Eco-Fuels LLC v. Sarker

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

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ECO-FUELS LLC,

Plaintiff,

- against –

MEMORANDUM & ORDER

DR. MOINUDDIN SARKER and WASTE

TECHNOLOGIES, LLC, 22-CV-250(KAM)(JAM)

Defendants.

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KIYO A. MATSUMOTO, United States District Judge:

Plaintiff Eco-Fuels LLC (“Eco-Fuels” or “Plaintiff”) brought

this action against Dr. Moinuddin Sarker and Waste Technologies,

LLC (together, “Defendants”) alleging breach of contract, fraud,

and unjust enrichment. Plaintiff seeks monetary damages,

attorneys’ fees and costs, and declaratory relief. Defendants

failed to appear or otherwise defend this action. After the Clerk

of the Court entered default against defendants pursuant to Rule

55(a) of the Federal Rules of Civil Procedure, Plaintiff filed the

instant motion for entry of default judgment. For the reasons

stated herein, Plaintiff’s motion for entry of a default judgment

is granted in part and denied in part pursuant to Rule 55(b)(2) of

the Federal Rules of Civil Procedure. Default judgment is granted

against Defendants, jointly and severally, and Plaintiff is

awarded $200,000.00 in damages, $72,352.44 in pre-judgment

interest as of February 26, 2024, and post-judgment interest from

the date judgment is entered as prescribed in 28 U.S.C. § 1961.

BACKGROUND

The following facts are taken from Plaintiff’s Complaint,

Motion for Default Judgment, supporting memorandum, and supporting

declaration and affidavits. (See ECF No. 1, Compl.; ECF No. 17-

8, Memorandum in Support of Motion for Default Judgment (“Mem.”);

ECF No. 17-3, Affidavit of Moses Kahan (“Kahan Aff.”); ECF Nos. 17-

4 through 17-7, Exhibits A through D to the Kahan Affidavit (“Aff.

Exs. A-D”); ECF No. 20, Declaration of Moses Kahan (“Kahan Decl.”);

ECF Nos. 20-1 through 20-5, Exhibits A through E to the Kahan

Declaration (“Decl. Exs. A-E”).) Given Defendants’ default, the

Court accepts as true all well-pleaded factual allegations in the

Complaint, except as to damages. See City of New York v. Mickalis

Pawn Shop, LLC, 645 F.3d 114, 137 (2d Cir. 2011).

I. Factual Background

Plaintiff Eco-Fuels LLC is a New York State limited liability

company with two members – Moses Kahan (“Kahan”), the managing

member, and Diana Glenn. (Kahan Decl. at ¶¶1, 7-8.) Both members

of Eco-Fuels are New York domiciliaries. (Id. at ¶¶9-10.)

Defendant Waste Technologies LLC (“Waste Technologies”) is a

Delaware limited liability company of which Dr. Moinuddin Sarker

(“Sarker”) is the sole member1. (Id. at ¶¶11-12.) Sarker is

domiciled in Connecticut. (Id. at ¶13.)

Sarker approached the members of Eco-Fuels in 2019 and offered

to “develop, construct, and manufacture a machine that would

convert plastic waste into fuel” (the “Machine”). (Compl. at ¶29.)

Plaintiff alleges that Sarker made representations both in

meetings with Plaintiff and on the Waste Technologies website

regarding his academic credentials and background in waste

conversion to energy. (Id. at ¶¶11-20.) Plaintiff subsequently

entered into a handwritten memorandum of understanding with

Defendants in July 2019, which was replaced by a subsequent

contract in October 2019 (the “Contract”). (Id. at ¶30.) The

contract was later amended in writing by the parties on December

22, 2019, via an addendum (the “Addendum”). (Id. at ¶31.)

The Contract represented that Defendants would “build such a

[plastic-converting] Machine for [Eco-Fuels] within six (6) months

from the date of this agreement” and that Defendants would

subsequently “lease commercial space” and allow Eco-Fuels “access

to the Space to operate the Machine for twelve months out of the

space after delivery.” (Aff. Ex. A at 1.) Defendants also agreed

to “train and teach [Eco-Fuel’s] engineer with the operational and

1 The Court notes that Kahan’s sworn declaration regarding Sarker’s status as

the sole member of Waste Technologies is supported by the contract between the

parties, which states that Sarker is the “sole owner of Waste Technologies LLC.”

(Aff. Ex. A at 1.)

maintenance and upkeep of the Machine” within two months of the

signing of the agreement, and that such training would continue

for six months after delivery of the Machine to Eco-Fuels. (Id.)

The Contract further set out a payment schedule from Eco-Fuels to

Defendants, noting that $50,000 had already been paid to Defendants

by Eco-Fuels, that $100,000 would be due within three business

days of the signing of the contract, and that progress payments of

$400,000 would eventually be due following certain milestones in

the development of the Machine. (Id. at 3.)

The parties’ December 2019 Addendum modified the payment

schedule for the Contract, noting that $165,000 had already been

paid to Defendants by Eco-Fuels, that $35,000 would be due within

five days of the signing of the Addendum, and that the subsequent

progress payments would be modified. (Aff. Ex. B. at 1.) The

Addendum also stated that “the [plastic-converting] Machine must

be one hundred percent (100%) buil[t] and functioning within sixty

(60) days from the date the Addendum B is signed.” (Id.)

On January 31, 2020, Sarker invited Plaintiff to inspect the

Machine in order to demonstrate that prior payments had in fact

been used to purchase materials to build the Machine, and that the

Machine itself was partially complete. (Kahan Aff. at ¶30.)

