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Revision Military Ltd. v. Gideon Services, Inc.

United States District Court, D. Vermont

October 30, 2017

Revision Military Ltd., Plaintiff,
v.
Gideon Services, Inc., Defendant.

          REPORT AND RECOMMENDATION (DOC. NO. 11)

          John M. Conroy, United States Magistrate Judge

         This is a breach of contract action brought by Plaintiff Revision Military Ltd. (Revision) against Gideon Services, Inc., (Gideon) for failure to pay $194, 512.60 for military batteries and battery chargers supplied by Revision to Gideon. (Doc. 1.) Despite proper service, Gideon failed to plead or otherwise answer the allegations of the Complaint and the Clerk entered a default under Fed.R.Civ.P. 55(a). (Doc. 10.) Presently before the Court is Revision's Motion for Default Judgment by the Court under Fed.R.Civ.P. 55(b)(2). (Doc. 11.) Revision seeks a judgment for damages in the amount alleged in the Complaint, together with its costs and interest. (Id.)

         Preliminary Statement

         On July 12, 2017, Revision filed the Complaint initiating this action in which it is alleged that Defendant has breached a contract by failing to pay for military batteries and battery chargers supplied to it by Plaintiff. (Doc. 1.) On August 1, 2017, an executed Summons was filed as evidence of service of process on the registered agent of Gideon. (Doc. 3.) No Answer or other responsive pleading has been filed on behalf of Gideon. A Clerk's Entry of Default was filed on October 4, 2017. (Doc. 10.) Plaintiff filed the pending Motion for Default Judgment pursuant to Fed.R.Civ.P. 55(b)(2) on October 4, 2017. (Doc. 11.)

         Notwithstanding the fact that Plaintiff has consented to jurisdiction by the Magistrate Judge over this case pursuant to 28 U.S.C. § 636(c), (Doc. 2), the decision on Plaintiff's Motion for Default must be in the form of a Report and Recommendation because Gideon, the defaulting party, has not consented to jurisdiction by the Magistrate Judge. See, e.g., Jack Tyler Eng'g Co. v. Colfax Corp., 2011 WL 384614 at *4 (W.D. Tenn. Feb. 3, 2011) (magistrate judge lacked statutory authority to enter default judgment absent consent of defaulting party); Victoria's Secret Stores v. Artco Equip. Co., 194 F.Supp.2d 704, 715 (S.D. Ohio 2002) (default judgment motion is dispositive and magistrate judge may only issue recommended dispositions with respect to such a motion); see generally N.Y. Chinese TV Programs, Inc. v. U.E. Enters., Inc., 996 F.2d 21, 25 (2d Cir. 1993) (absent consent, magistrate judge not authorized to issue final order).

         Discussion

         I. Factual Background

         It is well settled that a defendant who fails to answer or otherwise oppose a complaint is “deemed to have admitted all well-pleaded allegations in the complaint pertaining to liability.” Finkel v. Romanowicz, 577 F.3d 79, 81 n.1 (2d Cir. 2009) (citing Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992)). Accordingly, the following facts, which are drawn from Revision's Complaint, and the documentary evidence attached thereto, see Fed. R. Civ. P. 10(c), are established for the purpose of determining Gideon's liability.

         Revision is a Delaware corporation with its principal place of business in Essex, Vermont. (Doc. 1 at 1, ¶ 2.) It is in the business of providing protective equipment to the United States military and for military situations worldwide. (Id.) Gideon is an Alabama corporation with its principal place of business in Huntsville, Alabama. (Id. ¶ 3.) Gideon is in the business of providing technical supplies and services to government agencies. (Id.)

         By email communications dated July 11, 2016, and again on July 20, 2016, Gideon requested that Revision supply proposed unit pricing on 294 batteries and 147 charging devices. (Id. at 2, ¶¶ 6-8.) Revision provided the requested pricing and on August 8, 2016, Gideon ordered the batteries and chargers from Revision. (Id. ¶¶ 8-9.) The batteries and chargers were shipped and delivered in two shipments arriving on December 12, 2016, and January 4, 2017. (Id. ¶ 10.) Gideon failed to pay for the products within 30 days as specified in the purchase order. (Id. ¶¶10-11.) On February 16, 2017, Revision's Chief Financial Officer, Michael Garvey, and Gideon's Chief Executive Officer, Anna Thornley, spoke on the phone. (Id. ¶ 12.) Thornley agreed that Gideon would pay the sum of $25, 000 per week until the debt was satisfied. (Id. ¶¶ 12, 13.) Thornley later sent Garvey an email confirming that understanding. (Id. ¶ 13; Doc. 1-3.) Gideon has failed to pay any of the $194, 512.60 debt. (Id. at 3, ¶¶ 15, 16.)

         II. Subject-Matter and Personal Jurisdiction

         As with any motion, a court must first assure itself that it has subject-matter jurisdiction over the controversy. Here, it is clear that the Court has subject-matter jurisdiction under 28 U.S.C. § 1332(a) by reason of the diversity of citizenship between the parties and an amount in controversy exceeding $75, 000.

         “[B]efore a court grants a motion for default judgment, it may first assure itself that it has personal jurisdiction over the defendant.” Sinoying Logistics Pte Ltd. v. Yi Da Xin Trading Corp., 619 F.3d 207, 213 (2d Cir. 2010) (emphasis added). The Second Circuit has left open, however, the issue of “whether a district court must investigate its personal jurisdiction over [a] defendant before entering a default judgment.” Id. at 213 n.7; but see Credit Lyonnais Sec. (USA), Inc. v. Alcantara, 183 F.3d 151, 154 (2d Cir. 1999) (vacating default judgment and instructing district court to determine whether the plaintiffs could “prove the jurisdictional facts by a preponderance of the evidence”).

         It is also clear that the Court has specific personal jurisdiction over Gideon by virtue of Gideon doing business in Vermont. Personal jurisdiction over a defendant may be general or specific. In re Terrorist ...


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