Xiamen ITG Group Corp.,Ltd v. Peace Bird Trading Corp.

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

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XIAMEN ITG GROUP CORP., LTD.,

Plaintiff, REPORT AND RECOMMENDATION

-against- 19-CV-6524 (DLI) (ST)

PEACE BIRD TRADING CORP.,

Defendant, and

XING LIN (USA) INTERNATIONAL

CORP., and CRYSTAL VOGUE INC.,

Counterclaim Plaintiffs.

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TISCIONE, United States Magistrate Judge:

Xiamen ITG Group Corporation, Limited (“Plaintiff” or “ITG”) brought this action on

November 19, 2019, alleging twenty counts of breach of contract against Peace Bird Trading

Corporation (“Defendant Peace Bird”) for failure to pay sums owed for purchases of textiles,

pursuant to the United Nations Convention on Contracts for the International Sale of Goods

(“CISG”). On December 31, 2019, Defendant Peace Bird filed an Answer to the Complaint,

joining Xing Lin (USA) International Corporation (“Defendant Xing Lin”) and Crystal Vogue

Incorporated (“Defendant Crystal Vogue”) (together, “Defendants”)1, and asserting five

counterclaims against Plaintiff for breach of implied covenant of good faith and fair dealing,

promissory estoppel, and fraud in the inducement. On February 11, 2020, Plaintiff filed a Reply,

asserting seven additional breach of contract claims against Defendants Xing Lin and Crystal

1 Xing Lin and Crystal Vogue are identified in the case caption as counterclaim plaintiffs. However, all three entities

are owned by the same principal and, for purposes of this action, Xing Lin’s and Crystal Vogue’s interests are aligned

with Defendant Peace Bird, and they were all buyers of products sold by ITG for which ITG alleges breach of contract.

Given that ITG subsequently joined claims against both Xing Lin and Crystal Vogue, the Court will collectively refer

to Peace Bird, Xing Lin, and Crystal Vogue as “Defendants” for purposes of this motion.

Vogue. After the parties completed discovery and dispositive motion practice began, counsel for

Defendants sought leave to withdraw. On November 8, 2023, defense counsel’s motion to

withdraw was granted, and Defendants were given forty-five days to retain alternate counsel to

avoid default. Defendants have since failed to file an appearance.

Before this Court is Plaintiff’s motion for default judgment pursuant to Federal Rule of

Civil Procedure (“FRCP”) 55(b)(2) and to dismiss Defendants’ counterclaims for failure to

prosecute pursuant to FRCP 41(b). The motion was referred to this Court for a Report and

Recommendation by the Honorable Dora Lizette Irizarry. For the reasons set forth below, the

Court respectfully recommends that Plaintiff’s motion for default judgment be DENIED

WITHOUT PREJUDICE, that Plaintiff’s motion to dismiss Defendants’ counterclaims be

GRANTED, and that Defendants’ counterclaims be DISMISSED WITH PREJUDICE.

BACKGROUND

For purposes of a motion for default judgment, the Court is required to accept Plaintiff’s

alleged facts as true. Bricklayers & Allied Craftworkers Loc. 2, Albany, N.Y. Pension Fund v.

Moulton Masonry & Const., LLC, 779 F.3d 182, 188 (2d Cir. 2015) (per curiam); Henry v.

Oluwole, 108 F.4th 45, 55 (2d Cir. 2024). As such, the following facts are drawn from Plaintiff’s

Complaint and Reply,2 as well as the materials submitted in support of this motion on which the

pleadings integrally rely, namely, the relevant sales contracts that form the basis of Plaintiff’s

twenty-seven breach of contract actions.3 Courts do not, however, credit conclusory allegations on

2 After Defendants filed their Answer to Plaintiff’s Complaint, joining Defendants Xing Lin and Crystal Vogue and

asserting various counterclaims, Plaintiff filed a responsive pleading entitled “Answer to Counterclaims and to Claims

of Counterclaim Plaintiffs; and Counterclaims Against Counterclaim Plaintiffs,” which, in addition to answering

Defendants’ counterclaim allegations, asserted additional claims against the newly joined parties. See ECF No. 15

(hereinafter “Reply”). For clarity, so as not to be confused with Defendants’ Answer, the Court will refer to this

responsive pleading as Plaintiff’s “Reply.”

3 Typically, courts articulating the standard for which documents are deemed included in a complaint are doing so in

the context of Rule 12(b)(6) motions to dismiss. See, e.g., United States ex rel. Foreman v. AECOM, 19 F.4th 85, 106

(2d Cir. 2021) (ruling that complaints are deemed to include documents attached to the complaint, documents

motions for default judgment. Henry, 108 F.4th at 55, 57‒60, 62. As Plaintiff’s submissions total

over 1,000 pages, the Court assumes familiarity with the documents in question. In many instances,

the Court will cite to examples rather than providing exhaustive citations to every transaction

relevant to a fact contained herein.

I. Facts Alleged in the Complaint.

Plaintiff ITG is a Chinese corporation which is engaged in the sale of fabrics and textiles.

Compl. ¶¶ 1-2, 6, ECF No. 1. In 2016 and 2017, Plaintiff engaged in a series of transactions in

which it agreed to sell and ship various fabrics and textiles to Defendants.4 See, e.g., Compl. ¶¶ 1,

6, 21; Reply ¶¶ 40, 45. The initial writings, identified as “Sales Contracts,” listed the purchaser of

the product, an item number identifying the type of fabric, the quantity, the unit price, the payment

incorporated by reference, and documents integral to the complaint). However, as the Second Circuit has noted, courts

apply an “identical standard” to test the sufficiency of complaints for both Rule 12(b)(6) motions to dismiss and

motions for default judgment. Steginsky v. Xcelera Inc., 741 F.3d 365, 368 (2d Cir. 2014); see also Grp. One Ltd. v.

GTE GmbH, 625 F. Supp. 3d 28, 65 (E.D.N.Y. 2022) (same) (collecting cases); Henry, 108 F.4th at 55 (noting that

the standard for default judgments, in which courts take all well-pleaded factual allegations as true and disregard

conclusory allegations of law, “resembles [the standard] applicable to a motion to dismiss”). As such, courts

considering motions for default judgment consider documents attached to, incorporated in, or integral to the complaint

according to the same standards applicable for Rule 12(b)(6) motions. See, e.g., Flanagan v. Marco Martelli Assocs.,

Inc., No. 13-CV-6023 ADS AKT, 2015 WL 1042279, at *3 n.1 (E.D.N.Y. Mar. 9, 2015) (collecting cases); Gesualdi

v. Interstate Masonry Corp., No. 12-CV-0383 NGG VMS, 2014 WL 1311709, at *3 n.1, *3 n.2 (E.D.N.Y. Mar. 28,

2014) (collecting cases). To that end, contracts are routinely held integral to complaints alleging breach of contract.

Palin v. New York Times Co., 940 F.3d 804, 811, 811 n.18 (2d Cir. 2019) (noting that contracts and agreements that

are essential to the litigation are typically integral); Axiom Inv. Advisors, LLC by & through Gildor Mgmt., LLC v.

Deutsche Bank AG, 234 F. Supp. 3d 526, 533 (S.D.N.Y. 2017) (“On a motion to dismiss for breach of contract, courts

look not only at the sufficiency of the complaint but also at the contract itself, which by definition is integral to the

complaint.” (citing Interpharm, Inc. v. Wells Fargo Bank, Nat. Ass'n, 655 F.3d 136, 141 (2d Cir. 2011))); Miller v.

Metro. Life Ins. Co., No. 17-CV-07284 (AT)(SN), 2018 WL 6625096, at *2 (S.D.N.Y. Sept. 25, 2018), report and

recommendation adopted, No. 17CIV7284ATSN, 2018 WL 5993477 (S.D.N.Y. Nov. 15, 2018) (“A contract is

typically deemed integral to a complaint alleging a claim for breach of said contract.” (citing Chambers v. Time

Warner, Inc., 282 F.3d 147, 153-54 (2d Cir. 2002))); Florimon v. Allstate Ins. Co., 616 F. Supp. 3d 180, 186 n.2 (D.

Conn. 2022) (“A written contract is, of course, integral to a claim that a written contract was breached.”); Am. Builders

& Contractors Supply Co. v. CR1 Contracting, LLC, 565 F. Supp. 3d 330, 341 (W.D.N.Y. 2021) (holding that contract

submitted with motion for default judgment could be properly considered because contract was integral to complaint

alleging breach of contract).

4 For each count, Plaintiff repeatedly alleges that the parties “entered into a written Sales Contract,” referring to the

initial writing between the parties. See, e.g., Compl. ¶ 21. However, as will be discussed, the CISG does not require

that contracts be in writing, and there were multiple writings exchanged between the parties for each sales transaction.

In some circumstances, it is questionable whether the Sales Contract identified by Plaintiff as the controlling

agreement is, in fact, the controlling agreement. To the extent that Plaintiff alleges that the Sales Contracts constitute

the bargain between the parties, these allegations are conclusory. Nevertheless, the Court will refer to this writing as

a “Sales Contract” or “the contract” to identify this writing.

terms, a date by which the product was to be shipped, and the shipping terms. See, e.g., Compl. ¶¶

8, 10-11, 14, 21-25; Ex. 1-1A. The parties agreed that the fabrics and textiles would be shipped by

Plaintiff from China to Defendants in Mexico. Compl. ¶¶ 7-8.

For the “initial series” of transactions, the parties agreed that the items would be shipped

according to a “Cost, Insurance and Freight,” or “CIF,” delivery term. Compl. ¶¶ 11-13. Under a

CIF delivery term, Defendants, as the buyers, were responsible for paying the customs fees, duties,

and taxes imposed by Mexico to import the goods. Compl. ¶ 13. However, during the course of

their business relationship, the parties agreed to change to a “Landed Duty Paid,” or “LDP,”

delivery term. Compl. ¶¶ 14-15. Under an LDP delivery term, the seller, rather than the buyer, is

responsible for paying the government-imposed customs fees, duties, and taxes at the destination

port. Compl. ¶ 15. In switching to an LDP delivery term, the parties agreed that Plaintiff would

pay the customs fees, duties, and taxes imposed to import the fabrics, and would include this cost

in the purchase price of the fabrics sold to Defendants. Compl. ¶ 16. In exchange, Plaintiff alleges

that Defendants agreed to reimburse Plaintiff for the customs fees, duties, and taxes paid by

Plaintiff, “together with interest at the rate of 4% from the date each such payment was advanced

by [Plaintiff] on behalf of [Defendants].” Compl. ¶ 17.

For each of the transactions, Plaintiff arranged for the goods to be transported to the port

of departure, and shipped the goods on board a vessel. See, e.g., Compl. ¶¶ 12, 23, 26. Plaintiff

then provided relevant documentation to the purchasing Defendant, including a bill of lading, a

“Commercial Invoice,” and a packing list. See, e.g., Compl. ¶¶ 27, 30, 43, 46. The agreed-upon

items were shipped and, for transactions for which the parties had agreed upon an LDP delivery

term, Plaintiff paid the applicable customs fees, duties, and taxes.5 Compl. ¶ 18. Thus, Plaintiff

alleges for each Count that it “has, at all times, performed its obligations under the Sales

Contract.”6 See, e.g., Compl. ¶¶ 32, 48, 61, 74, 128. Defendants received the items, but failed to

remit payment for the fabrics and textiles when such payments became due.7 See, e.g., Compl. ¶¶

18-19, 25, 28, 33-34.

