Marchella of NY Inc. v. Mejia Tropical Products LLC

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

MARCHELLA OF NY INC. No. 22-cv-551 (JS)(ST)

and NORTHEAST BANANA CORP.,

MEMORANDUM & ORDER

Plaintiffs, GRANTING in part and

DENYING in part MOTION

- against - FOR DEFAULT JUDGMENT

MEJIA TROPICAL PRODUCTS LLC

and MARVIN E. MEJIA,

Defendants.

APPEARANCES

For Plaintiffs: Gregory A. Brown, Esq.

McCarron & Diess

200 Broadhollow Road, Suite 207

Melville, New York 11747

For Defendants: No appearance.

SEYBERT, District Judge:

INTRODUCITON

This case arises under the trust provisions of the

Perishable Agricultural Commodities Act, 7 U.S.C. § 499e(c)(4)

(“PACA”), a remedial statute designed to protect sellers of

perishable commodities who, without the statute, would lack any

way to secure themselves against nonpayment by their customers.

By this action, Plaintiffs Marchella of NY, Inc. (“Marchella”) and

Northeast Banana Corp (“NE Banana”, and together with Marchella,

the “Plaintiffs”) seek to recover monies from Defendants Mejia

Tropical Products LLC (“Mejia Tropical”) and Marvin E. Mejia

(“Mejia” and with Mejia Tropical, the “Defendants”), jointly and

severally and pursuant to PACA’s trust provisions, for wholesale

quantities of produce Plaintiffs delivered to Defendants. (See

Am. Compl., ECF No. 11.) Currently before the Court is Plaintiffs’

Motion for Default Judgment (hereafter, the “Motion”). (See ECF

No. 45; see also Support Memo, ECF No. 49.) Despite service of

the Motion upon the Defendants, the Motion is unopposed. (See

Aff. of Serv., ECF No. 50; Letter, ECF No. 51 (noting Defendants’

failure to timely oppose Motion).) For the reasons stated herein,

the Motion is GRANTED in part and DENIED in part.

BACKGROUND

I. Relevant Factual Background

The Court assumes the parties’ familiarity with the

underlying facts giving rise to this action. For the reader’s

convenience, it is sufficient to state that Plaintiffs sold bananas

and other produce (hereafter, the “Produce”) to Defendants on a

wholesale basis and subject to the PACA trust provisions, and that

Defendants resold said Produce to various food stores and other

establishments. As is relevant here, by the time Plaintiffs

commenced this action in 2022, Defendants had ceased paying

Plaintiffs for the delivered Produce and owed the Plaintiffs in

excess of $209,000.00. Eventually, Plaintiffs were able to collect

approximately $10,000.00 from a couple of Defendants’ customers.

II. Relevant Procedural Background

Despite a Preliminary Injunction Order being entered

directing Defendants to comply with their PACA obligations to pay

Plaintiffs for the Produce (see ECF No. 18), they failed to do so.

Defendants were ultimately found to be in contempt of the

Preliminary Injunction Order (see ECF No. 26; see also Order of

Continued Contempt, ECF No. 31; Amended Order of Continued

Contempt, ECF No. 36); however, notwithstanding being afforded the

opportunity to purge themselves of contempt, Defendants failed to

do so. And, even though Mejia appeared at the September 2022

contempt hearing and a related status conference in October 2022,

he never answered Plaintiffs’ Amended Complaint.1 (See Case

Docket, in toto.) Relatedly, Mejia Tropical never made an

appearance in this action. (See id.)

Thereafter, on December 5, 2022, the Clerk’s Entry of

Default was filed. (See ECF No. 44.) Plaintiffs now move for

default judgment relying upon: (1) their Amended Complaint; as

further supported by (2) the sworn affidavits of (i) Plaintiffs’

counsel, Attorney Brown (ECF No. 46), (ii) Ms. Khaimova for

Marchella (ECF No. 47), and (iii) Mr. Balducci for NE Banana (ECF

No. 48) (collectively, the “Supporting Affidavits”); and other

1 Mejia failed to appear at the December 5, 2022 continued contempt

hearing (see Minute. Entry, ECF No. 42, at 1) and has not been

heard from since the October 2022 status conference (see Case

Docket).

documentary evidence attached to the Supporting Affidavits. As

stated, supra, despite Defendants being served with the Motion,

they have not opposed it; their time to do so has long since

expired.

