Sushi Avenue Incorporated v. Philbrick's Fresh Market, LLC

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
Sushi Avenue, Inc.
v. 	Case No. 19-cv-428-JD
Philbrick’s Fresh Market, LLC
REPORT AND RECOMMENDATION
The plaintiff, Sushi Avenue, Inc. (“Sushi Avenue”), brought
suit against Philbrick’s Fresh Market, LLC (“Philbrick’s”)
alleging claims arising from an unpaid debt. 	The debt relates
to an agreement under which Sushi Avenue operated a sushi kiosk
in a Philbrick’s grocery store. 	On August 12, 2019, the Chief
Deputy Clerk of Court entered default against Philbrick’s for
failure to retain new counsel within 21 days of its previous
counsel’s withdrawal from the case. 	See doc. no. 12. 	Before
the court for Report and Recommendation is the plaintiff’s
motion for default judgment (doc. no. 14). 	See Fed. R. Civ. P.
55(b)(2). 	For the reasons that follow, the court recommends
that the plaintiff’s motion be granted in part and denied in
part.
Standard of Review
After default is entered and when the amount at issue is
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not a sum certain, “the party must apply to the court for a
default judgment.” 	Fed. R. Civ. P. 55(b)(2); see also KPS &
Assocs., Inc. v. Designs by FMC, Inc., 318 F.3d 1, 19 (1st Cir.
2003). 	Before entering a default judgment, the court “may
examine a plaintiff’s complaint, taking all well-pleaded factual
allegations as true, to determine whether it alleges a cause of
action.” 	Ramos-Falcón v. Autoridad de Energía Electríca, 301
F.3d 1, 2 (1st Cir. 2002) (citing Quirindongo Pacheco v. Rolon
Morales, 953 F.2d 15, 16 (1st Cir. 1992)). 	The defaulted party
is “taken to have conceded the truth of the factual allegations
in the complaint . . . .” 	Ortiz-Gonzalez v. Fonovisa, 277 F.3d
59, 62–63 (1st Cir. 2002) (quoting Franco v. Selective Ins. Co.,
184 F.3d 4, 9 n.3 (1st Cir. 1999)). 	The defaulted party does
not, however, “admit the legal sufficiency of those claims.” 	10
James Wm. Moore, Moore’s Federal Practice § 55.32[1][b] (3d ed.
2013). 	In short, “before entering default judgment, the court
must determine whether the admitted facts state actionable
claims.” 	United States v. Sullender, No. 16–cv–523–LM, 2018 WL
1368040, at *1 (D.N.H. Mar. 16, 2018).
Background
By virtue of its default, Philbrick’s concedes the
following facts alleged in the plaintiff’s complaint. 	Sushi
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Avenue, a Minnesota corporation with its principal place of
business in Minnesota, operates sushi kiosks out of grocery
stores across the United States. 	See doc. no. 1 ¶¶ 1, 6. 	On or
about August 2, 2017, Sushi Avenue entered into an agreement
(the “Agreement”) with Philbrick’s to operate a sushi kiosk in
its Portsmouth, New Hampshire retail store. 	See doc. no. 1 ¶ 7;
doc. no. 1-1. 	Under the Agreement, Sushi Avenue would provide
sushi products and related services at the kiosk and Philbrick’s
would pay Sushi Avenue 75% of the actual retail sales of sushi
products sold. 	See doc. no. 1 ¶ 8; doc. no. 1-1. 	These
payments would be due on a weekly basis. 	See doc. no. 1-1. 	The
Agreement required Philbrick’s to provide Sushi Avenue a regular
and accurate accounting of all sushi sales. 	See id.
Between January 1, 2018 and March 11, 2018,1 Philbrick’s
made only some of its required payments to Sushi Avenue. 	See
doc. no. 1 ¶ 9. 	Between March 11, 2018 and August 19, 2018,2
1 In paragraph 17 of the complaint (doc. no. 1), Sushi
Avenue states that this period of sporadic payments ran from
January 7, 2018 to March 18, 2018. 	Additionally, in Sushi
Avenue’s memorandum of law in support of its motion for default
judgment (doc. no. 14-1), it also references March 18 as the
date when Philbrick’s ceased payments. 	As this discrepancy does
not appear to affect the damages calculation, the court will
disregard it.
2 In its memorandum of law (doc. no. 14-1), Sushi Avenue
revises the end date of this period from August 19, 2018 to
September 9, 2018. 	The court addresses this discrepancy below.
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Philbrick’s failed to make any payments to Sushi Avenue, while
Sushi Avenue continued to provide products and services to
Philbrick’s. 	See doc. no. 1 ¶¶ 9, 17. 	On September 4, 2018,3
Sushi Avenue sent a letter to Philbrick’s demanding payment,
pursuant to the Agreement, by September 10, 2018. 	See doc. no.
