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Golia v. IBCS Group, Inc.

United States District Court, D. New Jersey

April 27, 2015

STEVEN GOLIA, Plaintiff,
v.
IBCS GROUP, INC., d/b/a IBCS GROUP, IBCS FIDELITY, INC., EDWARD SCARBOROUGH, and YVONNE SCARBOROUGH, Defendants.

MEMORANDUM OPINION

JEROME B. SIMANDLE, Chief District Judge.

In this action for the recovery of unpaid compensation, benefits, and commissions, Plaintiff Steven Golia (hereinafter, "Plaintiff") moves for default judgment under Rule 55(b)(2), Fed. R. Civ. P., against Defendants IBCS Group, Inc. (hereinafter, "IBCS") and IBCS Fidelity, Inc. (hereinafter, "Fidelity") for failure to answer or otherwise respond to Plaintiff's Complaint. [Docket Item 17.] For the reasons that follow, Plaintiff's motion will be granted in part with respect to IBCS and denied with respect to Fidelity, and the Court will enter a default judgment in favor of Plaintiff and against IBCS in the amount of $130, 655.29. The Court finds as follow:

1. In his Complaint, Plaintiff alleges that IBCS, a surety business, hired him as a "sales representative" on February 4, 2008.[1] (Compl. at ¶ 12.) Plaintiff's Employment Agreement with IBCS provided, in relevant part, for a base annual salary of $85, 000, a performance payment of 10% "of all company gross income related to surety business or guarantee business, " and "lease cost reimbursement for a Mercedes-Benz S550 4MATIC sedan, or equivalent vehicle." (Ex. A to Compl.) Following three years of service, IBCS and Plaintiff modified the employment agreement on March 3, 2011. (Id.) In the modification, IBCS increased Plaintiff's base annual salary to $125, 000, altered his performance payment structure, and agreed to pay Plaintiff's "unpaid 2009 bonus in the amount of $62, 500" by the end of the following month, April 2011. (Id.)

2. On February 7, 2012, however, Plaintiff alleges that IBCS "unilaterally decided to terminate" Plaintiff's employment as a sales representative, opting instead to retain him as an independent contractor. (Compl. at ¶ 14; see also Ex. B to Compl.) At that time, $34, 200 of the $62, 500 bonus for 2009 remained outstanding, as did to $19, 029.78 in "reimbursement" for Plaintiff's leased vehicle. (Compl. at ¶¶ 15-16.) Despite the termination, IBCS and Plaintiff entered into negotiations regarding his retention as an "agent" or "independent contractor" (id. at ¶¶ 20-21), and ultimately finalized the terms of Plaintiff's employment as a commissions-only agent by email correspondence on February 10, 2012 (hereinafter, the "Commission Agreement"). (Compl. at ¶¶ 20-21; see also Ex. B to Compl.) The Commission Agreement set forth a schedule of tiered commissions based upon Plaintiff's sale of final bonds, financial guarantees, and contract overruns, and required IBCS to make all commission payments within a specified period. (Compl. at ¶ 22; see also Ex. B to Compl.) From February to October 2013, Plaintiff completed ten "qualifying transactions" in the total amount of $17, 626, 249.65. (Compl. at ¶¶ 25-26; see also Exs. C & D to Compl.) Nevertheless, IBCS terminated the Commission Agreement on December 19, 2014, without first making all of the payments required by the Commission Agreement, nor compensating Plaintiff for the outstanding sums due under the Employment Agreement. (Compl. at ¶¶ 26-27.) Indeed, Plaintiff alleges that IBCS owes him $53, 229.78 under the terms of the Employment Agreement, as modified, and $111, 089.84 in unpaid commissions pursuant to the Commission Agreement.[2] (See Compl. at ¶ 31.)

3. As a result of IBCS's continued failure to comply with the compensation terms of the Employment and Commission Agreements, Plaintiff filed the initial Complaint in this action on April 23, 2014, alleging, in relevant part, that IBCS and Fidelity breached the terms of the Employment and Commission Agreements, and relatedly, violated New Jersey's Wage Payment Law, N.J.S.A. §§ 31:11-4.1, et seq. (hereinafter, "New Jersey's Wage Law"), and Sales Representatives' Rights Act, N.J.S.A. §§ 2A:61A-1, et seq. (hereinafter, "New Jersey's Commission Payment Statute"). (See Compl. at ¶¶ 32-44, 51-62.)

