Zoo v. Seneca Hardwoods LLC

• Decision Date: 23 May 2014
• Docket Number: 13 CV 4358 (PKC)(LB)
• Parties: PROFI-PARKIET SP. ZOO, Plaintiff, v. SENECA HARDWOODS LLC, Defendant.
• Court: U.S. District Court — Eastern District of New York

PROFI-PARKIET SP. ZOO, Plaintiff, v. SENECA HARDWOODS LLC, Defendant.

13 CV 4358 (PKC)(LB)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK

Dated: May 23, 2014

REPORT AND RECOMMENDATION

BLOOM, United States Magistrate Judge:

Plaintiff Profi-Parkiet Sp. Zoo ("Profi-Parkiet") brings this breach of contract action pursuant to the United Nations Convention on Contracts for the International Sale of Goods ("CISG") against Seneca Hardwoods LLC ("Seneca"), a New York-based manufacturer of hardwood floors, alleging that Seneca breached the terms of a sales agreement by providing wooden planks that did not conform to the parties' agreed-upon specifications. Despite proper service of the summons and complaint, defendant failed to plead or otherwise defend this action. On November 4, 2013, the Clerk noted defendant's default pursuant to Rule 55(a) of the Federal Rules of Civil Procedure. Plaintiff now moves for a default judgment pursuant to Rule 55(b) of the Federal Rules of Civil Procedure. The Honorable Pamela K. Chen referred plaintiff's motion to me for a Report and Recommendation in accordance with 28 U.S.C. § 636(b). For the reasons set forth below, it is respectfully recommended that plaintiff's motion for a default judgment should be granted in part and denied in part, and the Court should enter judgment for plaintiff in the amount of $52,537.07, plus pre-judgment as set forth herein.

BACKGROUND

Profi-Parkiet is a limited liability company registered and licensed to do business in the Republic of Poland, with its principal place of business in Warsaw, Poland. See Compl. ¶¶ 1-2. Plaintiff's primary business involves the wood trade, including the sale of wood floor panels, machine sales for woodworking, wood glues and chemicals, and general woodwork and masonry products. Id. ¶ 4. A portion of plaintiff's business also entails purchasing wood products from companies in the United States and reselling those products in the European market. Id. ¶ 5.

During the spring of 2011, plaintiff's representatives traveled from Poland to the U.S. to seek wood suppliers. Id. ¶ 9. On or about May 12, 2011 plaintiff entered into a sales agreement with Seneca, a New York based manufacturer of unfinished solid hardwood floors with its principal place of business in Odessa, New York. Id. ¶¶ 6-7, 11. The agreement, which was drafted with input from both plaintiff and defendant over the course of several email communications, set forth terms for the sale of Walnut Select and Better Grading ("S&B") 5¼" Tongue and Groove ("T&G") wood. Id. ¶¶ 12-13. Defendant agreed to supply 5,100 square feet of wood at approximately $3.87 per square foot, to be shipped to plaintiff through a third party, for a total cost of $20,487.98. Id. ¶¶ 15, 30; Compl. Ex. at 30.¹ Plaintiff wired $16,390.38, representing an eighty percent down payment, to defendant on May 12, 2011 to reserve the lumber and agreed to wire the final twenty percent payment after receiving and inspecting the product. Id. Plaintiff also agreed to cover the cost of shipping. Id.

On July 29, 2011 defendant informed plaintiff that shipment was delayed because the boxes required for packaging the product would not be available until August 12, 2011. Compl. Ex. at 38-39. On September 16, 2011, defendant notified plaintiff that shipment was further delayed due to a rise in the cost of raw material and that a shipment date would be set at a later time. Id. at 40. On October 19, 2011, plaintiff emailed a "final warning" to defendantdemanding immediate shipment or a refund of the down payment. Id. at 41. Defendant responded on November 11, 2011, asking that plaintiff agree to a modification in the order. Specifically, defendant asked whether plaintiff was willing to accept smaller pieces of lumber than plaintiff originally requested.² Plaintiff agreed to the changes. Id. at 47. Defendant informed plaintiff approximately two weeks later that the down payment already made would satisfy plaintiff's payment obligation. Id. at 46 ("We are basing the monies given as the full amount.").

In December 2011, the shipment arrived at plaintiff's facility in Warsaw, Poland. Compl. ¶ 18. After inspecting the contents of the shipment, plaintiff concluded that the wood did not conform to the terms of the order. Specifically, plaintiff asserts that the shipment violated the parties' agreement because (1) the flooring pieces were approximately one foot long, when plaintiff had ordered planks ranging from 18" to seven feet, with an average length of four feet; (2) the planks were not "tongue-and-groove" finished, as ordered; (3) the planks were cracked and split, and were therefore not in accordance with S&B grading, (4) the planks were discolored, and (5) there was approximately 313 square feet of flooring missing from the shipment. Id. ¶ 20; see also Compl. Ex. at 60. In an email dated February 22, 2012, plaintiff informed defendant that plaintiff did not accept the goods and demanded that defendant retrieve the goods, refund the payment, and reimburse all expenses incurred as a result of the shipment. Compl. ¶ 22; see also Compl. Ex. at 60.