II. Documents Integral to the Complaint, and Other Transactional Documents.8

A review of the relevant paperwork exchanged between the parties in engaging in these

transactions reveals additional information that is not alleged in the Complaint, or that, in some

instances, contradicts the allegations in the Complaint. For example, the Sales Contracts contained

a field entitled “Contract N[umber].” However, only some of the contracts contained such a

number. See, e.g., Ex. 1-5 (containing contract number); Ex. 1-16 (field for contract number not

completed). In some circumstances, when the Sales Contracts did include such a number, there

were multiple, differing contracts labeled with the same contract number but which detailed

5 The Complaint does not contain any allegations regarding when these payments were remitted, how much was paid,

how these payments were remitted, how Plaintiff determined the amount to be paid, or other relevant details. See

generally Complaint.

6 This allegation is, for some Counts, internally contradicted by Plaintiff’s other allegations. For example, for Count

8, Plaintiff alleges that “[t]he Sales Contract . . . provided that customer item number SPT010 was to be shipped out

of any port in China before July 10, 2017.” Compl. ¶ 122. Thereafter, Plaintiff alleges that “[o]n July 24, 2017” the

purchased items were shipped, before alleging that “Plaintiff ITG, has, at all times, performed its obligations under

the Sales Contract.” Compl. ¶¶ 125, 128.

7 Plaintiff’s Complaint and Reply allege that Defendants received the shipments. However, the interrogatories that

Plaintiff submitted in support of this motion deny receipt of item numbers OCC-0079 and OCC-0076 for Count 4, do

not ask about item number OCC-0080 for Count 4, deny receipt of OCC-0078 for Count 5, do not ask about OCC-

0077 for Count 5, contain no response for RY1101 for Count 15, do not ask about SO8-9, MF1001-1, or MF1001-2

for Counterclaim Count 5, and do not ask about SPT008 for Counterclaim Count 6. Ex. 8, at 53-56. The Sales Contracts

also appear to indicate that Plaintiff prepaid for ground freight from the port of destination to Mexico City inland,

where Defendants’ warehouse was located. See, e.g., Ex. 1-9 (“Freight Charge Terms: Prepaid to Mexico City,

Mexico.”). But see Ex. 3 (describing that Defendants will purchase insurance for ground transportation and will “have

full control of all customs clearance steps of the container from the destination port to our warehouse,” which would

include ground transportation, but not clarifying whether such “control” involved arranging for ground transport to

occur). However, Plaintiff did not submit any documentation indicating whether such transport occurred.

8 Plaintiff submitted a variety of forms which were exchanged between the parties in effectuating the underlying

transactions. While the Sales Contracts that Plaintiff alleges were breached are undoubtedly integral to the pleadings,

the remaining forms are not all necessarily “integral” to the pleadings, and Plaintiff has not submitted any argument

regarding which forms are and are not properly considerable.

different items, unit prices, or sums. For example, the contracts submitted for item numbers

LYM031 and LYM032, both of which are included in Count 1, are labeled with the same contract

number but have different unit prices and sums. Compare Ex. 1-1A, with Ex. 1-1B. For Counts 4

and 5, the contracts contain the same contract number but are for the purchase of different items.

Compare Ex. 1-4A, with Ex. 1-4B, and Ex. 1-5. Moreover, a review of the documents yields the

conclusion that the customer item numbers were intended to be a single-use, unique number, which

would increase in sequence each time a given customer reordered the same product. See, e.g., Ex.

1-1A; Ex. 1-1B (customer item number increasing from LYM031 to LYM032 when Defendant

Peace Bird ordered two shipments of the same product). However, in one instance there are two

contracts with the same item number, OCC-0078-Z, but for different quantities and a different

price per quantifying unit. See Ex. 1-4B; Ex. 1-5. In several instances, the sales contracts provided

for the purchase of multiple shipments of items, some of which are never mentioned or alleged in

Plaintiff’s Complaint and for which no documentation was submitted indicating that they ever

shipped. See, e.g., Ex. 1-1A (detailing purchase of LYM031-033 but containing no documentation

indicating LYM033 shipped); Ex. 1-4B (containing no documentation regarding whether OCC-

0076-DP, OCC-0080-DP, or OCC-0078-Z, for the latter at the quantities indicated in this contract

rather than the duplicate use of the item number in Count 5, ever shipped); Ex. 1-6 (containing no

information regarding whether PFPFD003 through PFPFD006 ever shipped); Ex. 1-7 (containing

no documentation indicating that PFPDB003 through PFPDB006 ever shipped).

Often, but not always, the Sales Contract included a provision allowing for an upward or

downward deviation from the ordered quantities by a certain percentage. See, e.g., Ex. 1-1A

(“Allowance +/-5% more or less of quantities.”); Ex. 1-18 (no term regarding deviation). When

present, this term provided for a 3 percent, 5 percent, or 10 percent deviation from the quantity

ordered. See, e.g., Ex. 1-1A (“Allowance +/-5% more or less of quantities.”); Ex. 1-2A

(“Allowance +/-10% more or less of quantities.”); Ex. 1-9 (“Allowance +/-3% more or less of

quantities.”). For many orders, including, but not limited to, Counts 3, 4, 5, 7, 8, and 9, the

quantities shipped were either above or below the allowed percentage of deviation. See, e.g., Ex.

1-8. For example, for Count 8, Defendant Peace Bird ordered 22,000 kilograms of a fabric, with

the sales contract containing a term allowing for an upward or downward deviation of 5%. See id.

Under such a term, the minimum that could be shipped in conformance with the agreement was

20,900 kilograms. See id. However, only 20,788 kilograms shipped. See id. This contrasts with the

allegations in the Complaint for Count 8, in which Plaintiff alleges that “Plaintiff ITG, has, at all

times, performed its obligations under the Sales Contract.” Compl. ¶ 128. For several purchases

for which a deviation percentage failed to be included, the shipped quantities nevertheless deviated

by more than 3%, 5%, or 10%. See, e.g., Ex. 1-12B (17,500 kilograms ordered and 16,574.9

kilograms shipped, thus falling more than 5% below the ordered quantity); see also Ex. 1-20

(14,870 kilograms ordered and 12,970.6 kilograms shipped, more than 10% below the ordered

quantity).

Often, but not always, the Sales Contract was “signed” by both parties by affixing the

company’s corporate seal to the document. See, e.g., Ex. 1-18 (signed by Defendant Peace Bird);

Ex. 1-5 (not signed by Defendant Peace Bird). Moreover, while not alleged in the Complaint, there

were additional forms that were exchanged between the parties for each transaction. For example,

the paperwork exchanged between the parties included a Chinese customs declaration form. See,

e.g., Ex. 1-1A, at 5-7; Ex. 1-3, at 5. Also, while not alleged in the Complaint, the papers exchanged

between the parties often, but not always, included a “Letter of Payment Guarantee.” See, e.g., Ex.

1-3, at 6 (containing Letter of Payment Guarantee); Ex. 1-7 (containing no Letter of Payment

Guarantee). When exchanged, the Letter of Payment Guarantee included information relevant to

the shipment of the goods, including the bill of lading number and the date of shipment, and stated

“We are one hundred percent promise to pay Xiamen ITG Group Corp.,Ltd. After shipment 180

days ,we assume all the responsibility if caused.” See, e.g., Ex. 1-3, at 6. The Letter of Payment

Guarantee, when exchanged, was typically executed by the purchasing company by affixing the

corporate seal to the letter, although in two circumstances, Defendant Crystal Vogue executed

Letters of Payment Guarantee for shipments purchased by Defendant Xing Lin. See, e.g., Ex. 1-3

(payment guarantee executed by Defendant Peace Bird for shipment of goods purchased by

Defendant Peace Bird); Ex. 1-X2 (payment guarantee executed by Defendant Crystal Vogue for

goods purchased by Defendant Xing Lin); Ex. 1-X3 (payment guarantee executed by Defendant

Crystal Vogue for goods purchased by Defendant Xing Lin). In some circumstances, the “Total

Amount” of the purchase indicated on the Letter of Payment Guarantee does not match the total

on the Commercial Invoice, the latter of which contained substantially more detail about what was

shipped, the weight, and the cost per unit. See, e.g., Ex. 1-12A, at 3, 6 (Commercial Invoice total

of $66,702.16 and Letter of Payment Guarantee total of $66,738.15); Ex. 1-12B, at 3, 6

(Commercial Invoice total of $65,400.68 and Letter of Payment Guarantee total of $65,321.34).

These discrepancies are not explained. In a variety of circumstances, such as for Counts 1, 8, 9,

11, 12, 13, 14, and 15, the dates of shipment on the Letters of Payment Guarantee do not match

the dates of shipment on the bills of lading. See, e.g., Ex. 1-1A; Ex. 1-1B.

For Count 9, the Complaint alleges that customer item number WD001-1, consisting of

851 rolls of fabric weighing 17,569.7 kilograms and totaling USD $152,258.82 was shipped in two

shipping containers. Compl. ¶¶ 138-140. However, the Commercial Invoice, Packing List, Bill of

Lading, and Letter of Payment Guarantee submitted indicate that 587 rolls weighing 12,269.7

kilograms and totaling USD $106,326.22 were shipped in one shipping container, and no

additional documentation for WD001-1 was submitted.9 See Ex. 1-9. Moreover, the contract

number on the Sales Contract, NLF20170706, matches the contract number for a purchase already

awarded in an arbitration before CIETAC. See Ex. 5-B.

Additionally, for Count 4, item number OCC-0079, the total of $60,080.21 alleged in the

Complaint matches the Commercial Invoice, but the unit prices charged for the items ordered do

not match the agreed-upon unit prices in the Sales Contract. Compl. ¶ 72; Ex. 1-4A. For example,

the agreed-upon unit price for the “Gadol” pattern was $2.90 per kilogram, which was charged for

989.1 of the kilograms that shipped, but the remaining 2,438.1 kilograms shipped were charged at

$3.13 per kilogram, an amount above the contracted-for sum. Ex. 1-4A. Notably, only 917

kilograms of the Gadol pattern were ordered, which appears to match the 989.1 kilograms that

were charged at $2.90 per kilogram. Ex. 1-4A. The additional line item for 2,438.1 kilograms

charged at a rate of $3.13 per kilogram appears not to have been ordered. See Ex. 1-4A. Similarly,

for the “Double Pique” pattern, only 1,799 kilograms at $2.80 per kilogram were ordered (for

which 1,769.9 kilograms shipped), but there are additional line items totaling 5,924.1 kilograms

which were charged at rates of $3.02, $3.05, $2.90, and $2.88 per kilogram, which also appear to

not be supported by any Sales Contract between the parties. See id. Moreover, the Sales Contract

9 These documents indicate that WD001-1 shipped and was invoiced with MESH001-1, the product detailed in Count

10. While not integral to the Complaint, Plaintiff’s affidavits submitted in support of damages repeatedly attempt to

list an additional shipment for WD001-1 that is otherwise unsupported by any documentation indicating that it did, in

fact, ship, nor that it was appropriately invoiced. See, e.g., Janiec Decl. ¶ 18, ECF No. 67-1 (listing second WD001-1

purchase totaling $45,932.60); Wang Decl. ¶ 40, ECF No. 67-6 (listing second WD001-1 invoice for $45,932.60);

Jiang Decl. ¶ 33, ECF No. 67-8 (listing an LDP payment for WD001-1 for $40,000 and an LDP payment for

“WD001&MESH001” for $47,000); Jiang Decl. App. A, ECF No. 67-8 (listing an LDP payment for WD001-1 and

AYR069-P, an item which is otherwise unmentioned in any of the actions in the Complaint or Reply, as $47,000, and

listing an LDP payment for WD001-1 and MESH001-1 as $64,000). The bill of lading number listed in Appendix A

of the Jiang Declaration for WD001-1 and AYR069-P matches the bill of lading number for one of the transactions at

issue in an arbitration held before the China International Economic and Trade Arbitration Commission (CIETAC),

specifically for contract number NLF20170620, for which damages were already awarded. Compare Jiang Decl. App.