1 ¶ 11. 	It is undisputed that the outstanding balance was
$80,939.90. 	See doc. no. 1 ¶ 22. 	On September 6, 2018,
Philbrick’s sent a “good faith” payment of $5,000 toward the
$80,939.90 balance but stated it could not make further
payments. 	See doc. no. 1 ¶ 12. 	On September 13, 2018, Sushi
Avenue indicated that the $5,000 payment was insufficient and
demanded payment in full or agreement to a payment plan. 	See
doc. no. 1 ¶ 13. 	Sushi Avenue has not presented the “good
faith” check for payment. 	See id.
Discussion
Sushi Avenue brings three claims against Philbrick’s: (1)
Breach of contract (Count I); (2) Account stated (Count II); and
3 Paragraph 11 of the complaint states that the letter was
sent on September 10, 2018. 	However, as this date would
conflict with the deadline provided in the letter (doc. no. 1 ¶
11) and Philbrick’s September 6 response (doc. no. 1 ¶ 12), as
well as the September 4 date that Sushi Avenue references in its
memorandum of law (doc. no. 14-1), the court will assume that
the September 4 date is correct.
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(3) Unjust enrichment (Count III). 	Sushi Avenue seeks
$80,939.90 in damages for the amount owed under the Agreement,
plus interest. 	Sushi Avenue also seeks attorneys’ fees and
costs.
I. 	Liability
A. Breach of Contract (Count I)
Under New Hampshire law,4 “a breach of contract occurs when
there is a failure without legal excuse to perform any promise
which forms the whole or part of a contract.” 	BAE Sys. Info. &
Elecs. Sys. Integration, Inc. v. SpaceKey Components, Inc., 941
F. Supp. 2d 197, 213 (D.N.H. 2013), aff'd, 752 F.3d 72 (1st Cir.
2014) (quoting Axenics, Inc. v. Turner Constr. Co., 164 N.H.
659, 668 (2013)) (brackets and internal quotation marks
omitted).
Under the Agreement, Philbrick’s was required to pay Sushi
Avenue 75% of the actual retail sales for sushi products sold.
4 Neither party has addressed whether to apply New
Hampshire’s or Minnesota’s substantive law. 	In a diversity
action, “the court applies the choice-of-law rules of the forum
state. . . .” 	Patrick v. Massachusetts Port Auth., 141 F. Supp.
2d 180, 187 n.6 (D.N.H. 2001). 	Under New Hampshire’s choice-of-
law rules, “when more than one state may have an interest . . .
the court must first decide whether New Hampshire law actually
conflicts with the laws of the other interested states.” 	Id.
If there is no conflict, no additional analysis is necessary.
Id. 	Here, there is no conflict between New Hampshire and
Minnesota law. 	See Lyon Financial Services, Inc. v. Illinois
Paper and Copier Co., 848 N.W.2d 539, 543 (Minn. 2014).
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See doc. no. 1 ¶ 8. 	In its complaint, Sushi Avenue alleges that
Philbrick’s breached the Agreement by making sporadic payments
between January 1, 2018 and March 11, 2018, and no payments
between March 11, 2018 and August 19, 2018, while Sushi Avenue
continued to perform its contractual duties. 	See doc. no. 1 at
¶¶ 9, 16–17. 	Sushi Avenue’s complaint asserts that these missed
payments totaled $80,939.90. 	See doc. no. 1 at ¶ 17. 	Accepting
these allegations as true, Philbrick’s breached its obligations
under the Agreement.
B. Other Claims (Counts II – III)
Because Sushi Avenue has adequately alleged its breach of
contract claim and each count seeks identical damages, the court
recommends the district judge deny Counts II and III.
II. 	Damages
“In the case of defaulting defendants, allegations of
damages are not deemed admitted in the context of a default
judgment, and it is the plaintiff’s burden to establish any
entitlement to recovery.” 	Joe Hand Promotions, Inc. v. Rajan,
No. 10-40029-TSH, 2011 WL 3295424, at *3 n.2 (D. Mass. July 28,
2011) (internal quotation marks and citation omitted). 	Sushi
Avenue seeks to recover damages for (1) the amounts due under
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the Agreement, plus interest and (2) attorneys’ fees and costs.5
A. Contractual damages and interest
The Agreement provides that “[c]lient will pay Vendor 75%
of the actual retail sales (excluding taxes) of the pre-packed
sushi products sold.” 	Doc. no. 1-1. 	It further states that
“[p]ayments shall be due and owing every week from Monday
through Sunday.” 	Id.
In its complaint, Sushi Avenue seeks $80,939.90 in unpaid
charges for goods and services provided under the Agreement. 	In
its motion for default judgment, however, Sushi Avenue seeks to
recover $88,568.79 for those amounts. 	In support of its motion,
Sushi Avenue includes an affidavit from its president stating
that $88,568.79 represents the amount due and a table listing
each of the outstanding amounts due and the total due. 	See doc.
no. 14-2 at ¶ 5.
“A default judgment must not differ in kind from, or exceed
in amount, what is demanded in the pleadings.” 	Fed. R. Civ. P.