Plaintiff did not find the inspection satisfying, however, finding

“limited materials strewn around the shop,” and Sarker requested

that Plaintiff return for another inspection on February 18, 2020.

(Id. at ¶¶31-32.) Upon Plaintiff’s subsequent inspection on

February 18, 2020, it appeared that “some progress had been made”

but that the Machine was still not 50% complete. (Id. at ¶33.)

Sarker informed Plaintiff that he would not be able to meet the

60-day timeframe set forth in the Addendum for assembly of the

Machine. (Id. at ¶35.) Plaintiff suspended its payments under

the Addendum and Contract at that point, and sent a notice of

default under the Contract by letter dated February 23, 2020. (Id.

at ¶36.)

Plaintiff alleges that “the bulk of the funds received from

the Plaintiff were not used for the purchase of material and

Machine assembly” but were instead utilized by Sarker to “fund his

lavish lifestyle, including but [not] limited to international

travel to the City of Mecca located in Saudia Arabia, Bangladesh,

India, and Europe.” (Id. at ¶¶38-39.) In total, Plaintiff paid

Waste Technologies a total of $200,000 pursuant to the Contract

and the Addendum. (Kahan Decl. at ¶19.)

II. Procedural Background

Plaintiff commenced this action against Defendants on January

16, 2022. (See Compl.) Plaintiff’s complaint alleges fraud,

breach of contract and unjust enrichment, and seeks damages,

attorney’s fees, and a declaratory judgment regarding ownership of

the Machine2. (See id. ¶¶ 65-97.)

Plaintiff filed affidavits stating that Sarker was personally

served with the summons and complaint twice – first on January 20,

2022, and subsequently on January 24, 2022. (ECF Nos. 5, 7.)

Plaintiff filed an affidavit stating that Waste Technologies was

served on February 9, 2022. (ECF No. 6.) Subsequently, on April

14, 2022, Plaintiff filed a request for a certificate of default

against all Defendants, based on their failure to answer or

otherwise respond to the complaint. (ECF No. 8.) The Clerk of

Court entered a certificate of default against both Sarker and

Waste Technologies on April 18, 2022. (ECF No. 9.)

Plaintiff thereafter filed a motion for default judgment on

July 25, 2022, before filing a motion to stay the instant case on

September 29, 2022, noting that Defendant Sarker had filed for

bankruptcy protection in Connecticut. (ECF Nos. 10, 11.) This

Court granted Plaintiff’s motion to stay on September 30, 2022,

and simultaneously denied Plaintiff’s motion for default judgment

without prejudice for failure to follow EDNY Local Civil Rules.

2 Because Plaintiff has not addressed its entitlement to a declaratory judgment

regarding ownership of the Machine in its motion for default judgment, the Court

concludes that Plaintiff has abandoned this cause of action. See Joe Hand

Promotions, Inc. v. Bernal, No. 18-CV-85 (ILG), 2019 WL 885930, at *3 (E.D.N.Y.

Feb. 22, 2019) (finding that although Plaintiff prayed for injunctive relief in

its complaint, it did not request such relief in its motion for default judgment,

and therefore the claim was deemed abandoned); see also Payamps v. M & M

Convenience Deli & Grocery Corp., No. 16-CV-4895 (LDH) (SJB), 2019 WL 8381264,

at *3 n.3 (E.D.N.Y. Dec. 9, 2019) (finding that claim alleged in the complaint,

but not asserted in motion for default judgment, was abandoned).

(Docket Order dated September 30, 2022.) Plaintiff subsequently

refiled its motion for default judgment on November 6, 2022,

alongside a motion to lift the previously entered stay. (ECF Nos.

12, 13.) The Court granted the Motion to lift the stay on November

7, 2022, in light of the dismissal of Sarker’s Chapter 13

bankruptcy case. (Docket Order dated November 7, 2022.)

Subsequently, Plaintiff’s motion for default judgment, filed prior

to the lifting of the stay, was terminated as improperly filed,

and Plaintiff refiled the motion for default judgment on October

26, 2023.

This Court subsequently ordered Plaintiff to show cause as to

why the action should not be dismissed for lack of subject matter

jurisdiction on December 12, 2023. (Docket Order dated December

12, 2023.) The Court requested Plaintiff to identify each member

of Plaintiff Eco-Fuels LLC and Defendant Waste Technologies LLC

and properly plead facts establishing each member’s citizenship as

of the date the complaint was filed, and also requested Plaintiff

provide additional factual evidence regarding monetary damages.

(Id.) Plaintiff responded to the Court’s Order to Show Cause on

January 2, 2024, and satisfied the Court that diversity subject

matter jurisdiction was proper. (See generally ECF 20.)

LEGAL STANDARD

Pursuant to Rule 55, courts follow a two-step process to enter

default judgment. City of New York v. Mickalis Pawn Shop, LLC,

645 F.3d 114, 128 (2d Cir. 2011). First, when the defendant fails

to plead or otherwise defend and that failure is shown by affidavit

or otherwise, the clerk of court enters the defendant’s default.

See Fed. R. Civ. P. 55(a). A court considers an entry of default

against a party to be an admission of all the well-pleaded

allegations in the complaint regarding liability. Cement &

Concrete Workers Dist. Council Welfare Fund v. Metro Found.

Contractors Inc., 699 F.3d 230, 234 (2d Cir. 2012). Second, if

the defaulting party fails to appear or move to set aside the entry

of default under Rule 55(c), the opposing party may move the court

to enter a default judgment to establish liability and damages.