A, with Ex. 5-B. The CIETAC arbitration decision does not contain enough information to determine whether any

amounts awarded for this shipment may have included charges for item number WD001-1. See Ex. 5-B.

itself was not executed by Defendant Peace Bird and there appears to have been no Letter of

Payment Guarantee indicating that Defendant Peace Bird ultimately ratified any shipment of the

extra goods, nor the elevated unit prices. See id.

Finally, while not clearly alleged in the Complaint, when the parties agreed to switch to an

LDP delivery term for the transactions between them, they did so by executing a separate LDP

agreement, the terms of which were, apparently, to be applicable for all subsequent goods

transactions entered into by the parties. Ex. 3. In other words, the terms of the separate LDP written

agreement were intended by the parties to apply to the written sales agreements that the parties

would enter into with one another going forward. Plaintiff obtained a separate LDP agreement

from each of the Defendants. Ex. 3. Although Defendants each executed the agreement by affixing

their corporate seals, Plaintiff did not execute the agreement. See Ex. 3. The original, executed

agreements were drafted in both Chinese and English, but, in support of this motion, Plaintiff also

provided an official translation of the Chinese contained in the agreement.10 See Ex. 3. The English

contained in the original LDP agreement and the official English translation of the Chinese

portions of the agreement are not an exact match, but are similar in several material respects.

Specifically, the English portion of the original bilingual agreement stated as follows:

We guarantee to XIAMEN ITG GROUP CO.,LTD that we will take all

responsibility for All orders which we ordered under LDP payment item for below

4 point,

First: we will buy insurance from destination port to our warehouse by ourself under

our cost.

10 As explained in Lifang Wang’s Declaration, the Chinese portion of the original, executed agreement contained an

introductory clause with explanatory background about what an LDP delivery term is, but the agreement did not

contain an English translation of these sentences. Wang Decl. ¶ 31. Thus, the certified English translation of the

Chinese portion of the agreement contains translations for these sentences. While this is not explained in the Complaint

or in the materials considered to be included in the Complaint, a review of the LDP agreements reveals that there is,

in fact, an introductory portion which is untranslated. See Ex. 3, at 1-3.

Second: we agree ITG use his relative forwarder ship goods and to be agency with

us operative all LDP process.

Third: we will control all the step of customs clearance from destination port to our

warehouse, all the risk from these steps undergo our responsibility.

Forth we agree pay 4% more for the cost which XIAMEN ITG GROUP CO.,LTD

prepared us for the LDP cost.

All and all, we guarantee all the risk from destination to warehouse even all these

under China export & Credit Insurance Corporation, sincerely guarantee for good

business and cooperation relationship.

Ex. 3, at 1-3. The official English translation of the Chinese portion of the bilingual agreement

states as follows:

The U.S. LDP: L.D.P. (landed duty paid) is one of the trade terms in which the

seller shall bear import duties, including customs inspection fees and any other

taxes and fees payable as a result of goods importation and delivery to the buyer.

LDP usually means that the seller conducts customs clearance through a third party

forwarder (the third party is often controlled and designated by the seller

themselves as the agent for procedures of overall customs clearance). The general

probability of LDP trade term in the U.S. has reached 55%, and many American

purchasers have gradually shifted CIF to LDP. We guarantee to Xiamen ITG Group

Co., Ltd. that we will take full responsibility for the following 4 points for all our

orders under the LDP payment terms:

First, we will purchase insurance from the port of destination to our warehouse by

ourselves in accordance with the goods cost.

Secondly, we agree ITG to use their designated freight forwarder to operate the

entire LDP customs clearance process together with our local customs clearance

company.11

11 The English version of this clause in the original agreement contained three key points. Namely, Defendants agreed

that: (1) “ITG use his relative forwarder ship goods”; (2) ITG would “operat[e] all LDP process”; and (3) ITG would

“be agency with us.” In the certified translation, the clause appears to contain additional words that have no parallel

with the English in the original agreement. Namely, the certified translation states that: (1) “ITG [was] to use their

designated freight forwarder”; (2) “to operate the entire LDP customs clearance process”; and (3) “together with our.”

To this end, “ship goods” appears to parallel “freight,” “together with” could reasonably be a linguistic synonym for

“agency with,” and “our” could be a close derivative of “us.” Thus, the certified translation appears to effectively

match the English clause in the original agreement word for word up to the word “our.” The English clause in the

original agreement does not contain any wording that might parallel “local customs clearance company,” or that might

indicate that ITG was obligated to ensure that the company ITG selected to remit LDP payments would work in

conjunction with a company selected by Defendants (i.e., “together with our local customs clearance company”). This

difference is not explained. For example, the English portion of the agreement may mistakenly omit a clause of a

sentence that is present in the Chinese portion. These differences may arguably modify the parties’ respective

obligations in facilitating the customs clearance process, as the phrase “together with our local customs clearance

Thirdly, we will have full control of all customs clearance steps of the contain from

the destination port to our warehouse, and will bear the responsibility for all the

risks arising from all these steps.

Fourthly, we agree to pay ITG 4% more of the customs clearance fee as a reward

for ITG to advance the LDP cost for us.

All in all: We sincerely guarantee the settlement of all risks in all links from the

port of destination to our warehouse under LDP. Even if all of these are covered by

China Export Credit Insurance Corporation, we sincerely guarantee for the better

business relationship in the future.

Ex. 3, at 4-11.

As discussed, the Complaint alleges that, for purchases made with an LDP delivery term

according to the above agreement,12 Defendants agreed to reimburse Plaintiff for the customs fees,

duties, and taxes paid by Plaintiff, “together with interest at the rate of 4% from the date each such

payment was advanced by [Plaintiff] on behalf of [Defendants].” Compl. ¶ 17. Notably, however,

neither of the above translations mentions the word “interest” or discusses any deadlines or dates

regarding when such payment would be due, or when this alleged interest would begin accruing.

Rather, the translations state that Defendants agreed to pay “4% more for the . . . LDP cost” and

“4% more of the customs clearance fee as a reward,” provisions which both appear to stipulate to

a 4% flat rate. Ex. 3. The sales contracts exchanged between the parties also do not utilize the term

“interest” or provide timeframes for payment. Rather, they simply state the delivery term as

follows: “LDP The guest warehouse, customs clearance fee and customs duties are paid by

XIAMEN ITG GROUP CORP., LTD.” See, e.g., Ex. 1-6. While the Complaint alleges that the

company” presumably contemplates a higher degree of involvement by Defendants than what is apparently described

in the English portion of the agreement.

12 As discussed, the Complaint does not explain that the LDP arrangement was effectuated by entering into a separate

writing which was intended to complement or supplement the subsequent sales agreements between the parties.

However, it impliedly references the separate writing by referring to the parties’ “LDP Agreement” as a capitalized

term, although it omits a definition thereof. Compl. ¶ 16.

parties “agreed that under their LDP Agreement . . . the amount of the fees, duties, and taxes, that

were paid by ITG would be included in the purchase price of the items sold to [Defendants],”

neither of the translations mention that the customs fees, duties, and taxes would be included in

the item cost. Ex. 3. It is unclear whether this allegation refers to an oral discussion between the

parties. Moreover, it is unclear how the parties were supposed to identify the sums upon which

any purported 4% accruing interest would be imposed, tracked, or invoiced, if the LDP customs

and duty fees were hidden within the itemized prices charged for the products.13

III. Extrinsic Documents Submitted in Support of Motion for Default Judgment.

The Complaint generally alleges that “[a]s required by the terms of the Sales Contracts,

ITG shipped the items purchased by Peace Bird, and paid the customs’ fees, duties and taxes on

each shipment made by it to Peace Bird,” Compl. ¶ 18, but does not specifically allege the amounts

paid, or when they were paid, despite alleging that these sums were subject to 4% interest that

would begin accruing upon the date of payment. Compl. ¶¶ 17, 20-35. While the question of

potential accrual of 4% interest under the LDP agreement speaks to damages, whether Plaintiff

paid, and indeed timely paid, LDP customs fees, duties, and taxes in accordance with the terms of

13 In addition to making it more difficult, from an accounting perspective, to track the amounts accrued and owed, this

method also does not appear to be otherwise beneficial. It would presumably be more time consuming to increase the

unit prices for various items on a list of ordered products in order to “bury” a flat sum among the totals charged than

it would be to simply add an extra line item entitled “customs fees” reflecting the amount in question. If this was not

done because the total of the customs fees could not be predicted in advance, then one wonders how Plaintiff knew

how much to increase the cost of the items by in order to “bury” this sum within the cost of the items charged.

Moreover, all of these questions are raised within the context of a series of writings in which Defendants appear never

to have agreed to the “burying” of the respective customs or duties fees among the cost of the products. Even assuming

that Defendants’ signature on the relevant Sales Contracts with these inflated totals reflected agreement to this practice,

not all of the Sales Contracts were, indeed, signed by Defendants. Moreover, the “burying” of these sums within the

cost of the items charged causes conflicting payment terms for the amounts that are “counted toward” the customs and

duties fees. For example, the invoices (which contain the LDP fees within them) contain OA 180 due dates, stipulating

that the sum is due within 180 days from the date of shipment. See, e.g., Ex. 1-9. However, according to the materials

submitted by the parties, Plaintiff is apparently alleging that Defendants agreed “to pay interest at the rate of 4% on

the amount being advanced, from the date of the advance to the date that payment on the shipment became due.”

Janiec Decl. ¶ 19. Thus, by the time the invoice became due, the total that it stated would be due within 180 days

would no longer be the amount actually due and owing. It is thus unclear how Defendants were supposed to determine

how much they owed.

the Sales Contracts and the LDP agreement speaks to liability for breach of contract, and Plaintiff’s

allegation that “Plaintiff ITG, has, at all times, performed its obligations under the Sales Contract.”

See, e.g., Compl. ¶ 89.

To this end, Plaintiff submitted various forms of documentation to demonstrate that the

required LDP payments were, in fact, made in accordance with the parties’ agreements. For

example, Plaintiff submitted two declarations from two employees, Lifang Wang and Shufang

Jiang, alleging a series of efforts in June and July of 2017 to locate a freight forwarder who could

manage the LDP payment process in compliance with certain currency restrictions imposed by

Chinese law. See Wang Decl. ¶¶ 24-37; Jiang Decl. ¶¶ 16-28. These declarations allege that

Defendants’ principal had identified a freight forwarder who was potentially authorized by the

Chinese government to make the necessary LDP payments, Grand Power Express International

(China) Limited. Wang Decl. ¶¶ 34-35; Jiang Decl. ¶ 28. Wang’s declaration alleges that Plaintiff

began shipping out the orders that were made on an LDP basis on June 30, 2017, because

Defendants’ principal “expressed confidence” that Grand Power would be able to process the

payments. Wang Decl. ¶ 35. Wang alleges that, since “[i]t usually takes approximately 3 to 4 weeks

for a shipment made by ocean vessel from China to arrive at the destination port in Mexico,”

Plaintiff began shipping the LDP orders because “[a]t the time, it was felt that by the time that the

shipments arrived at the destination port, Grand Power would be in place as Peace Bird’s agent

and would be in a position to accept the LDP payments made by ITG.”14 Id. Wang further alleges

that Grand Power “confirmed to ITG that it would be able to process the proposed LDP

transactions” “[i]n the latter part of July 2017.” Id.

14 While the declaration alleges “it was felt,” it does not specify by whom it was felt.

Both declarations allege that, while the LDP orders had been shipped between June 30,

2017, and July 31, 2017, Plaintiff “still had not received the authorization from [Defendants] to

advance the LDP payments to Grand Power.” Id. ¶ 36; see also Jiang Decl. ¶ 29. Wang’s

declaration states that “[i]t was not until on or about August 10, 2017, that ITG received the

authorization from Peace Bird for Grand Power to receive the LDP payments on its behalf,” while

Jiang’s declaration states that, on that date, “ITG was provided with the authorization by Peace

Bird to deal with Grand Power Express International (China) Limited . . . as its agent to receive

the advances for the customs fees, duties, and taxes that were paid by ITG on behalf of Peace

Bird.” Wang Decl. ¶ 36; Jiang Decl. ¶ 29. The declarations provide a copy of this authorization,

executed only by Defendant Peace Bird, which is dated August 10, 2017, and states: “This proves

that . . . Peace Bird Trading Corp. authorized Grand Power Express International (China) Limited

. . . to do custom clearance and receive tax payment by LDP trading term of orders of Xiamen ITG

Group Corp., Ltd.” Ex. 4.

