BASF Corporation v. Blanchards' Auto Paint & Body LLC

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF LOUISIANA

BASF CORPORATION CIVIL ACTION

VERSUS

BLANCHARDS’ AUTO PAINT & NO. 22-01008-BAJ-RLB

BODY LLC

RULING AND ORDER

Before the Court is Plaintiff BASF Corporation’s unopposed Motion For

Default Judgment (Doc. 13). For reasons that follow, Plaintiffs Motion will be

GRANTED IN PART.

I. BACKGROUND

A. Alleged Facts

Plaintiff BASF Corporation (“BASF”) alleges that BASF and Defendant

Blanchards’ Auto Paint & Body LLC (“Blanchards”) entered into a “Requirements

Agreement” on or about August 7, 2017. (Doc. 1 at § 9). Under the Requirements

Agreement, Blanchards was required to purchase “refinish products” from only

BASF, and to purchase at least $121,000 of such products. (Id. at § 10). BASF

furnished $19,000 in consideration to Blanchards as consideration for the

Requirements Agreement, which was to be refunded at a 110% rate should the

Requirements Agreement be terminated with less than one-fifth of the minimum

purchase requirement having been fulfilled. Ud. at 11-12).

BASF alleges that Blanchards breached the Requirements Agreement on or

about March 10, 2020, when Blanchards ceased operations and ceased purchasing

BASF products. (id. at {§ 13-14). Blanchards’ purchases of BASF products at that

time amounted to $22,100. Ud. at § 14). This sum amounts to less than one-fifth of

the minimum purchase requirement specified in the Requirements Agreement. (Id.

at § 12). As a result, Plaintiff alleges that Defendant is indebted to the Plaintiff in the

amount of $119,800. Cd. at p. 8).

B. Procedural History

On December 9, 2022, Plaintiff sued Defendant for breach of contract. (See id.).

On March 8, 2028, Defendant was served with a copy of the summons and complaint

through personal service on Todd M. Blanchard. (Doc. 6). On April 4, 2023, Plaintiff

moved for a Clerk’s Entry of Default, which was entered against Defendant that same

day. (Docs. 7, 8). On June 28, 2028, Plaintiff filed a Motion for Default Judgment.

(Doc. 10). This motion was denied without prejudice due to Plaintiffs failure to

properly attach a copy of the Requirements Agreement to Caroline Cooper’s

Declaration. (Doc. 12). On January 2, 2024, Plaintiff filed another Motion for Default

Judgment, (Doc. 13), that corrected this mistake, (see Doc. 13-4). This Motion is

unopposed.

II. LAWAND ANALYSIS

A. Standard

Rule 55(b)(2) authorizes a district court to enter a default judgment against a

party who has failed to plead or otherwise defend a lawsuit. Fed. R. Civ. P. 55. The

U.S. Court of Appeals for the Fifth Circuit utilizes a three-step process for plaintiffs

to obtain a default judgment. See New York Life Ins. Co. v. Brown, 84 F.3d 187, 141

(5th Cir. 1996). Initially, a default occurs if a party “fail[s] to plead or otherwise

defend” against an action. Fed. R. Civ. P. 55(a). Next, the clerk will enter a default if

the party's failure to plead or otherwise defend has been shown “by affidavit or

otherwise.” New York Life Ins. Co., 84 F.3d at 141. After an entry of default, a party

may apply to the court for a default judgment. Fed. R. Civ. Proc. 55(b); New York Life

Ins. Co., 84 F.3d at 141.

After a party moves for a default judgment, the court undertakes a two-step

process to determine whether to enter a default judgment. Initially, the Court must

determine whether entry of a default judgment is appropriate under the

circumstances. Lindsey v. Prive Corp., 161 F.3d 886, 893 (5th Cir. 1998). This inquiry

requires an analysis of several factors, including: (1) whether material issues of fact

are present; (2) whether there has been substantial prejudice; (8) whether the

grounds for default have been clearly established; (4) whether the default was caused

by excusable neglect or good faith mistake; (5) the harshness of the default judgment;

and (6) whether the court would think itself obliged to set aside the default on a

motion by the defendant. See id.

Next, the Court must determine whether the plaintiffs complaint sets forth

facts sufficient to entitle the plaintiff to relief. Nishimatsu Constr. Co. v. Houston

Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975). In this analysis, “the Court must

accept the well-pleaded factual allegations in the plaintiffs complaint.” Meyer v.

Bayles, 559 F. App’x 312, 313 (5th Cir. 2014) (internal citations omitted). That being

said, “[t]he defendant is not held to admit facts that are not well-pleaded or to admit

conclusions of law.” Nishimatsu, 515 F.2d at 1206.

Should the Court find—after the two-step process—that entry of a default

judgment is warranted, the Court must determine what form of relief the plaintiff

should be granted. See United States v. 1998 Freightliner Vin #:

LFUYCZYB3WP886986, 548 F.Supp.2d 381, 384 (W.D. Tex. 2008). A defaulting

defendant “concedes the truth of the allegations of the Complaint concerning

defendant’s liability, but not damages.” Ins. Co. of the W. v. H & G Contractors, Inc.,

2011 WL 4738197, *4 (8.D. Tex., Oct. 5, 2011). Rather, a court must hold a hearing

to determine the amount of damages, unless the amount claimed can be

demonstrated “by detailed affidavits establishing the necessary facts.” United Artists

Corp. v. Freeman, 605 F.2d 854, 857 (5th Cir. 1979).