See Fed. R. Civ. P. 55(b)(2). Before entering a default judgment,

the court “must ensure that (1) jurisdictional requirements are

satisfied; (2) the plaintiff took all the required procedural steps

in moving for default judgment; and (3) the plaintiff's

allegations, when accepted as true, establish liability as a matter

of law.” Jian Hua Li v. Chang Lung Grp. Inc., No. 16-CV-6722 (PK),

2020 WL 1694356, at *4 (E.D.N.Y. Apr. 7, 2020) (citations omitted).

Although the court accepts as true all well-pleaded factual

allegations in the complaint, the court must still ensure the

allegations provide a basis for liability and relief, and the court

has discretion to require further proof of necessary facts. Finkel

v. Romanowicz, 577 F.3d 79, 84 (2d Cir. 2009). If the unchallenged

facts establish the defendant’s liability, the court determines

the amount of damages due. See Credit Lyonnais Sec. (USA), Inc.

v. Alcantara, 183 F.3d 151, 155 (2d Cir. 1999). The court may

determine damages without an in-person hearing based on the

plaintiff’s affidavits so long as it can ensure a basis for the

damages specified in the default judgment. Transatlantic Marine

Claims Agency, Inc. v. Ace Shipping Corp., Div. of Ace Young Inc.,

109 F.3d 105, 111 (2d Cir. 1997).

DISCUSSION

I. Jurisdiction

Title 28 U.S.C. § 1332 provides that “[t]he district courts

shall have original jurisdiction of all civil actions where the

matter in controversy exceeds the sum or value of $75,000,

exclusive of interests and costs, and is between . . . citizens of

different States.” 28 U.S.C. § 1332(a)(1). “Diversity

jurisdiction requires that all of the adverse parties in a suit be

completely diverse with regard to citizenship.” Handelsman v.

Bedford Vill. Assocs. Ltd. P'ship, 213 F.3d 48, 51 (2d Cir. 2000)

(internal quotation marks and citation omitted).

Plaintiff Eco-Fuels, a New York LLC, alleges that both of its

members are New York citizens. (Kahan Decl. at ¶¶7-10.) Plaintiff

alleges that Defendant Sarker is the sole member of Waste

Technologies LLC, a Delaware LLC, and that Sarker is a citizen of

Connecticut. (Id. at ¶¶11-13.) Plaintiff alleges that it suffered

damages of at least $200,000, the amount it paid Defendants under

the contract. (Id. at ¶14.) Thus, there is diversity jurisdiction

between Plaintiff and Defendants. See Bayerische Landesbank, New

York Branch v. Aladdin Cap. Mgmt. LLC, 692 F.3d 42, 49 (2d Cir.

2012) (“a limited liability company [] takes the citizenship of

each of its members”).

The Court may not enter a default judgment unless it has both

subject-matter jurisdiction over the action and personal

jurisdiction over each defendant. See Covington Indus., Inc. v.

Resintex A.G., 629 F.2d 730, 732 (2d Cir. 1980) (“A judgment

entered against parties not subject to the personal jurisdiction

of the rendering court is a nullity.”). Under New York's long-

arm statute, contained in New York Civil Practice Law and Rules

(“CPLR”) § 302(a), courts may exercise personal jurisdiction over

a non-domiciliary “who in person or through an agent . . .

transacts any business within [New York] or contracts anywhere to

supply goods or services in the state,” but only where the cause

of action arises from the enumerated acts. CPLR § 302(a); see

Best Van Lines, Inc. v. Walker, 490 F.3d 239, 244 (2d Cir. 2007).

Here, both Defendants were party to a contract to supply goods and

services to Plaintiff, a New York LLC, and the contract included

a choice-of-law clause providing for New York law to govern the

contract. (Aff. Ex. A at 2.) The cause of action for the instant

case is breach of the same contract, and as such, the Court finds

that Defendants transacted business within New York and are subject

to the Court’s personal jurisdiction. See McNamee v. Clemens, 762

F. Supp. 2d 584, 594 (E.D.N.Y. 2011) (describing the factors

considered to determine whether a non-domiciliary has transacted

business in New York, including whether the defendant has an

ongoing contractual relationship with a New York corporation and

whether there is a choice-of-law clause in any such contract).

This Court may also exercise jurisdiction over Defendants to

the extent they have consented to allow the Court to do so. See

Brown v. Lockheed Martin Corp., 814 F.3d 619, 625 (2d Cir. 2016)

(“an entity may contract or stipulate with another to permit

proceedings in a state's courts, notwithstanding the remoteness

from the state of its operations and organization”). Relevant to

the instant case, “parties can consent to personal jurisdiction

through forum-selection clauses in contracts.” Ramiro Aviles v.

S & P Glob., Inc., 380 F. Supp. 3d 221, 258 (S.D.N.Y. 2019)

(internal quotation marks and citation omitted). Here, the

Contract includes a forum-selection clause stating that “[b]oth

parties agree to submit to personal jurisdiction to a Federal or

State court of competent jurisdiction sitting in and for the County

of Kings in any action or proceeding arising out of this

agreement.” (Aff. Ex. A. at 2.) Both Sarker and Waste

Technologies were party to the contract in question and thus this

Court finds that Defendants are subject to its jurisdiction as

regards any dispute arising out of the Contract.

II. Procedural Requirements

Before the court will enter a default judgment, the plaintiff

must show that entry of default was appropriate, which itself

requires showing that the defendant was effectively served with

process. Sik Gaek, Inc. v. Yogi’s II, Inc., 682 F. App’x 52, 54

(2d Cir. 2017) (summary order). Local Rule 55.2 imposes the

additional requirements that the plaintiff attach certain

materials to the motion and file proof that all motion papers were

mailed to the defendant.