Neither of the declarations explain why an authorization from Defendants needed to be

provided. Indeed, the LDP agreement executed between the parties in May 2017 already provided,

according to one translation, that Plaintiff was authorized to operate as Defendants’ agent. Ex. 3,

at 1-3; Wang Decl. ¶ 31 (identifying LDP agreements as having been executed in May 2017).

According to the certified translation, the LDP agreement stated that, under an LDP delivery term,

the freight forwarder “is often controlled and designated by the seller themselves as the agent for

procedures of overall customs clearance,” and further stated: “we agree ITG to use their designated

freight forwarder to operate the entire LDP customs clearance process.” Ex. 3, at 4-6. These terms

all apparently indicate that Plaintiff was responsible for arranging for and overseeing the payment

of the customs and duties fees, and that Grand Power would be operating as Plaintiff’s agent for

this process. It is unclear why the declarations apparently indicate that authorization was needed

for Grand Power to operate as Defendants’ agent for this process. Indeed, according to Jiang’s

declaration, Grand Power had already begun invoicing Plaintiff for the LDP customs and duties

fees before this authorization was executed, with the first being received on August 7, 2017. See

Jiang Decl. App. A. The submissions also do not account for the delay between Grand Power

confirming “[i]n the latter part of July 2017” that it could process the payments and Grand Power

generating the first invoice on August 7, 2017, nor which of the parties was responsible for setting

up logistics with Grand Power to cause the invoices to begin to be generated and sent. Wang Decl.

¶ 35; Jiang Decl. App. A. Moreover, the authorization does not appear to actually have been

necessary, as only Defendant Peace Bird executed this authorization, and the LDP shipment in

Counterclaim Count 1 for Defendant Crystal Vogue was apparently processed without one. See

Ex. 1-X1; Ex. 4.

While not explaining the reason why this authorization was needed, the declarations allege

that Plaintiff began to remit payments to Grand Power for the LDP fees the day after it received

the executed authorization from Defendant Peace Bird. Wang Decl. ¶¶ 36-37; Jiang Decl. ¶¶ 29-

32. Thus, under the applicable LDP terms, as derived from both the LDP agreement and the

applicable Sales Contracts, it is unclear whether Plaintiff took timely steps, or was responsible for

taking timely steps, to arrange for the LDP payments to begin being processed through Grand

Power as their designated freight forwarder, and thus whether Plaintiff was complying with its

contractual obligations as alleged. With respect to the LDP payments that are alleged to have been

remitted to Grand Power, the documentation contains a variety of discrepancies, but which only

speak to the sum of damages, rather than liability, and thus need not be treated as true for purposes

of this motion for default judgment.

IV. Procedural History.

Plaintiff commenced this action on November 19, 2019, alleging twenty counts of breach

of contract against Defendant Peace Bird. See Compl., ECF No. 1. On December 31, 2019,

Defendant Peace Bird appeared and filed an Answer, joining Defendants Xing Lin and Crystal

Vogue, collectively asserting five counterclaims. See Answer, ECF No. 9. On February 11, 2020,

Plaintiff filed a Reply, answering the five counterclaims and asserting seven additional breach of

contract claims against newly joined Defendants Xing Lin and Crystal Vogue. See Reply, ECF

No. 15. On March 26, 2020, Defendants Xing Lin and Crystal Vogue filed a responsive pleading

answering the seven additional breach of contract claims. See Answer to Reply, ECF No. 18. For

the next two and a half years, discovery continued, was completed, and dispositive motion practice

began. See Min. Entry, ECF No. 55; Mot. for Pre-Mot. Conference, ECF No. 56; Opp’n to Mot.

for Pre-Mot. Conference, ECF No. 57; Proposed Br. Schedule, ECF No. 58.

Thereafter, on October 20, 2022, defense counsel filed a letter seeking to withdraw from

the case due to non-payment. See Letter, ECF No. 59. Briefing on the pending motion for summary

judgment was held in abeyance pending a decision on the request. See Docket Order dated Dec. 5,

2022. On April 14, 2023, the Honorable Dora Lizette Irizarry Ordered defense counsel to file a

formal motion to withdraw with additional detail regarding the circumstances prompting the

request. See Docket Order dated Apr. 14, 2023. On April 28, 2023, defense counsel filed a formal

motion to withdraw, which was ultimately granted. See Mot. to Withdraw, ECF No. 62; Docket

Order dated Nov. 8, 2023. Because Defendants are corporations, and thus must be represented by

counsel in order to proceed in federal court, Defendants were given 45 days to obtain replacement

counsel or risk an entry of default. See Docket Order dated Nov. 8, 2023. If no replacement counsel

appeared by December 22, 2023, Plaintiff was granted leave to seek a certificate of default and to

subsequently file a motion for default judgment with the Court. See id. Defendants did not file an

appearance through counsel by the deadline and, to date, still have not done so.

On January 3, 2024, Plaintiff requested a Certificate of Default from the Clerk of Court,

and the Clerk entered default on January 17, 2024. See Req. Certificate Default, ECF No. 65; Entry

of Default, ECF No. 66. Thereafter, on February 5, 2024, Plaintiff filed the instant motion for

default judgment. Pl.’s Mot. Default J., ECF No. 67. The Honorable Dora Lizette Irizarry referred

the motion to the undersigned for this Report and Recommendation. See Referral Orders dated

Feb. 6, 2024.

LEGAL STANDARD

I. Rule 55(b)(2) Standard.

Rule 55 of the Federal Rules of Civil Procedure calls for a two-step process for obtaining

a default judgment. Priestley v. Headminder, Inc., 647 F.3d 497, 504-05 (2d Cir. 2011). First, the

plaintiff must request entry of default by the Clerk of the Court. Id. (citing Fed. R. Civ. P. 55(a)).

However, an entry of default at the first step “does not by definition entitle plaintiffs to an entry of

a default judgment.” Bricklayers, 779 F.3d at 187. Thus, once default has been entered against the

non-responsive parties, the plaintiff “must apply to the court for a default judgment.” Fed. R. Civ.

P. 55(b)(2); see City of New York v. Mickalis Pawn Shop, LLC, 645 F.3d 114, 128 (2d Cir. 2011)

(describing two-step process).

Because “a default is an admission of all well-pleaded allegations against the defaulting

party,” in determining whether to enter a default judgment, the court must accept all well-pleaded

factual allegations in the complaint as true and draw all reasonable inferences in the plaintiff’s

favor. Henry, 108 F.4th at 55 (quoting Vt. Teddy Bear Co., Inc. v. 1-800 Beargram Co., 373 F.3d

241, 246 (2d Cir. 2004)) (citing Finkel v. Romanowicz, 577 F.3d 79, 84 (2d Cir. 2009)). Then, the

court must determine whether these facts establish the defendants’ liability as a matter of law.

Mickalis Pawn Shop, LLC, 645 F.3d at 137; see also Henry, 108 F.4th at 55 (“[A] district court

may not enter a default judgment unless the plaintiff's complaint states a valid facial claim for

relief.” (citations and quotations omitted)); Priestley, 647 F.3d at 506 (holding that complaint must

allege facts that establish elements of cause of action). However, in examining the sufficiency of

the complaint, the court does not credit conclusions of law. Henry, 108 F.4th at 55; see also

Priestley, 647 F.3d at 506 (holding that conclusory allegations that are unsupported by factual

allegations, or contradicted by alleged facts, are properly rejected). In conducting this inquiry, the

burden of proof is on the plaintiff to demonstrate that “th[e] uncontroverted allegations, without

more, establish the defendant's liability on each asserted cause of action.” McDermott v. Light the

Region Media LLC, No. 6:23-CV-06094 EAW, 2023 WL 8656783, at *3 (W.D.N.Y. Dec. 15,

2023) (collecting cases); Shum v. Jili Inc., No. 17CIV7600RPKVMS, 2023 WL 2974902, at *8

(E.D.N.Y. Mar. 19, 2023) (same).

Courts require that the complaint, and documents considered to be included in the

complaint, facially state a claim without resort to extrinsic evidence. Grp. One Ltd., F. Supp. 3d at

59 (collecting cases in which courts declined to consider evidence extrinsic to the pleadings in

determining whether the allegations sufficiently stated a claim); Flanagan, 2015 WL 1042279, at

*3 n.1 (collecting cases where courts considered, on motions for default judgment, documents that

were incorporated by reference into, or integral to, the complaint in determining its legal

sufficiency). This is because “[t]he essence of Fed. R. Civ. P. 55 is that a plaintiff can obtain from

a default judgment equivalent relief to but not greater than that it would obtain in a contested

proceeding assuming it prevailed on all of its factual allegations.” Henry, 108 F.4th at 55 (quoting

Spin Master Ltd. v. 158, 463 F. Supp. 3d 348, 367 (S.D.N.Y. 2020)). While the complaint must,

on its own, facially state a claim for relief, the court, in its discretion, may also investigate the basis

for the facts alleged and require the submission of proof therefor. Henry, F.4th at 55; see also

Greathouse v. JHS Sec. Inc., 784 F.3d 105, 117 n.17 (2d Cir. 2015) (noting that court has discretion

to investigate basis for plaintiff’s allegations before deciding whether to grant default). Put another

way, while the court treats the factual allegations in the complaint as true, the court can investigate

or consider extrinsic evidence to satisfy itself that the factual allegations are, indeed, supportable

by evidence. “Only after the district court is convinced that the facts meet the elements of the

relevant cause of action—whether those facts are established by well-pleaded allegations or proven

by admissible evidence—may the district court enter a default judgment.” Henry, 108 F.4th at 55.

Moreover, “[b]ecause defaults are generally disfavored and are reserved for rare occasions, when

doubt exists as to whether a default should be granted . . . , the doubt should be resolved in favor

of the defaulting party.” Id. at 51 (quoting Enron Oil Corp. v. Diakuhara, 10 F.3d 90, 96 (2d Cir.

1993)).

Because the decision whether the enter a default judgment is discretionary, courts also

separately examine several factors to determine whether to exercise such discretion. Grp. One Ltd.,

625 F. Supp. 3d at 60–61 (collecting cases separately examining whether the complaint facially

stated a claim and the factors for whether to exercise discretion to enter default judgment);

Greathouse, 784 F.3d at 116 (“The decision whether to enter default judgment is committed to the

district court’s discretion.”). Specifically, to “determin[e] whether to grant a default judgment, the

court looks to the same factors that apply to a motion to set aside a default judgment for good

cause, namely: ‘(1) the willfulness of default, (2) the existence of any meritorious defenses, and

(3) prejudice to the non-defaulting party.’” Grp. One Ltd., 625 F. Supp. 3d at 54 (citations omitted);

Stokes v. MilkChocolateNYC LLC, 681 F. Supp. 3d 226, 236 (S.D.N.Y. 2023) (same); see also

Pecarsky v. Galaxiworld.com Ltd., 249 F.3d 167, 171 (2d Cir. 2001) (examining three factors for

setting aside a default judgment to determine whether district court properly granted a default

judgment).