B. Analysis

i. Whether Default Judgment is Appropriate

The Lindsey factors support the entry of a default judgment against Defendant.

See Lindsey, 161 F.3d at 893. There are no issues of material fact because Defendant

has failed to appear before this Court to offer its own arguments or version of the

facts. Plaintiff has been substantially prejudiced by Defendant’s failure to file a

responsive pleading or otherwise defend against the Complaint. There is no

indication that Defendant’s failure to respond to the complaint was caused by

excusable neglect or a good faith mistake. Plaintiff has clearly established the

grounds for the default. Further, Defendant’s “failure to file a responsive pleading or

otherwise defend the instant lawsuit mitigates the harshness of a default judgment.”

EW Polymer Group, LLC v. GSX Intl Group, Inc., 622 F.Supp.3d 232, 237 (M.D. La.

2022). Finally, there are no facts which suggest that reasons exist to set aside the

default judgment if it were to be challenged by Defendant.

u. Whether Plaintiff's Complaint Establishes a Viable Claim

for Relief

1. Breach of Contract

Now, it must be determined whether Plaintiffs allegations, as set forth in the

Complaint and accepted as true, provide a sufficient basis for judgment in its favor.

See Nishimatsu Const., 515 F.2d at 1206. Plaintiff has brought claims for breach of

contract and unjust enrichment. (Doc. 1 at pp. 4-7). The contract in question is

governed by Michigan law. (Doc. 1-8 at p. 3).

To establish a breach of contract claim under Michigan law, a plaintiff “must

establish by a preponderance of the evidence that (1) there was a contract, (2) the

other party breached the contract, and (3) the breach resulted in damages to the party

claiming breach.” Media One Commcns LLC v. Macatawa Bank Corp., No. 333153,

2017 WL 2989089, at *2 (Mich. Ct. App. July 18, 2017) (quoting Bank of Am., NA v.

First Am. Title Ins. Co., 878 N.W.2d 816 (Mich. 2016)). In order to find a contract was

in existence, Plaintiff must show “(1) parties competent to contract, (2) a proper

subject matter, (8) a legal consideration, (4) mutuality of agreement, and (5)

mutuality of obligation.” Hess v. Cannon Twp., 696 N.W.2d 742, 748 (Mich. Ct. App.

2005) (quoting Thomas v. Leja, 187 Mich.App. 418, 422, 468 N.W.2d 58 (1991)).

Plaintiff has alleged sufficient facts to determine that a valid contract was in

existence. Both parties were business entities competent to contract. (Doc. 1 at §§ 1-

5). The Requirements Agreement contemplated the purchase and sale of automobile

refinishing products, a legal subject matter. (Id. at §§ 10-11). Plaintiff paid Defendant

$19,000 as consideration for the Requirements Agreement. (/d. at § 11). Plaintiff has

provided a copy of the Requirements Agreement, signed by both Defendant and

Plaintiff, which indicates mutuality of agreement and mutuality of obligation. (Id. at

{ 9).

Plaintiff has likewise pled sufficient facts to support the conclusion that

Defendant breached the contract. Plaintiff asserts that Defendant ceased business

operations on or about March 10, 2020. Ud. at § 13). Defendant did not complete the

mandatory minimum purchase requirements prior to ceasing operation. (Id. at § 138).

Plaintiff has also alleged facts showing that Defendant’s breach caused

damage. Plaintiff was entitled to a minimum purchase requirement of $121,000

under the Requirements Agreement. (/d. at 4 10). Of this amount, only $22,100 was

furnished by Defendant. (/d. at § 14). This leaves an outstanding balance of $98,900.

Ud.). Further, the Requirements Agreement was terminated with less than one-fifth

of the minimum purchase requirement having been fulfilled. ([d.). Pursuant to the

Requirements Agreement, Plaintiff is thereby additionally owed $20,900. Ud.). For

the foregoing reasons, Plaintiff has established a viable claim for breach of contract.

2. Unjust Enrichment

“(I]Jn order to sustain a claim of... unjust enrichment, a plaintiff must

establish (1) the receipt of any benefit by the defendant from the plaintiff and (2) an

inequity resulting to the plaintiff because of the retention of the benefit by the

defendant.” AFT Mich. v. Michigan, 846 N.W.2d 583, 677-78 (Mich. Ct. App. 2014),

sub nom. AFT Michigan v. State of Michigan, 497 Mich. 197 (2015) (citing Morris

Pumps v. Centerline Piping, Inc., 729 N.W.2d 898, 904 (Mich. Ct. App. 2006)). Here,

Defendant received $19,000 from Plaintiff. (Doc. 1 at § 11). This money was

transferred in consideration for a contract that has not been completed. It would be

inequitable to allow Defendant to retain the $19,000 benefit for purchase of a certain

amount of refinish products from Plaintiff when this amount was never met.