DISCUSSION

I. Applicable Law

“Federal Rule of Civil Procedure 55 is the basic

procedure to be followed when there is a default in the course of

litigation.” Vt. Teddy Bear Co. v. 1–800 Beargram Co., 373 F.3d

241, 246 (2d Cir.2004). “Rule 55 provides a ‘two-step process’

for the entry of judgment against a party who fails to defend:

first, the entry of a default, and second, the entry of a default

judgment.” City of N.Y. v. Mickalis Pawn Shop, LLC, 645 F.3d 114,

128 (2d Cir 2011) (quoting New York v. Green, 420 F.3d 99, 104 (2d

Cir.2005).

Entry of default is appropriate where a “party against

whom a judgment for affirmative relief is sought has failed to

plead or otherwise defend.” FED. R. CIV. P. 55(a). A defendant’s

default constitutes “an admission of all well-pleaded allegations”

against [it].” A&B Alt. Mktg. v. Int’l Quality Fruit Inc., 35

F.4th 913 (2d Cir. 2022); Mickalis Pawn Shop, 645 F.3d at 128

(“The first step, entry of a default, formalizes a judicial

recognition that a defendant has, through its failure to defend

the action, admitted liability to the plaintiff.”).

Upon the satisfaction of the first step, the second step

of Rule 55 must then be satisfied. “The second step, entry of a

default judgment [pursuant to Rule 55(b)], converts the

defendant’s admission of liability into a final judgment that

terminates the litigation and awards the plaintiff any relief to

which the court decides it is entitled, to the extent permitted by

Rule 54(c).” Mickalis Pawn Shop, 645 F.3d at 128. When

determining whether default judgment is warranted, the court

reviews a plaintiff’s allegations to decide whether said

allegations establish a defendant’s liability as a matter of law.

See Finkel v. Romanowicz, 577 F.3d 79, 84 (2d Cir. 2009); see also

A&B Alt. Mktg. v. Int’l Quality Fruit Inc., 521 F. Supp. 3d 170,

175–76 (E.D.N.Y. 2021) (“It is hornbook law that on a motion for

default judgment, the well-pleaded allegations of the complaint

pertaining to liability are accepted as true.” (citing Greyhound

Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d

Cir. 1992))).

Further, “[i]t is well-settled that on a motion for a

default judgment, a defendant’s default does not constitute an

admission as to the damages claimed in the complaint.” A&B Alt.

Mktg., 521 F. Supp. 3d at 176 (citation omitted). Rather, it is

the plaintiff’s burden to establish entitlement to requested

damages. See Credit Lyonnais Sec. (USA), Inc. v. Alcantara, 183

F.3d 151, 155 (2d Cir. 1999); see also A&B Alt. Mktg., 521 F. Supp.

3d at 176 (same). “To determine damages, the court may conduct an

inquest or it may rely on the affidavits and other documentary

evidence provided by plaintiff, obviating the need for a hearing

on damages.” A&B Alt. Mktg., 521 F. Supp. 3d at 176 (first citing

FED. R. CIV. P. 55(b)(2)(B); then citing Bricklayers & Allied

Craftworkers Local 2 v. Moulton Masonry & Constr., LLC, 779 F.3d

182, 189 (2d Cir. 2015)).

II. Analysis

As an initial matter, the Court relies upon the relevant

legal standards, analyses, and reasoning articulated in a report

and recommendation in another recent PACA case from this District

where Plaintiffs’ counsel was counsel for the plaintiff seeking

default judgment, to wit, Ryeco, LLC v. Legend Produce, Inc., No.

20-CV-4044, 2021 WL 2742873 (E.D.N.Y. May 24, 2021) (hereafter,

the “Ryeco R&R Decision”). Of significance: The Ryeco plaintiff

did not lodge any objections to the Ryeco R&R Decision, which was

adopted in its entirety by District Judge Block. See Ryeco, 2021

WL 2741605 (E.D.N.Y. July 1, 2021) (adopting report and

recommendation). Said legal standards, analyses and reasonings

are incorporated by reference herein.

A. Service of Process and Default

As a threshold matter, the Court makes the following

findings. The record reflects that proper service has been made

on Defendants. (See ECF Nos. 10, 14; see also, e.g., ECF Nos. 17,

18, 22, 24, 27, 28, 29, 37, 41.) As noted, review of the Case

Docket establishes that no answer, motion or other appearance was

filed by or on behalf of the Defendants. (See Case Docket, in

toto.) Further, the Clerk of Court properly entered notation of

Defendants’ default pursuant to Rule 55(a) of the Federal Rules of

Civil Procedure. (See Entry of Default, ECF No. 44.)

