Quartix Finance Inc. v. MXM NV Inc

Background

Quartix Finance Inc. sued MXM NV Inc. and Adde Issagholi for breach of contract. The claims arose from a Customer Services Agreement and a guaranty. The agreement allowed MXM to request advances connected to approved invoices. It required repayment of each advance when demanded or, absent a demand, on its maturity date. It also required interest at the rate quoted on the platform and provided for default interest on overdue amounts. The agreement selected New York law.

MXM executed the agreement dated September 7, 2023. Issagholi executed the guaranty, which made him a primary obligor for the customer’s obligations to Quartix. Quartix made three advances to MXM: $288,960 on September 11, 2023; $355,285 on September 15, 2023; and $77,240 on September 25, 2023. The advances carried a negotiated annual interest rate of 21%. MXM made one payment of $10,064.17 toward the third advance.

Quartix extended the maturity dates to January 9, January 11, and January 22, 2024. As of those dates, the amounts allegedly owed were $309,677.75, $380,328.63, and $72,423.56. MXM did not repay those amounts. Quartix sent a default notice to MXM and Issagholi on January 26, 2024, but the defendants did not pay the remaining amounts.

Procedural History

Quartix filed the complaint on February 21, 2024. The court entered certificates of default after the defendants failed to answer or otherwise respond. On July 22, 2024, Judge John G. Koeltl entered a default judgment for Quartix, with the amount to be determined through a damages inquest. A damages inquest is a proceeding to determine the amount owed after default.

Quartix submitted affidavits, proposed findings, spreadsheets, and other documents supporting its damages. Neither defendant appeared, opposed the submissions, or requested a hearing. Quartix later withdrew its request for attorneys’ fees and costs.

Analysis

A default generally treats well-pleaded liability allegations as admitted, but the plaintiff must still prove the amount of damages. Applying New York law, the court stated that a breach-of-contract claim requires a contract, performance by the plaintiff, breach by the defendant, and damages.

The court found that Quartix established each element. The agreement and guaranty showed the defendants’ contractual obligations; Quartix’s evidence showed that it advanced the funds and sent a demand for payment; and the defendants failed to pay what was due. The court therefore concluded that Quartix was entitled to damages under the agreement and New York law.

The court determined that the contract supported principal damages of $309,677.75, $380,328.63, and $72,423.56. It also determined that pre-judgment interest was appropriate at 21% per year from January 9, January 11, and January 22, 2024, respectively, through the date judgment is entered. The recommendation calculated the daily rate as 0.00058333%. The court also recommended post-judgment interest at the statutory rate under 28 U.S.C. § 1961.

Recommendation and Notice

Magistrate Judge Katharine H. Parker recommended that the court award the three principal amounts, the specified 21% pre-judgment interest, and post-judgment interest under 28 U.S.C. § 1961. She made no recommendation concerning attorneys’ fees or costs because Quartix withdrew that request.

The document is a report and recommendation, not a statement that Judge Koeltl had adopted the recommendation. The notice allowed Quartix fourteen days and the defendants seventeen days to file written objections. It stated that failing to object on time would waive objections for purposes of appeal.