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

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
CDS Air Freight, Inc.
v. 	Civil No. 18-cv-58-JL
North American Training and
Logistics, Inc. and William E. Gifford
REPORT AND RECOMMENDATION
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
1 CDS moved for default judgment under Federal Rule of Civil
Procedure 55(b)(1), arguing that the Clerk of Court should enter
default judgment in its favor because the amount it seeks under
the parties’ agreement represents a sum certain. 	Even though
amounts owed under the parties’ agreement could be considered a
sum certain under Rule 55(b)(1), CDS’s request for attorneys’
fees “prevents the clerk from entering a judgment under Rule
55(b)(1), since the reasonableness of the attorney[s’] fees
necessitates a judgment call by the Court.” 	Int’l Union of
Operating Engineers, Local 4 v. Stanley Excavation, 243 F.R.D.
25, 27 (D. Me. 2007) (internal quotation marks and citation
omitted). 	“If the plaintiff is seeking both a sum certain,
which would fall under Rule 55(b)(1), and damages that require
judicial determination under Rule 55(b)(2), the entire matter,
including the sum certain, must be determined under Rule
55(b)(2).” 	Id. (citing Conetta v. Nat’l Hair Care Ctrs., Inc.,
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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
186 F.R.D. 262, 268 (D.R.I. 1999) (“A case is either for a ‘sum
certain’ or not. 	A party must choose one of the two procedures
offered by Fed. R. Civ. P. 55(b) . . . .”), aff’d, 236 F.3d 67
(1st Cir. 2001)).
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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.
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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
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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)).
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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 Gifford (Count III)
In its complaint, CDS alleges that Gifford signed the
Credit Application on behalf of NATL, as its President and CEO,
and in doing so “is personally liable and individually
responsible for payment of all amounts due” as owed on the four
invoices. 	See doc. no. 1 at 4. 	Gifford has failed to make any
payments. 	Accepting these allegations as true, Gifford is in
breach of his obligations under the Credit Agreement.
Therefore, the court recommends that the district judge grant
CDS’s motion for default judgment as to Count III.
IV. 	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,
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No. 10-40029-TSH, 2011 WL 3295424, at *3 n.2 (D. Mass. July 28,
2011) (internal quotation marks and citation omitted). 	CDS
seeks to recover damages for (1) the amounts due under the four
invoices; (2) interest as to each respective invoice, from
December 2014 until June 30, 2018; and (3) attorneys’ fees and
costs.
(1) 	Invoices
In its motion for default judgment, CDS seeks $133,127.85
in amounts invoiced to NATL for freight forwarding and shipping
services provided by CDS from December 2014 through April 2015.
CDS sent NATL four invoices in the following amounts: (1)
$46,576.82; (2) $57,649.88; (3) $50,196.70; and (4) $4,070.00.
NATL made only partial payment of the first invoice in the
amount of $25,365.45. 	Therefore, NATL and Gifford owe
$133,127.85 under the invoices and the court recommends that the
district judge award CDS that amount in damages.
(2) 	Interest
The Credit Agreement provides that interest will accrue on
overdue accounts at the rate of 1.5% per month or 18% annually.
See doc. no. 1 at 4.
CDS seeks $78,365.32 in interest, which it asserts
represents 1.5% interest on the amount owed under the invoices
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from December 2014, when NATL and Gifford failed to pay the
first of the four outstanding invoices, until June 30, 2018.
The court finds that CDS is entitled to the interest it seeks
and therefore recommends that the district judge award CDS
$78,365.32 in interest.
(3) 	Attorneys’ Fees and Costs
An award of reasonable attorneys’ fees is typically
calculated by the lodestar method in which the court multiplies
the hours productively spent by a reasonable hourly rate.
Spooner v. EEN, Inc., 644 F.3d 62, 67-68 (1st Cir. 2011).
“`Reasonable hourly rates will vary depending on the nature of
the work, the locality in which it is performed, the
qualifications of the lawyers, and other criteria.’” 	Hutchinson
ex rel. Julien v. Patrick, 636 F.3d 1, 16 (1st Cir. 2011)
(quoting United States v. One Star Class Sloop Sailboat, 546
F.3d 26, 38 (1st Cir. 2008)). 	The determination of what
constitutes a “reasonable” fee is left to the court’s
discretion. 	de Jesus v. Banco Popular de P.R., 918 F.2d 232,
233-34 (1st Cir. 1990).
The party seeking a fee award bears the burden of producing
materials to support the request. 	Hutchinson, 636 F.3d at 13.
“Appropriate supporting documentation includes counsel’s
contemporaneous time and billing records and information
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establishing the usual and customary rates in the marketplace
for comparably credentialed counsel.” 	Spooner, 644 F.3d at 68;
see also Bogan v. City of Boston, 489 F.3d 417 (1st Cir. 2007).
CDS seeks an award of $11,967.37 in attorneys’ fees and
$400.00 in costs. 	However, CDS did not submit an affidavit or
additional documentation to support its request for attorneys’
fees and costs. 	Nowhere does CDS detail the hours billed on the
case or its attorneys’ rates. 	Further, CDS fails to provide any
details concerning the actual costs incurred, separate and apart
from any legal work performed.
A request for attorneys’ fees and costs, unbolstered by any
supporting documentation, does not provide the court with
sufficient information to determine whether CDS’s request is
reasonable. 	Spooner, 644 F.3d at 68. 	The court therefore
recommends that the district judge deny CDS’s request for
attorneys’ fees and costs without prejudice to renewal, with
sufficient supporting documentation, within fifteen (15) days of
the date of the district judge’s order either approving or
rejecting this Report and Recommendation.
Conclusion
For the foregoing reasons, the court recommends that the
district judge: (1) grant CDS’s motion for default judgment
(doc. no. 9) on Counts I and III; (2) deny CDS’s motion on Count
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II; (3) award CDS $211,493.17 in past due invoices and interest;
and (4) deny CDS’s request for attorneys’ fees and costs without
prejudice to renewal within fifteen (15) days of the date of the
district judge’s order on this Report and Recommendation.
Any objection to this Report and Recommendation must be
filed within fourteen days of receipt of this notice. See Fed.
R. Civ. P. 72(b)(2). The fourteen day period may be extended
upon motion. Failure to file specific written objections to the
Report and Recommendation within the specified time waives the
right to appeal the district court’s order. See Santos-Santos v.
Torres-Centeno, 842 F.3d 163, 168 (1st Cir. 2016); Fed. R. Civ.
P. 72(b)(2).
__________________________
Andrea K. Johnstone
United States Magistrate Judge
September 10, 2018
cc: 	Jon C. Cowen, Esq.
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