Assure Global, LLC v. Anderson

Background

Assure Global, LLC, doing business as WeShield, alleged that it agreed with Axxeum, LLC to purchase 500,000 black, six-millimeter-thick industrial nitrile gloves for $65,000. The agreement was reflected in group-chat messages, a purchase order, and an invoice. Assure Global wired the full $65,000 to Axxeum.

Assure Global alleged that the shipment contained only 340,000 gloves and that the gloves were not six millimeters thick as promised. Assure Global ultimately resold $7,498.37 worth of the gloves it received. The defendants did not file an answer or otherwise respond to the operative complaint.

Assure Global moved for a default judgment under Federal Rule of Civil Procedure 55. A default judgment is a judgment entered when a defendant fails to defend, but the court must still determine whether the complaint’s well-supported allegations establish legal liability. The court had diversity jurisdiction because the parties’ alleged citizenships were different and the amount Assure Global sought exceeded $75,000.

Liability for Breach of Contract

The court applied Article 2 of New York’s Uniform Commercial Code because the dispute involved the sale of goods. It held that Assure Global adequately alleged an enforceable contract with Axxeum. The alleged agreement identified the quantity, price, glove type, thickness, sizes, and other terms sufficiently to form a contract. Assure Global performed by paying $65,000.

The court held that Axxeum failed to perform because it delivered fewer gloves than agreed and delivered gloves that did not conform to the promised thickness. Assure Global’s decision to keep and resell some nonconforming gloves did not eliminate its potential remedies for the nonconformity. The motion for default judgment was therefore granted as to Axxeum’s liability for breach of contract.

Anderson’s Individual Liability

Assure Global also sought to hold Anderson personally liable by piercing the corporate veil. Piercing the corporate veil means disregarding the company’s separate legal status and imposing liability on an individual associated with it. Applying Pennsylvania law, the court noted the strong presumption against doing so but found that Assure Global’s allegations were sufficient at the default-judgment stage.

Assure Global alleged that Anderson was Axxeum’s sole member and director, made its decisions, negotiated the transaction, and was directly involved in its partial performance. It also alleged that Axxeum was undercapitalized. Taking those allegations as true, the court found them sufficient to pierce the corporate veil and held Anderson individually liable for the breach of contract.

Damages

The court denied the motion with respect to damages. A default admits well-pleaded allegations of liability, but it does not admit the amount of damages. Assure Global sought $94,317.43, including $57,501.63 for merchandise not received or not resold, $28,800 for replacing the missing gloves, $720 in warehouse overtime, $850 in additional shipping costs, filing and service costs, and $5,208 in attorney’s fees.

The court found the damages submission legally and mathematically deficient. For accepted nonconforming goods, the usual measure is the difference between the value of the goods promised and the value of the goods received, but Assure Global provided no evidence of those market values. The court also found that Assure Global double-counted the $20,800 paid for the 160,000 missing gloves. Under the contract-replacement rule, the alleged five-cent-per-glove difference supported $8,000, not $28,800.

The court also questioned the request for attorney’s fees because Assure Global identified no statute or contractual provision authorizing them. Because the submissions did not allow damages to be calculated with reasonable certainty, the court denied the motion with respect to damages and referred the issue to Magistrate Judge Sarah L. Cave for an inquest.

Disposition

The court concluded that Assure Global’s motion for default judgment was granted in part and denied in part. Liability was established against Axxeum and Anderson, while damages remained to be determined in the referred proceeding. The court directed the Clerk of Court to close the motion docket entry.