US Foods, Inc. v. D. Brian's Deli Corp.

Background

US Foods, Inc. alleged that it supplied D. Brian’s Deli Corp. with food and related products and services reflected in invoices dated January 20, 2020, through March 18, 2020. US Foods alleged that it fully performed its obligations but D. Brian’s did not pay the invoices.

On July 15, 2020, D. Brian’s executed a promissory note acknowledging that the invoice balances were due and owing and agreeing to pay them under a schedule, with interest. The note was signed by Doug Sams, identified as D. Brian’s owner and chief executive officer, and Ryan Farr, identified as US Foods’ Upper Mid-West and Dakotas credit manager. US Foods alleged that D. Brian’s failed to make the scheduled payments.

D. Brian’s was served with the summons and complaint on January 7, 2021, but did not respond or otherwise appear. The Clerk entered D. Brian’s default. D. Brian’s also did not respond to US Foods’ motion for default judgment or appear at the June 14, 2021 hearing.

Analysis

A default judgment is a judgment entered when a defendant fails to respond. The court explained that default generally makes the complaint’s factual allegations—except allegations about the amount of damages—accepted as true. The court still had to determine whether those allegations stated a valid legal claim and whether US Foods proved its damages with reasonable certainty.

The court found that US Foods stated a valid claim for breach of the promissory note. Applying Minnesota law under the note’s Minnesota choice-of-law provision, the court found allegations establishing a contract, US Foods’ performance, and D. Brian’s breach. The note treated a missed payment as an event of default and allowed US Foods to pursue remedies provided in the note, other agreements, the Uniform Commercial Code, or other law.

US Foods also asserted alternative claims for account stated and unjust enrichment. The court found that US Foods plausibly pleaded the account-stated claim because the allegations and note showed a prior debtor-creditor relationship, agreement about the amount owed, and a promise to pay. Because US Foods had plausibly pleaded its breach-of-note and account-stated claims, the court found it unnecessary to consider unjust enrichment.

The court found that US Foods proved its damages to a reasonable degree of certainty. The unpaid invoice balance was $237,867.94. Under the note, interest accrued at 3% annually on the unpaid principal from the note’s date, with an additional 18% annually after an event of default until the default was cured. The court found that $45,789.58 in prejudgment interest was due.

The court also approved US Foods’ request for $9,009.50 in attorneys’ fees and costs. The note required D. Brian’s to reimburse enforcement and collection expenses, including attorneys’ fees and court costs. The court found the submitted billing rates and time entries reasonable and adequately documented. The note also required interest on those expenses at 10% annually.

Finally, the court held that federal law entitled US Foods to post-judgment interest on the money judgment, including the attorneys’ fees. It set that interest at 0.08% annually, beginning when judgment was entered and continuing until the judgment was satisfied.

Order

Judge Eric C. Tostrud granted Plaintiff’s Motion for Default Judgment. The order held Defendant D. Brian’s Deli Corp. liable to Plaintiff US Foods, Inc. for:

- $237,867.94 in unpaid invoices; - $45,789.58 in prejudgment interest on the unpaid invoices; - $9,009.50 in attorneys’ fees and costs; - interest on the attorneys’ fees and costs at 10% annually; and - post-judgment interest at 0.08% annually from the date judgment was entered until the judgment was satisfied, calculated as described in 28 U.S.C. § 1961(b).

The court ordered that judgment be entered accordingly.