Vulfova v. Brand Brain Media, LLC
| Docket Number | Civil Action 22-cv-01477-CNS |
| Decision Date | 26 October 2023 |
| Parties | INESSA VULFOVA, Plaintiff, v. BRAND BRAIN MEDIA, LLC, Defendant. |
| Court | U.S. District Court — District of Colorado |
This matter is before the Court on Plaintiff Inessa Vulfova's (“Plaintiff's”) Motion for Default Judgment (“Motion”) as to Defendant Brand Brain Media, LLC (“Defendant”) (ECF No. 23). On September 2, 2022 a copy of the summons and complaint were served on Defendant by certified mail at Defendant's principal address (ECF No. 14). Defendant failed to respond (ECF No. 20, ¶ 1). On January 27, 2023, Plaintiff filed a Motion for Entry of Default (see generally id.). On January 31, 2023 the Clerk of Court entered default against Defendant (ECF No 21). Plaintiff then filed the instant Motion, seeking entry of default judgment under Federal Rule of Civil Procedure 55(b)(2) on April 11, 2023 (ECF No. 23). For the reasons set forth below, the Court DENIES Plaintiff's Motion.
Plaintiff brings a claim for breach of contract and seeks a declaratory judgment that she is the owner of software referred to as “AMS SAAS” (see generally ECF No. 1). Plaintiff contracted with Defendant to create the AMS SAAS software along with corresponding brand assets, pricing models, plans, and strategies (ECF No. 1-1 at 11). In exchange, Plaintiff agreed to pay Defendant $252,825.19 and transfer her e-commerce brand, “Germ Aide,” to Defendant (id.). The parties established a payment schedule, stipulating that Plaintiff would pay defendant $63,206.30 “upon execution of [the] [a]greement,” followed by eighteen consecutive monthly payments of $10,534.38 (id.). The parties agreed that, upon payment of the total project cost, all intellectual property, patents, and rights in the AMS SAAS software would transfer from Defendant to Plaintiff (id.). The contract (“Contract”) was signed on October 10, 2021, by Eric Leopardi, the President & CEO of Defendant Brand Brain Media, LLC, and on October 11, 2021, by Plaintiff (id. at 10).
On May 4, 2022, Mr. Leopardi emailed Plaintiff, claiming Plaintiff breached the Contract (ECF No. 1-4 at 1). Mr. Leopardi attached a draft civil complaint to this email and advised Plaintiff that, “[s]hould [Plaintiff] fail to make payment of [her] outstanding balance in full by the close of business today,” Defendant would file the draft complaint in federal court (id.). To the Court's knowledge, Defendant's complaint was never filed.
Prior to receiving Mr. Leopardi's email, Plaintiff paid Defendant $172,481 (ECF No. 1 at 8). Plaintiff also attempted to transfer the assets of Germ Aide to Defendant (id., ¶ 7). For instance, she transferred the Germ Aide trademark to a Wyoming LLC as directed by Mr. Leopardi, and she shipped Germ Aide inventory from China to the United States (id., ¶¶ 7, 8). Plaintiff informed Defendant that the inventory had arrived in the U.S., but Defendant never took possession of it from the importer (id., ¶ 11-12). In Defendant's draft complaint, Defendant alleges Plaintiff failed to transfer Germ Aide assets to Defendant (ECF No. 1-4 at 3).
For its part, Defendant delivered a prototype version of the AMS SAAS software to Plaintiff (ECF No. 1, ¶ 9). Plaintiff reviewed the software and reported back to Defendant regarding 184 items that needed to be addressed for the software to work effectively (id.). Plaintiff does not specify whether Defendant responded to her requests for improvement to the software. In its draft complaint, Defendant alleges it “performed all the conditions of the contract on [its] part,” and “expanded the functional scope of the [. . .] software [. . .] beyond the agreed upon limits of functionality” (ECF No. 1-4 at 4). Plaintiff does not address these claims in her Complaint (see ECF No. 1).
A court may enter default judgment against a party that has failed to plead or otherwise defend an action brought against it. Fed.R.Civ.P. 55(b)(2). “A party is not entitled to a default judgment as of right; rather the entry of a default judgment is entrusted to the sound judicial discretion of the court.” Villanueva v. Acct. Discovery Sys., LLC, 77 F.Supp.3d 1058, 1066 (D. Colo. 2015) (internal quotations omitted). “Strong policies favor resolution of disputes on their merits,” and default judgment should be “available only when the adversary process has been halted because of an essentially unresponsive party.” In re Rains, 946 F.2d 731, 732 (10th Cir. 1991) (citations omitted).
