Constellation Newenergy, Inc. v. Om Vegetable, Inc.

Background

Constellation Newenergy, Inc. sued Om Vegetable, Inc. for allegedly failing to pay invoices under a Customer Contract for EME Express Energy Services, referred to in the opinion as the Energy Services Agreement. Constellation alleged that Om Vegetable owed $727,582.65. The parties later reached a settlement in connection with an earlier federal lawsuit. Under the settlement terms, Om Vegetable agreed to execute a confession of judgment for the claimed contract amount, plus attorneys’ fees and interest. Om Vegetable did not sign the formal settlement documents or pay Constellation.

The complaint in this action asserted three claims: breach of the Settlement Agreement, breach of the Energy Services Agreement, and unjust enrichment. The Clerk entered a certificate of default after Om Vegetable failed to defend the case. Constellation then moved for a default judgment under Federal Rule of Civil Procedure 55(b)(2). Constellation served the motion on Om Vegetable’s registered agent, but Om Vegetable’s counsel did not appear at the court’s telephonic hearing.

Jurisdiction and Default Judgment Standard

The court found diversity jurisdiction because the parties were incorporated and had their principal places of business in different states, and the amount in controversy exceeded the statutory threshold. The court noted uncertainty about whether venue was proper in the Southern District of New York, but concluded that Om Vegetable waived any venue objection by failing to appear. The court therefore considered the default-judgment motion.

A default judgment involves two steps: entry of default, followed by a judgment awarding relief. A default admits well-pleaded factual allegations concerning liability, but it does not automatically establish the amount of damages. The court still had to determine whether Constellation’s allegations stated a valid claim and whether its evidence established damages with reasonable certainty.

Liability

The Energy Services Agreement provided that Maryland law governed. Under Maryland law, a breach-of-contract claim requires a contractual obligation, a breach, and damages. The court held that Constellation’s allegations were sufficient: Om Vegetable was required to pay for Constellation’s services, did not pay, and caused Constellation monetary harm.

The court stated that Constellation had elected to proceed on the Energy Services Agreement claim. It therefore dismissed the Settlement Agreement claim and the unjust-enrichment claim because the damages sought under those claims would be duplicative. The opinion does not state that those dismissals were with or without prejudice.

Damages and Interest

For actual damages, Constellation submitted a June 17, 2020 final invoice listing $727,582.65 as due under the Energy Services Agreement. The agreement required payment within 20 business days, and Constellation’s credit-risk manager declared that Om Vegetable had not paid. The court found this evidence sufficient and awarded $727,582.65 in damages.

The court applied New York law to prejudgment interest and awarded $130,603.20. It calculated interest from July 8, 2020, the date by which the invoice was due, using New York’s statutory simple-interest rate for contract claims. The court also awarded post-judgment interest at the rate required by federal law, calculated from entry of the judgment.

Attorneys’ Fees and Costs

The Energy Services Agreement allowed Constellation to recover reasonable costs and attorneys’ fees related to Om Vegetable’s failure to pay. Constellation requested $75,425.05, including fees and costs connected to this case and the earlier federal litigation. After reviewing the billing records, the court awarded $65,425.05 in attorneys’ fees and $1,182.34 in costs, totaling $66,607.39. The court did not award additional fees for finalizing the default-judgment papers or attending the hearing.

Disposition

The court ordered that default judgment be entered against Om Vegetable. It directed the Clerk to prepare a judgment awarding $727,582.65 in damages, $130,603.20 in prejudgment interest, $66,607.39 in attorneys’ fees and costs, and post-judgment interest. The Clerk was also directed to close the default-judgment motion.