Armadillo Distribution Enters., Inc. v. Hai Yun Musical Instruments Mfr. Co.

• Court: U.S. District Court — Middle District of Florida
• Writing for the Court: Charlene Edwards Honeywell, United States District Judge
• Citation: Armadillo Distribution Enters., Inc. v. Hai Yun Musical Instruments Mfr. Co., 142 F.Supp.3d 1245 (M.D. Fla. 2015)
• Decision Date: 05 November 2015
• Docket Number: Case No: 8:12-cv-1839-T-36EAJ
• Parties: Armadillo Distribution Enterprises, Inc., Plaintiff, v. Hai Yun Musical Instruments Manufacture Co. Ltd., Defendant.

142 F.Supp.3d 1245

Armadillo Distribution Enterprises, Inc., Plaintiff,

v.Hai Yun Musical Instruments Manufacture Co. Ltd., Defendant.

Case No: 8:12-cv-1839-T-36EAJ

United States District Court, M.D. Florida, Tampa Division .

Signed November 5, 2015

Erin M. Bradford, James Moran Shuler, Kass Shuler, PA, Scott Allan Frick, Frick Law Group, PA, Tampa, FL, for Plaintiff.

Hai Yun Musical Instruments Manufacture Co. Ltd., Foshan, Guangdon, China, pro se.

ORDER

Charlene Edwards Honeywell, United States District Judge

This matter comes before the Court upon the Plaintiff's Motion for Involuntary Dismissal of Defendant's Counterclaims (Doc. 84) and Plaintiff's Motion for Default Judgment (Doc. 85). Defendant, a foreign corporation, is currently unrepresented and has not responded to the motions. The Court, having considered the motions and being fully advised in the premises, will grant Plaintiff's Motion for Involuntary Dismissal of Defendant's Counterclaims (Doc. 84) and grant in part and deny in part Plaintiff's Motion for Default Judgment (Doc. 85).

BACKGROUND

I. Procedural History

Invoking this Court's diversity jurisdiction, Plaintiff Armadillo Distribution Enterprises, Inc. ("Armadillo") filed the instant action alleging that Defendant Hai Yun Musical Instruments Manufacture Co. Ltd. ("Hai Yun") breached a manufacturing contract, an implied covenant of good faith and fair dealing, an express warranty, an implied warranty of merchantability, and an implied warranty of fitness for a particular purpose. See Doc. 1. On October 22, 2013, the Clerk entered a default against Hai Yun for failure to timely respond to the complaint. Doc. 17. Hai Yun then appeared through counsel and filed a motion to set aside the entry of default. Docs. 18, 19. On November 20, 2013, the motion to set aside the default was granted. Doc. 21.

In its Amended Answer, filed on February 26, 2014, Hai Yun raised affirmative defenses of waiver, set-off, comity, collateral estoppel, and res judicata . Doc. 38. Hai Yun also asserted counterclaims for breach of contract (Count I) and domestication of an out-of-country foreign money judgment, pursuant to Fla. Stat. §§ 55.601, et seq . (Count II). Id. Hai Yun alleged, inter alia , that it had already obtained a judgment against Armadillo in a related breach-of-contract action filed in China, based on Armadillo's failure to pay Hai Yun amounts owed under purchase orders. Id. ¶ 82. Armadillo appeared by counsel and defended that proceeding, and the Chinese court ultimately ordered Armadillo to pay Hai Yun approximately $195,184 for the cost of the goods and $48,688 in damages. Id . ¶¶ 83-86 & Exh. A.

In August 2014, Hai Yun's counsel moved to withdraw. Docs. 58, 61, 63. The magistrate judge granted the motion and ordered Hai Yun to obtain substitute counsel within 30 days because corporations cannot appear pro se in this Court. See Docs. 64, 66; Palazzo v. Gulf Oil Corp ., 764 F.2d 1381, 1385 (11th Cir.1985) ; Local Rule 2.03(e). The magistrate judge notified Hai Yun that failure to timely obtain substitute counsel could result in entry of default or other sanctions. See Docs. 64, 66. After Hai Yun failed to obtain counsel within the time allowed, the magistrate judge issued an Order to Show Cause as to why sanctions should not be imposed, including default. Doc. 71. Hai Yun did not respond to that Order and a Clerk's default was entered on June 23, 2015. Doc. 79.

The final pretrial conference in this matter was held on June 23, 2015. Doc. 80. Hai Yun did not appear and Armadillo represented that Hai Yun did not cooperate in the drafting of the pretrial statement. Armadillo was given one week to file a motion for default judgment and the case was removed from the Court's July 2015 trial calendar, to be rescheduled if necessary. On June 30, 2015, Armadillo timely filed its Motion for Default Judgment (Doc. 85), as well as a Motion for Involuntary Dismissal of Counterclaims (Doc. 84) and a Motion to Withdraw Jury Demand (Doc. 86). Hai Yun has not responded to any of these motions and, to date, no attorney has appeared on its behalf.

II. Factual Allegations¹

Armadillo is a major distributor of musical instruments, including, but not limited to, famous brands such as Dean® and ddrum®, to dealers throughout the United States and to international distributors throughout the world. Doc. 1 ¶ 4. Over the years, Armadillo has invested large amounts of time, effort, and money to develop the ddrum® brand's "Diablo" line of drum kits and the goodwill associated therewith. Id. ¶ 9.

