R&G Enters. v. Soo Jeong Choi

• Decision Date: 24 May 2022
• Docket Number: 19-CV-11699 (PAE) (SN)
• Parties: R&G ENTERPRISES, INC., Plaintiff, v. SOO JEONG CHOI, et al., Defendants.
• Court: U.S. District Court — Southern District of New York

R&G ENTERPRISES, INC., Plaintiff,
v.
SOO JEONG CHOI, et al., Defendants.

No. 19-CV-11699 (PAE) (SN)

United States District Court, S.D. New York

May 24, 2022

HONORABLE PAUL E. ENGELMAYER JUDGE

REPORT & RECOMMENDATION

SARAH NETBURN, UNITED STATES MAGISTRATE JUDGE

Plaintiff R&G Enterprises (“R&G” or “Plaintiff”) has sued defendants Soo Jeong Choi (“Choi”), Rae H. Lee (“Lee”), and R&H Cleaners, Inc. (“R&H”) for violating the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601, et seq. (“CERCLA”), breach of contract, breach of the duty of good faith and fair dealing, private and public nuisance, negligence, trespass, and strict liability. Plaintiff seeks compensatory, liquidated, and incidental damages along with attorney's fees and costs, as permitted by the parties' contract. ECF No. 1, Complaint (“Compl.”) ¶ 29. After Defendants Choi and R&H failed to appear, the Honorable Paul A. Engelmayer entered a default in R&G's favor and referred the matter to my docket to conduct an inquest on damages. ECF No. 29.

PROCEDURAL BACKGROUND

On December 20, 2019, Plaintiff filed its Complaint. Defendant R&H was served with the Complaint on January 3, 2020, and Defendant Choi was served on January 21, 2020. ECF Nos. 12, 13. After Defendants failed to appear, the Clerk of the Court entered Certificates of Default as to Defendant R&H and Defendant Choi (the “Defaulting Defendants”) on February 5 and February 13, 2020, respectively. ECF Nos. 18, 21.

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After eight months of inactivity, the Court ordered the Plaintiff to show cause why the case against the Defaulting Defendants should not be dismissed for failure to prosecute. ECF No. 23. Because Plaintiff had not filed a proof of service on Defendant Lee, the Court also ordered Plaintiff to advise whether Defendant Lee had been timely served. Id.

In response, Plaintiff moved for a default judgment against the Defaulting Defendants. ECF No. 24. Plaintiff explained that it had attempted to serve Defendant Lee but had been unsuccessful, and therefore sought a default judgment against only Defendants Choi and R&H. Id., Ex. 3 at ¶ 9. The Court directed the Defaulting Defendants to oppose Plaintiff's motion for default by November 16, 2020. ECF No. 26. They did not appear or respond.

The Court entered a default against the Defaulting Defendants on November 17, 2020. ECF Nos. 28. The Court ordered the Defaulting Defendants to file their opposition to Plaintiff's Motion for the Entry of Default Judgment within 30 days, ECF No. 30, but they have failed to appear or otherwise respond.

DISCUSSION

I. Legal Standard

The Court of Appeals set forth the procedural rules applicable to the entry of a default judgment in City of New York v. Mickalis Pawn Shop, LLC:

“Federal Rule of Civil Procedure 55 is the basic procedure to be followed when there is a default in the course of litigation.” Vt. Teddy Bear Co. v. 1-800 Beargram Co., 373 F.3d 241, 246 (2d Cir. 2004). Rule 55 provides a “two-step process” for the entry of judgment against a party who fails to defend: first, the entry of a default, and second, the entry of a default judgment. New York v. Green, 420 F.3d 99, 104 (2d Cir. 2005). The first step, entry of a default, formalizes a judicial recognition that a defendant has, through its failure to defend the action, admitted liability to the plaintiff. . . . The second step, entry of a default judgment, converts the defendant's admission of liability into a final judgment that terminates the litigation and awards the plaintiff any relief to which the court decides it is entitled, to the extent permitted by Rule 54(c)

645 F.3d 114, 128 (2d Cir. 2011).

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Where default has been entered against a defendant, courts are to accept as true all of the well-pleaded facts alleged in the complaint, except those concerning the amount of damages. See Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., Div. of Ace Young Inc., 109 F.3d 105, 108 (2d Cir. 1997) (citing Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992)). “Even after the default . . . it remains for the court to consider whether the unchallenged facts constitute a legitimate cause of action, since a party in default does not admit mere conclusions of law.” In re Industrial Diamonds Antitrust Litig., 119 F.Supp.2d 418, 420 (S.D.N.Y. 2000) (cleaned up). Where a plaintiff's well-pleaded facts are sufficient to state a claim on which relief can be granted, the only remaining issue in an inquest is if the plaintiff has provided adequate support for the requested relief. See Gucci Am., Inc. v. Tyrrell-Miller, 678 F.Supp.2d 117, 119 (S.D.N.Y. 2008) (citing Credit Lyonnais Sec. (USA), Inc. v. Alcantara, 183 F.3d 151, 155 (2d Cir. 1999)).

