Veerji Exports v. Carlos St Mary, Inc.
- Lorna Schofield
- 1:22-cv-03661
- U.S. District Court · Southern District of New York
- 6
In Veerji Exports v. Carlos St. Mary, Judge Schofield granted default judgment against Carlos St. Mary, Inc. and Carlos St. Mary on liability only.
Veerji Exports obtained a default judgment establishing liability against Carlos St. Mary, Inc. and Carlos St. Mary, but no final damages award was entered. Brink’s Global Services, Inc. remained an actively litigating defendant, and the damages issue was deferred.
What happened
In Veerji Exports v. Carlos St. Mary, Inc., Veerji Exports alleged that Carlos St. Mary, Inc. acquired $3,275,000 in diamonds, paid only $1,000, and that Carlos St. Mary helped carry out the fraud. Veerji also alleged that Brink’s Global Services, Inc. was grossly negligent in releasing the diamonds.
The court found that service on Carlos St. Mary, Inc. and Carlos St. Mary was effective, and that it had authority over the defendants. Neither defaulting defendant responded, and the clerk issued certificates of default. The court concluded that the complaint’s allegations established breach-of-contract and fraud liability against the defaulting defendants as a matter of law.
Judge Lorna G. Schofield granted Veerji Exports’ motion for default judgment against Carlos St. Mary, Inc. and Carlos St. Mary as to liability only. The court did not enter a final damages award because the alleged harm was also attributed to Brink’s, which was still actively litigating; damages would await the conclusion of the case against Brink’s.
The detailed version
- Veerji Exports v. Carlos St Mary, Inc. · No. 1:22-cv-03661
- Lorna Schofield
- Oct. 5, 2022
Background
Veerji Exports alleged that Carlos St. Mary, Inc. acquired diamonds worth $3,275,000 from Veerji by fraud and failed to pay all but $1,000 of the purchase price. The complaint also alleged that Carlos St. Mary, the company’s principal, defrauded Veerji in obtaining the diamonds. Veerji separately alleged that Brink’s Global Services, Inc., a non-defaulting defendant, was grossly negligent in permitting the diamonds to be acquired by Carlos St. Mary, Inc. and Carlos St. Mary.
Service and jurisdiction
The court held that service on Carlos St. Mary, Inc. was effective because Veerji served the Texas Secretary of State after attempting to locate and personally serve the company’s registered agent, as permitted by Texas law. The court also authorized service on Carlos St. Mary through delivery of the summons and complaint to the concierge at an address believed to be associated with his apartment building and through WhatsApp, a communication method the parties had used for the transaction.
The court concluded that it had subject-matter jurisdiction based on diversity of citizenship. It also found personal jurisdiction over Carlos St. Mary and Carlos St. Mary, Inc. because they allegedly conducted business in New York by directing shipment of the diamonds to a Brink’s facility there and picking them up there.
Default and liability
Carlos St. Mary, Inc. and Carlos St. Mary did not answer or otherwise respond to the complaint. The clerk issued certificates of default. A default generally treats well-pleaded liability allegations as admitted, but the court must still determine whether those allegations establish legal liability.
The court concluded that the allegations established Carlos St. Mary, Inc.’s liability for breach of contract. The complaint alleged a valid agreement to exchange diamonds for payment, Veerji’s delivery of the diamonds, the company’s failure to pay, and resulting damages. The court stated that the breach occurred when the company took possession of the diamonds on August 4, 2021, because payment was allegedly due before possession transferred.
The court also concluded that the allegations established fraud liability against both Carlos St. Mary, Inc. and Carlos St. Mary. The complaint alleged that Carlos promised payment while having no present intention to perform, made false statements to cover up or delay discovery of the fraud, intended Veerji to rely on the misrepresentations, and caused Veerji’s loss.
Damages and disposition
The court found that Veerji’s documentary evidence established damages of $3,274,000 with reasonable certainty. That amount represented the alleged $3,275,000 purchase price minus the $1,000 payment. The opinion contains a typographical version of this figure as "$3,274.000.00," but elsewhere states $3,274,000.00.
The court nevertheless declined to enter a final damages judgment at this stage. Veerji alleged that the defaulting defendants and Brink’s were jointly and severally responsible for one indivisible injury, and the merits proceedings against Brink’s had not concluded. The court therefore ordered that Veerji Exports’ motion for default judgment against Carlos St. Mary, Inc. and Carlos St. Mary was GRANTED as to liability only.
Read the full 6-page opinion on CourtListener, the free public archive maintained by the Free Law Project.