B. Liability

1. As to Mejia Tropical

To recover monies from a PACA trust, a

plaintiff must show five elements:

(1) the commodities sold were

perishable agricultural

commodities; (2) the purchaser of

the perishable agricultural

commodities was a commission

merchant, dealer, or broker; (3) the

transaction occurred in interstate

or foreign commerce; (4) the seller

has not received full payment on the

transaction; and (5) the seller

preserved its trust rights by giving

written notice to the purchaser of

its intention to[ ] do so

[(hereafter, the “PACA Recovery

Elements”)].

Ryeco R&R Decision, at *3. Upon examination of the Amended

Complaint, the Motion, and the Supporting Affidavits, together

with their respective supporting evidence, and for substantially

the same reasons as discussed in the Ryeco R&R Decision when

examining each of PACA Recovery Elements, the Court finds

Plaintiffs’ uncontroverted allegations establish each of the

requisite PACA Recovery Elements warranting judgment in their

favor as to their PACA-related causes of action, i.e., the Second,

Third, and Fourth Causes of Action.

Plaintiffs have also shown they are entitled to default

judgment against Mejia Tropical for failure to pay for goods sold,

their Fourth Cause of Action. By their Amended Complaint and the

Khaimova and Balduccia Affidavits, Plaintiffs have established the

purchase and sale of the Produce, as well as Mejia Tropical’s

failure to pay for the invoiced and delivered Produce. (See Am.

Compl. ¶¶8-13; Khaimova Aff. ¶¶ 5-6; Balduccia Aff. ¶¶ 5-6.) See

also, e.g., Alessi Equip., Inc. v. Am. Piledriving Equip., Inc.,

578 F. Supp. 3d 467, 507 (S.D.N.Y. 2022) (“The U.C.C. provides

that a seller is entitled to payment for goods sold and delivered

to the buyer, which the buyer then accepts. The buyer may thus

bring a breach of contract action for the price of goods sold and

delivered by showing ‘the purchase, sale and delivery of [such]

goods at an established price and nonpayment therefor.’” (first

citing N.Y. U.C.C. Law § 2-607(1); then quoting Conocophillips v.

261 E. Merrick Rd. Corp., 428 F. Supp. 2d 111, 126 (E.D.N.Y.

2006)).

For essentially the same reasons, Plaintiffs have also

established their entitlement to default judgment against Mejia

for their breach of contract claim, i.e., the Fifth Cause of

Action. For clarity, it is well-established that an invoice

between merchants is deemed a contract. See generally NE Trading,

Inc. v. Ven-Co Produce, Inc., No. 09-CV-7767, 2011 WL 4444511, at

*5 (S.D.N.Y. Sept. 26, 2011)) (“When the contract is between

merchants, ‘inclusion of terms in the seller’s invoice, without

protest from the buyer on receipt, makes the invoice terms the

terms of the contract.’” (citation omitted)). Examining the

Amended Complaint, as well as the Khaimova and Balduccia

Affidavits, shows Plaintiffs’ invoices to Mejia Tropical were the

parties’ contracts. Further examination of those same documents

also establishes that Plaintiffs complied with their contractual

obligations by delivering the aggregate amount of $209,252.50

worth of Produce to Mejia Tropical, but that Mejia Tropical did

not comply with its contractual obligations by failing to pay the

$209,252.50 for the delivered Produce. Hence, Mejia Tropical’s

liability for breach of contract is established.

2. As to Mejia, Individually

As aptly stated by Plaintiffs: “According to PACA

jurisprudence, an individual who is in a position to oversee the

proper application of the PACA trust assets, and who does not

preserve the trust assets for the beneficiaries, for whatever

reason and however innocent, has breached a fiduciary duty and is

personally liable for that tortious act.” (Support Memo at ECF

p.12 (citing S. Katzman Produce Inc. v. Yadid, 999 F.3d 867 (2d

Cir. 2021))); see also Ryeco R&R Decision, at *6 (“Officers and

directors of a corporation who are considered in a ‘position of

control’ over the PACA trust assets, can be held personally liable

for the breach of the PACA trust even if they did not personally

dissipate the assets.” (citation omitted)). Because Mejia

admitted “he is the sole stockholder of Mejia Tropical and that he

did ‘everything’ at the business, including having sole check

signing authority and deciding which of Mejia Tropical’s suppliers

to pay and when,” the Court agrees Plaintiffs have established

that Mejia is personally liable for the debt to Plaintiffs.

(Support Memo at ECF pp. 11-12 (citing Mejia Dep. Tr., Ex. 5, ECF

No. 46-5, attached to Brown Aff.).) See also Coosemans

Specialties, Inc. v. Gargiulo, 485 F.3d 701, 705, 707 (2d Cir.

2007).

