Voice Tele Services Inc. v. Blu-Dot Telecoms Ltd.

Background

Voice Tele Services Inc. brought a breach-of-contract action against Blu-Dot Telecoms Ltd. The parties had entered a Reciprocal Carrier Services Agreement under which Voice Tele Services would provide telecommunications services and issue invoices every 15 days, payable within 15 days. Voice Tele Services alleged that Blu-Dot failed to pay three February 2019 invoices in full.

The invoices totaled $400,297.49. Blu-Dot made two payments totaling $147,018.02 toward one invoice and made no payments toward the other two. Voice Tele Services alleged that the remaining unpaid balance was $253,279.47. The agreement also allowed invoice charges to be disputed within seven days, but Blu-Dot did not dispute the charges.

Blu-Dot failed to respond to the complaint, and the Clerk issued a certificate of default. Blu-Dot also failed to appear at Judge Koeltl’s order-to-show-cause hearing. Judge Koeltl determined that Voice Tele Services was entitled to a default judgment and referred the case to Magistrate Judge Ona T. Wang to determine damages. Voice Tele Services submitted proposed findings and an inquest memorandum, but Blu-Dot filed no opposition.

Jurisdiction, Venue, and Liability

The report found subject-matter jurisdiction based on diversity of citizenship because the amount sought exceeded $75,000, Voice Tele Services was identified as a citizen of Pennsylvania, and Blu-Dot was identified as a citizen of the United Kingdom. The report also found personal jurisdiction and venue based on the agreement’s forum-selection clause, which consented to jurisdiction in New York City and required related civil actions to be brought there. The record also showed that Blu-Dot had been personally served.

Under New York law, a breach-of-contract claim requires a contract, performance by the plaintiff, breach by the defendant, and resulting damages. Because of Blu-Dot’s default, the factual allegations in the complaint were accepted as true for purposes of liability. The report concluded that Voice Tele Services adequately alleged that it provided the services and that Blu-Dot failed to pay, making Blu-Dot liable for breach of contract.

Voice Tele Services also asserted an account-stated claim. It acknowledged that any damages on that claim would be duplicative if damages were awarded for breach of contract, so the report addressed damages under the breach-of-contract claim.

Damages and Interest

The report calculated the unpaid principal as follows:

- Invoice No. 324: $147,124.93 minus $147,018.02 in payments, leaving $106.91. - Invoice No. 354: $104,196.19 unpaid. - Invoice No. 384: $148,976.37 unpaid.

The total unpaid balance was therefore $253,279.47.

The agreement provided for late-payment interest of 1.5% per month or the maximum amount permitted by law, whichever was greater. The report recommended denying additional late charges because awarding both contractual late charges and prejudgment interest on the same amounts would provide duplicative compensation.

For prejudgment interest, the report applied New York’s nine-percent annual simple-interest rate. It calculated $5.85 for Invoice No. 324, $5,318.29 for Invoice No. 354, and $7,126.38 for Invoice No. 384, for a total of $12,450.52 through September 27, 2019. It also calculated additional interest of $62.45 per day from September 28, 2019, through the date of judgment. The report recommended post-judgment interest at the federal statutory rate from the date of judgment until payment.

Costs and Recommended Disposition

The report found that Voice Tele Services could recover $400 for the filing fee and $20 for the statutory docket fee, for total recommended costs of $420.

Magistrate Judge Wang recommended that judgment be awarded in the following amounts:

- $253,279.47 in damages; - $12,450.52 in prejudgment interest, plus $62.45 per day from September 28, 2019, through the date of judgment; - $420 in costs; and - Post-judgment interest at the statutory federal rate.

Together, the listed damages, prejudgment interest, and costs totaled $266,149.99, before additional interest accruing after September 27, 2019. The report was a recommendation to Judge Koeltl, not the final judgment itself. The parties were given 14 days after receiving the report to file written objections; the report stated that failing to object would waive objections and prevent appellate review.