Once a court has decided to enter a default judgment, the court must determine whether,

and how much, to award in damages. See Am. Builders, 565 F. Supp. 3d at 343–44 (first deciding

to enter default judgment before turning to question of damages); Credit Lyonnais Sec. (USA), Inc.

v. Alcantara, 183 F.3d 151, 154–55 (2d Cir. 1999) (ruling that even when entry of default judgment

is warranted, damages are not necessarily awarded); Grp. One Ltd., 625 F. Supp. 3d at 80 (granting

default judgment but deferring ruling on damages as insufficiently supported); Lenard v. Design

Studio, 889 F. Supp. 2d 518, 527–28 (S.D.N.Y. 2012) (“Where, on a damages inquest, a plaintiff

fails to demonstrate its damages to a reasonable certainty, the court should decline to award any

damages, even though liability has been established through default.” (collecting cases)); Ningbo

Yang Voyage Textiles Co. v. Sault Trading, No. 18CV1961ARRST, 2019 WL 5399973, at *5

(E.D.N.Y. Sept. 10, 2019), report and recommendation adopted, No. 118CV1961ARRST, 2019

WL 5394568 (E.D.N.Y. Oct. 22, 2019) (describing the damages inquest as “a separate

obligation”). Unlike allegations pertaining to liability, allegations in the complaint relating to

damages are not deemed admitted upon entry of a default. Bricklayers, 779 F.3d at 189; see also

Cement & Concrete Workers Dist. Council Welfare Fund, Pension Fund, Annuity Fund, Educ. &

Training Fund & Other Funds v. Metro Found. Contractors Inc., 699 F.3d 230, 234 (2d Cir. 2012)

(“[I]t is well established that ‘[w]hile a party's default is deemed to constitute a concession of all

well pleaded allegations of liability, it is not considered an admission of damages.’” (citation

omitted)). Instead, “[o]nce liability is determined, the plaintiff bears the burden of establishing an

amount of damages with reasonable certainty.” Stokes, 681 F. Supp. 3d at 236 (citing Transatlantic

Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 111 (2d Cir. 1997)). To do so,

the court must “first determine[e] the proper rule for calculating damages on [the given] claim and

then assess[] plaintiff's evidence supporting the damages to be determined under this rule.”

McDermott, 2023 WL 8656783, at *4 (quotations and citation omitted); see also Credit Lyonnais,

183 F.3d at 155. “There must be an evidentiary basis for the damages sought by plaintiff, and a

district court may determine there is sufficient evidence either based upon evidence presented at a

hearing or upon a review of detailed affidavits and documentary evidence.” Cement & Concrete

Workers, 699 F.3d at 234. “Regardless of the evidence presented, ‘[a] default judgment must not

differ in kind from, or exceed in amount, what is demanded in the pleadings.’” Busrel Inc. v.

Dotton, No. 1:20-CV-01767, 2022 WL 16559446, at *7 (W.D.N.Y. Nov. 1, 2022) (quoting Fed.

R. Civ. P. 54(c)); see also Silge v. Merz, 510 F.3d 157, 160 (2d Cir. 2007) (“By limiting damages

to what is specified in the ‘demand for judgment,’ [Rule 54(c)] ensures that a defendant who is

considering default can look at the damages clause, satisfy himself that he is willing to suffer

judgment in that amount, and then default without the need to hire a lawyer.”). Thus, the burden

of proof is on the plaintiff to demonstrate entitlement to the damages requested. J & J Sports

Prods., Inc. v. Senor De Chalma Corp., No. 15CV6648ARRCLP, 2016 WL 7655800, at *4

(E.D.N.Y. Dec. 19, 2016), report and recommendation adopted sub nom. J&J Sports Prods., Inc.

v. Senor De Chalma Corp., No. 15-CV-6648(ARR)(CLP), 2017 WL 61937 (E.D.N.Y. Jan. 5,

2017).

II. Rule 41(b) Standard.

Rule 41(b) authorizes a district court to dismiss an action “[i]f the plaintiff fails to

prosecute.” Fed. R. Civ. P. 41(b). “Rule 41 applies with equal force ‘to a dismissal of any

counterclaim, crossclaim, or third-party claim.’” Rsch. Found. for State Univ. of New York v.

Telluric Labs, LLC, No. 21-CV-1898 (JS)(SIL), 2023 WL 6307995, at *6 (E.D.N.Y. Sept. 28,

2023) (quoting Fed. R. Civ. P. 41(c)). Because “corporation[s] may not appear in federal court pro

se,” Kaplan v. Bank Saderat PLC, 77 F.4th 110, 116 n.8 (2d Cir. 2023) (citing Grace v. Bank

Leumi Tr. Co. of N.Y., 443 F.3d 180, 192 (2d Cir. 2006)), a corporation cannot prosecute an action

when the corporation fails to obtain replacement counsel following prior counsel’s withdrawal.

Schwartzman v. Label, LLC, No. 115CV05793VSBSDA, 2020 WL 1034373, at *1 (S.D.N.Y. Jan.

22, 2020), report and recommendation adopted, No. 15CV5793VSBSDA, 2020 WL 1033531

(S.D.N.Y. Mar. 3, 2020) (collecting cases); Telluric Labs, 2023 WL 6307995, at *6‒7 (dismissing

counterclaims of corporate defendant for failure to prosecute due to failure to obtain replacement

counsel). Courts thus analyze counterclaims brought by unrepresented corporate defendants under

the applicable Rule 41(b) framework. Id.

While “involuntary dismissal is an important tool for preventing undue delays and avoiding

docket congestion,” U.S. ex rel. Drake v. Norden Sys., Inc., 375 F.3d 248, 250–51 (2d Cir. 2004)

(citing Link v. Wabash R.R. Co., 370 U.S. 626, 629–31 (1962)), it is nevertheless a “harsh remedy”

that should be reserved for “extreme situations.” Lewis v. Rawson, 564 F.3d 569, 576 (2d Cir.

2009) (quoting Minnette v. Time Warner, 997 F.2d 1023, 1027 (2d Cir. 1993)). Thus, the Second

Circuit has established a five-factor test (sometimes referred to as the “Drake” factors) for

determining whether involuntary dismissal is warranted pursuant to Rule 41(b). Id. The Drake

factors examine whether:

(1) the plaintiff's failure to prosecute caused a delay of significant duration; (2)

plaintiff was given notice that further delay would result in dismissal; (3) defendant

was likely to be prejudiced by further delay; (4) the need to alleviate court calendar

congestion was carefully balanced against plaintiff's right to an opportunity for a

day in court; and (5) the trial court adequately assessed the efficacy of lesser

sanctions.

Id. (quoting Drake, 375 F.3d at 254). “In making use of this test, [n]o one factor is dispositive, and

ultimately [the Court] must review the dismissal in light of the record as a whole.” Id. (quotations

and citations omitted); see also Heendeniya v. St. Joseph's Hosp. Health Ctr., 830 F. App'x 354,

357 (2d Cir. 2020).

DISCUSSION

The Court will first address Plaintiff’s motion for default judgment pursuant to Rule

55(b)(2), before proceeding to Plaintiff’s motion to dismiss Defendants’ counterclaims for failure

to prosecute pursuant to Rule 41(b).

I. Plaintiff’s Motion for Default Judgment Under Rule 55(b)(2) Should Be Denied

Without Prejudice Because Plaintiff’s Allegations Are Contradicted By Its

Submissions, and Thus Do Not Adequately Establish Liability.

Plaintiff’s Complaint and Reply allege 27 breach of contract actions under the CISG.

“[T]he CISG governs sales contracts between parties from different signatory countries,” unless

the parties exclude its application. Delchi Carrier SpA v. Rotorex Corp., 71 F.3d 1024, 1028 n.1

(2d Cir. 1995); see also Transmar Commodity Grp. Ltd. v. Cooperativa Agraria Indus. Naranjillo

Ltda., 721 F. App'x 88, 89 (2d Cir. 2018). Here, Plaintiff, the seller, is a Chinese corporation, and

all three Defendants, as buyers, are American corporations. Compl. ¶¶ 2-3; Answer 43, ¶¶ 4-5.

Both China and the United States are signatories to the CISG. Ningbo Yang, 2019 WL 5399973,

at *2; see also CISG, art. 3 (listing both the United States and China as signatories). Moreover,

none of the relevant documents exchanged between the parties in the relevant transactions

contained any provisions mentioning choice of law. See, e.g., Ex. 1-1A. Thus, the CISG governs

the sales at issue.15

15 To this end, the Court notes, sua sponte, that it has subject matter jurisdiction over this action pursuant to 28 U.S.C.

§ 1331. Ningbo Yang, 2019 WL 5399973, at *2; see also Hanwha Corp. v. Cedar Petrochemicals, Inc., 760 F. Supp.

2d 426, 430 (S.D.N.Y. 2011) (collecting cases).

“A plaintiff asserting a breach of contract claim under the CISG must show: (1) the

existence of a valid and enforceable contract containing both definite and certain terms, (2)

performance by plaintiff, (3) breach by defendant and (4) resultant injury to plaintiff.” Ningbo

Yang, 2019 WL 5399973, at *3 (quotations and citation omitted). These elements are the same as

those for breach of contract under New York law. Id; Busrel, 2022 WL 16559446, at *8; Nantong

Sanhai Garment Co. v. Fab Mill Inc., No. 21 CIV. 859 (NRB), 2022 WL 540756, at *2 (S.D.N.Y.

Feb. 23, 2022).

The problem, on the instant motion, is that Plaintiff’s pleadings and submissions contradict,

and, at times, even negate these elements. For example, with respect to the first element, the

contracts for Counts 4 and 5, and Counterclaim Counts 4, 5, 6, and 7, are not signed by the

purchasing Defendant.16 See, e.g., Ex. 1-5. Under the CISG, this would not necessarily preclude

the existence of a valid and enforceable contract, as it does not contain a statute of frauds provision

or a parol evidence rule. To be sure, Article 11 of the CISG states that “[a] contract . . . need not

be concluded in or evidenced by writing and is not subject to any other requirement as to form. It

may be proved by any means, including witnesses.” CISG, art. 11; see also Claudia v. Olivieri

Footwear Ltd., No. 96 CIV. 8052 (HB)(TH), 1998 WL 164824, at *5 (S.D.N.Y. Apr. 7, 1998)

(collecting scholarly articles analyzing permissibility of parol evidence under the CISG). Thus, on

default, the existence of an oral contract could be established via factual allegations describing the

content of such conversations, which would be deemed true. Namely, these factual allegations

would need to establish offer and acceptance, both of which are necessary under the CISG to

consummate a valid and enforceable contract. CISG, art. 14(1) (“A proposal for concluding a

16 Based upon the submissions for Counterclaim Count 4, the orders for item numbers SPT003, SPT004, SPT005, and

SPT006 were all placed via one writing. Despite the contracts appearing to be identical, the copies of the contract

submitted as exhibits for SPT003, SPT004, and SPT005 are unsigned, but the copy of the contract submitted as an

exhibit for SPT006 is signed. This discrepancy is not explained. See Ex. 1-X4A; Ex. 1-X4B; Ex. 1-X4C; Ex. 1-X4D.

contract addressed to one or more specific persons constitutes an offer if it is sufficiently definite

and indicates the intention of the offeror to be bound in case of acceptance.”); CISG, art. 18(1) (“A

statement made by or other conduct of the offeree indicating assent to an offer is an acceptance.”);

CISG, art. 18(2) (“An acceptance of an offer becomes effective at the moment the indication of

assent reaches the offeror.”); CISG, art. 23 (“A contract is concluded at the moment when an

acceptance of an offer becomes effective in accordance with the provisions of this Convention.”).

However, Plaintiff does not allege that the parties entered into an oral contract. Rather, for

every count, Plaintiff alleges that the parties “entered into a written Sales Contract.” See, e.g.,

Compl. ¶ 79 (emphasis added).17 Plaintiff’s allegation that Defendants entered into a contractual

relationship is a legal conclusion, rather than a factual allegation that Defendants assented to the

bargain by agreeing to purchase specific products, or describing the circumstances or method

through which they may have assented (i.e., telephone call, email, etc.), and thus is not properly

credited on a motion for default judgment. That said, neither it, nor the unsigned Sales Contracts,

establish that Defendants assented to the terms (whether as offeror or offeree), thus creating a valid

and enforceable contract.