A. Service of Process

The Court finds that Plaintiff properly served each defendant

with the summons and complaint. Under the Federal Rules, service

for a “corporation, . . . partnership, or other unincorporated

association that is subject to suit under a common name” can occur

“by delivering a copy of the summons and of the complaint to an

officer, a managing or general agent, or any other agent authorized

by appointment or by law to receive service of process.” Fed. R.

Civ. P. 4(h)(1)(B). Federal Rule of Civil Procedure 4(e)(1) and

4(h)(1)(A) also permits a party to effect service on an individual

or corporate entity in accordance with the rules of the state where

the district is located or where service is made.

As to Waste Technologies LLC, a Delaware LLC, it is unclear

from the pleadings whether the company is authorized to do business

in the State of New York. In New York, where this Court is located,

serving a foreign LLC not authorized to do business in the state

via the Secretary of State is proper “[i]n any case in which a

non-domiciliary would be subject to the personal or other

jurisdiction of the courts of [New York] under article three of

the civil practice law and rules.” NY Limited Liability Company

Law (“NY LLC Law”) § 304(a). Service via the Secretary of State

is likewise proper fo r an authorized foreign LLC. Id. § 303(a).

The Court will proceed under the assumption that Waste Technologies

is an unauthorized foreign LLC, as Plaintiff cites to NY LLC Law

§ 304 in its affidavit of process. (See ECF No. 6.)

As discussed supra, the Court has found that Waste

Technologies is subject to personal jurisdiction in New York

pursuant to CPLR § 302(a); thus, it may be served in accordance

with NY LLC Law § 304. To properly serve a foreign LLC, three

steps are required. “First, service upon the unauthorized foreign

limited liability company may be made by personal delivery of the

summons and complaint, with the appropriate fee, to the Secretary

of State.” Glob. Liberty Ins. Co. v. Surgery Ctr. of Oradell,

LLC, 59 N.Y.S.3d 751, 753 (2d Dep’t 2017) (citing NY LLC Law §

304(b)). As provided in the affidavit of service, Plaintiff

properly served the Secretary of State and paid the appropriate

fee. (See ECF No. 6.) “Second, in order for the personal delivery

to the Secretary of State to be ‘sufficient,’ the plaintiff must

also give the defendant direct notice of its delivery of the

process to the Secretary of State, along with a copy of the

process.” Glob. Liberty Ins. Co., 59 N.Y.S.3d at 753 (citing NY

LLC Law § 304(c)(2)). Plaintiff complied with the second step by

mailing, via registered mail, Waste Technologies’ registered agent

in Delaware3 a copy of the summons and complaint, along with notice

of the service on the Secretary of State. (ECF No. 6.) “Third,

after process has been delivered to the Secretary of State and

direct notice of that service has been sent to the defendant, the

plaintiff must file proof of service,” to include the “return

receipt” from the registered mailing made as part of step two, to

the clerk of the court. Glob. Liberty Ins. Co., 59 N.Y.S.3d at

753. Plaintiff attached the return receipt, showing a delivery

date of January 31, 2022, to its affidavit of service, properly

completing step three. (ECF No. 6.) As such, Plaintiff properly

complied with the requirements of NY LLC Law § 304 in serving

Defendant Waste Technologies, and service was complete 10 days

after filing the affidavit of service with the clerk of court.

3 The Court may properly take judicial notice of public records. See Haru

Holding Corp. v. Haru Hana Sushi, Inc., No. 13-CV-7705 (RWS), 2016 WL 1070849,

at *2 (S.D.N.Y. Mar. 15, 2016) (taking judicial notice of information provided

by the New York State Department of State). The Court takes judicial notice of

the public entity information provided by the Delaware Department of State,

Division of Corporations showing that “Waste Technologies, LLC” has as its

registered agent “The Company Corporation” with an address of 251 Little Falls

Drive, Wilmington, DE – the address to which Plaintiff mailed process. See

https://icis.corp.delaware.gov/Ecorp/EntitySearch/NameSearch.aspx (search

conducted using entity name “Waste Technologies, LLC” which returns file number

5395420).

Regarding Sarker, The Federal Rules of Civil Procedure

provide that an individual may be served via any means authorized

by the state in which service is attempted or by delivering service

personally, at the individual's dwelling, or to an authorized

agent. Fed. R. Civ. P. 4(e). In the instant case, Plaintiff served

the summons and complaint upon Sarker personally at his home

address in Connecticut. (ECF No. 7, Kahan Decl. at ¶13.) Thus,

Plaintiff properly served Sarker.

B. Entry of Default

The Court next finds that the Clerk of Court properly entered

a certificate of default against each defendant. Because Plaintiff

filed its affidavit of service on February 9, 2022, (see ECF

No. 6), service was complete “ten days after [the affidavit was]

filed with the clerk of the court,” see NY LLC Law § 304(e) -

February 19, 2022. Thus, Waste Technologies was required to answer

or otherwise respond to the Complaint by March 12, 2022. See

Fed. R. Civ. P. 12(a)(1)(A)(i). Likewise, because Sarker was

served on January 24, 2022, (see ECF No. 7), he was required to

answer or otherwise respond to the complaint by February 14, 2022.

When both Defendants failed to respond, Plaintiff filed a request

for a certificate of default on April 14, 2022. (See ECF No. 8.)

The Clerk of Court entered a certificate of default against both

Defendants on April 18, 2022. (ECF No. 9.)