54(c). 	“Thus, where a complaint specifies the amount of damages
sought, the plaintiff is limited to entry of a default judgment
5 In its complaint, Sushi Avenue pleads punitive damages.
See doc. no. 1 ¶ 3. 	As Sushi Avenue does not seek punitive
damages in its motion for default judgment, the court need not
address the issue here. 	However, to the extent that Sushi
Avenue seeks punitive damages, such damages are not recoverable
under New Hampshire law. 	See N.H. Rev. Stat. Ann. § 507:16.
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in that amount.” 	Trustees of the Nat’l Automatic Sprinkler
Indus. Welfare Fund v. Sheehe, No. DKC 11-0365, 2011 WL 5034830,
at *2 (D. Md. Oct. 21, 2011); see also Outram v. Outram, No. 08-
3437 (ADS)(ETB), 2010 WL 1222935, at *2 (E.D.N.Y. Mar. 4, 2010)
(holding that in the context of a motion for default judgment,
the “plaintiff may not recover money damages in excess of that
pleaded in her Amended Complaint”), report and recommendation
adopted, No. 08-CV-3437(ADS)(ETB), 2010 WL 1222893 (E.D.N.Y.
Mar. 23, 2010); Jackson v. Vogt, No. 09-4569, 2009 WL 3756563,
at *3 n.1 (E.D. La. Nov. 5, 2009) (awarding the plaintiff the
amount alleged in her complaint despite evidence submitted with
her motion for default judgment showing she may have been
entitled to an additional $138).
Sushi Avenue does not address the discrepancy between the
damages figure in its complaint and the amount it seeks in its
motion for default judgment. 	Based on the court’s reading, it
appears that Sushi Avenue may have added missed payments for the
period between August 19, 2018 and September 9, 2018 to its
damages calculation. 	However, Sushi Avenue is limited to the
damages alleged in its complaint,6 and the court recommends that
6 While paragraph 14 of the complaint asserts that the
“sums due and owing to Sushi Avenue under the Contract continue
to accumulate,” this general allegation cannot reasonably be
construed to cover additional amounts due from August and
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the district judge award damages in the amount of $80,939.90,
plus interest.7
B. Attorneys’ fees and costs
“The party seeking the [fee] award has the burden of
producing materials that support the request.” 	Hutchinson ex
rel. Julien v. Patrick, 636 F.3d 1, 13 (1st Cir. 2011) (citing
Hensley v. Eckerhart, 461 U.S. 424, 433 (1983)). 	Sushi Avenue
has requested attorneys’ fees and costs but does not provide any
basis for such an award. 	See doc. no. 14. 	Instead, Sushi
Avenue seeks permission to submit a separate affidavit regarding
attorneys’ fees within ten days of the default judgment order.
See id. 	The court therefore recommends that the district judge
deny Sushi Avenue’s request for attorneys’ fees and costs
without prejudice to filing a motion seeking such relief, with
supporting documentation, within ten (10) days of the date of
the district judge’s order approving or rejecting this Report
and Recommendation.
September 2018. 	Thus, Sushi Avenue is limited to the actual
damages pleaded in the complaint, plus interest. 	See doc. no. 1
¶¶ 18, 23.
7 As the Agreement does not include an interest provision,
Sushi Avenue may only recover interest as provided under New
Hampshire law. 	See doc. no. 1-1; see also N.H. Rev. Stat. Ann.
§ 524:1-b; Healy v. Franklin Elec. Co., Inc., No. 08–cv–503–PB,
2011 WL 32522, at *1 (D.N.H. Jan. 5, 2011) (“State law applies
to an award of prejudgment interest in diversity suits.”).
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Conclusion
For the foregoing reasons, the court recommends that the
district judge: (1) grant Sushi Avenue’s motion for default
judgment (doc. no. 14) on Count I; (2) deny the motion for
default judgment as to Counts II and III; (3) award Sushi Avenue
$80,939.90, plus interest; and (4) deny Sushi Avenue’s request
for attorneys’ fees and costs without prejudice to filing a
motion seeking such relief within ten (10) days of the date of
the district judge’s order on this Report and Recommendation.
In light of the foregoing, the damages hearing scheduled for
September 30, 2019 is cancelled.
Any objection to this Report and Recommendation must be
filed within fourteen days of receipt of this notice. 	See Fed.
R. Civ. P. 72(b)(2). 	The fourteen-day period may be extended
upon motion. 	Failure to file specific written objections to the
Report and Recommendation within the specified time waives the
right to appeal the district court’s order. 	See Santos-Santos
v. Torres-Centeno, 842 F.3d 163, 168 (1st Cir. 2016); Fed. R.
Civ. P. 72(b)(2).
__________________________
Andrea K. Johnstone
United States Magistrate Judge
September 17, 2019
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cc: 	Blair A. Harrington, Esq.
Thomas P. Harlan, Esq.
Frederick B. Finberg, Esq.
Philbrick’s Fresh Market, LLC, Pro Se
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