United States District Court, D. Arizona
TO THE
HONORABLE STEPHEN M. MCNAMEE, SENIOR UNITED STATES DISTRICT
JUDGE.
REPORT AND RECOMMENDATION
Honorable Deborah M. Fine United States Magistrate Judge.
Before
the Court are Plaintiff's motion for default judgment
against Defendant (Doc. 19), motion updating requested
damages (Doc. 28), motion for attorneys' fees and costs
(Doc. 20) and amended/supplemental motion for attorneys'
fees and costs (Doc. 29). Defendant has not answered or
otherwise appeared. The undersigned Magistrate Judge
currently presides over this case pursuant to Local Rule
Civil 3.7(b) pending the consent of all parties. However,
because Defendant has not appeared, this report and
recommendation is directed to Senior United States District
Court Judge Stephen M. McNamee.
I.
BACKGROUND [1]
Plaintiff
is an Arizona corporation, while Defendant is a South Korean
corporation with principal offices located in South Korea.
(Doc. 1 at 1-2) The parties entered into a paper materials
supply agreement in October 2010, under which Plaintiff
agreed to sell to Defendant all “supply
materials” required by Defendant, and Defendant agreed
not to purchase supply materials or similar goods from any
other vendor for the duration of the agreement (“2010
Supply Agreement”). (Id. at 3) Defendant
further agreed to purchase “a minimum of 4, 000 metric
tons per month of materials from [Plaintiff].”
(Id.) The agreement expressly stated that its terms
would “be construed in accordance with the laws of the
State of Arizona.” (Id. at 14) The parties
provided for the option to amend the 2010 Supply Agreement,
and concurred that the Supply Agreement would terminate in
September 2025. (Id. at 3-4)
From
approximately January 2015 through July 2016, Defendant
purchased “substantially less” than the minimum
required amount of material as defined in the 2010 Supply
Agreement, and purchased materials from suppliers other than
Plaintiff, in violation of the agreement. (Id. at 3)
On December 27, 2015, the parties executed an additional
agreement to amend the 2010 Supply Agreement to alter
Defendant's minimum purchase requirements during a new,
and significantly truncated four-year term (“December
2015 Agreement”). (Id. at 4) The parties
further agreed that if they did not execute a modified supply
agreement by the end of December 2016, Defendant immediately
would pay Plaintiff compensation in the amount of 2 billion
KRW. (Id. at 4, 17) The parties met in April, June,
and November 2016, to execute a modified supply agreement,
without success, after which Plaintiff consented to an
extension of the deadline by one month, to January 31, 2017.
(Id. at 4-5) Defendant failed to meet this deadline,
and on February 10, 2017, Plaintiff “sent
correspondence to [Defendant]
notifying
it that [Plaintiff] was terminating the Supply Agreement,
effective as of the date of said letter.” (Id.
at 5) However, in January 2017, Defendant received and
accepted, but did not pay for, six shipments of product from
Plaintiff. (Id., Doc. 19-1 at 4) Plaintiff alleges
that Defendant owes $148, 713.29 USD for these materials, and
has filed both an affidavit from Mr. Younglin Woo,
Plaintiff's President, and copies of invoices relating to
these six shipments. (Id. at 4, 7-12)
II.
SUMMARY OF PROCEEDINGS TO DATE
Plaintiff
filed its Complaint on July 20, 2017 (Doc. 1), and also filed
notice of service of process pursuant to the Hague
Convention, which service occurred on November 10, 2017 (Doc.