4. On May 6, 2014, Plaintiff successfully effectuated personal service of the Complaint upon IBCS and Fidelity at their principal place of business in Charlottesville, Virginia. [Docket Items 3 & 4.] Following the failure of IBCS and Fidelity to answer or otherwise respond, the Clerk of Court entered default against all defendants [Docket Items 9 & 10], and Plaintiff's motion for default judgment followed. [Docket Item 17.]

5. In the pending motion, Plaintiff argues that the unchallenged facts demonstrate his entitlement to unpaid compensation and benefits in the aggregate amount of $53, 229.78 for breach of the Employment Agreement and/or for violating New Jersey's Wage Law, N.J.S.A. § 34:11-4.3. (See Pl.'s Br. at 11-16.) Plaintiff similarly argues that the undisputed facts reflect his entitlement "to payment of $111, 089.00" in outstanding commissions, in addition to "$333, 267.00 in exemplary damages, " attorney's fees, and costs pursuant to New Jersey's Commission Payment Statute, N.J.S.A. § 2A:61A-3. (See id. at 11-14, 16-17; see also Frank Aff. at ¶¶ 9-10.)

6. Federal Rule of Civil Procedure 55(b)(2) authorizes courts to enter a default judgment against a properly served defendant who fails to a file a timely responsive pleading. See FED. R. CIV. P. 55(b)(2); see also Chanel v. Gordashevsky , 558 F.Supp.2d 532, 535 (D.N.J. 2008) (citing Anchorage Assoc. v. Virgin Is. Bd. of Tax Rev. , 922 F.2d 168, 177 n.9 (3d Cir. 1990)). Nevertheless, the decision of whether to enter a default judgment rests within the sound "discretion of the district court, " Hritz v. Woma Corp. , 732 F.2d 1178, 1180 (3d Cir. 1984), and the Court of Appeals for the Third Circuit has "repeatedly state[d] [its] preference that cases be disposed of on the merits whenever practicable." Id. at 1181.

7. As a result, prior to entering a judgment of default, a court must determine: (1) whether the plaintiff produced sufficient proof of valid service and evidence of jurisdiction, (2) whether the unchallenged facts present a legitimate cause of action, and (3) whether the circumstances otherwise render the entry of default judgment "proper." Teamsters Health & Welfare Fund of Phila. & Vicinity v. Dubin Paper Co., No. 11-7137 , 2012 WL 3018062, at *2 (D.N.J. July 24, 2012) (internal citations omitted). In so considering, a court must accept as true every "well-pled" factual allegation of the complaint. Comdyne I. Inc. v. Corbin , 908 F.2d 1142, 1149 (3d Cir. 1990). A court need not, however, accept the plaintiff's legal conclusions, nor the plaintiff's assertions concerning damages. See id.; see also Doe v. Simone, No. 12-5825, 2013 WL 3772532, at *2 (D.N.J. July 17, 2013) (citations omitted).

8. As to the first inquiry, the Court must consider whether it possesses personal jurisdiction over IBCS and Fidelity, both foreign corporations.[3] Because the record fails to disclose any basis to exercise general jurisdiction over IBCS and Fidelity, [4] the Court must consider whether IBCS and/or Fidelity have "purposefully directed'" relevant activities at this forum for purposes of specific jurisdiction. Gen. Elec. Co. v. Deutz AG , 270 F.3d 144, 150 (3d Cir. 2001) (quoting Burger King Corp. v. Rudzewicz , 471 U.S. 462, 472 (1985)). In a contract case, such as this one, in order to exercise specific jurisdiction over IBCS and/or Fidelity, the facts of the Complaint must specifically demonstrate that contacts of IBCS and/or Fidelity with this forum proved "instrumental in either the formation or the breach of the contract." Control Screening LLC v. Tech. Application and Production Co. (Tecapro), HCMC-Vietnam , 687 F.3d 163, 167 (3d Cir. 2012). Here, because IBCS and Plaintiff negotiated both Agreements while Plaintiff remained in this forum, and because this litigation arises from Plaintiff's in-forum performance under the Agreements, the undisputed facts readily support the exercise of specific jurisdiction over IBCS. (See Exs. A & B to Compl. (identifying Plaintiff's New Jersey address).)

