Griffen Security, LLC v. Thompson

District Court, S.D. New York·Decided June 17, 2020·No. 1:19-cv-03494·Unknown

Opinion

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ---------------------------------------------------------------X GRIFFEN SECURITY, LLC, :

: Plaintiff, 19 Civ. 3494 (VSB) (GWG) : -against- REPORT AND : RECOMMENDATION CITADEL CAR ALARMS, LLC, :

Defendant. : ---------------------------------------------------------------X GABRIEL W. GORENSTEIN, UNITED STATES MAGISTRATE JUDGE Plaintiff Griffen Security, LLC (“Griffen”) brought this action alleging breach of a license agreement by defendant Citadel Car Alarms, LLC (“Citadel”), and four individuals. The individual defendants settled, Citadel defaulted, and Griffen now seeks a default judgment against Citadel under Federal Rule of Civil Procedure 55(b)(2).1 For the reasons that follow, Griffen should be awarded a judgment for $42,670.32. I. BACKGROUND On April 19, 2019, Griffen filed a complaint alleging that the defendants wrongfully terminated their patent license agreement. See Complaint, filed April 19, 2019 (Docket # 1) (“Compl.”) ¶ 1. Citadel was served with a summons and the complaint on April 25, 2019. See Affidavit of Service, filed May 8, 2019 (Docket # 23). Citadel failed to respond, and the Clerk issued a certificate of default. See Clerk’s Certificate of Default, filed September 25, 2019 (Docket # 42). Following a show cause hearing, Griffen’s application for a default judgment was granted, see Order, filed Nov. 19, 2019 (Docket # 54), and the case was referred to the

1 See Statement of Damages, filed Feb. 20, 2020 (Docket # 61) (“Statement”).

1 undersigned for an inquest on damages, see Amended Order Referring Case to Magistrate Judge, filed Jan. 2, 2020 (Docket # 59). Pursuant to the Court’s order, see Scheduling Order for Damages Inquest, filed Jan. 6, 2020 (Docket # 60), Griffen filed a statement setting forth its claim to damages, see Statement. In that statement, Griffen seeks $119,369.78 in attorneys’ fees

and costs. Id. at 11, 19. II. FINDINGS OF FACT AND CONCLUSIONS OF LAW In light of Citadel’s default, Griffen’s properly pleaded allegations in the complaint, except those related to damages, are accepted as true. See, e.g., City of N.Y. v. Mickalis Pawn Shop, LLC, 645 F.3d 114, 137 (2d Cir. 2011) (“It is an ‘ancient common law axiom’ that a defendant who defaults thereby admits all ‘well-pleaded’ factual allegations contained in the complaint.”) (quoting Vt. Teddy Bear Co., Inc. v. 1-800 Beargram Co., 373 F.3d 241, 246 (2d Cir. 2004)); Finkel v. Romanowicz, 577 F.3d 79, 84 (2d Cir. 2009) (“In light of [defendant’s] default, a court is required to accept all . . . factual allegations as true and draw all reasonable inferences in [plaintiff’s] favor.”) (citation omitted). “The district court must instead conduct an

inquiry in order to ascertain the amount of damages with reasonable certainty.” Credit Lyonnais Sec. (USA), Inc. v. Alcantara, 183 F.3d 151, 155 (2d Cir. 1999) (citation omitted). This inquiry requires the District Court to: (1) “determin[e] the proper rule for calculating damages on . . . a claim” and (2) “assess[] plaintiff’s evidence supporting damages to be determined under this rule.” Id. Federal Rule of Civil Procedure 55(b)(2) “allows but does not require the district judge to conduct a hearing” on the damages amount. Bricklayers and Allied Craftworkers Local 2, Albany, N.Y. Pension Fund v. Moulton Masonry & Const., LLC, 779 F.3d 182, 189 (2d Cir. 2015) (“[T]he court may conduct such hearings or order such references as it deems necessary

2 and proper.”) (internal quotation marks and citation omitted). In this case, the Court finds that a hearing is unnecessary inasmuch as Griffen’s submissions have not been contested and they provide all the information needed to determine Griffen’s damages. A. Liability of Defendants

The only damages Griffen seeks for breach of the license agreement from Citadel is its attorneys’ fees and costs. See Statement at 19. Griffen brought this case in federal court under the diversity statute, 28 U.S.C. § 1332. See Compl. ¶¶ 8-12; see also Statement at 8. State law governs the award of attorneys’ fees in diversity cases. Grand Union Co. v. Cord Meyer Dev. Co., 761 F.2d 141, 147 (2d Cir. 1985) (citing Alyeska Pipeline Serv. Co. v. Wilderness Soc’y, 421 U.S. 240, 259 n. 31 (1975)); accord Euro Pac. Capital Inc. v. Bohai Pharm. Grp., Inc., 2018 WL 1596192, at *7 (S.D.N.Y. Mar. 28, 2018). “Under New York law, a contract that provides for an award of reasonable attorneys’ fees to the prevailing party in an action to enforce the contract is enforceable if the contractual language is sufficiently clear.” Metro Found. Contractors, Inc. v. Arch Ins. Co., 551 F. App’x 607, 610 (2d Cir. 2014) (summary order)

(quoting NetJets Aviation, Inc. v. LHC Comms., LLC, 537 F.3d 168, 175 (2d Cir. 2008)). The parties entered into a license agreement that was effective on May 25, 2018. Compl. ¶ 2; see also Patent License Agreement, filed April 19, 2019 (Docket # 1-1) (“Agreement”). The agreement provides that in the event of a dispute “[t]he Court shall award reasonable attorneys’ fees and costs associated therewith to the prevailing Party(ies) to the extent determined by the Court to have prevailed.” Agreement at 6. The term “prevailing Party” is not defined in the license agreement but in the context of statutory attorneys’ fees, a plaintiff is a prevailing party if it obtains a default judgment. See, e.g., MSC Mediterranean Shipping Co. Holding S.A. v. Forsyth Kownacki LLC, 2017 WL 1194372, at *1 (S.D.N.Y. Mar. 30, 2017) (“Plaintiff . . . is the

3 prevailing party by virtue of the Default Judgment entered in its favor.”) (internal quotation marks omitted); accord Abafita v. Aldukhan, 2019 WL 6735148, at *9-10 (S.D.N.Y. Apr. 4, 2019) (citations omitted), adopted by 2019 WL 4409472 (S.D.N.Y. Sept. 16, 2019). Thus, we conclude that Citadel is entitled to fees here.

B. Calculation of Attorneys’ Fees and Costs Griffen seeks attorneys’ fees in the amount of $115,112, and costs in the amount of $4,257.78. Where attorneys’ fees are provided for by a provision of a contract, such a provision is enforceable under New York law and courts “will order the losing party to pay whatever amounts have been expended . . . so long as those amounts are not unreasonable.” F.H. Krear & Co. v. Nineteen Named Trs., 810 F.2d 1250, 1263 (2d Cir. 1987); Ford Motor Credit Co. v. Miller, 990 F. Supp. 107, 112 (N.D.N.Y. 1998) (attorney’s fees permitted under guaranty); accord Wells Fargo Bank, N.A. v. Bivona & Cohen, P.C., 2016 WL 2745847, at *5 (S.D.N.Y. May 11, 2016), adopted by 2016 WL 3098843 (S.D.N.Y. June 1, 2016). As the Second Circuit noted in Arbor Hill Concerned Citizens Neighborhood Ass’n v. County of Albany, 522 F.3d 182

(2d Cir.

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