C. Damages

1. Pre-Judgment Interest

“While PACA ‘does not itself establish a right to

interest and collection costs,’ courts have found that ‘the

purchaser is required to pay such items when the parties’ contract

so provides,’ and thus, ‘in such a case, the interest and

collection costs become subject to the PACA trust together with

the principal debt.’” Ryeco R&R Decision, at *9 (quoting G & P

Warehouse, Inc. v. Cho’s Church Ave. Fruit Mkt., No. 15-CV-6174,

2016 WL 5802747, at *7 (E.D.N.Y. Aug. 12, 2016); further citation

omitted). As to Marchella: Because Marchella’s invoices include

the term of added interest at a rate of 18% per annum on untimely

payments (see, e.g., Marchella Invoice, ECF No. 4-2 at ECF p.4.),

it has established its right to such damages. Conversely, as to

NE Banana: NE Banana’s invoices do not include terms regarding

the charging of interest on overdue payments. (See, e.g., NE

Banana Invoice, ECF No. 13-2 at ECF p.4.) However, NE Banana has

requested prejudgment interest at a 9% per annum rate pursuant to

Sections 5001 and 5004 of New York Civil Practice Law and Rules.

(See Am. Compl. ¶46.) In line with the reasoning articulated in

the Ryeco R&R Decision on this issue, see 2021 WL 2742873, at *9,

the Court finds NE Banana has established its entitlement to

prejudgment interest at a 9% per annum rate.

2. Attorneys’ Fees and Costs

Similarly, finding its statement of the law sound, and

its reasoning thorough and well-articulated, the Court follows the

Ryeco Court’s lead in determining whether Plaintiffs have

established entitlement to the attorneys’ fees and costs. Based

upon the Court’s review of the Plaintiffs’ respective Invoices,

Plaintiffs have established their entitlement to an award of

attorneys’ fees and costs. (See, e.g., Marchella Invoice, ECF No.

4-2 at ECF p.4; NE Banana Invoice, ECF No. 13-2 at ECF p.4.) Such

damages shall be awarded as follows.

a. Attorney Fees

i. Hourly Rates

There is no reason to deviate from the rates recommended

by the Ryeco Magistrate Judge, especially since: (1) it is the

requesting party’s burden to establish that the requested hourly

rate is reasonable; and (2) the information provided by Attorney

Brown regarding requested rates in light of the attorneys’

respective experience is minimal. See, e.g., Gesualdi v. Bestech

Transport, LLC, No. 14-CV-1110, 2022 WL 866853, at *3 (E.D.N.Y.

Mar. 23, 2022) (“It is Plaintiffs’ burden to ‘offer evidence to

the Court in addition to the attorney’s own affidavits why its

requested fee is appropriate.’”(citations omitted)). “‘In light

of the cursory nature of the information provided concerning each

attorney’s background and experience ‘the Court will rely on the

decisional law and its own experience in assessing the

reasonableness of Plaintiffs’ requested rates.’” Id. (quoting

Div. 1181 Amalgamated Transit Union—N.Y. Emps. Pension Fund v. D

& A Bus Co., 270 F. Supp. 3d 593, 622 (E.D.N.Y. 2017); further

citation omitted). Thus, as did the Ryeco Court, this Court finds

a reasonable rate for Attorney Brown’s services in this case to be

$385.00 per hour and a reasonable rate for Attorney Diess’ services

in this case to be $425.00 per hour. By correlation, the Court

finds a reasonable rate for Attorney Surbey’s services in this

case to be $350.00 per hour since he has been practicing law five

(5) years less than Attorney Brown. Cf. Pilitz v. Inc. Vill. of

Freeport, No. 07-CV-4078, 2011 WL 5825138, at *5 (E.D.N.Y. Nov.

17, 2011) (“Where, as here, the moving party fails to provide any

biographical information to support the reasonableness of the

rates, the court may use its discretion to award fees at a lower

rate than requested.”); Bank of Am., N.A. v. Jacobi Tool & Die

M.F.G., Inc., No. 17-CV-6828, 2019 WL 7599891, at *4 n.4 (E.D.N.Y.

Oct. 22, 2019).

ii. Time Billed

Given the Court’s familiarity with this case and its

careful review of the billable hours charged, it finds that the

hours expended by Attorneys Brown (73.60 hours), Diess (3.10

hours), and Surbey (3.10 hours) were not excessive, redundant or

otherwise unnecessary.