9. The Court, however, finds the unchallenged facts, even accepted as true, insufficient to provide a basis to exercise specific jurisdiction over Fidelity. Critically, the Agreements contain no reference to Fidelity (see, e.g., Exs. A & B to Compl.), and Plaintiff concedes that the Agreements only imposed contractual obligations by and between Plaintiff and IBCS.[5] (See, e.g., Compl. at ¶ 31 (noting that Plaintiff seeks damages as "a result of IBCS's multiple breaches of the Employment Agreement and Commission Agreement"); see also Pl.'s Br. at 1-3 (arguing that IBCS "has failed and continues to fail to make the require payments" pursuant to the Employment and Commission Agreements).) Indeed, despite asserting claims against Fidelity, Plaintiff's Complaint makes only one fleeting reference to Fidelity, by alleging that, at some point "during the course of the business relationship between [Plaintiff] and IBCS, IBCS transferred its surety business operations to Fidelity, " which "operated as an alter ego of IBCS." (Compl. at ¶¶ 4-5.) Nevertheless, Plaintiff has alleged no facts to suggest that Fidelity has any claims-based contacts with this forum, nor has Plaintiff addressed the relevant standard for imputing the jurisdictional contacts of one entity to its alleged alter ego. See, e.g., Westfield Ins. Co. v. Interline Brands, Inc., No. 12-6775 , 2013 WL 6816173, at *21 (D.N.J. Dec. 20, 2013) (discussing the necessary showing for personal jurisdiction based upon an alter ego theory). Plaintiff's motion for default judgment will therefore be denied with respect to Fidelity.[6]

10. With respect to the second inquiry, the Court must consider whether the undisputed facts of Plaintiff's Complaint allege legitimate claims for breach of contract against IBCS. The Court, however, need not belabor this inquiry, because the unchallenged facts of Plaintiff's Complaint easily state a sufficient claim for breach of contract against IBCS. In order to succeed on a breach of contract claim under New Jersey law, a plaintiff must show that (1) a valid contract existed, (2) that the defendant failed to perform under the contract, and (3) that failure to perform caused injury to plaintiff. See Gutwirth v. Woodford Cedar Run Wildlife Refuge, 38 F.Supp. 3d 485, 491 (D.N.J. 2014) (citing Red Roof Franchising, LLC v. Patel , 877 F.Supp.2d 124, 131 (D.N.J. 2012)). The elements of a valid contract consist of "mutual assent, consideration, legality of the object of the contract, capacity of the parties, and formulation of memorialization." Id. (citing D'Agostino v. Appliances Buy Phone, Inc., No. 10-05415, 2011 WL 4345674, at *6 (D.N.J. Sept. 15, 2011)). On March 3, 2011, IBCS and Plaintiff entered into a valid Employment Agreement, in which Plaintiff agreed to perform services as a sales representative for IBCS, in return for a specified salary, bonus payments, and benefits. (See Compl. at 12-13; see also Ex. A to Compl.) Plaintiff's Complaint, however, alleges that IBCS breached the express terms of the modified Employment Agreement by terminating his employment, without remitting the $34, 200.00 balance of his unpaid 2009 bonus, nor relieving him of the $19, 029.78 remaining on his auto lease obligation-both as required by the Employment Agreement. (See Compl. at ¶¶ 51-55.) As a result of IBCS's failure to perform its obligations under the Employment Agreement, Plaintiff alleges that he suffered damages in the amount $53, 229.78. (Compl. at ¶¶ 15-16; see also Golia Aff. At ¶¶ 7-8.) Following the termination of Plaintiff's employment as a sales representative, IBCS and Plaintiff entered into a valid Commission Agreement, in which Plaintiff agreed to act as a commissions-based independent contractor for IBCS, and IBCS agreed to make commission payments on sales of final bonds, financial guarantees, and contract overruns, in accordance with a specified schedule. (See Compl. at ¶¶ 21-23; see also Ex. B to Compl.) Plaintiff's Complaint states that he executed ten qualified transactions and accruing a total commission of $111, 089.84, but alleges that IBCS terminated his position as an independent contractor on December 19, 2013, without making all of the required commission payments. (Compl. at ¶¶ 25-26, 30-31; see also Golia Aff. At ¶¶ 14, 17.) Rather, as of February 8, 2013, IBCS only made payments totaling $34, 274.33. (See Compl. at ¶ 30.) Based upon these undisputed allegations, the Court finds that Plaintiff has sufficiently stated claims for breach of the Employment and Commission Agreements.[7] See Lee v. A to Z Trading LLC, No. 12-4624, 2014 WL 7339195, *2 (D.N.J. Dec. 23, 2014) (finding that the plaintiff "stated a sufficient cause of action for a breach of contract claim").