Defendant has therefore stated a viable claim for unjust enrichment.

ui. Damages

Finally, the Court must determine damages. A defaulting defendant “concedes

the truth of the allegations of the Complaint concerning defendant's liability, but not

damages.” Ins. Co. of the W. v. H & G Contractors, Inc., 2011 WL 4738197, *4 (S.D.

Tex., Oct. 5, 2011). A court's award of damages in a default judgment must be

determined after a hearing, unless the amount claimed can be demonstrated “by

detailed affidavits establishing the necessary facts.” United Artists Corp. v. Freeman,

605 F.2d 854, 857 (5th Cir. 1979). If a court can mathematically calculate the amount

of damages based on the pleadings and supporting documents, a hearing is

unnecessary. Joe Hand Promotions, Inc. v. Alima, No. 3:13-CV-0889-B, 2014 WL

1632158, at *3 (N.D. Tex. Apr. 22, 2014) (citing James v. Frame, 6 F.3d 307, 310 (5th

Cir. 1993)).

Here, Plaintiff has provided an affidavit establishing that Defendant is

obligated to refund 110% of the funds furnished by Plaintiff as consideration for the

Requirements Contract, since Defendant failed to meet at least one-fifth of the

minimum purchase requirement. (Doc. 13-4). Plaintiff has therefore sufficiently

demonstrated that it is owed $20,900. Plaintiff has also adequately demonstrated

that it incurred a $402 filing fee in bringing the present action, (Doc. 18-3), which the

Court may tax against Defendant as the losing party in this matter. See Crawford

Fitting Co. v. J. T. Gibbons, Inc., 482 U.S. 437, 440 (1987) (citing 28 U.S.C. § 1920).

The Court will not impose Plaintiffs other requested damages at this time.

Regarding Plaintiffs request for the Court to tax the $763.50 fee that it paid for

service of process against Defendant, Plaintiff has failed to show exceptional

circumstances surrounding service of Defendant support apportioning the private

process server fees against it. See Cypress-Fairbanks Indep. Sch. Dist. v. Michael F.

by Barry F., 118 F.8d 245, 257 (5th Cir. 1997) (‘As there was nothing exceptional

about the parties or the nature of the case, the district court should have denied these

unnecessary private service costs.”).

Plaintiff also requests expectation damages in the amount of $98,900. (Doc. 18-

1 at p. 8). Expectation damages are “damages designed to make the plaintiff whole.”

Frank W. Lynch & Co. v. Flex Techs., Inc., 463 Mich. 578, 586 n. 4 (2001). Plaintiff

has requested the remainder of the minimum purchase requirement under the

Requirements Agreement, yet it has failed to address the issue of the materials that

this sum relates to. The Court therefore has no basis for calculating the amount

necessary to make Plaintiff whole. Were the Court to enter expectation damages in

the amount of $98,900, Plaintiff would potentially be granted a windfall because it

could have sold the contemplated refinish products to different buyers at similar or

greater prices than would have been paid by Defendant.

Further, should Plaintiff still be owed the profits from these refinish products

in light of its relative size and subsequent status as a “lost volume seller,” Barrick

Ent., Inc. v. 2257 Waterman Op. Co., No. 275038, 2008 WL 582551, at *5 (Mich. Ct.

App. Mar. 4, 2008), Plaintiff has not provided any facts detailing the estimated profits

for such materials. This seems an especially thorny issue, as the Requirements

Agreement provides that refinish products were to be sold “at suggested refinish

pricing,” yet the contract does not specify what that pricing actually is. (Doc. 13-4 at

p. 5). Nor does the Requirements Agreement specify the amount of refinish products

Defendant was obligated to purchase at any given time — a fact that would

presumably have substantial impact over the expectation damages calculation since

Plaintiffs costs in making refinish products and the price at which the company sells

its products will constantly shift according to a myriad of factors.! Because Plaintiff

has failed to establish the facts necessary for the Court to award expectation

damages, the Court will decline to impose such costs against Defendant at this time.

See Freeman, 605 F.2d at 857 (“damages should not have been awarded without ...

a demonstration by detailed affidavits establishing the necessary facts.”).

I. CONCLUSION

Accordingly,

IT IS ORDERED that the Plaintiff's Motion for Default Judgment (Doc.

13) be and is hereby GRANTED IN PART.

IT IS FURTHER ORDERED that a default judgment in favor of Plaintiff

against Defendant be and is hereby ENTERED, establishing that Plaintiff is entitled

to $21,302.00 for its breach of contract and unjust enrichment claims.

IT IS FURTHER ORDERED that Plaintiffs request for expectation damages

and private process server fees be and is hereby DENIED WITHOUT PREJUDICE.

Plaintiff may file an additional motion seeking such damages should it wish to do so.

1 The Court notes that since the Requirements Agreement was executed, there have been

various notable events that presumably had some impact on Plaintiffs supply chain and

associated pricing strategies, such as, for example, a global pandemic.

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Judgment shall issue separately.

Baton Rouge, Louisiana, this l ty of June, 2024

JUDGE BRIAN A. |

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF LOUISIANA

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