While mentioning consent, the Complaint’s introductory allegations, which are repeated

and realleged for each claim,18 do not cure this deficiency. Specifically, Plaintiff alleges that, in

the written Sales Contracts, Plaintiff “agreed to sell, and [Defendants] agreed to buy” the various

fabrics and textiles. Compl. ¶ 6; see also id. ¶ 20 (repeating and realleging paragraphs 1 through

19 for Count 1). This allegation is contradicted by the copies of the Sales Contracts that

17 Plaintiff’s pleadings are formulaic, in that the allegations for each count mirror one another. Thus, throughout this

discussion, the Court will often cite to one instance exemplifying a point being discussed, rather than citing every

observable instance.

18 Note, however, that the introductory allegations appear only to have been repeated and realleged for the 20 counts

against Defendant Peace Bird. The Reply, which asserts the Counterclaims against Defendants Xing Lin and Crystal

Vogue, do not contain these allegations nor do they incorporate or reference them therein.

Plaintiff submitted, because they contain no signature or stamp indicating that Defendant did agree

to the terms. Thus, for Counts 4 and 5, and Counterclaim Counts 4, 5, 6, and 7, neither Plaintiff’s

pleadings nor the documents integral to them establish offer and acceptance for the first element—

the existence of a valid and enforceable contract.19 Ningbo Yang, 2019 WL 5399973, at *3

(quotations and citation omitted).

Plaintiff also fails to address the validity, enforceability, and application of the LDP

Agreement. As an initial matter, the LDP Agreement is a separate writing, which is not a contract

for the sale of goods. Thus, it is not immediately clear whether the CISG is even applicable to it,

nor does Plaintiff address whether it is. Moreover, Plaintiff does not present argument regarding

how the Court should address the interrelation of separate writings under the CISG or the

application of one writing to another, such as in the circumstances presented here, nor whether the

LDP Agreement is integral to the pleadings, since Plaintiff does not bring a breach of contract

action for breach of the LDP Agreement. Moreover, it is unclear whether the LDP Agreement is a

valid and enforceable contract containing definite and certain terms allowing for a determination

of the “price,” see CISG, art. 14(1), since Plaintiff’s own submissions apparently disagree

regarding what the “price” term says.

19 Plaintiff’s pleadings never mention the Letters of Payment Guarantee exchanged between the parties. While

contracts are integral to complaints alleging breach of contract, the Plaintiff alleges that the Sales Contracts are the

contracts giving rise to the breach of contract actions. See, e.g., Compl. ¶¶ 37-41. Plaintiff’s non-reliance on the

Guarantees is further evidenced by the fact that, for the counts where the totals of the Commercial Invoices and the

Guarantees, differ, Plaintiff pleads damages matching the totals of the Commercial Invoices, not the Guarantees. See,

e.g., Compl. ¶¶ 165, 168; Ex. 1-11A; Ex. 1-11B. Thus, it is unclear whether, and Plaintiff makes no argument that,

the Guarantees are integral to the pleadings or properly considerable for liability for breach of contract actions brought

for breach of the Sales Contracts. Grp. One Ltd., 625 F. Supp. 3d at 59 n.16 (collecting cases refusing to consider

extrinsic evidence in determining whether complaint facially states a claim); Flanagan, 2015 WL 1042279, at *3 n.1

(collecting cases only considering documents integral to or incorporated by reference into complaint). Even if they

were, for Counts 4 and 5, there are no Guarantees. See, e.g., Ex. 1-5. In any event, the Guarantees do not contain

important terms, such as quantities and unit prices. See, e.g., Ex. 1-X7; CISG, art. 14(1) (“A proposal for concluding

a contract . . . constitutes an offer if it is sufficiently definite . . . . A proposal is sufficiently definite if it indicates the

goods and expressly or implicitly fixes or makes provision for determining the quantity and the price.”). Plaintiff has

presented no argument under the CISG to address or resolve these issues.

First, Plaintiff’s Complaint alleges that, under the LDP Agreement, the parties agreed that

Plaintiff would be reimbursed for “the full amount of the customs’ fees, duties and taxes advanced

by [Plaintiff], together with interest at the rate of 4% from the date each such payment was

advanced by Plaintiff,” and agreed that “the amount of the fees, duties and taxes . . . would be

included in the purchase price of the items sold.” Compl. ¶¶ 16-17. The LDP Agreement that

Plaintiff submitted in support of its motion for default, however, was written in both English and

Chinese, and neither the English nor Chinese provisions contain these terms. Rather, the relevant

English provision in the agreement stated that Defendants “agree[d] pay 4% more for the cost

which XIAMEN ITG GROUP CO.,LTD prepared us for the LDP cost,” and the relevant Chinese

provision stated that Defendants “agree[d] to pay ITG 4% more of the customs clearance fee as a

reward for ITG to advance the LDP cost for us.”20 Ex. 3. Neither provision mentions the word

“interest,” sets any dates on which interest would begin to accrue or how it would be calculated,

nor states that the fees would be included in the purchase price of the items sold. Indeed, it appears

to provide for a 4% flat sum, not accruing interest. While extrinsic evidence, including oral

conversations during negotiations, can be considered to determine the intended agreement under

the CISG, even when this parol evidence contradicts the written document, see Claudia, 1998 WL

164824, at *5, Plaintiff does not address this contradiction, and appears to allege that the parties

agreed in writing, not an oral discussion, to 4% interest. Specifically, Plaintiff alleges that the 4%

interest is provided for “under their LDP Agreement.” Compl. ¶ 16. The agreement, however, does

not provide for this, and Plaintiff has presented no argument explaining how Plaintiff’s

uncontroverted evidence (namely, the terms of the LDP Agreement that Plaintiff submitted) is

consistent with the allegation in the Complaint.

20 For the full text of both the English and Chinese terms of the agreement, see Background, Part II, supra.

For the second element of a breach of contract action under the CISG, Plaintiff must show

that it satisfactorily performed in accordance with the agreement. This element is also contradicted

by the allegations in Plaintiff’s pleadings, as well as the documents integral to them. For eleven

claims, Plaintiff’s uncontroverted allegations establish that the items were delivered late.21 Indeed,

in some instances, the items were delivered several months after the deadline imposed by the

contract. Compare Reply 30, ¶ 42 (“The Sales Contract provided that . . . customer item number

SPT006 was to be shipped out of any port in China before February 15, 2017.”), with Reply 34, ¶

66 (“On May 23, 2017, customer item number SPT006 . . . was shipped-on-board from Ningbo,

China.”). While Plaintiff alleges, for all counts, that “Plaintiff ITG, has, at all times, performed its

obligations under the Sales Contract,” this allegation is a threadbare recital of the second element

of the cause of action, and is plainly contradicted by the well-pleaded factual allegations in

Plaintiff’s pleadings. See Reply 35, ¶ 69; see also Henry, 108 F.4th at 58 (rejecting allegations in

complaint that were threadbare recitals of the elements of the causes of action). These threadbare

recitals of the causes of action do not constitute well-pleaded factual allegations for purposes of a

default judgment. See Henry, 108 F.4th at 58; Priestley, 647 F.3d at 506 (reversing entry of default

judgment because the factual allegations contradicted the threadbare legal conclusion alleged in

the complaint). Instead, the well-pleaded factual allegations which the Court must credit (and

which are, indeed, correct per the copies of the documents submitted) are those establishing that

the parties agreed that deliveries would occur by certain dates, but that those deliveries ultimately

did not occur by those dates.22 See Priestley, 647 F.3d at 506.

21 The claims are as follows: Counts 1 (for the first shipment), 6, 8, 9, and 10, and Counterclaim Counts 1, 2, 3, 4, 5,

and 7.

22 Again, as with the first element, the Letters of Payment Guarantee do not cure these deficiencies. First, they are

likely not integral to the pleadings, as the pleadings do not allege breach of the Guarantees as the contract (indeed, as

discussed, Plaintiff’s plead damages do not match the sums of the Guarantees). Since they are never mentioned in the

pleadings, they are also not incorporated by reference therein. Even if they were integral, for two of the late deliveries,

no Guarantees were exchanged. See Ex. 1-6; Ex. 1-X1. For two others, the Guarantees were executed by a different

An examination of the Sales Contracts integral to the pleadings further contradicts the

allegation that “Plaintiff ITG, has, at all times, performed its obligations under the Sales Contract.”

See Compl. ¶ 32. For example, the shipments for several of the contracts provided terms for

quantity, but which allowed for upward or downward deviations of 3%, 5%, or 10%. See, e.g., Ex.

1-3; Ex. 1-5; Ex. 1-7. However, for at least 10 claims, Plaintiff shipped amounts that were either

over, under, or both over and under, the permissible deviations according to the contracts.23 See,

e.g., Ex. 1-3.

For contracts that do not provide terms allowing for deviations, the shipments almost never

conformed to the exact weight ordered, presumably because this is very difficult to achieve. Thus,

a reasonable interpretation under the CISG would presumably excuse minor, technical breaches in

weight. See CISG, art. 9(1) (“The parties are bound by any usage to which they have agreed and

by any practices which they have established between themselves.”). Indeed, an examination of

the record reveals that, when the parties did provide for deviation, they most frequently agreed to

a permissible deviation of 5%. However, even among the contracts for which the terms apparently

did not permit any deviation, for at least five of these contracts, Plaintiff sent quantities that

deviated by 5% or more.24 See, e.g., Ex. 1-12B. Thus, for fifteen claims, Plaintiff apparently

breached by sending incorrect quantities, and thus the documents integral to the pleadings

contradict Plaintiff’s conclusory allegation that Plaintiff, at all times, performed its obligations

under the contracts.

Defendant (i.e., someone other than the buyer). See Ex. 1-X2; Ex. 1-X3. Moreover, as discussed, Plaintiff has not

addressed the Guarantees’ missing terms.

23 Specifically, Counts 3, 4, 5, 7, 8, 9, and Counterclaim Counts 2, 4 (for three of the four shipments), 5 (for the first

shipment), and 7. For more a more detailed comparison of quantities ordered and shipped, see Background, Part II,

supra.

24 These Counts are 12 (for two shipments), 13 (for the second shipment), 15 (for the first shipment), 17 (for the first

shipment), and 20.

Plaintiff’s submissions raise a multitude of other questions in terms of incorrect totals

charged,25 items that were ordered but apparently did not ship,26 unexplained differences between

the Commercial Invoice totals and the totals in the Letters of Payment Guarantee,27 an apparent

missing shipment for an item,28 among other problems. The major remaining question with respect

to whether the pleadings establish liability, however, is whether Plaintiff complied in remitting the

LDP payments. As discussed, Plaintiff alleges in the Complaint that it remitted the LDP fees for

the relevant shipments. Compl. ¶ 18. Although this allegation is vague and does not provide any

detail regarding dates remitted, methods of remittance, or other pertinent information (all of which

may limit the recovery of damages under FRCP 54(c) which limits recovery on default to the

damages established in the complaint), the Court, for purposes of whether to enter a default

judgment, accepts this allegation as true. Plaintiff’s submissions, however, call into question

whether Plaintiff timely remitted these payments.

The Court has reviewed in detail the content of Plaintiff’s submissions, which total more

than 1,000 pages in length, including the submissions that detail the background behind the parties’

decisions and steps taken in entering into the LDP Agreement. See Background, Part III, supra.

To summarize, without belaboring the point, the affidavits submitted by Plaintiff in support of this

motion indicate that Defendants, rather than Plaintiff, took the steps necessary to locate a freight

forwarder who was able to process the LDP payments. In the interim, Plaintiff began sending out

shipments before the freight forwarder had officially been put in place to perform these services.