11. Finally, with respect to the third inquiry, whether the entry of default judgment would be proper, the Court must consider "(1) whether the party subject to default has a meritorious defense, (2) the prejudice suffered by the party seeking default, and (3) the culpability of the party subject to default." Doug Brady, Inc. v. N.J. Bldg. Laborers Statewide Funds , 250 F.R.D. 171, 177 (D.N.J. 2008). Here, IBCS has failed to proffer any defense to Plaintiff's claims, meritorious or otherwise, and the Complaint does not clearly suggest the existence of any meritorious contract defenses, such as mistake, duress, unconscionability, misrepresentation, or fraud. See Surdi v. Prudential Ins. Co. of Am., No. 08-225 , 2008 WL 4280081, at *2 (D.N.J. Sept. 8, 2008) ("The facts as alleged in the Complaint provide no indication of a meritorious defense."). Moreover, because Plaintiff has no other means of seeking damages for the harm caused by IBCS, the Court finds that Plaintiff would be prejudiced in the absence of a default judgment. See Gowan v. Cont'l Airlines, Inc., No. 10-1858 , 2012 WL 2838924, at *2 (D.N.J. July 9, 2012) (noting that the inability to "vindicate rights" absent a default judgment constitutes prejudice); see also Ramada Worldwide Inc. v. Courtney Hotels USA, Inc., No. 11-896 , 2012 WL 924385, at *5 (D.N.J. Mar. 19, 2012) ("If a default judgment is not entered, [the plaintiff] will continue to be harmed because it will not be able to seek damages for its injuries due to defendant's continuing refusal to participate in this case."). Lastly, because IBCS failed to defend against this litigation despite having been effectively served with the Complaint, the Court finds IBCS's delay attributable to culpable conduct. See Lee, 2014 WL 7339195, at *3 (finding the defendant's failure to respond despite awareness of the litigation "due to culpable conduct"). For these reasons, the Court finds default judgment warranted as to Plaintiff's breach of contract claims against IBCS.

12. Nevertheless, the Court must still assess the amount of damages sought by Plaintiff. In considering the amount of damages, where the plaintiff seeks damages in a sum certain, the Court may rely upon detailed affidavits, without resorting to a hearing. Durant v. Husband , 28 F.3d 12, 15 (3d Cir. 1994); Amresco Fin. I L.P. v. Storti, No. 99-2613 , 2000 WL 284203, at *2 (E.D. Pa. Mar. 13, 2000) (noting that the entry of a default judgment with an award of damages is proper when the damage amount can be ascertained from detailed figures in evidence and affidavits). As stated above, Plaintiff seeks $130, 045.29 in damages as a result of IBCS's breaches of the Employment and Commission Agreements, and has substantiated these damages with the detailed affidavits of Plaintiff and counsel for Plaintiff, a voluminous number of invoices that establish Plaintiff's completion of qualified transactions under the Commission Agreement, and Plaintiff's statement of IBCS's accounts. (See Golia Aff.; Frank Aff.; Exs. C & D to Compl.) As a result, the Court finds Plaintiff ...


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