C. Local Rule 55.2

Local Rule 55.2(b) requires that a plaintiff attach to a

motion for default judgment the Clerk’s certificate of default, a

copy of the complaint, and a proposed form of default judgment.

Local Rule 55.2(c) requires that all papers submitted in connection

with a motion for a default judgment be mailed to the “last known

residence” of an individual defendant or “last known business

address” of a corporate defendant.

Plaintiff’s Motion for Default Judgment is supported by an

affirmation that declares Waste Technologies and Sarker were

served with all required documents at the addresses at which they

were originally served. (See ECF No. 17 at 3.) Likewise,

Plaintiff’s response to the Court’s Order to Show Cause was

supported by an affirmation that the response and its exhibits

were served upon Defendants at the same addresses. (ECF No. 22.)

Accordingly, Plaintiff has met the requirements of Local Rule

55.2(c).

III. Liability

Having assured itself that the jurisdictional and procedural

prerequisites to enter a default judgment are met, the Court now

must assess whether Plaintiff’s well-pleaded factual allegations

establish Defendants’ liability as a matter of law.

A. Choice of Law

The parties agreed pursuant to the Contract that their

agreement “shall be governed by and construed under the laws of

the State of New York.” (Aff. Ex. A at 2.) “The validity of a

contractual choice-of-law clause is a threshold question that must

be decided not under the law specified in the clause, but under

the relevant forum's choice-of-law rules governing the

effectiveness of such clauses.” Fin. One Pub. Co. v. Lehman Bros.

Special Fin., 414 F.3d 325, 332 (2d Cir. 2005). Thus, this Court,

sitting in diversity, is bound to apply New York law to determine

the validity and scope of the choice-of-law clause. When a choice-

of-law provision exists “and the jurisdiction chosen by the parties

has a substantial relationship to the parties or their performance,

New York law requires the court to honor the parties’ choice

insofar as matters of substance are concerned, so long as

fundamental policies of New York law are not thereby violated.”

Woodling v. Garrett Corp., 813 F.2d 543, 551 (2d Cir. 1987) (citing

A.S. Rampell, Inc. v. Hyster Co., 144 N.E.2d 371, 379 (N.Y. 1957)).

Plaintiff, a party to the Contract, is a New York limited liability

company, and there is no evidence that enforcement of the choice

of law provision would violate the fundamental policies of New

York. Accordingly, the Court will apply New York substantive law

to Plaintiff’s claims arising out of the Contract.

B. Breach of Contract Claim

“To state a claim for breach of contract under New York law,

the complaint must allege: (i) the formation of a contract between

the parties; (ii) performance by the plaintiff; (iii) failure of

defendant to perform; and (iv) damages.” Orlander v. Staples,

Inc., 802 F.3d 289, 294 (2d Cir. 2015) (internal quotation marks

omitted). The Court finds that Plaintiff has alleged adequate

facts to satisfy each of these four elements: (i) Plaintiff agreed

to pay Defendants a total of $500,000 in exchange for Defendants

building “a machine that converts assorted plastic into fuel”

within six months of the signing of the Contract or sixty days of

the signing of the Addendum (ii) Plaintiff performed under the

parties’ agreements by paying a total of $200,000, all payments

required prior to a demonstration by Sarker that the Machine

“properly functions,” (iii) Defendants breached the agreements by

failing to demonstrate a properly functioning Machine, and failing

to deliver the Machine; and (iv) Plaintiff has been damaged in the

amount of $200,000. (Kahan Aff. at ¶¶5-7, 15, 17-19; Aff. Exs. A,

B.) Thus, the Court finds that Plaintiff has sufficiently pled

that the Defendants are liable for breach of contract.

The Court also finds that it is appropriate to hold both

Defendants jointly and severally liable for any damages awarded to

Plaintiff on its breach of contract claim because both Defendants

signed the Contract and Addendum. See Todtman, Nachamie, Spizz &

Johns, P.C. v. Ashraf, 241 F.R.D. 451, 457 (S.D.N.Y. 2007), aff'd,

316 F. App'x 51 (2d Cir. 2009) (entering judgment against corporate

defendant and individual defendant jointly and severally on breach

of contract claim where both were party to contract at issue).

“Under the doctrine of joint and several liability, when two (2)

or more defendants act together to cause an injury, each defendant

is liable to the victim for the total damages.” Ainbinder v. Money

Ctr. Fin. Grp., Inc., No. 10-CV-5270 (SJF), 2014 WL 1220630, at *3

(E.D.N.Y. Mar. 24, 2014) (citing Zapico v. Bucyrus–Erie Co., 579

F.2d 714, 718 (2d Cir. 1978)). Both Sarker and Waste Technologies

were party to the Contract and the Addendum, and both Defendants

were referred to “[c]ollectively” throughout the Contract as

“Doctor.” (See Aff. Exs. A, B.) Thus, Defendants Sarker and Waste

Technologies are collectively bound by the terms of the Contract

and are jointly and severally liable for any damages incurred as

a result of a breach of that agreement.

C. Unjust Enrichment

The Complaint also asserts an unjust enrichment claim against

the Defendants. The Court finds that this claim is duplicative of

Plaintiff's breach of contract claim and therefore denies

Plaintiff's motion as to the unjust enrichment claim.

