United States District Court, D. New Jersey
FEDERAL INSURANCE COMPANY as subrogee of PMC GLOBAL, INC., Plaintiff,
RT&T LOGISTICS, INC. and S AT I LLC, Defendants.
L. Cooper United States District Judge
Insurance Company as subrogee of PMC Global, Inc.
(“Plaintiff”) brought this action against
RT&T Logistics, Inc. (“RT&T”) and S AT I
LLC (“S AT, ” and together with RT&T,
“Defendants”) for, inter alia, breach of
contract after S AT allegedly damaged cargo it was
transporting. (Dkt. 1 at 3-4.) S AT failed to timely respond to
the Complaint, and Plaintiff requested entry of default.
(Dkt. 13.) The Clerk of the Court entered default in favor of
the Plaintiff in accordance with Fed.R.Civ.P. 55(a).
(See entry following dkt. 13.) Plaintiff has now
moved for default judgment against S AT in the amount of
$370, 350.00, plus prejudgment interest. (Dkt. 14-2.) We have
reviewed the submissions made in support of the motion, and
decide the motion without oral argument. See L. Civ.
R. 78.1(b). For the reasons below, we will deny without
prejudice Plaintiff's motion for default judgment.
a party has defaulted, the consequence is that the factual
allegations of the complaint, except those relating to the
amount of damages, will be taken as true.”
Teamsters Pension Fund of Phila. & Vicinity v. Am.
Helper, Inc., No. 11-624, 2011 WL 4729023, at *2 (D.N.J.
Oct. 5, 2011) (quoting DIRECTV, Inc. v. Pepe, 431
F.3d 162, 165 n. 6 (3d Cir. 2005)). “The entry of a
default judgment is largely a matter of judicial discretion,
although the Third Circuit has emphasized that such
‘discretion is not without limits, however, and [has]
repeatedly state[d] [its] preference that cases be disposed
of on the merits whenever practicable.'”
Chanel, Inc. v. Gordashevsky, 558 F.Supp.2d 532, 535
(D.N.J. 2008) (quoting Hritz v. Woma Corp., 732 F.2d
1178, 1181 (3d Cir. 1984)).
to entering default judgment, the court must: “(1)
determine it has jurisdiction both over the subject matter
and parties; (2) determine whether defendants have been
properly served; (3) analyze the complaint to determine
whether it sufficiently pleads a cause of action; and (4)
determine whether the plaintiff has proved damages.”
Moroccanoil, Inc. v. JMG Freight Grp. LLC, No.
14-5608, 2015 WL 6673839, at *1 (D.N.J. Oct. 30, 2015).
Additionally, the Court must consider the following three
factors: “(1) prejudice to the plaintiff if default is
denied, (2) whether the defendant appears to have a litigable
defense, and (3) whether defendant's delay is due to
culpable conduct.” Chamberlain v. Giampapa,
210 F.3d 154, 164 (3d Cir. 2000); see also Nationwide
Mut. Ins. Co. v. Starlight Ballroom Dance Club, Inc.,
175 F. App'x 519, 522 (3d Cir. 2006).
conclude that default judgment is inappropriate at this time
because Defendant RT&T is actively litigating this case
and Plaintiff's claims against the two Defendants are
intertwined. As we have previously explained, “[w]here
the motion for default judgment is made as to only one
defendant in a multi-defendant case, ‘the preferred
practice is for the court to withhold granting default
judgment until the action is resolved on its merits against
non-defaulting defendants: if plaintiff loses on [the]
merits, the complaint should then be dismissed against both
defaulting and non-defaulting defendants.'”
Alpine Fresh, Inc. v. Jala Trucking Corp., 181
F.Supp.3d 250, 257-58 (D.N.J. 2016) (quoting Animal Sci.
Products, Inc. v. China Nat. Metals & Minerals Imp. &
Exp. Corp., 596 F.Supp.2d 842, 849 (D.N.J. 2008));
see also Charles A. Wright et. al., 10A Fed. Prac.
& Proc. Civ. § 2690 (3d ed. 2015) (“judgment
should not be entered against that defendant until the matter
has been adjudicated with regard to all defendants, or all
defendants have defaulted”).
default judgment at this time is in line with the Third
Circuit's stated preference that cases be disposed of on
the merits. Chanel, 558 F.Supp.2d at 535. It is also
particularly appropriate here where the Defendants may be
jointly or severally liable for the damages sought. The
claims in the Complaint were brought against both RT&T
and S AT. Should the claims against RT&T fail on their
merits, we would be faced with the risk of inconsistent
judgments if we granted default judgment against S AT.
See, e.g., Farzetta v. Turner & Newall,
Ltd., 797 F.2d 151, 154 (3d Cir. 1986). The risk of
inconsistent judgments is only compounded where, as here,
RT&T has cross-claimed against S AT for contribution and
indemnification. (Dkt. 6 at 8-9.) See Alpine Fresh,
181 F.Supp.3d at 258 (declining to grant default judgment and
noting pending cross-claims between defendants).
imposing the “extreme sanction” of default
judgment, we would also need to undertake an inquiry into
whether the party subject to default has a meritorious
defense. Teamsters Pension Fund of Phila., 2011 WL
4729023, at *4. In light of RT&T's active litigation
of this case, we need not address now the merits of various
defenses that may exist, including those raised by RT&T
as affirmative defenses. (Dkt. 6 at 7.) For the same reason,
we need not evaluate other issues that appear on the face of
the Complaint, such as whether some or all of the
Plaintiff's claims are preempted by the Carmack
Amendment, 49 U.S.C. § 14706, or other laws. See,
e.g., Ameriswiss Tech., LLC v. Midway Line of
Illinois, Inc., 888 F.Supp.2d 197, 204-08 (D.N.H. 2012)
(holding that certain state law claims were preempted by
Carmack Amendment and Interstate Commerce Commission
we decline to grant default judgment against S AT for the
reasons above, we also note that Plaintiff's motion for
default judgment appears to be deficient for lack of proper
service. “Before the Court can enter default judgment,
it must find that process was properly served on the
Defendant[s].” Teamsters Pension Fund of
Phila., 2011 WL 4729023, at *2. Corporations may be
served “by delivering a copy of the summons and of the
complaint to an officer, a managing or general agent, or any
other agent authorized by appointment or by law to receive
service of process.” Fed.R.Civ.P. 4(h)(1)(B). Mailing a
copy of the Complaint via certified mail or delivering a copy
of the Complaint to an unidentified representative of the
company is insufficient service under Rule 4 of the Federal
Rules of Civil Procedure. See Taveras v. Resorts
Int'l Hotel, Inc., No. 07-4555, 2008 WL 577291, at
*1 (D.N.J. Feb. 29, 2008). The Affidavit of Service submitted
in this case does not identify whether the Complaint was
served on agent authorized to receive service of process.
(Dkt. 14-5.) Accordingly, it is not clear whether Defendant S
AT has been properly served as required for us to enter
reasons stated above, we will deny without prejudice
Plaintiff's motion for default judgment and issue an