PWV Consultants LLC v. Chebil Realty LLC

Background

PWV Consultants LLC brought six claims against Chebil Realty LLC and Eric Chebil concerning Chebil Realty’s alleged failure to pay for technology and design services. PWV and Chebil Realty signed a Services Agreement on December 10, 2018. Under that agreement, PWV provided software engineering and related services at $175 per hour, and payment was due within five business days after receipt of an invoice. The agreement also provided for interest on late payments and recovery of reasonable collection costs, including attorneys’ fees. Eric Chebil later signed a personal guarantee covering Chebil Realty’s payment obligations.

PWV alleged that it performed services from December 2018 through September 2019 and sent 29 invoices totaling $399,100.00. Chebil Realty paid $66,595.00. Chebil Realty initially had counsel and filed an answer that included a counterclaim alleging that PWV failed to develop and provide an app. After its counsel withdrew, Chebil Realty did not retain new counsel, even though the court required a company to appear through counsel. The Clerk entered default against Chebil Realty, and the company did not oppose PWV’s motion for default judgment.

Default Judgment Against Chebil Realty

The court applied the factors governing default judgment: whether the default was willful, whether the defendant appeared to have a potentially meritorious defense, and whether denying judgment would prejudice the plaintiff. It found all three factors favored PWV. Chebil Realty’s failure to retain counsel and failure to respond to the motion supported a finding of willful default. Because Chebil Realty did not respond, the court had no identified meritorious defense before it, and PWV would have no alternative recourse if judgment were denied.

The court treated the well-pleaded factual allegations in PWV’s complaint as admitted for purposes of liability. It found that PWV established the elements of breach of contract: an agreement existed, PWV performed, Chebil Realty breached by failing to pay the full invoiced amount, and PWV suffered damages. The court also struck Chebil Realty’s answer and counterclaim because the company failed to appear through counsel.

Damages

The court awarded PWV $332,505.00 for unpaid invoices. That amount represented the $399,100.00 invoiced for services minus the $66,595.00 that Chebil Realty paid.

The Services Agreement provided for interest on unpaid invoices at the maximum rate allowed by law. Applying New York’s 16-percent annual rate and PWV’s calculation method, the court awarded $225,746.96 in contractual interest through the date of the order. The court also awarded $73,589.42 in attorneys’ fees and costs under the agreement after finding that the documented legal fees were reasonable.

Disposition and Remaining Claims

The court granted PWV’s unopposed motion for default judgment against Chebil Realty and awarded a total of $631,841.38, plus post-judgment interest at the federal statutory rate. The court directed the Clerk to enter judgment against Chebil Realty, dismiss its counterclaim, and terminate the case as to that company.

The court did not decide the motion for summary judgment against Eric Chebil. The proceedings against him were stayed because he filed a Chapter 7 bankruptcy petition. The court directed that the pending motions concerning him be terminated without prejudice to renewal if the bankruptcy stay is lifted or terminated. The case remained referred to Magistrate Judge Willis for general pretrial management.