“[T]o succeed on a claim for unjust enrichment under New York

law, a plaintiff must prove that ‘(1) defendant was enriched, (2)

at plaintiff's expense, and (3) equity and good conscience militate

against permitting defendant to retain what plaintiff is seeking

to recover.’” Diesel Props S.r.l. v. Greystone Bus. Credit II

LLC, 631 F.3d 42, 55 (2d Cir. 2011) (quoting Briarpatch Ltd., L.P

v. Phoenix Pictures, Inc., 373 F.3d 296, 306 (2d Cir. 2004)).

Although Plaintiff has satisfied the unjust enrichment elements,

“when a ‘matter is controlled by contract,’ the plaintiff has no

valid claim for unjust enrichment under New York law.” Marshall

v. Hyundai Motor Am., 51 F. Supp. 3d 451, 471 (S.D.N.Y. 2014)

(quoting Goldman v. Metro. Life Ins. Co., 841 N.E.2d 742, 746 (N.Y.

2005)); see also Cont'l Cas. Co. v. Contest Promotions NY, LLC,

No. 15-CV-501 (MKB), 2016 WL 1255726, at *3-4 (E.D.N.Y. Mar. 28,

2016) (collecting cases). Here, the Complaint alleges a valid

contract that existed between the parties, which the Defendants

breached, causing damage to Plaintiff. Because the dispute is

“governed by a valid contract, Plaintiff is not entitled to recover

on an unjust enrichment theory.” Cont'l Cas. Co., 2016 WL 1255726,

at *4.

D. Fraud

“Under New York law, to state a cause of action for fraud, a

plaintiff must allege a representation of material fact, the

falsity of the representation, knowledge by the party making the

representation that it was false when made, justifiable reliance

by the plaintiff and resulting injury.” Lerner v. Fleet Bank,

N.A., 459 F.3d 273, 291 (2d Cir. 2006) (internal quotation marks

and citation omitted). In a diversity action such as this, “to

comply with [Federal Rule of Civil Procedure] 9(b), the complaint

must: (1) specify the statements that the plaintiff contends were

fraudulent, (2) identify the speaker, (3) state where and when the

statements were made, and (4) explain why the statements were

fraudulent.” Id. at 290 (internal quotation marks omitted). In

addition, a fraud claim must also “allege facts that give rise to

a strong inference of fraudulent intent.” Id. A plaintiff may

establish a “strong inference” of fraud “(a) by alleging facts to

show that defendants had both motive and opportunity to commit

fraud, or (b) by alleging facts that constitute strong

circumstantial evidence of conscious misbehavior or recklessness.”

Id. at 290–91.

As an initial matter, Plaintiff’s fraud claim is duplicative

of its breach of contract claim. “‘[A] cause of action for fraud

may be maintained where a plaintiff pleads a breach of duty

separate from, or in addition to, a breach of the contract.’”

Sotheby's, Inc. v. Stone, 388 F. Supp. 3d 265, 275 (S.D.N.Y. 2019)

(quoting First Bank of Americas v. Motor Car Funding, Inc., 690

N.Y.S.2d 17, 21 (1st Dep't 1999)). “But where ‘the promise

concerned the performance of the contract itself, the fraud claim

is subject to dismissal as duplicative of the claim for breach of

contract.’” Id. (quoting Fairway Prime Est. Mgmt., LLC v. First

Am. Int'l Bank, 952 N.Y.S.2d 524, 527 (1st Dep't 2012)). Here,

the allegedly false promises on which Plaintiff bases its fraud

claim “concern[] the performance of the contract itself[.]” Id.

Plaintiff alleges that Sarker falsely represented that he had

the sole ownership rights to a company which owned patents related

to converting plastic waste into fuel, and that those

representations were made as a means to induce Plaintiff into

entering into the Contract. (Compl. at ¶¶67-68, Kahan Aff. at

¶¶9-13.) The representations in question were made as part of the

language of the contract itself, and therefore, Plaintiff’s fraud

claim is duplicative of its breach of contract claim. See

Bridgestone/Firestone, Inc. v. Recovery Credit Servs., Inc., 98

F.3d 13, 19 (2d Cir. 1996) (finding fraud claim duplicative of

breach of contract claim where the defendant's allegedly

fraudulent “representations were intended to lull [the plaintiff]

into a false sense of security and ... amount[ed] to little more

than intentionally-false statements by [the defendant] indicating

his intent to perform under the contract”); see also Spinelli v.

Nat'l Football League, 903 F.3d 185, 209 (2d Cir. 2018)

(“Misrepresentations made to induce a party to enter a contract

are not actionable as fraud . . . unless they are ‘collateral’ to

the contract induced.”). Because Plaintiff’s fraud claim is

duplicative of its breach of contract claim, it must be dismissed,

and the Court need not analyze whether it would otherwise meet the

heightened pleading requirements of Federal Rule of Civil

Procedure 9(b).

IV. Damages

Having determined Defendants’ liability, the Court must

determine whether Plaintiff has provided sufficient evidence to

support its claims for damages, or whether a hearing is necessary

to determine the amount of damages. Transatlantic Marine Claims

Agency, Inc. v. Ace Shipping Corp., Div. of Ace Young Inc., 109

F.3d 105, 111 (2d Cir. 1997). “Although the default establishes

a defendant’s liability, unless the amount of damages is certain,

the court is required to make an independent determination of the

sum to be awarded.” US All. Fed. Credit Union v. M/V Kamara Fam.,

No. 20-CV-1733 (AMD) (SJB), 2023 WL 5622067, at *8 (E.D.N.Y. Aug.

31, 2023) (internal quotation marks and citation omitted); see

also Cement & Concrete Workers Dist. Council Welfare Fund v. Metro.

