Dongguan Cheng One Co., Ltd. v. Desen Inc.

Background

Dongguan Cheng One Co., Ltd. sued Desen Inc. for breach of contract, unjust enrichment, and account stated based on unpaid clothing invoices. Dongguan alleged that it invoiced Desen $1,999,857, received payments totaling $1,127,957 before wire-transfer fees, and was owed $873,260 after accounting for those fees. Dongguan also alleged that Desen accepted the goods without objecting to their delivery, quality, or compliance with contract specifications.

Desen did not appear at the January 22, 2025 hearing on whether default judgment should be entered, and the court entered default judgment for Dongguan that day. Desen later retained counsel and moved under Federal Rule of Civil Procedure 60(b)(1) and (6) to vacate the judgment, reopen the case, and accept its proposed answer. Desen argued that it had not received the complaint and had a defense because some goods were shipped late. Desen also requested a stay of enforcement while the motion was pending.

Legal standard

The court explained that relief from a default judgment under Rule 60(b) is discretionary. In deciding whether to vacate such a judgment, courts consider whether the default was willful, whether the defendant has a meritorious defense, and whether vacating the judgment would prejudice the plaintiff. A meritorious defense requires facts that, if proven, would constitute a complete defense; conclusory denials are not enough.

Court’s analysis

The court did not decide whether Desen’s default was willful. Although Desen submitted statements that it had not received the complaint, the court noted that its later conduct—including attempting to withdraw approximately $1.7 million from a bank account, failing to respond to Dongguan’s information subpoena, and moving to vacate only after its accounts were frozen—raised concerns about avoiding responsibility. The court concluded that the other two factors were sufficient to resolve the motion.

The court found that Dongguan would be prejudiced if the judgment were vacated. It relied on Desen’s failure to respond to the information subpoena and its attempted withdrawal of funds, reasoning that this conduct could further frustrate Dongguan’s efforts to recover on the judgment.

The court also found that Desen had not presented a meritorious defense. Desen generally asserted that the parties expected delivery within 30 days and that delayed shipments harmed its business. But Desen did not explain how the alleged delays breached the operative contract or authorized it to withhold payment. The court also noted that Desen did not claim to have rejected or revoked acceptance of the goods or objected to the invoices and statements, and had paid $1,127,957 toward the invoices. The court concluded that alleged delays, without more, did not provide a complete defense to the contract, unjust-enrichment, or account-stated claims.

The court noted Dongguan’s argument that Desen’s motion was untimely, but made no determination on that issue because it denied the motion on other grounds.

Disposition

The court DENIED Desen’s motion to vacate the default judgment and directed the Clerk of Court to terminate the motion. The court also denied Desen’s request to stay enforcement of the judgment as moot.