From the submissions, it is unclear who made the decision to proceed with the shipments before

25 Count 4, customer item number OCC-0079. See Background, Part II, supra.

26 Count 1, customer item number LYM033; Count 4, customer item numbers OCC-0076-DP, OCC-0080-DP, and

OCC-0078-Z; Count 6, customer item numbers PFPFD003 through PFPFD006; Count 7, customer item numbers

PFPDB003 through PFPDB006; as well as Counterclaim Counts 2, 3, 4, 6, and 7. See Background, Part II, supra.

27 Counts 11, 12, 13. 14, and 15. See Background, Part II, supra.

28 Count 9, for customer item number WD001-1. See Background, Part II, supra.

the freight forwarder was in place. These events occurred against the backdrop of an LDP

Agreement according to which the onus appears to have been on Plaintiff, not Defendants, to

facilitate the LDP process, which steps it appears Plaintiff may not have been diligently taking.

Moreover, the submissions indicate that Plaintiff was awaiting an authorization from Defendants

to allow them to work with the freight forwarder before they began processing the payments. It is

unclear, however, why this authorization was necessary, as the LDP Agreement itself seemingly

already provided such authorization, and one LDP payment was processed for Defendant Crystal

Vogue, who never executed such authorization. Thus, while the Court credits as true Plaintiff’s

allegation that it made the LDP payments (and, indeed, the submissions confirm this), Plaintiff’s

submissions call into question whether these obligations were timely performed.

As noted above, a non-defaulting party is not automatically entitled to the entry of default

judgment, see Bricklayers, 779 F.3d at 187, but rather bears the burden of establishing their

entitlement thereto. McDermott, 2023 WL 8656783, at *3 (collecting cases); Shum, 2023 WL

2974902, at *8 (same). To that end, a plaintiff’s complaint must contain well-pleaded facts which,

when accepted as true, establish the requisite elements of the cause of action, Mickalis Pawn Shop,

645 F.3d at 137; Henry, 108 F.4th at 55; Priestley, 647 F.3d at 506, without resort to extrinsic

evidence beyond the pleadings. Grp. One Ltd., 625 F. Supp. 3d at 59 n.16; Flanagan, 2015 WL

1042279, at *3 n.1; cf. Henry, 108 F.4th at 55 n.5. Moreover, when doubt exists about whether to

enter a default judgment, such doubts are resolved in favor of the defaulting party. Henry, 108

F.4th at 51 (quoting Enron Oil, 10 F.3d at 96).

Given the above, the Court cannot say that Plaintiff has met its burden of showing that the

pleadings facially state a claim for liability. Notably, the Second Circuit has held that factual

allegations that contradict the elements of a cause of action preclude the entry of default judgment.

Priestley, 647 F.3d at 506. Moreover, courts routinely hold that alleged facts that are contradictory

or inconsistent are not “well-pleaded” and should not be credited. See, e.g., In re Livent, Inc.

Noteholders Sec. Litig., 151 F. Supp. 2d at 405–06 (collecting cases); Freedom Mortg. Corp. v.

Bullock, No. 19-CV-664-NGG-SJB, 2022 WL 18299810, at *2 (E.D.N.Y. Mar. 11, 2022), report

and recommendation adopted, No. 19CV664NGGSJB, 2022 WL 4445399 (E.D.N.Y. Sept. 23,

2022); Lin v. Quality Woods, Inc., No. 17-CV-3043-DLI-SJB, 2021 WL 4129151, at *7 (E.D.N.Y.

Aug. 10, 2021). Indeed, courts have even held that alleged facts are not “well-pleaded” when

contradicted by extrinsic evidence submitted by the plaintiff. See J & J Sports, 2016 WL 7655800,

at *4 (collecting cases); Glob. Auto, Inc. v. Hitrinov, No. 13CV2479PKCRER, 2021 WL 7367078,

at *5 (E.D.N.Y. Aug. 20, 2021), report and recommendation adopted, No. 13CV2479PKCRER,

2022 WL 593613 (E.D.N.Y. Feb. 28, 2022) (collecting cases).

Simply put, “[a] default does not . . . excuse any defects in the plaintiffs’ pleading.”

Freedom Mortg. Corp., 2022 WL 18299810, at *2 (citation omitted). Moreover, with respect to

the adequacy of the motion itself, courts often deny motions for default judgment without prejudice

to allow parties to correct procedural deficiencies or brief inadequately briefed substantive issues.

See, e.g., Romualdo v. Guru Krupa 104 Corp., No. 19-CV-5188-DG-SJB, 2023 WL 6167614, at

*9 (E.D.N.Y. Sept. 1, 2023); Saavedra v. Dom Music Box Inc., No. 21-CV-6051, 2024 WL

208303, at *2–3 (E.D.N.Y. Jan. 19, 2024).

In light of the various ways in which Plaintiff’s allegations are internally contradictory,

and contradicted by the evidence submitted, in ways which speak directly and necessarily to the

elements of the cause of action, the Court has doubts, that it must resolve in favor of the defaulting

party, with respect to whether entry of default judgment is appropriate in this case. While the issues

discussed above do not impact all of the causes of action in this case, they are pervasive enough to

make it impractical to bifurcate the claims.29 Moreover, for many of the same reasons discussed

above, and especially with respect to the LDP Agreement, even if the Court were to find the entry

of default judgment appropriate, the Court would not be satisfied, with reasonable certainty, that

Plaintiff has met its burden of proof in establishing the alleged damages. Stokes, 681 F. Supp. 3d

at 236 (citing Transatlantic Marine, 109 F.3d at 111). Thus, the Court respectfully recommends

that Plaintiff’s motion for default judgment be denied without prejudice.

Should Plaintiff file a new motion for default judgment, the new motion should also address

the following concerns with respect to a damages award. First, Plaintiff should address why the

Court should interpret the LDP Agreement to provide for 4% interest, rather than a 4% flat rate,

despite the language in the agreement and the various concerns, as previously noted, about the

practice of “burying” the cost of the LDP fees in the amount charged for the items ordered.

Specifically, Plaintiff should address the permissibility of this practice and how, given that

practice, the parties planned to track and ascertain the accrual of interest in order for Defendants

to determine how much they owed.

Second, assuming the LDP fees are appropriately subject to 4% accruing interest, Plaintiff

should address how the practice of “burying” the fees in the invoice totals impacts any damages

award in light of Rule 54(c). Busrel, 2022 WL 16559446, at *7 (quoting Fed. R. Civ. P. 54(c))

(“Regardless of the evidence presented, ‘[a] default judgment must not differ in kind from, or

exceed in amount, what is demanded in the pleadings.’”); see also Silge, 510 F.3d at 160 (“By

limiting damages to what is specified in the ‘demand for judgment,’ [Rule 54(c)] ensures that a

defendant who is considering default can look at the damages clause, satisfy himself that he is

willing to suffer judgment in that amount, and then default without the need to hire a lawyer.”).

29 Count 2 appears to be the only claim unaffected by the above analyses.

Specifically, Plaintiff’s pleadings make no mention of the amounts paid for LDP fees, presumably

because the sales documents exchanged between the parties do not mention these sums. Thus, from

a review of the pleadings, one cannot readily determine how much of the damages alleged for each

count should be subject to 4% interest (the LDP portions of the totals), and how much should be

subject to a standard rate of prejudgment interest (the goods portions of the totals).

Third, Plaintiff’s submissions with respect to the amounts charged for orders are

contradictory or unclear in several key respects that should be resolved. For Count 9, for customer

item number WD001-1, Plaintiff should address why the Complaint alleges $152,258.82 in

damages when the invoiced total only amounted to $106,326.22. The affidavits submitted in

support of Plaintiff’s motion list a separate line item for this count in the amount of $45,932.60

which would account for the difference, but which is unexplained and unaccounted for. Janiec

Decl. ¶ 18; Wang Decl. ¶ 40. For Count 4, as discussed in Background, Part II, supra, the prices

charged for the shipped items are incorrect per the amounts detailed in the Sales Contract.

For the LDP payments, Plaintiff’s own submissions contradict one another multiple times.

For example, for customer item numbers WD001-1 and MESH001-1, which were shipped under

bill of lading number YMLUC232013344, Plaintiff received two invoices from Grand Power, the

freight forwarder, designating this bill of lading number, in amounts of $24,000 and $40,000, thus

totaling $64,000. See Ex. 6. One of the two charts submitted with Jiang’s declaration matches this

amount, and attributes it to the above bill of lading number, as well as Commercial Invoice number

17458YFM99BM100A. See Jiang Decl. App. A. Jiang’s other chart, however, lists the LDP

amount paid for WD001-1 and MESH001-1 as $47,000, rather than $64,000, despite attributing it

to that same invoice number. Jiang Decl. ¶ 33. By contrast, Janiec’s declaration lists WD001-1 and

MESH001-1 individually, and states that the invoiced amount for each was $106,326.22 and

$62,897.30, respectively. Janiec Decl. ¶ 18. These sums match the amount for each of these items

as invoiced in the same Commercial Invoice number that Jiang twice identifies. See Ex. 1-9, at 3.

Thus, there can be no doubt that Janiec’s declaration is referring to the shipment of WD001-1 and

MESH001-1 that was shipped under bill of lading number YMLUC232013344. However, Janiec’s

declaration identifies the LDP fees for these items as $40,000 and $47,000, respectively, thus

totaling $87,000. See Janiec Decl. ¶ 18. This total is plainly contradicted by the invoices that the

freight forwarder, Grand Power, submitted, which designate the bill of lading number that they

correspond with, and which indicate that that bill of lading number was invoiced under two Grand

Power invoices, which together totaled $64,000.

Other discrepancies include the fact that, in Janiec’s declaration, the mysterious second

shipment for WD001-1 in the amount of $45,932.60 is identified as having no LDP charges. Janiec

Decl. ¶ 18. Meanwhile, Jiang’s LDP charts twice list the second WD001-1 order, for one chart on

its own, and for one chart together with an unknown item never mentioned in any of the filings

(AYR069-P), and list it as totaling $40,000 and $47,000, respectively. Jiang Decl. ¶ 33, App. A.

The Grand Power invoice charged $47,000 for the bill of lading that these charts apparently

attribute this item as relating to.

Moreover, Plaintiff alleges to have made six lump sum payments, on five separate days,

for the LDP fees. Janiec’s declaration lists the payments made on August 24, 2017, and September

22, 2017, for items at issue in this action, as totaling $396,000 and $121,000, respectively. Janiec

Decl. ¶ 19. The $396,000 sum matches one of Jiang’s charts, see Jiang Decl. ¶ 33, but not the

other, see Jiang Decl. App. A. The $121,000 sum also matches only one of Jiang’s charts, but in

reverse. See Jiang Decl. ¶ 33 (totaling $121,000); Jiang Decl. App. A (totaling $138,000). Janiec’s

declaration also details the total amount of LDP fees advanced for orders related to this action as

equaling $960,000, see Janiec Decl. ¶ 19, however, Wang’s declaration states that the $960,000

sum includes amounts already awarded in the CIETAC arbitrations. Wang Decl. ¶ 38.

Also, with respect to these payments, Jiang’s declaration is internally contradictory. For

example, one of Jiang’s charts lists the third LDP payment as being for $102,000, but attributes it

to three items (DXB097, BB1027, and DXDB004) which together only total $100,000, and lists

the fourth payment as being for $100,000, but attributes it to three items (PS1028, PS1029, and

DXB086) which total $102,000. Jiang Decl. ¶ 33. Jiang further alleges that some unspecified

portion of the third payment for $102,000 was for items that were arbitrated before CIETAC. Jiang

Decl. ¶ 33 (“The 3rd, 6th, and 7th payments also included advances that were made by ITG for

shipments that were included in the CIETAC arbitration.”). By contrast, Jiang’s other chart

attributes the three items identified for the latter payment to the former payment, and the three

items identified for the former payment to the latter payment (i.e., it reverses the items attributed

to the respective payments). Jiang’s declaration also does not allege that the sixth payment for

$450,000 included advances for shipments included in the CIETAC arbitrations, but the items

attributed to that payment in each of Jiang’s charts fail to account for $54,000 and $47,000,

respectively. Jiang Decl. ¶ 33, App. A. Finally, while Jiang’s factual allegations allege that some

unspecified portion of the seventh payment, for $138,000, was for items arbitrated before

CIETAC, see Jiang Decl. ¶ 33, Jiang’s second chart attributes all $138,000 of that payment to

items at issue in this case (while the first chart does not). Jiang Decl. App. A.