Found. Contractors Inc., 699 F.3d 230, 234 (2d Cir. 2012)

(explaining that although the allegations in a complaint related

to liability are deemed admitted upon entry of a default judgment,

a default “is not considered an admission of damages” (internal

quotation marks omitted)). “The court must determine the amount

of damages, actual or statutory, that may be assessed,” and “ensure

that there is a reasonable basis for the damages specified in a

default judgment.” Santillan v. Henao, 822 F. Supp. 2d 284, 290

(E.D.N.Y. 2011) (citation omitted).

In response to the Court’s Order to Show Cause, Plaintiff has

annexed a declaration of the managing member of Eco-Fuels which

includes as supporting exhibits bank statements and photographs of

checks reflecting the various payments made to Defendants pursuant

to the Contract and the Addendum. (Decl. Exs. A-E; Kahan Decl. at

¶¶1, 14-19 (Kahan attesting to his knowledge of and the accuracy

of the attached bank statements and photographs of checks).) The

Court finds that Plaintiff has met its evidentiary burden and that

a hearing to determine damages is unnecessary because the

submissions constitute a “sufficient basis from which to evaluate

the fairness of” Plaintiff’s damages request without the need for

a hearing. Fustok v. ContiCommodity Servs., Inc., 873 F.2d 38, 40

(2d Cir. 1989). The Court will next analyze the appropriate amount

of contract damages and pre- and post-judgment interest, as well

as Plaintiff’s request for attorneys’ fees and costs.

A. Contract Damages

The breach of contract in this action relates to the

Defendants’ failure to deliver the Machine, which would

purportedly convert plastic waste into fuel – a good governed by

the Uniform Commercial Code. See N.Y. U.C.C. Law (“UCC”) § 2-105

(“‘[g]oods’ means all things (including specially manufactured

goods) which are movable at the time of identification to the

contract for sale”); see also id. § 2-106 (“‘Contract for sale’

includes both a present sale of goods and a contract to sell goods

at a future time.”) Although the Contract in the instant case

also included services such as training, when those services are

“incident to the sale of goods,” the contract is still “subject to

the UCC.” KSW Mech. Servs. v. Johnson Controls, Inc., 992 F. Supp.

2d 135, 141 (E.D.N.Y. 2014) (citing Richard A. Rosenblatt & Co.,

Inc. v. Davidge Data Sys. Corp., 743 N.Y.S.2d 471, 472 (1st Dep't

2002)). Thus, the Court finds as a matter of law that the UCC

applies to the Contract and the Addendum because they predominately

involved a sale of goods, and any services were incidental to that

sale.

“When a buyer contracts to purchase goods and the seller fails

to deliver, UCC § 2-711(1) allows the frustrated buyer to recover,

among other things, ‘so much of the price as has been paid.’”

Ethereum Ventures LLC v. Chet Mining Co. LLC, No. 19-CV-7949 (LLS)

(KHP), 2021 WL 9036270, at *4 (S.D.N.Y. Oct. 20, 2021), report and

recommendation adopted, 2022 WL 2531588 (S.D.N.Y. Jan. 28, 2022)

(quoting Kashi v. Gratsos, 790 F.2d 1050, 1056 (2d Cir. 1986)).

Plaintiff has provided evidence showing that it paid a total of

$200,000, out of an overall purchase price of $500,000, to

Defendants pursuant to the Contract and the Addendum, (see Kahan

Decl at ¶¶14-20; Decl. Exs. A-E), and that Defendants failed to

deliver the Machine by February 22, 2020, as promised, (see Kahan

Aff. at ¶¶16-21, 35-37.) Accordingly, Plaintiff is entitled to

recover $200,000 as refund damages under the contract.

B. Pre-judgment Interest

Plaintiff requests pre-judgment interest. (Mem. at 12.) In

New York, “[a] plaintiff who prevails on a claim for breach of

contract is entitled to pre-judgment interest as a matter of

right.” Hounddog Prods., L.L.C. v. Empire Film Grp., Inc., 826 F.

Supp. 2d 619, 630 (S.D.N.Y. 2011) (internal quotation marks

omitted) (citing U.S. Naval Inst. v. Charter Commc'ns, Inc., 936

F.2d 692, 698 (2d Cir. 1991)). Under New York law, pre-judgment

interest accrues at a rate of nine percent per annum and is

calculated “from the earliest ascertainable date the cause of

action existed ... to the date the verdict was rendered or the

report or decision was made.” CPLR §§ 5001(b)–(c), 5004. Courts

calculate the “earliest ascertainable date” as the date of the

contract breach. See Guilbert v. Gardner, 480 F.3d 140, 149 (2d

Cir. 2007) (holding that “cause of action for breach of contract

ordinarily accrues and the limitations period begins to run upon

breach”).

In the instant case, the Court finds that the earliest

ascertainable date that the cause of action existed was February

20, 2020, based on the Contract and Addendum. Pursuant to the

terms of the original Contract, the Machine was required to be

built “within six (6) months from the date of this agreement,”

which, based on the signing date of October 4, 2019, would be April

4, 2020. (Aff. Ex. A at 1.) However, that deadline was

subsequently modified by the Addendum dated December 22, 2019, to

require the Machine to be “one hundred percent (100%) buil[t] and

functioning within sixty (60) days from the date Addendum B is

signed.” (Aff. Ex. B at 1.) Sixty days after December 22, 2019,

is February 20, 2020, and Defendants were in breach of the contract

when they failed to deliver the Machine by that deadline.