Accordingly, Plaintiffs have established entitlement to

attorneys’ fees in the amount of $30,738.50, as calculated, below:

Attorney Hourly Rate Hours Worked Total

Brown $385.00 73.60 $28,336.00

Diess $425.00 3.10 $1,317.50

Surbey $350.00 3.10 $1,085.00

TOTAL: $30,738.50

b. Costs

“The party seeking to recover costs ‘bears the burden of

adequately documenting and itemizing the costs requested.’” Datiz

v. Int’l Recovery Assocs., Inc., No. 15-CV-3549, 2020 WL 5899881,

at *14 (E.D.N.Y. Mar. 12, 2020) (quoting Ganci v. U.S. Limousine

Serv. Ltd., No. 10-CV-3027, 2015 WL 1529772, at *8 (E.D.N.Y. Apr.

2, 2015) (citation omitted)), report and recommendation adopted as

modified, 2020 WL 3790348 (E.D.N.Y. July 7, 2020) (modification

unrelated to denial of costs); D & A Bus, 270 F. Supp. 3d at 628

(“[I]t is incumbent upon the party seeking reimbursement of its

costs to provide the court adequate substantiation in the form of

receipts and other documents not only showing such costs were

incurred, but that they were paid,” and collecting cases for the

proposition). “In the absence of adequate substantiation, a party

is not entitled to recover costs.” Id. (citing Douyon v. N.Y.

Med. Health Care, P.C., 49 F. Supp. 3d 328, 352 (E.D.N.Y. 2014)

(declining to award costs due to an absence of documentation); Joe

Hand Promotions, Inc. v. Elmore, No. 11-CV-3761, 2013 WL 2352855,

at *12 (E.D.N.Y. May 29, 2013) (same)); see also, e.g., Local Civil

Rule 54.1(a).

Here, Plaintiffs submitted a “Client Expenses Report”

delineating $6,589.61 in total costs incurred, which comprises of:

$1,445 for a deposition; $402 for the filing fee; $1,373.35 for

online research; $20 for photocopying; $1,014.94 for postal and

Federal Express services; $2,216.25 for private process services;

$100 for translation service; and $18.07 (presumably) for travel.

(See Client Expenses Report, Ex. G, ECF No. 46-7, at ECF pp.22-

29, attached to Brown Aff.) No supporting invoices or bills have

been provided to substantiate the requested costs. Counsel made

the same fatal omission in Ryeco, which was the reason the Ryeco

Court denied plaintiffs’ request for all costs other than the

Court’s filing fee. See Ryeco R*R Decision, at *11 (citing Piedra

v. Ecua Rest., Inc., No. 17-CV-3316, 2018 WL 1136039, at *20

(E.D.N.Y. Jan. 31, 2018) (“[T]he Court cannot simply accept at

face value the other costs that plaintiff’s counsel seeks, such as

service of process and translator services, without additional

supporting documentation for those costs.”), report and

recommendation adopted in relevant part by 2018 WL 1135652 (Feb.

28, 2018)). Thus, as in Ryeco (which provided clear guidance on

what is required to properly advance a request for costs in the

context of default judgment), because Plaintiffs have not

substantiated their requested costs with the requisite supporting

documentation, other than the Court’s filing fee, Plaintiffs have

not established entitlement to their costs in this instance.2

However, because the Court may take judicial notice of the payment

of its filing fee, see Jacobi Tool & Die, 2019 WL 7599891, at *6,

Plaintiffs have established their entitlement to that cost. (See

Docket Text to ECF 1 (“filing fee $402, receipt number ANYEDC-

2 The Court further notes, that similar to PACER fees, fees for

online research are generally considered part of a firm’s overhead

and, therefore, not reimburseable. See, e.g., Jacobi Tool & Die,

2019 WL 7599891, at *7 (quoting Cardoza v. Mango King Farmers Mkt.

Corp., No. 14-CV-3314, 2015 WL 5561033, at *19 (E.D.N.Y. Sept. 1,

2015) (“Plaintiffs have failed to show the Court how the attorney’s

fees are not crafted to absorb such fees.”)).

15242950”).) Hence, Plaintiffs are entitled to $402.00 only in

costs.

CONCLUSION

Accordingly, IT IS HEREBY ORDERED that Plaintiffs’

Motion for Default Judgment (ECF No. 45) is GRANTED in part and

DENIED in part;

IT IS FURTHER ORDERED that Plaintiffs’ counsel is

directed to disburse to the Plaintiffs the $10,522.00 recovered

from Defendants’ accounts receivable; and

IT IS FURTHER ORDERED that, by no later than May 5, 2023,

Plaintiffs’ counsel is to submit a revised proposed Final Default

Judgment drafted in accordance with the Court’s ruling herein. An

accompanying worksheet delineating relevant calculations is to be

included for the Court’s consideration.

SO ORDERED.

/s/ JOANNA SEYBERT

Joanna Seybert, U.S.D.J.

Dated: April 17, 2023

Central Islip, New York