“[A] plaintiff seeking to recover damages against a defaulting defendant must prove its claim th[r]ough the submission of evidence . . . .” Malletier v. Carducci Leather Fashions, Inc., 648 F.Supp.2d. 501, 503 (S.D.N.Y. 2009). A court may determine the amount a plaintiff is entitled to recover without holding a hearing so long as (1) the court determines the proper rule for calculating damages, and (2) the evidence submitted by the plaintiff establishes “with reasonable certainty” the basis for the damages. Id. (first citing Credit Lyonnais Sec. (USA), Inc., 183 F.3d at 155, then citing Transatlantic Marine Claims Agency Inc., 109 F.3d at 111).

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II. Facts Related to Liability

The following facts are established by the admissible evidence submitted in support of Plaintiff's motion for a default judgment and the allegations in the Amended Complaint, which are deemed admitted except to the extent they concern the amount of damages. See Greyhound, 973 F.2d at 158.

Plaintiff is a corporation with a registered business address in Scarsdale, New York, although it avers that all of its activities are directed, controlled, and coordinated at 25 East Spring Valley Avenue, Suite 260, Maywood, New Jersey 07607. Compl. ¶ 1. In or about September 2007, Plaintiff entered into a written lease agreement (the “Lease”) with Lee and R&H pursuant to which Lee and R&H agreed to rent Plaintiff's commercial property at 616 Melrose Avenue, Bronx, New York (the “Premises”) from October 1, 2007, through December 21, 2015, for the purpose of operating a “dry cleaners and related tailoring business only.” Id. at ¶ 8; ECF No. 24, Ex. 12 (“Lease”) ¶ 2. The Lease stipulated the following relevant provisions regarding contamination and conditions at the Premises:

4. Tenant shall not use, keep or permit to be used or kept, any foul or noxious gas or substance in the demised premises, or permit or suffer the demised premises to be occupied or used in a manner offensive or objectionable to Owner or other occupants of the building by reason of noise, odors, and/or vibrations, or interfere in any way with other tenants or those having business therein (“noxious gas prohibition”).

10. Tenant shall not bring or permit to be brought or kept in or on the demised Premises, any inflammable, combustible, or explosive, or hazardous fluid, materials, chemical or substance, or cause or permit any odors of cooking or other processes, or any unusual or other objectionable odors, to permeate or emanate from the demised premises (“combustible materials prohibition”).

62.....Tenant shall remain liable for the removal of all garbage, refuse, rubbish and any and all hazardous materials, substances and chemicals at the Premises. Tenant assumes sole responsibility and liability necessary to assure that the Premises are always in compliance with all governmental and environmental guidelines

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throughout the term of the Lease, and upon their vacating the Premises (“clean-up and regulatory obligations”).

78. Tenant covenants that the Premises shall be kept free of Hazardous Materials in accordance with applicable law, and shall not be used to generate, manufacture, refine, transport, treat, store, handle, dispose, transfer, produce or process Hazardous Materials, and Tenant shall not cause or permit, as a result of any intentional or unintentional act or omission on the part of Tenant or any assignee, sublessee or occupant, the installation or placement of Hazardous Materials in or on the Premises or suffer the presence of Hazardous Materials on the Premises . . . Tenant shall conduct and complete all investigations, studies, sampling, and testing and all remedial, removal, and any other actions necessary to clean up and remove all Hazardous Materials, on, from or affecting the demised Premises in accordance with all applicable federal, state and local laws, ordinances, rules, regulations, and policies. The term “Hazardous Materials” as used in this Lease shall include any toxic or hazardous materials or substances, as defined by any federal, state or local laws, ordinance, rule or regulation. The obligations and liabilities of Tenant under this paragraph shall survive the assignment, subletting and termination of this Lease (“Hazardous Materials prohibition and remediation obligations”).

Lease ¶¶ 62, 78; ECF No. 24, Ex. 12 Rules and Regulations Attached to and Made a Part of this Lease (“Rules and Regulations”) ¶¶ 4, 10. The Lease also required the Tenant to “take good care” of the Premises and, upon expiration or termination of the Lease, surrender the Premises in “good order and condition.” Lease ¶¶ 4, 21 (“good order and condition obligation”).

Defendants Lee and R&H leased the Premises from approximately October 1, 2007, through approximately January 2014, after which they assigned the Lease to Defendant Choi. Compl. ¶ 11. Choi and R&G executed a Lease Extension and Assumption (“Lease Extension”) in December 2015, which extended terms of the lease until December 31, 2030. Id. at ¶¶ 12-13; see ECF No. 24, Ex. 13. The Lease...