Plaintiff argues that pre-judgment interest should be

computed from October 4, 2019, the date the Contract was signed,

because Defendants made “material misrepresentation[s] to the

Plaintiff and therefore defaulted under the Contract.” (Mem. at

12.) Plaintiff’s breach of contract damages are based not on

fraudulent misrepresentations included in the contract itself,

however, but rather on Defendant’s failure to deliver a completed,

functioning machine, as discussed supra. Accordingly, the Court,

which is granted “wide discretion in determining a reasonable date

from which to award pre-judgment interest,” finds that February

20, 2020, the date Defendants failed to deliver the Machine, is an

appropriate date to utilize for calculating pre-judgment interest.

Conway v. Icahn & Co., 16 F.3d 504, 512 (2d Cir. 1994). Plaintiff

is thus entitled to an award of pre-judgment interest at a rate of

nine percent per year, $49.324 per day, calculated from February

20, 2020, through the date the Court enters judgment, for a total

4 Yearly interest of $18,000 ($200,000 x 0.09) divided by 365 days.

of $72,352.445, assuming judgment is entered on the same date as

this order – February 26, 2024.

C. Post-judgment Interest

Plaintiff also requests post-judgment interest. (Mem. at

12.) Post-judgment interest is mandatory and governed by federal

statute. See 28 U.S.C. § 1961(a). Therefore, the Court finds

that Plaintiff is entitled to post-judgment interest using the

federal rate set forth in 28 U.S.C. § 1961(a), and calculated from

the date the Clerk of the Court enters judgment in this action

until the date of payment.

D. Attorneys’ Fees and Costs

Plaintiff also requests attorneys’ fees and costs, to be

determined at an inquest. However, the Court finds such an inquest

to be unnecessary, because, as compared to pre-judgment interest,

“[t]here is no similar right to an award of attorney's fees on an

ordinary claim of breach of contract.” U.S. Naval Inst. v. Charter

Commc'ns, Inc., 936 F.2d 692, 698 (2d Cir. 1991). Plaintiff argues

that it is entitled to attorneys’ fees based on the indemnification

provision in the Contract, which reads in relevant part as follows:

[Defendants Waste Technologies and Sarker] hereby

agree[] to indemnify, hold harmless and defend [Eco-

Fuels] its employees, officers, directors, attorneys,

agents, successors and assignors against any and all

expenses, costs of defense (including, without

limitation, attorneys' fees, witness fees, damages,

judgments, fines and amounts paid in settlement) and any

amounts [Eco-Fuels] becomes legally obligated to pay

5 Daily interest of $49.32 multiplied by 1,467 days.

because of any claim or claims against [Eco-Fuels], to

the extent that such claim or claims (i) result from

[Defendants’] acts or failure to act under this

agreement, (ii) arise out of the breach or alleged breach

of this agreement or any representation by [Defendants]

hereunder . . .

(Aff. Ex. A. at 3 (emphasis added).) Plaintiff misreads the

indemnification clause, however, which the Court finds applies

only to claims against Plaintiff that Plaintiff is legally

obligated to pay, and not to a claim brought by Plaintiff against

Defendants for breach of contract.

“[W]hile parties may agree that attorneys' fees should be

included as another form of damages, such contracts must be

strictly construed to avoid inferring duties that the parties did

not intend to create.” Oscar Gruss & Son, Inc. v. Hollander, 337

F.3d 186, 199 (2d Cir. 2003) (citing Hooper Assocs., Ltd. v. AGS

Computers, Inc., 548 N.E.2d 903, 905 (N.Y. 1989)). As a result,

under New York law, “‘the court should not infer a party’s

intention’ to provide counsel fees as damages for a breach of

contract ‘unless the intention to do so is unmistakably clear’

from the language of the contract.” Id. (quoting Hooper Assocs.,

Ltd., 548 N.E.2d at 905). The Court reads the section of the

Contract excerpted above as referring only to third-party claims

against Plaintiff, given the reference only to indemnification for

claims against Eco-Fuels. See Bourne Co. v. MPL Commc'ns, Inc.,

751 F. Supp. 55, 57-58 (S.D.N.Y. 1990) (a contract did not extend

indemnification to actions between the parties when the agreement

did not expressly indicate such an intention). There is no

language in the Contract that obligates a party to pay attorneys’

fees to the other. Because it is not “unmistakably clear” from

the language of the Contract that attorneys’ fees were intended to

be included as another form of damages for a breach, this Court

will not infer the parties’ intention to do so. Thus, the Court

finds that an award of attorneys’ fees is not appropriate in the

instant case.

CONCLUSION

For the reasons stated above, Plaintiff’s Motion for Default

Judgment is granted in part and denied in part. The Court grants

default judgment as to Plaintiff’s breach of contract claim and

denies default judgment as to its other claims.

Default judgment is entered against Defendants, jointly and

severally, and Plaintiff is awarded (i) contract damages of

$200,000; (ii) pre-judgment interest at the daily rate of $49.32,

calculated from February 20, 2020, through the date the Court

enters judgment, for a total of $72,352.44 as of February 26, 2024;

and (iii) post-judgment interest at the rate set forth in 28 U.S.

§ 1961(a), from the date of the entry of judgment until the date

of payment in full.

The Clerk of Court is respectfully directed to enter judgment

in accordance with this Memorandum and Order. Plaintiff is ordered

to serve a copy of this Memorandum and Order and the Judgment on

Defendants and file declarations of service for each defendant

within two days after the Clerk of Court enters the Judgment.

SO ORDERED.

Dated: February 26, 2024 b “7

Brooklyn, New York - —

□ - eo eee ewe

KIYO A. MATSUMOTO

United States District Judge

Eastern District of New York

31