Fometal S.R.L. v. Admiral Metals Servicenter Company Incorporated

Background

Fometal S.R.L. sued several defendants concerning contracts for the delivery of aluminum sheets. Keili Trading LLC and Mendel Levitin, also known as Mendy Levitin, failed to plead or otherwise defend. The Clerk entered a certificate of default against them under Rule 55(a) of the Federal Rules of Civil Procedure. Fometal moved for default judgment, served the motion and the court’s order to show cause, and appeared at the December 1, 2022 hearing. Keili Trading and Levitin did not respond or appear.

Default-judgment standard

A default admits the well-pleaded factual allegations against the defaulting party, but it does not automatically establish legal liability. The court must independently decide whether the allegations state a valid claim. The court accepted Fometal’s well-pleaded allegations as true for purposes of the motion, while reviewing each asserted theory of liability.

Rulings on liability

The court granted Fometal judgment of liability against Keili Trading and Levitin for breach of contract under the United Nations Convention on Contracts for the International Sale of Goods.

The court denied Fometal’s motion for default judgment as to its civil claim under the Racketeer Influenced and Corrupt Organizations Act because the complaint did not adequately plead that claim. The court also denied default judgment as to the civil conspiracy claim and the veil-piercing theory because those theories were not adequately pleaded.

The complaint alleged that Keili Trading and Levitin could be liable either as parties to the contracts or as third parties that interfered with contracts between Fometal and other defendants. Because both theories were adequately pleaded, the court found that the conversion, unjust enrichment, tortious interference, vicarious liability, and account stated claims arose from the same facts and sought damages tied to the alleged contract breaches. The court therefore denied default judgment as to those claims as duplicative of the breach-of-contract claim.

The court likewise denied default judgment as to the common-law fraud claim. Fometal’s fraud allegations concerned promises that payment would be made under the contracts, which the court viewed as part of the contracts rather than as separate, outside misrepresentations.

Damages

The court made no finding on damages at this stage. Fometal sought at least $1 million on its claims but identified $223,617.07—the cost of the contracts—as the basis for recovery on the breach-of-contract claim. The court also noted the possibility of prejudgment and post-judgment interest. Because the non-defaulting defendants remained in the case and might be held jointly and severally liable for the same damages, the court deferred the damages determination until the claims against those defendants are resolved. It stated that the damages proceeding for the defaulting defendants should be consolidated with the damages phase of the case against the non-defaulting defendants.

Disposition

The court entered judgment of liability on the breach-of-contract claim, denied the motion for default judgment as to the other identified claims, and deferred damages. The Clerk was directed to terminate the pending default-judgment motion.