Hai Yun is a Chinese corporation that manufactures musical instruments, including drums. Id. ¶ 5. Armadillo and Hai Yun have had a long-standing business relationship over several years, whereby Armadillo would contract with Hai Yun for the manufacture of certain musical instruments to be delivered to Armadillo at its headquarters in Tampa, Florida, which were thereafter marketed and sold under Armadillo's ddrum® brand of musical instruments. Id. ¶ 11. Over the course of several years, Armadillo placed numerous orders with Hai Yun for drums. Id. ¶ 12. In each instance, Hai Yun would manufacture the drums to meet the specifications that Armadillo would provide and would deliver the drums to Armadillo at its headquarters. Id. In each instance, the drums that Hai Yun delivered conformed to the specifications and were thereafter distributed by Armadillo as was contemplated by both Armadillo and Hai Yun. Id.

In the spring of 2010, Armadillo placed an order with Hai Yun for the manufacture of approximately one thousand Drum Kits, to serve as the 2011 line of the ddrum® brand's "Diablo" Drum Kits. Id. ¶ 13. Hai Yun accepted the order from Armadillo, and the parties agreed that Hai Yun would furnish samples for Armadillo's approval prior to manufacturing the Drum Kits, and would, upon receipt of approval, manufacture and deliver the Drum Kits to Armadillo at its headquarters in Tampa, Florida. Id. ¶ 14. Thereafter, prior to initiating the production run to manufacture the Drum Kits, Hai Yun built and shipped Drum Kit samples to Armadillo which were inspected and approved by Armadillo in terms of both design and quality of the drums. Id. ¶ 15.

After receiving Armadillo's approval of the sample Drum Kits, Hai Yun manufactured and delivered to Armadillo five shipping containers at its headquarters in Tampa, Florida, each one containing approximately two hundred Drum Kits. Id. ¶ 16. As per Armadillo's standard practice with products ordered from Hai Yun, and based upon the careful review of the samples previously provided to Armadillo by Hai Yun, upon receipt, Armadillo began distribution of the first container of Drum Kits to Armadillo's retail outlet customers. Id. ¶ 17.

Shortly after it started distributing the Drum Kits to its retail outlet customers, Armadillo began receiving complaints from those retail outlet customers, who had been forced to accept a high number of product returns due to significant cosmetic and structural defects in the shells of the Drum Kits. Id. ¶ 18. As soon as Armadillo began receiving the high volume of complaints from its retail outlet customers, Armadillo immediately inspected the remaining four shipment containers, containing approximately eight hundred Drum Kits and discovered that the Drum Kits manufactured by Hai Yun were catastrophically defective at an alarming rate. Id. ¶ 19. Specifically, a high number of the drum shells had obvious finish defects, and many shells were actually deformed, delaminated and/or cracked. Id. The Drum Kits were beyond repair. Id. It became clear that the samples Hai Yun had provided were not representative of the Drum Kits that it manufactured and delivered to Armadillo. Id.

As a result of Hai Yun's defective manufacture of the Drum Kits, Armadillo was forced to cease distribution of the Drum Kits, as they were unfit for commercial distribution. Id. ¶ 20. Moreover, these defective Drum Kits so severely tainted the ddrum® brand's "Diablo" line, that Armadillo was forced to discontinue the "Diablo" line, losing all of the goodwill that Armadillo had developed over the years in the "Diablo" line. Id.

MOTION FOR DEFAULT JUDGMENT

I. Standard of Review

A court considering a motion for default judgment must determine whether the factual allegations of the complaint provide a sufficient legal basis supporting such entry.

Nike, Inc. v. Austin , No. 6:09–cv–796–Orl–28KRS, 2009 WL 3535500, at *1 (M.D.Fla. Oct. 28, 2009) (citing Nishimatsu Constr. Co. v. Houston Nat'l Bank , 515 F.2d 1200, 1206 (5th Cir.1975) ("The defendant is not held to admit facts that are not well-pleaded.")). The Court must " ‘examine the sufficiency of the allegations in the complaint to determine whether the plaintiff is entitled to’ a default judgment." Id. (citing Fid. & Deposit Co. v. Williams , 699 F.Supp. 897, 899 (N.D.Ga.1988) ).

In deciding to grant a default judgment after entry of default, "a court may consider whether material issues of fact remain, whether the facts alleged in the complaint state a valid cause of action, whether a plaintiff has been substantially prejudiced by the delay involved and how harsh an effect a default judgment might have on the defendant."

Ivy v. Thor n ton (In re Thornton), 419 B.R. 787, 793 (Bankr.W.D.Tenn.2009) (quoting La Barbera v. Federal Metal & Glass Corp., 666 F.Supp.2d 341 (E.D.N.Y.2009) ). A plaintiff must also establish that the damages sought are reasonable under the circumstances. Patray v. Nw. Publ'g, Inc. , 931 F.Supp. 865, 869 (S.D.Ga.1996). The trial judge has "considerable latitude in determining the amount of the damages" when ruling on a motion for default judgment. Id.

II. Discussion

In the Motion for Default Judgment, Armadillo does not address the counts individually or by name. Instead, Plaintiff only refers to relief under Fla. Stat. §§ 672.714 and 672.715. These statutes are not mentioned in the Complaint, which cites only to Fla. Stat. § 672.315. The Court can only...