Intelligen Power Sys., LLC v. Dventus Techs. LLC, 14 Civ. 7392 (PAE)
| Decision Date | 12 November 2015 |
| Docket Number | 14 Civ. 7392 (PAE) |
| Parties | INTELLIGEN POWER SYSTEMS, LLC, Plaintiff, v. dVENTUS TECHNOLOGIES LLC, Defendant. |
| Court | U.S. District Court — Southern District of New York |
In this action, plaintiff Intelligen Power Systems, LLC ("Intelligen") brought claims for fraudulent inducement and breach of contract arising from the failure of defendant dVentus Technologies LLC ("dVentus") to deliver equipment under a supply contract, even when given more time than the parties had agreed upon.1 The case was litigated through a motion to dismiss and through substantial discovery, after which time dVentus's counsel was permitted to withdraw. dVentus, a corporate entity that may not appear pro se, subsequently failed to secure substitute counsel, despite ample notice of its need to do so. The Court entered default judgment for Intelligen as to liability and referred the case to the Honorable James C. Francis IV, United States Magistrate Judge, for an inquest into damages.
Before the Court is Judge Francis's October 15, 2015 Report and Recommendation, which is attached. Dkt. 140 ("Report"). Judge Francis recommends the award of damages to Intelligen in the principal amount of $1,097,523.36, plus prejudgment interest in the amount of $69,533.68 for the period up to August 25, 2015, and further prejudgment interest on theprincipal amount calculated at 9% per year from August 26, 2015 to the date of judgment. For the reasons that follow, the Court adopts the Report, subject to very minor modifications as discussed below.
The Court assumes familiarity with the facts of this case, as set forth in the Court's decision on dVentus's motion to dismiss. See Dkt. 91, reported at Intelligen Power Systems, LLC v. dVentus Technologies LLC, No. 14 Civ. 7392 (PAE), 2015 WL 3490256, at *1-3 (S.D.N.Y. June 2, 2015). The Court briefly recounts the relevant procedural history.
On May 19, 2015, two days before oral argument on the motion to dismiss, dVentus's counsel moved to withdraw. Dkt. 76. On May 21, 2015, following oral argument and an ex parte colloquy with dVentus's counsel, the Court denied the motion to withdraw pending the completion of certain discovery. Dkt. 82. On June 2, 2015, the Court denied in part and granted in part dVentus's motion to dismiss, allowing Intelligen's claims of fraudulent inducement and breach of contract to proceed. See Intelligen, 2015 WL 3490256, at *15. On August 7, 2015, the Court granted defense counsel's motion to withdraw, effective August 21, 2015. Dkt. 125, at 4. The Court's order noted that if successor counsel were not secured by that date, it would entertain an immediate application for a default judgment. Id. No successor counsel has appeared, although the Court has received several messages from dVentus's principal, Daniel Gizaw, to the effect that he purportedly lacks the funds necessary to secure counsel. See Dkt. 127, 130, 135, 141.
On September 11, 2015, the Court held a show cause hearing at which no counsel for dVentus appeared, and the Court that day entered default judgment as to liability in favor of Intelligen. Dkt. 131. The Court referred the case to Judge Francis for an inquest into damages. Dkt. 132.
Intelligen submitted proposed findings of fact and conclusions of law on September 30, 2015. Dkt. 133. Intelligen also filed a declaration of Danielle C. Lesser on October 2, 2015, which contained exhibits attesting to its damages. Dkt. 134 ("Lesser Decl."). Judge Francis issued the Report on October 15, 2015. Dkt. 140.
In reviewing a Report and Recommendation, a district court "may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge." 28 U.S.C. § 636(b)(1)(C). "To accept those portions of the report to which no timely objection has been made, a district court need only satisfy itself that there is no clear error on the face of the record." Ruiz v. Citibank, N.A., No. 10 Civ. 5950 (KPF) (RLE), 2014 WL 4635575, at *2 (S.D.N.Y. Aug. 19, 2014) (); see also Mims v. Walsh, No. 04 Civ. 6133 (BSJ) (FM), 2012 WL 6699070, at *2 (S.D.N.Y. Dec. 23, 2012) (quoting Edwards v. Fischer, 414 F. Supp. 2d 342, 346-47 (S.D.N.Y. 2006)).