15 at 1). Plaintiff states that in December 2017, after
Defendant had received service of the Complaint,
Defendant's “corporate representative called
[Plaintiff] regarding the Complaint.” (Doc. 16 at 2) On
January 16, 2018, Plaintiff requested entry of default based
on Defendant's failure to answer or otherwise defend
(Id. at 1-2), which the Clerk of the Court entered
on January 17, 2018. (Docs. 17, 18)
Plaintiff
alleged claims of breach of contract, and breach of the
implied covenant of good faith and fair dealing, each with
regard to the December 2015 Agreement, and asserted damages
in the amount of 2 billion Korean Won (“KRW”),
with interest. (Doc. 1 at 5-6) Plaintiff further alleged
claims of breach of contract, and breach of the implied
covenant of good faith and fair dealing, each under the
Uniform Commercial Code, with regard to the 2010 Supply
Agreement, and asked for damages of $148, 713.29, with
interest. (Id. at 6-7) Plaintiff also asserted an
alternative claim for unjust enrichment as to the materials
received by Defendant in January 2017, valued at $148,
713.29. (Doc. 1 at 7-8) Plaintiff does not seek judgment on
this claim, and agrees to voluntarily dismiss it without
prejudice pursuant to Federal Rule of Civil Procedure
41(a)(1)(A), if the Court grants its motion for default
judgment. (Doc. 19 at 3 n.2). Plaintiff further asserted it
is entitled to an award of attorneys' fees pursuant to
A.R.S. § 12-341.01. (Id. at 8)
On
April 6, 2018, the undersigned filed a report and
recommendation (“R&R”) (Doc. 21) addressing
Plaintiff's initial motion for default judgment (Doc. 19)
and its initial motion for attorneys' fees and costs
(Doc. 20). The R&R recommended granting Plaintiff's
motion for default judgment in part, to award reasonable
attorneys' fees and costs, and to award judgment on
damages relating to the unpaid value of materials received by
Defendant from Plaintiff in January 2017. (Doc. 21 at 10) The
R&R further recommended deferral of a ruling on
Plaintiff's motion for default judgment respecting its
claim for liquidated damages under the December 2015
Agreement, and allowed Plaintiff to file a supplemental
motion to provide evidentiary support, or to schedule an
evidentiary hearing. (Id.) Based on the evidence in
the pleadings, the undersigned questioned whether
Plaintiff's requested amount of liquidated damages was a
“reasonable forecast” of Plaintiff's damages
under Arizona law. (Id. at 8) The undersigned
recommended that the Court allow Plaintiff to file a
supplemental motion providing evidentiary support for its
claims for liquidated damages, or to schedule a hearing to
consider such evidence. (Id. at 10)
On
April 20, 2018, Plaintiff filed a motion to supplement its
brief supporting liquidated damages. (Doc. 22) Thereafter, on
May 3, 2018, the undersigned set an evidentiary hearing on
the issue of the reasonableness of the requested liquidated
damages, and ordered Plaintiffs to file a hearing brief.
(Doc. 23 at 3) At the same time, the undersigned vacated the
R&R filed on April 6, 2018. (Id.) After
Plaintiff filed its hearing brief (Doc. 26), the undersigned
entered an order advising Plaintiff that the briefing had
satisfied the Court's concerns about Plaintiff's
claim for liquidated damages, and informed Plaintiff that a
new R&R would be forthcoming and would include
recommendations that Plaintiff's motion for default
judgment should be granted in full and that reasonable
attorneys' fees and costs should be awarded. (Doc. 27)
The undersigned accordingly vacated the evidentiary hearing
set for June 4, 2018, and ordered Plaintiff to file an
updated motion for attorneys' fees and costs, along with
supporting documentation. (Id.) The undersigned
further ordered Plaintiff to file an update on the damages
sought, including a current statutory interest calculation
and any necessary information on the currency exchange rate.
(Id.) On June 14, 2018, Plaintiff filed its amended
motion for default judgment (Doc. 28) and its
amended/supplemental motion for attorneys' fees and costs
(Doc. 29).
In its
motion updating requested damages, Plaintiff claims
sum-certain damages for breach of the December 2015 Agreement
in the amount of 2 billion Korean Won (or the U.S. dollar
equivalent) (Doc. 28 at 1), and for the value of materials
ordered, received, and accepted by Defendant in January 2017,
totaling $148, 713.29 USD (Id. at 2). Plaintiff also
seeks pre-judgment interest pursuant to A.R.S. §
44-1201(A) at the rate of 10% per annum on both the 2 billion
KRW compensation[2] and on the value of supply materials
accepted by Defendant in January 2017[3]. (Id. at 1-3)
Additionally, Plaintiff seeks attorneys' fees incurred
through June 14, 2018, in the amount of $39, 112.20 (Doc. 29
at 2), and filing fee and others costs totaling $513.88 (Doc.
29 at 5).
Plaintiff's
supplemental motion for attorneys' fees and costs is
supported by the declaration of the lead attorney, averring
to the accuracy and reasonableness of the requested fees and
costs. (Doc. 29-1) Attached to the declaration are detailed
invoices for legal services provided, and resumes of the
attorneys who billed time on this matter. (Doc. 29-1 at 6-59)
III.
LEGAL STANDARD
Because
Defendant's default has been properly entered pursuant to
Rule 55(a), the Court has discretion to grant default
judgment against Defendant under Rule 55(b). See
Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir.
1980), although the “starting point is the general rule
that default judgments are ordinarily disfavored.”
Eitel v. McCool, 782 F.2d 1470, 1471-72
(9th Cir. 1986). The Ninth Circuit instructs that
in assessing whether entry of default judgment should be
granted, a court may consider a number of factors (the
Eitel factors), including:
(1) the possibility of prejudice to the plaintiff, (2) the
merits of plaintiff's substantive claim, (3) the
sufficiency of the complaint, (4) the sum of money at stake
in the action; (5) the possibility of a dispute concerning
material facts; (6) whether the default was due to excusable
neglect, and (7) the strong policy underlying the Federal
Rules of Civil Procedure favoring decisions on the merits.
NewGen, LLC v. Safe Cig, LLC, 840 F.3d 606, 616
(9th Cir. 2016) (quoting Eitel, 782 F.2d
...