Guangzhou Yongjia Garment Mfg. Co. v. Zoomers Inc.

• Decision Date: 28 August 2020
• Docket Number: 19 CV 2759 (NGG)(LB)
• Parties: GUANGZHOU YONGJIA GARMENT MANUFACTURING CO. LTD., Plaintiff, v. ZOOMERS INC., Defendant.
• Court: U.S. District Court — Eastern District of New York

GUANGZHOU YONGJIA GARMENT MANUFACTURING CO. LTD., Plaintiff, v. ZOOMERS INC., Defendant.

19 CV 2759 (NGG)(LB)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK

August 28, 2020

REPORT AND RECOMMENDATION

BLOOM, United States Magistrate Judge:

Plaintiff, Guangzhou Yongjia Garment Manufacturing Co. Ltd. ("Yongjia"), brings this diversity action against Defendant, Zoomers Inc. ("Zoomers"), to recover money allegedly due for apparel products that Yongjia sold and delivered to Zoomers. Compl. ¶¶ 4, 7, 9, ECF No. 1. Yongjia moves pursuant to Rule 55(b) of the Federal Rules of Civil Procedure and Local Civil Rule 55.2 for entry of a default judgment against Zoomers in the amount of $151,925.12, plus pre-judgment and post-judgment interest at a 9% per annum rate. Mot. Default J. 1, ECF No. 10. The Honorable Nicholas G. Garaufis referred plaintiff's default judgment motion to me for a Report and Recommendation in accordance with 28 U.S.C. § 636(b). Electronic Order 6/15/2020. For the reasons set forth below, it is respectfully recommended that: the Court should decline to rule on plaintiff's motion for a default judgment; the complaint should be dismissed without prejudice for failure to adequately plead subject matter jurisdiction; and plaintiff should be granted leave to file an amended complaint within thirty (30) days of any adoption of this Report and Recommendation.

BACKGROUND¹

Yongjia manufactures apparel products; Zoomers sells apparel products. See Compl. ¶¶ 3-4. At some point in 2015, Zoomers issued purchase orders to purchase various apparel products from Yongjia. Id. ¶¶ 4, 8. Yongjia accepted the orders and delivered the goods to Zoomers, who received the shipments and accepted delivery. Id. ¶¶ 9, 15. Yongjia issued invoices, which were designated as 15PM01-012, 15PMO2-021, and 16PM08-019, were due on May 13, 2015, June 5, 2015, and August 11, 2016, respectively, and collectively totaled $162,350.95. Id. ¶¶ 9-10. Zoomers received the invoices without objection, id. ¶ 22, and Yongjia made written demands for payment, id. ¶ 17; nonetheless, payment of the balance of $151,925.12 remains outstanding and due, id. ¶¶ 10-12.

PROCEDURAL HISTORY

On May 10, 2019, plaintiff commenced this diversity action against defendant by filing the complaint, which alleges three causes of action: breach of contract, account stated, and unjust enrichment. ECF No. 1. On July 22, 2019, plaintiff filed an affidavit of service of the summons and complaint on the New York Secretary of State as agent for defendant. See ECF No. 6. After defendant failed to answer or otherwise respond to the complaint, the Court ordered plaintiff to take appropriate action against defendant by September 27, 2019. Electronic Order 9/16/2019. Plaintiff requested a certificate of default on September 25, 2019, ECF No. 8, which the Clerk of Court entered on October 3, 2019, ECF No. 9. On October 9, 2019, plaintiff filed the instant motion for a default judgment pursuant to Rule 55(b) of the Federal Rules of Civil Procedure and Local Civil Rule 55.2, seeking $151,925.12, plus pre-judgment and post-judgment interest at a 9% per annum rate.² ECF No. 10. Plaintiff's counsel, attorney Ruofei Xiang, attaches to the instant motion: an affirmation in support, ECF No. 10-1, a proposed order, ECF No. 10-2, and an affirmation of service, ECF No. 10-3. On June 15, 2020, the Honorable Nicholas G. Garaufis referred plaintiff's motion, ECF No. 10, to me for a Report and Recommendation in accordance with 28 U.S.C. § 636(b). Electronic Order 6/15/2020.

DISCUSSION

I. Subject Matter Jurisdiction

"Federal courts are courts of limited jurisdiction." Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). "They possess only that power authorized by Constitution and statute[.]" Id. (citations omitted). "A federal court's jurisdiction generally may be predicated upon federal question jurisdiction, codified at 28 U.S.C. § 1331, or diversity jurisdiction, codified at 28 U.S.C. § 1332." Winter v. Novartis Pharm. Corp., 39 F. Supp. 3d 348, 350 (E.D.N.Y. 2014). Although not raised by the parties, the Court must be satisfied that jurisdiction exists before considering the claims presented. See Wynn v. AC Rochester, 273 F.3d 153, 157 (2d Cir. 2001) (per curiam) (citations omitted); Lyndonville Sav. Bank & Tr. Co. v. Lussier, 211 F.3d 697, 700 (2d Cir. 2000) ("It is axiomatic that federal courts . . . may not decide cases over which they lack subject matter jurisdiction."); Mackason v. Diamond Fin. LLC, 347 F. Supp. 2d 53, 54 (S.D.N.Y. 2004) ("A district court is required to raise sua sponte the question whether diversity of citizenship is adequately pleaded[.]"). This requirement applies with no less force on a motion for default judgment. See, e.g., Centra Developers Ltd. v. Jewish Press Inc., No. 16 CV 6737 (WFK)(LB), 2018 WL 1788148, at *5 (E.D.N.Y. Feb. 20, 2018), report and recommendation adopted, 2018 WL 1445574 (E.D.N.Y. Mar. 23, 2018) (citations omitted) ("Prior to entering a default judgment, the Court must ascertain that subject matter jurisdiction exists over plaintiff's claims."). "[T]he party invoking federal jurisdiction bears the burden of establishing that jurisdiction exists." Bey v. New York, No. 12 CV 2171 (WFK), 2012 WL 1899379, at *2 (E.D.N.Y. May 4, 2012) (quoting Conyers v. Rossides, 558 F.3d 137, 143 (2d Cir. 2009)).