As neither party has submitted objections to the Report, review for clear error is appropriate. Because the Report explicitly states that "[f]ailure to file timely objections will preclude appellate review," Report at 10, both parties' failure to object operates as a waiver of appellate review. See Monroe v. Hyundai of Manhattan & Westchester, 372 F. App'x 147, 147-48 (2d Cir. 2010) (summary order) (quoting Caidor v. Onondaga Cnty., 517 F.3d 601, 604 (2d Cir. 2008); Frank v. Johnson, 968 F.2d 298, 300 (2d Cir. 1992)).
Careful review of Judge Francis's thorough and well-reasoned Report reveals that only the slightest modifications are necessary.
First, the Report sets forth two slightly different principal damages amounts: The introduction says $1,100,098.80, while the conclusion says $1,097,523.36. Compare Report at1, with Report at 10. Tallying the damages figures approved in the body of the opinion, with which there is no clear error, the Court finds that the correct total is $1,097,523.36.
Second, the Court finds that the Report slightly miscalculated the prejudgment interest. Because of its erroneous finding that nine months rather than eight months elapsed between January and the end of August 2015, see id. at 9, the Report slightly overestimated the amount of prejudgment interest that accrued as of August 25, 2015 (ignoring the issue of whether the last six days of August are appropriately counted). That amount should be $69,511.6, not $69,533.68. Nevertheless, because the ultimate amount of prejudgment interest to be awarded must reflect the continued accrual of prejudgment interest between August 25, 2015 and the date of final judgment, as the Report acknowledges in its conclusion, see Report at 10, this slight miscalculation as to the intermediate total as of August 25, 2015 would not have affected the ultimate award.
Finally, the Report notes that Intelligen seeks to recover its litigation costs and directs Intelligen to submit a Bill of Costs to the Clerk of Court. Report at 9 n.5. However, it is not evident to the Court whether Intelligen is seeking litigation costs or attorneys' fees. While withholding judgment on the availability of such relief, the Court notes that the parties' contract does not appear to contain a fee-shifting provision, and that "New York law does not permit fee-shifting in breach of contract cases, unless specifically provided in the contract." Jia Chen v. Antel Commc'ns, LLC, No. 14 Civ. 6629 (SJF), 2015 WL 5793404, at *7 (E.D.N.Y. Sept. 30, 2015) (citing Equitable Lumber Corp. v. IPA Land Dev. Corp., 38 N.Y.2d 516 (N.Y. 1976)); see also Wright v. Selle, 811 N.Y.S.2d 525, 527 (4th Dep't 2006) (). Therefore, Intelligen is directed to file a motion for attorneys' fees and costs, if it desires to doso, by November 19, 2015, explaining the legal basis for seeking such relief. If Intelligen does not file such a motion, the Court expects to direct entry of final judgment forthwith.
For the foregoing reasons, the Court adopts the Report's recommendation that Intelligen be awarded damages in the principal amount of $1,097,523.36. The Court further adopts the recommendation of an award of prejudgment interest at an annual rate of 9%, calculated for each item of damages (appropriately modified pursuant to Judge Francis's Report) from the appropriate start date, as identified in Exhibit 12 of the Lesser declaration, to the date of judgment. The Court further directs Intelligen to file a motion for attorneys' fees and costs, if any, by November 19, 2015.
SO ORDERED.
/s/_________
Paul A. Engelmayer
United States District Judge
Dated: November 12, 2015
New York, New York
14 Civ. 7392 (PAE) (JCF)
Plaintiff Intelligen Power Systems, LLC ("Intelligen") claims that defendant dVentus Technologies, LLC ("dVentus") fraudulently induced it to enter into a supply contract and then breached that contract. After entering a judgment of default against dVentus on September 11, 2015, the Honorable Paul A. Engelmayer, U.S.D.J., referred the case to me for a calculation of damages. I held an inquest on October 5, 2015; dVentus did not appear. For the reasons set forth below, the plaintiffs should be awarded damages in the amount of $1,100,098.80 plus statutory interest.
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