When facing a motion for default judgment, a court must first evaluate and establish its jurisdiction. See, e.g., Bixler v. Foster, 596 F.3d 751, 761 (10th Cir. 2010). To enter default judgment, a court must have both subject-matter jurisdiction over the action and personal jurisdiction over each defaulting defendant. Williams v. Life Sav. & Loan, 802 F.2d 1200, 1203 (10th Cir. 1986). The second step of the inquiry is to evaluate whether the plaintiff's pleadings support a judgment on the claims alleged. Tripodi v. Welch, 810 F.3d 761, 765 (10th Cir. 2016). The complaint “must contain either direct or inferential allegations respecting all the material elements necessary to sustain a recovery under some viable legal theory.” Bryson v. Gonzales, 534 F.3d 1282, 1286 (10th Cir. 2008) (citation omitted); see also Bixler, 596 F.3d at 762 (). If a plaintiff fails to allege facts in support of a required element of their claim, they cannot prevail on their claims through default judgment. See Marshall v. Baggett, 616 F.3d 849, 852-853 (8th Cir. 2010). When moving for default judgment, the plaintiff's burden is akin to the one borne by a party seeking to defeat a motion to dismiss for failure to state a claim. Graveling v. Castle Mortg. Co., 631 Fed.Appx. 690, 698 (11th Cir. 2015) (per curiam) ().
When deciding on a motion for default judgment, the court accepts all well-pleaded factual allegations in the complaint as true. See Behav. Analyst Certification Bd., Inc. v. Solis, No. 21-CV-02131-NYW-STV, 2022 WL 17736781 at *2 (D. Colo. Dec. 16, 2022) (). However, “a party in default does not admit conclusions of law, only allegations of fact, and so the factual allegations must be enough to establish substantive liability.” Villoldo v. Republic of Cuba, No. 21-CV-02497-NYW-NRN, 2023 WL 2390713 at *3 (D. Colo. Mar. 7, 2023) (citations omitted). Thus, while the entry of a default judgment relieves the plaintiff “from having to prove the complaint's factual allegations, default judgment “must be supported by a sufficient basis in the pleadings.” Equal Emp. Opportunity Comm'n v. Roark-Whitten Hosp. 2, LP, 28 F.4th 136, 157 (10th Cir. 2022) (citations omitted).
Having considered Plaintiff's Motion for Default Judgment, the case file, and relevant legal authority, the Court denies Plaintiff's Motion for Default Judgment.
To enter default judgment, a court must have both subject matter jurisdiction over the action and personal jurisdiction over the defaulting defendant. See Williams, 802 F.2d at 1203. The Court considers these jurisdictional prerequisites below, concluding that both are satisfied.
Plaintiff asserts that the Court has subject matter jurisdiction over this action pursuant to 28 U.S.C. § 1332 (ECF No. 1, ¶ 3). The Court agrees. A court has subject matter jurisdiction over an action when there is either a federal question at issue or diversity between the parties. See §§ 1331, 1332. Section 1332, provides, in pertinent part, that “district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs,” and the controversy “is between citizens of different States.”
Defendant is a Colorado limited liability company (“LLC”) (ECF No. 1, ¶ 2). The citizenship of an LLC is determined by the citizenship of each of its members. Gwilt v. Harvard Square Ret. & Assisted Living, 537 F.Supp.3d 1231, 1245 (D. Colo. 2021). According to Defendant's articles of organization,[2]Defendant's only member is Eric Leopardi, who is domiciled in Parker, Colorado. Since Mr. Leopardi is domiciled in Colorado, he is a citizen of Colorado, as is Defendant. See id. at 1244. (“For purposes of federal diversity jurisdiction, an individual's state citizenship is equivalent to domicile” (citation omitted)). Meanwhile, Plaintiff is a resident and citizen of California (ECF No. 1, ¶ 1). Accordingly, the parties are diverse as required by statute. § 1332(a).
Plaintiff must also establish that the amount in controversy exceeds $75,000. See id. Here, Plaintiff seeks to recover her damages resulting from Defendant's breach of contract, including the $172,481 she paid to Defendant, the $227,000 valuation of the Germ Aide product she transferred to Defendant, and the amounts she will have to pay a third-party developer for the AMS SAAS software in the event Defendant fails to complete its obligations under the agreement, as well as consequential damages and reasonable attorney's fees (ECF No. 1 at 8). Accordingly, the matter in controversy exceeds $75,000.
Based on the foregoing, Plaintiff has properly met her burden to show diversity...
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