Here, plaintiff invokes this Court's subject matter jurisdiction based on diversity jurisdiction, specifically alienage jurisdiction. See Compl. ¶ 5 ("This Court possesses jurisdiction over this case pursuant to 28 U.S.C. § 1332(a), as there is diversity between a subject of a foreign state and a citizen of the State of New York[.]"); 28 U.S.C. § 1332(a)(2). 28 U.S.C. § 1332 "provides for diversity jurisdiction for disputes between, inter alia, 'citizens of a State and citizens or subjects of a foreign state.'" Bayerische Landesbank v. Aladdin Capital Mgmt. LLC, 692 F.3d 42, 48 (2d Cir. 2012) (quoting 28 U.S.C. § 1332(a)(2)) (explaining that "[t]his form of diversity jurisdiction is often referred to as 'alienage' jurisdiction."). See also Hebei Tiankai Wood & Land Constr. Co. v. Chen, 348 F. Supp. 3d 198, 205-06 (E.D.N.Y. 2018) (recounting the history and purpose of alienage jurisdiction). Alienage jurisdiction requires complete diversity between the parties. Ergowerx Int'l, LLC v. Maxell Corp. of Am., 18 F. Supp. 3d 453, 454-55 (S.D.N.Y. 2014), aff'd, 615 Fed. Appx. 689 (Fed. Cir. 2015) (collecting cases).

For purposes of diversity jurisdiction, a corporation of a foreign State is "deemed, constructively, a citizen or subject of such State," JPMorgan Chase Bank v. Traffic Stream (BVI) Infrastructure Ltd., 536 U.S. 88, 91 (2002) (citation omitted), and a corporation is "a citizen of both its state of incorporation and its principal place of business, regardless of whether such place is foreign or domestic," Bayerische, 692 F.3d at 51 (citing 28 U.S.C. § 1332(c)(1)). Courts define principal place of business as the "nerve center" — "the place where the corporation's high level officers direct, control, and coordinate the corporation's activities." See Hertz Corp. v. Friend, 559 U.S. 77, 80-81 (2010). For purposes of diversity jurisdiction, a limited liability company's citizenship is determined by the citizenship of its members, see Bayerische, 692 F.3d at 49 (citing Handelsman v. Bedford Vill. Assoc. Ltd. P'ship, 213 F.3d 48, 51-52 (2d Cir. 2000)), and thus the complaint "must allege the citizenship of natural persons who are members of a limited liability company and the place of incorporation and principal place of business of any corporate entities who are members of the limited liability company," Avant Capital Partners, LLC v. W108 Dev. LLC, 387 F. Supp. 3d 320, 322 (S.D.N.Y. 2016) (quoting New Millennium Capital Partners, III, LLC v. Juniper Grp. Inc., No. 10 Civ. 46 (PKC), 2010 WL 1257325, at *1 (S.D.N.Y. Mar. 26, 2010) (citing Handelsman, 213 F.3d at 51-52)).

Plaintiff has not adequately pleaded Yongjia's citizenship.³ Plaintiff alleges that Yongjia at all material times "was and is a foreign company engaged in international commerce with its principal offices located at 217 Teishanhe Road, Shandong Ave., Huashan Town, Huadu, Xinhe Cun, Guangzhou, Guangdong 510880." Compl. ¶ 1.⁴ Besides describing itself as a "foreign company," plaintiff does not allege what type of entity Yongjia is. Based on its full name, "Guangzhou Yongjia Garment Manufacturing Co. Ltd.," Compl. 1 (emphasis added), it may well be that Yongjia is a limited liability company or a corporation; however, this is far from clear. See White Pearl Inversiones S.A. v. Cemusa, Inc., 647 F.3d 684, 686-87 (7th Cir. 2011) ("[I]t can be difficult to decide whether a business bearing the suffix 'Ltd.' is a corporation for the purpose of § 1332 or is more like a limited partnership, limited liability company, or business trust.").⁵ If Yongjia is in fact a limited liability company, the complaint is inadequately pleaded for failing to identify Yongjia's members and their citizenship. If Yongjia is in fact a corporation, the complaint is still inadequately pleaded. Plaintiff does not allege where Yongjia is incorporated nor Yongjia's "principal place of business." Plaintiff's allegation that Yongjia has "principal offices" at an address in an unidentified foreign state is insufficient. See Compl. ¶¶ 1, 5. The complaint simply does not plead sufficient jurisdictional facts to enable the Court to determine whether there is complete diversity between the parties.

As plaintiff has failed to adequately plead diversity⁶ to establish the Court's subject matter jurisdiction over the instant case, the Court should decline to consider the merits of plaintiff's motion. See, e.g., Roistacher v. Bondi, 624 Fed. App'x 20, 23 (2d Cir. 2015) (summary order) ("Having determined that it lacked subject-matter jurisdiction, the district court's subsequent consideration of the merits . . . was...