plaintiff refiled its motion in compliance with the Court's directive. See generally Dkt. No. 89.

On June 22, 2023, the Court granted Plaintiff's request to strike Defendant's answer, thus allowing Plaintiff to obtain an entry of default. See June 2023 Order. On June 28, 2023, Plaintiff obtained such entry, see Dkt. No. 97, allowing the Court to consider Plaintiff's Motion for Default Judgment.

III. LEGAL STANDARD

After the clerk has filed an entry of default against a party that has failed to plead or otherwise defend, a court may enter default judgment upon application of the opposing party. See Fed.R.Civ.P. 55(b). Default judgment is an extreme sanction, and decisions on the merits are favored. See Meehan v. Snow, 652 F.2d 274, 277 (2d Cir. 1981). However, default judgment is ordinarily justified when a party fails to respond after having received proper notice. See Bermudez v. Reid, 733 F.2d 18, 21 (2d Cir. 1984). After an entry of default has been entered, all the well-pleaded allegations in a complaint pertaining to liability are deemed true. See Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 108 (2d Cir. 1997) (recognizing that the factual allegations in the complaint, except those relating to damages, are deemed true after default).

However, a court cannot take allegations in a complaint regarding damages as true. See Credit Lyonnais Sec. (USA), Inc., v. Alcantara, 183 F.3d 151, 154-55 (2d Cir. 1999). After establishing liability, a court must conduct an inquiry to ascertain the amount of damages with reasonable certainty. Transatlantic, 109 F.3d at 111. To determine damages in the context of a default judgment, “[t]he court may conduct hearings or make referrals” as it deems necessary and proper. Fed.R.Civ.P. 55(b)(2). However, “it [is] not necessary for the District Court to hold a hearing, as long as it ensured that there [is] a basis for the damages specified in the default judgment.” Fustok v. ContiCommodity Serv., Inc., 873 F.2d 38, 40 (2d Cir. 1989); see also Action S.A. v. Marc Rich & Co., Inc., 951 F.2d 504, 508 (2d Cir. 1991); Bricklayers and Allied Craftworkers Local 2, Albany, N.Y. Pension Fund v. Ne. King Constr. Co., No. 06-CV-0806, 2009 WL 1706586, at *1 (N.D.N.Y. June 16, 2009).

IV. DISCUSSION

A. Statute of Limitations

The CHASS Agreement provides that it shall be governed by the laws of New York and Algeria. See CHASS Agreement § 8.12. Under New York law, the statute of limitation for breach of contract is six years, which ordinarily starts at the time of breach. See Airco Alloys Div., Airco Inc. v. Niagara Mohawk Power Corp., 430 N.Y.S.2d 179, 186 (N.Y.App.Div. 4th Dept. 1980). However, Plaintiff alleges an ongoing breach of the parties' agreement between 2003 and 2006. See Am Compl. ¶ 10; see also Dkt. No. 2 at 52-62. Accordingly, under New York's continuing-violation doctrine, Plaintiff's combined breach of contract claims accrued on the date of the final breach. Miller v. Metro. Life Ins. Co., 979 F.3d 118, 122 (2d Cir. 2020) (quoting Stalis v. Sugar Creek Stores, Inc., 744 N.Y.S.2d 586, 587 (N.Y.App.Div. 4th Dept. 2002)) (“[W]here a contract provides for continuing performance over a period of time, each breach may begin the running of the statute anew such that accrual occurs continuously.”).

The last invoice provided by Plaintiff is dated September 25, 2006. See Dkt. No. 2 at 62. According to the terms of the contract, payment of this invoice was due sixty days later. See CHASS Agreement § 5.1.4 (“Payment . . . shall be made within 60 days following receipt of CHASS, LLC's Remuneration Invoice for the phase work.”).^[1] Accordingly, payment for Plaintiff's final invoice was due by November 24, 2006. Therefore, under the doctrine of continuing violation, Plaintiff's claims accrued on this date, and Plaintiff had until November 24, 2012, to bring its claims against Defendant.

However, Plaintiff alleges that, on two separate occasions, Defendant reaffirmed its intent to pay its debt. See Am. Compl. ¶¶ 11-12; see also Extension Request; Commitment Letter. In the first letter, dated July 14, 2009, Defendant acknowledged its debt and requested an extension of time to pay it. See Am. Compl. ¶ 11; see also Extension Request. In the second letter, dated March 19, 2013, Defendant acknowledged the debt and indicated its intent to pay the principal in full by the end of 2015. See Am. Compl. ¶ 12; see also Commitment Letter.

Under New York law, a “a debtor's acknowledgement of indebtedness” may “restart the running of a period of limitations” to collect that debt. Bainbridge Fund Ltd. v. Republic of Argentina, 37 F.4th 847, 852 (2d Cir. 2022) (citations and quotation marks omitted); see also N.Y. Gen. Oblig. Law § 17-101 (codifying this rule). In order to restart the statute of limitations, such an acknowledgment “must be in writing,” “made under such circumstances that an express promise to pay the debt may be fairly implied,” and “must contain nothing inconsistent with an intention on the part of the debtor to pay it.” Bainbridge, 37 F.4th at 852 (citations and quotation marks omitted).

Here, the letters furnished by Plaintiff satisfy these requirements. First, they are both in writing and apparently signed by an officer of Defendant. See Extension Request; Commitment Letter. Second, a promise to pay is fairly implied by each letter; the extension request in the first letter may be fairly construed as an implied promise to pay the debt by the new deadline, see Extension Request, while the second letter states that Defendant will “honor and pay the total amount” of the debt by the “end of year 2015,” Commitment Letter. Third, neither letter contains any language that is inconsistent with Defendant's stated intent to pay the underlying debt.

Therefore, under New York law, each letter has reset the statute of limitations for Plaintiff's breach of contract claims.

Plaintiff brought this action in state court “on or about” February 17, 2016. Notice of Removal ¶ 1. Because it brought suit less than six years after the Commitment Letter, Plaintiff's breach of contract claims are not barred by New York's statute of limitations.

B. Default Judgment

“In determining whether to grant a motion for default judgment, courts consider three factors: (1) whether the defendant's default was willful; (2) whether defendant has a meritorious defense to plaintiff's claims; and (3) the level of prejudice the nondefaulting party would suffer as a result of the denial of the motion for default judgment.” Capital Inv. PTY, LLC v. Onestone Capital, LLC, No. 23-CV-4487, 2023 WL 7004164, at *1 (S.D.N.Y. Oct. 24, 2023) (citing Kelly Toys Holdings, LLC v. alialialiLL Store, 606 F.Supp.3d 32, 48 (S.D.N.Y. 2022)) (internal quotation marks omitted).

1. Willfulness

The Court has no trouble concluding that Defendant's breach is willful. It is “well settled that...