Plaintiff should also address the extent to which the arbitrations may have already awarded

sums at issue in this action, including the fact that the Peace Bird arbitration award adjudicates a

transaction identified by the same contract number as one at issue in this case (NLF20170706,

Count 9) and the fact that the bill of lading number that Jiang identifies for the combined shipment

for WD001-1 and AYR069-P matches the bill of lading number for contract number

NLF20170620, as awarded in the CIETAC arbitration. See Ex. 5-B. Specifically, Plaintiff should

address whether the multiple mentions of a second shipment of WD001-1 totaling $45,932.60 were

already awarded.

Finally, Plaintiff should address the Grand Power invoices submitted for LDP fees and

explain why, for multiple shipments, there are multiple invoices (either two or four installments),

all with the same totals and with the same bill of lading number. See Jiang Decl. App. A. It is

unclear that these are intended to be segmented increments added together, as alleged, rather than

duplicates that were being reinvoiced multiple times. For Grand Power invoice numbers

00492585, 00492586, and 00492587, Plaintiff should address why they were attributed to item

numbers LYM031, PFPFD002, and PFPDB002, when the bill of lading numbers identified on the

invoices do not match any identifiable numbers on the bills of lading for those items. See Jiang

Decl. App. A.

II. The Court Should Dismiss Defendants’ Counterclaims Pursuant to Rule 41(b)

Because Defendants Have Failed to Prosecute Their Claims for Two Years.

In contrast to Plaintiff’s motion for default judgment, the Court has sufficient information

to evaluate Plaintiff’s motion to dismiss Defendants’ counterclaims for failure to prosecute. In this

case, Defendants’ counterclaims should be dismissed for failure to prosecute.

As detailed above, courts review the five Drake factors in deciding whether dismissal for

failure to prosecute pursuant to Rule 41(b) is appropriate. The first factor, whether the claimant’s

failure to prosecute caused a delay of significant duration, “breaks down into two parts: (1) whether

the failures to prosecute were those of the [claimant], and (2) whether these failures were of

significant duration.” Drake, 375 F.3d at 255. With respect to the latter, while “[t]here is no fixed

period of time that must elapse before a [claimant’s] failure to prosecute becomes substantial

enough to warrant dismissal,” multiple cases have held that “[d]elays of several months have been

found to warrant dismissal.” See Caussade v. United States, 293 F.R.D. 625, 629 (S.D.N.Y. 2013)

(collecting cases). Indeed, dismissal may be proper after as few as three months, particularly in

circumstances where the claimant has become unreachable. Id. (collecting cases); see also Lopez

v. Cath. Charities of Archdiocese of New York, No. 00-CIV-1247, 2001 WL 50896, at *3

(S.D.N.Y. Jan. 22, 2001) (dismissing case under Rule 41(b) where claimant “failed to take any

steps to prosecute this action for at least three months” (emphasis in original)).

Here, Defendants, as corporations, must be represented by counsel in order to proceed in

this action. Kaplan, 77 F.4th at 116 n.8; Telluric Labs, 2023 WL 6307995, at *6. Because

Defendants’ counsel has withdrawn and Defendants have failed to retain alternate counsel,

Defendants have effectively become unreachable. As counsel’s motion to withdraw was granted

on November 8, 2023, this has persisted for almost ten months, but it appears that Defendants’

involvement in this action ceased for at least a year before that point, pending the decision on

counsel’s motion to withdraw. Courts have held that durations of a year, and even of six months,

sufficiently weigh in favor of dismissal for unrepresented corporations. See Telluric Labs, 2023

WL 6307995, at *6 (collecting cases). Moreover, Defendants’ withdrawal from this action and

failure to obtain replacement counsel appears to be willful. Thus, the failure to prosecute was that

of the claimant, and both aspects of the first Drake factor weigh in favor of dismissal.

For the second factor, whether the claimant was given notice that further delay would result

in dismissal, Defendants were warned, both by counsel and by the Court, that, as corporations,

they were unable to proceed in federal court without counsel. These warnings did not specifically

indicate that their claims may be subject to dismissal for failure to prosecute, and instead

mentioned default judgment. Nevertheless, the warnings did communicate that Defendants would

be unable to engage in proceedings if counsel was not obtained. Thus, the warnings put Defendants

on notice of some of the consequences contemplated by this factor, but perhaps not all. The second

Drake factor is thus neutral.

The third factor, whether Plaintiff is likely to be prejudiced by further delay, also militates

in favor of dismissal. A “presumption of prejudice is particularly appropriate where. . . the

[claimant’s] delay was ‘prolonged.’” See William v. City of New York, 771 F. App’x 94, 95 (2d

Cir. 2019) (quoting Shannon v. Gen. Elec. Co., 186 F.3d 186, 195 (2d Cir. 1999)). To that end,

“when a [claimant] offers no reasonable excuse for the delay, prejudice to the [respondent] is

presumed because, as litigation drags on, evidence can be lost and discovery becomes more

difficult.” Montanez-Garcia v. City of New York, 2018 U.S. Dist. LEXIS 106807, *5-6 (S.D.N.Y.

June 25, 2018) (citing Sanders v. Doe, No. 05CV7005, 2008 U.S. Dist. LEXIS 40515, at *12

(S.D.N.Y. May 8, 2008)). More specifically, “[w]here a [claimant] has become inaccessible for

months at a time, courts presume prejudice.” Caussade, 293 F.R.D. at 630 (collecting cases)

(emphasis added).

Here, there does not appear to be any specific prejudice with respect to the progression of

the discovery process because discovery in this action is already complete. Nevertheless, the

evidence that Plaintiff obtained or intended to utilize may degrade over time, such as if intended

witnesses become unavailable. Thus, the Court presumes prejudice given the prolonged delay. See

Telluric Labs, 2023 WL 6307995, at *7 (presuming prejudice for counterclaims of corporate

defendant due to prolonged delay). Moreover, and as discussed, Defendants here effectively

become unreachable for a prolonged period. Thus, the third Drake factor weighs in favor of

dismissal.

The fourth Drake factor, which requires courts to carefully balance expediency and the

rights of the plaintiff, is neutral with respect to dismissal. In examining the fourth factor, courts

must strike the proper “balance” between alleviating excess cases on the docket and the litigant’s

right to be heard. Specifically, courts look at whether a litigant has been given an opportunity “to

be heard on the issue of failure to prosecute,” Martens v. Thomann, 273 F.3d 159, 182 (2d Cir.

2001), and consider the plaintiff’s “interest in prosecuting [his] case.” See Caussade, 293 F.R.D

at 631. “The Second Circuit has cautioned that [a] court must not let its zeal for a tidy calendar

overcome its duty to do justice.” Id. at 631 (quotations and citations omitted). “Nonetheless,

fairness to other litigants, whether in the same case or merely in the same court as competitors for

scarce judicial resources[,] may require a district court to dismiss a case pursuant to Rule 41(b).”

Id. (quotations and citations omitted). To that end, “[d]ismissal is warranted where there is a lack

of due diligence in the prosecution of the lawsuit by [the claimant].” West v. City of New York,

130 F.R.D. 522, 524 (S.D.N.Y. 1990) (citing Lyell Theatre Corp. v. Loews Corp., 682 F.2d 37, 43

(2d Cir. 1982)).

Here, Defendants were warned in November 2023 that they must obtain replacement

counsel but, to date, have failed to do so. Defendants did not seek to be heard on this issue.

Moreover, despite Plaintiff having filed the instant motion seeking dismissal for failure to

prosecute and serving such motion on Defendants, see ECF No. 67-65, Defendants have not

opposed the motion or sought to be heard on it. Thus, despite having ample opportunity to be

heard, Defendants have not expressed interest in prosecuting (or, perhaps, ability to prosecute) this

case. Indeed, it appears that the reason for Defendants’ failure to prosecute is that Defendants

exhausted the funding needed to defend Plaintiff’s claims against them. See Mot. to Withdraw ¶

4, ECF No. 62. While Defendants have had ample opportunity to be heard, dismissing Defendants’

claims likely does little to relieve the Court’s docket to preserve scarce judicial resources for other

litigants at this juncture because this action, with respect to Plaintiff’s claims, may still proceed.

But see Telluric Labs, 2023 WL 6307995, at *7 (finding that dismissal of corporate defendant’s

counterclaims would preserve resources because court devoted “considerable time tending to th[e]

case, particularly issues stemming from [the defendant’s] representation”). Thus, the fourth Drake

factor is neutral.

The fifth Drake factor, the adequacy of lesser actions, also weighs in favor of dismissal.

“The final factor pertains to whether lesser sanctions would have been sufficient to remedy any

prejudice resulting from [the claimant’s] delay.” Caussade, 293 F.R.D. at 631 (quotations and

citations omitted). However, “district courts are not required to exhaust possible lesser sanctions

before imposing dismissal or default if such a sanction is appropriate on the overall record.” Id.

(quoting S. New England Tel. Co. v. Global NAPs Inc., 624 F.3d 123, 148 (2d Cir. 2010)).

Moreover, “[c]ourts consistently find that dismissal is the only adequate remedy for failure to

prosecute where a [claimant] cannot be contacted because the [claimant] would be unaware of any

lesser sanction that could be imposed.” Id. (collecting cases).

There does not appear to be any lesser sanction that could be imposed which would resolve

Defendants’ monetary obstacle in failing to retain alternate counsel. Indeed, the only lesser

sanction presumably available is further delay. This, however, does not remedy the prejudice to

Plaintiff, as described above, caused by Defendants’ delay. Thus, such a lesser remedy cannot be

considered sufficient. Thus, the fifth Drake factor weighs in favor of dismissal.

Having weighed all five Drake factors, the Court finds that the first, third, and fifth factors

weigh in favor of dismissal, while the second and fourth factors are neutral. However, no one

factor is dispositive. Lewis, 564 F.3d at 576. Viewing the record as a whole, the Court thus

recommends that Defendants’ counterclaims be dismissed with prejudice for failure to prosecute.

See Telluric Labs, 2023 WL 6307995, at *7 (dismissing corporate defendant’s counterclaims with

prejudice and collecting cases).

CONCLUSION

For the reasons set forth above, the Court recommends that Plaintiff’s motion for default

judgment be DENIED WITHOUT PREJUDICE, that Plaintiff’s motion to dismiss Defendants’

counterclaims for failure to prosecute be GRANTED, and that Defendants’ counterclaims be

DISMISSED WITH PREJUDICE.

OBJECTIONS TO THIS REPORT AND RECOMMENDATION

Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b)(2) of the Federal Rules of Civil

Procedure, the parties shall have fourteen (14) days from service of this Report and

Recommendation to file written objections. Failure to file timely objections shall constitute a

waiver of those objections both in the District Court and on later appeal to the United States Court

of Appeals. See Marcella v. Capital Dist. Physicians’ Health Plan, Inc., 293 F.3d 42, 46 (2d Cir.

2002); Small v. Sec’y of Health & Human Servs., 892 F.2d 15, 16 (2d Cir. 1989); see also Thomas

v. Arn, 474 U.S. 140 (1985).

SO ORDERED.

/s/

Steven L. Tiscione

United States Magistrate Judge

Eastern District of New York

Dated: Central Islip, New York

August 30, 2024