Spark Multinational, LLC v. Yong Xing Ltd.
| Docket Number | EP-22-CV-00030-FM |
| Decision Date | 17 March 2023 |
| Parties | SPARK MULTINATIONAL, LLC, Plaintiff, v. YONG XING LIMITED, Defendants. |
| Court | U.S. District Court — Western District of Texas |
ORDER GRANTING DEFAULT JUDGMENT
Before the court is “Motion for Default Judgment” (“Motion”) [ECF No. 12], filed October 27, 2022 by Spark Multinational, LLC (“Spark” or “Plaintiff”). Therein, Plaintiff requests default judgment against Yong Xing Limited (“Yong Xing” or “Defendant”).[1] After due consideration the Motion is GRANTED.
[2] In August 2020, Yong Xing agreed to sell Sparks 8,200 cases of nitrile examination gloves in small, medium and large sizes for $639,600, plus shipping costs.[3]
During negotiation of the sale, Yong Xing sent Spark a sample case that “appeared to be compliant with Spark's order.”[4] Satisfied with the sample, Spark sent Yong Xing a partial payment.[5] “After shipping the gloves, Yong Xing provided Spark with an inspection report . . . purportedly . . . showing that the shipment conformed with all inspection criteria including quantity, quality, workmanship, and labeling.”[6] Spark then paid the remainder of the order price and “all costs associated with the delivery.”[7]
“Regrettably, the inspection report proved to be false.”[8] The gloves delivered did not comply with Spark's order and “did not match those provided in the ‘sample' case.”[9] They [10]
“Spark purchased gloves from Yong Xing in order to fulfill a contractual obligation to its largest customer as well as to sell on the open market.”[11] [12] Yong Xing then “provided Spark with a $100,000 refund and $41,806 credit.”[13]
Unsatisfied, “Spark demanded full repayment.”[14] In response, [15] “Additionally, Yong Xing arranged for a third-party inspection of the delivered gloves in El Paso, Texas,” which “concluded that the gloves failed in terms of ‘Packaging and Labeling,' ‘Product Description,' and ‘Workmanship.'”[16]Nevertheless, Yong Xing did not reimburse Spark.[17]
In September 2021, [18]
In January 2022, Plaintiff filed a complaint asserting claims for breach of contract, violation of the Texas Deceptive Trade Practices Act (“DTPA”), fraudulent inducement, money had and received, and unjust enrichment.[19] Defendant was served in April,[20] but failed to appear.
In August, upon request by Plaintiff, the Clerk of Court entered default against Defendant.[21] Two months later, Plaintiff filed the instant Motion seeking default judgment.[22]
Under Federal Rule of Civil Procedure (“Rule”) 55(a), “[w]hen a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, . . . the clerk must enter the party's default.” After a defendant's default has been entered, a plaintiff may apply for a judgment based on such default.[23] “A default judgment is a judgment on the merits that conclusively establishes the defendant's liability.”[24] Rule 55(b) provides two means by which a plaintiff may obtain an entry of default judgment. Under certain circumstances, the plaintiff may apply to the clerk of the court for the entry of default judgment.[25] In all others, the party entitled to a judgment by default must apply to the court.[26]
[27] In evaluating what constitutes a “sufficient basis” for a default judgment, the Fifth Circuit held sufficiency is based on the standards of Rule 8:
Rule 8(a)(2) requires a pleading to contain a short and plain statement of the claim showing that the pleader is entitled to relief. The purpose of this requirement is to give the defendant fair notice of what the claim is and the grounds upon which it rests. The factual allegations in the complaint need only be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact). Detailed factual allegations are not required, but the pleading must present more than an unadorned, the-defendant-unlawfully-harmed-me accusation.[28]
Plaintiff asserts claims for breach of contract, violation of the DTPA, and fraudulent inducement.[29] Alternative to breach of contract, Plaintiff asserts claims of unjust enrichment and money had and received.[30]
“To prevail on a breach of contract claim, a party must establish the following elements: (1) a valid contract existed between the plaintiff and the defendant; (2) the plaintiff tendered performance or was excused from doing so; (3) the defendant breached the terms of the contract; and (4) the plaintiff sustained damages as a result of the defendant's breach.”[31]
Plaintiff has adequately pled existence of a contract. Evidence shows that Plaintiff agreed to purchase 8,200 cases of blue powder-free, nitrile examination gloves in small, medium, and large sizes from Defendant.[32] Each case contained ten 100-glove boxes, which were $7.80 apiece.[33] Thus, the contract was valued at $639,600, for which Plaintiff paid Defendant in full.[34]
However, an inspection of the delivery Plaintiff received shows the delivery failed to conform to the contract specifications: gloves came in at least thirteen different colors; many were of a non-nitrile material; others were damaged or otherwise defective; no box contained 100 gloves (they ranged from forty to eighty-seven); many cases were unmarked as to glove size or color; and still others had the incorrect color marked.[35]
Finally, Plaintiff suffered damages due to Defendant's breach. Plaintiff paid: $639,600 for the gloves; $54,829.30 for shipping and related fees; $3,820 to return 1,000 cases to Cambodia for inspection; and $26,837.61 in labor costs associated with storing, sorting, and inspecting the delivery after its customer rejected the gloves.[36] These initial damages thus totaled $725,086.91. Defendant then refunded Plaintiff $100,000 and gave it a $41,806 credit, reducing damages to $583,280.91.[37] Subsequently, however, Plaintiff paid heftily on the open market to secure replacement gloves necessary to fulfil its contractual obligations to its customer.[38]
Plaintiff has established a breach of contract claim.
“Generally, the elements of a DTPA action are (1) the plaintiff is a consumer, (2) the defendant engaged in false, misleading, or deceptive acts, and (3) these acts constituted a producing cause of the consumer's damages.”[39]
The DTPA defines a consumer to include any partnership or corporation that has assets below $25 million who seeks to purchase “any goods or services” and who is not “owned or controlled by a corporation or entity with assets of $25 million or more.”[40] Plaintiff avers it is a consumer as so defined.[41]
Unlawful deceptive trade practices under the DTPA include “representing that goods are original or new if they are deteriorated, reconditioned, reclaimed, used, or secondhand,” “of a particular standard, quality, or grade,” or “of a particular style or model, if they are of another.”[42]Defendant agreed to sell Plaintiff 8,200 cases of blue nitrile examination gloves, sent Plaintiff a correct representative sample, sent an inspection report purportedly confirming the delivery conformed to specifications, and yet shipped Plaintiff gloves that variously and extensively failed to satisfy the agreement.
Finally, as discussed above Plaintiff was damaged by Defendant's deception.
Plaintiff has established a DTPA claim.
A fraudulent inducement claim “requires proof that: (1) the defendant made a material misrepresentation; (2) the defendant knew at the time that the representation was false or lacked knowledge of its truth; (3) the defendant intended that the plaintiff should rely or act on the misrepresentation; (4) the plaintiff relied on the misrepresentation; and (5) the plaintiff's reliance on the misrepresentation caused injury.”[43]
Here Defendant represented that it would sell Plaintiff 8,200 cases of blue nitrile examination gloves. These specifications were material to Plaintiff. The false inspection report Defendant gave Plaintiff as well as the sheer scope of Defendant's failure to properly deliver supports the inference that Defendant knew its...
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