Defendant responded in a February 23, 2012 email apologizing for plaintiff's dissatisfaction, but stating that the "product was sent to you as agreed upon." Compl. Ex. at 61.Defendant also denied responsibility for any damages occurring "[o]nce the product was out of our custody and control." Id. On March 5, 2012, defendant offered plaintiff, "in the spirit of good will . . . a credit towards future purchase of any species EXCEPT Black Walnut." Id. at 64 (emphasis in original).

By letter dated June 18, 2012, plaintiff's attorney reiterated plaintiff's demand for a refund and informed defendant that plaintiff intended to initiate legal proceedings. Compl. ¶ 29; Compl. Ex. at 72-73. Defendant did not respond to this letter. Compl. ¶ 30.

PROCEDURAL HISTORY

Plaintiff filed this action on August 1, 2013, alleging breach of contract and other related claims. Defendant was served on August 6, 2013; its answer was due on August 27, 2013. ECF No. 4. When defendant did not respond to the Complaint, plaintiff requested a Certificate of Default on November 4, 2013 pursuant to Rule 55(a) of the Federal Rules of Civil Procedure. ECF No. 5. The Clerk of Court entered a default on November 4, 2013. ECF No. 7. On March 7, 2014, plaintiff moved for default judgment pursuant to Rule 55(b) of Federal Rules of Civil Procedure. ECF No. 8. The Honorable Pamela K. Chen referred plaintiff's motion to me for a Report and Recommendation in accordance with 28 U.S.C § 636(b). See Order dated Mar. 12, 2014.

DISCUSSION

I. Subject Matter Jurisdiction

"Federal courts are courts of limited jurisdiction and may only entertain disputes as specifically authorized by the Constitution or statute." Genpharm Inc. v. Pliva-Lachema A.S., 361 F.Supp.2d 49, 53 (E.D.N.Y. 2005) (citing Kokkonen v. Guardian Life Ins. Co. of Amer., 511 U.S. 375, 377 (1994)). As such, courts "may examine subject matter jurisdiction, sua sponte, at any stage of the proceeding." Adams v. Suozzi, 433 F.3d 220, 224 (2d Cir. 2005).Pursuant to 28 U.S.C. § 1331, federal district courts "have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. Plaintiff alleges that "[t]his Court has subject matter jurisdiction over this action pursuant to 28 U.S.C. § 1331 as the matter asserts claims arising under the laws of the United States," but does not specify the law conferring jurisdiction.³

Although the majority of the claims asserted in the Complaint are state law causes of action arising from defendant's alleged breach of contract, plaintiff also brings a claim under the United Nations Convention on Contracts for the International Sale of Goods ("CISG"). See CISG, 19 I.L.M. 668 (1980). "The CISG is an international treaty⁴ that governs the formation of international sales contracts as well as the rights and obligations of the parties. Ratified by the Senate in 1986, the CISG is a self-executing treaty that creates a private right of action in federal court." Genpharm, 361 F.Supp.2d at 54; see also United Nations Comm'n on Int'l Trade Law (UNCITRAL), Status: 1980 United Nations Convention on [CISG] 2005, at http:// www.uncitral.org/uncitral/en/uncitral_texts/sale_goods/1980CISG_status.html (last visited May 23, 2014) (listing the parties to the CISG, including the United States and Poland); Stawski Dist. Co., Inc. v. Zywiec Breweries PLC, No. 02 C 8708, 2003 WL 22290412, at *2 (N.D. Ill. Oct. 6, 2003) (noting that "both Poland and the United States have ratified the [CISG]").

While there are few cases discussing claims arising under the CISG, the available case law establishes both that federal district courts have subject matter jurisdiction over such claims, and that plaintiff's claims here are encompassed by the CISG. See, e.g., Genpharm, 361 F. Supp. 2d at 54 (noting that "[t]here are only a handful of American cases interpreting the CISG," but finding that a dispute "involv[ing] an agreement to supply goods . . . falls within this Court's treaty jurisdiction, and this Court's subject matter jurisdiction"); see also Delchi Carrier SpA v. Rotorex Corp., 71 F.3d 1024, 1027 (2d Cir. 1995) (affirming applicability of CISG to dispute involving sale of compressors to Italian manufacturer of air conditioners); Hanwha Corp. v. Cedar Petrochemicals, Inc., 760 F. Supp. 2d 426, 430 (S.D.N.Y. 2011) ("As a treaty, the CISG is a source of federal law."); Geneva Pharms. Tech. Corp. v. Barr Labs, Inc., 201 F.Supp.2d 236, 281 n.26 (S.D.N.Y. 2002) ("Because the alleged sales contract involves international trade, [plaintiff's] claims must be analyzed according to the provisions of the [CISG]."), rev'd on other grounds, 386 F.3d 485, 489 (2d Cir. 2004).

II. Rule 55

Rule 55 of the Federal Rules of Civil Procedure establishes the two-step process for a plaintiff to obtain a default...