Network America Lines, Inc. v. XPI Enterprise, Ltd.

Background

Network America Lines, Inc. (NAL) sought a default judgment under Federal Rule of Civil Procedure 55(b)(2) against XPI Enterprise, Ltd., trading as “X Port International.” NAL alleged that the parties entered into nine bills of lading between March 28, 2014, and July 11, 2014. The bills covered shipments from Savannah, Georgia, to Benghazi, Libya, with XPI as shipper and NAL as carrier.

NAL alleged that it delivered all nine shipments and performed its contractual obligations. Under the bills of lading, XPI was required to pay ocean freight charges. NAL sent invoices and written payment demands, but XPI did not pay. The bills stated that they were governed by the “law of U.S.A.” and that disputes would be decided by courts in New York, New York.

Default

XPI’s counsel moved to withdraw. Magistrate Judge Pitman granted that motion and stated that XPI, as a corporation, could appear only through counsel and needed to retain new counsel. After XPI failed to obtain new counsel or otherwise contact the court, the court found XPI in default and allowed NAL to seek a default judgment. The Clerk later issued a certificate of default.

The court applied a two-step analysis. First, it considered whether default was appropriate by examining whether XPI’s failure was willful, whether XPI had a potentially valid defense, and whether NAL would be harmed if default judgment were denied. The court found that XPI’s continued failure to appear despite clear instructions and ample opportunity indicated willful conduct. Although XPI had answered the complaint, it offered only general denials and minimal affirmative defenses and provided no evidence supporting a complete defense. The court also found that NAL would be prejudiced by having to continue incurring litigation costs without another way to obtain relief.

Liability

Second, the court considered whether NAL’s complaint adequately established XPI’s liability. Applying New York law, the court stated that a breach-of-contract claim requires allegations of a contract, the plaintiff’s performance, the defendant’s failure to perform, and resulting damages. The court found that NAL alleged each element: the bills of lading formed the contracts; NAL shipped the goods; XPI failed to pay; and NAL lost the amounts it should have received.

Because of the default, the complaint’s well-supported allegations were treated as admitted. Along with NAL’s uncontested documents, those allegations established that XPI failed to pay the freight charges for the nine shipments. The court therefore concluded that NAL was entitled to damages for breach of contract.

Damages and Interest

NAL requested $22,700 in damages, representing the unpaid freight invoices. The court found that the bills of lading and a sworn declaration from NAL’s Vice President and House Counsel established that amount with reasonable certainty.

NAL also requested prejudgment interest at eight percent per year from March 15, 2017, through July 29, 2019. The court found that request reasonable as to both the rate and the dates. It awarded $4,313 in prejudgment interest.

Disposition

Judge Laura Taylor Swain granted NAL’s motion for default judgment. The court directed the Clerk to enter judgment against XPI Enterprise, Ltd., trading as “X Port International,” for $27,013, consisting of $22,700 in damages and $4,313 in prejudgment interest. The court also directed the Clerk to close the case.