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Exporting Commodities International, LLC v. Southern Minerals Processing, LLC

United States District Court, D. New Jersey

November 17, 2017



          JOSEPH ABRAHAM BAHGAT THE PRIVACY FIRM PC On behalf of Defendant.


          NOEL L. HILLMAN, U.S.D.J.

         This case concerns the sale of reclaimed coal at a defunct Mississippi power plant. Presently before the Court is the motion of Plaintiff for default judgment and the motion of Defendant to vacate default and dismiss Plaintiff's complaint. For the reasons expressed below, Defendant's motion will be granted, and Plaintiff's motion will be denied.


         Plaintiff, Exporting Commodities International, LLC (“ECI”), filed a complaint[1] for breach of contract and other related claims against Defendant, Southern Minerals Processing, LLC (“SMP”), for SMP's alleged breach of the parties' agreement that ECI purchase the remaining coal stockpile at a closed power plant owned by Mississippi Power. ECI is involved in the sale and distribution of bituminous coal, and SMP is a seller of coal. According to ECI, SMP had an agreement with Mississippi Power to sell the coal to a third party, and SMP would pay a royalty to Mississippi Power based on that sale.

         ECI claims that in “late 2015, ECI began discussing with [SMP] the possibility of buying and then reselling reclaimed coal from Mississippi Power, ” with an estimated recoverable quantity of 150, 000 tons. ECI and SMP “began exchanging information including, but not limited to, project status and the quality of the material in December 2015.” In April 2016, ECI began discussions with Uniper, a potential buyer for the coal.[2] ECI claims that it received a formal bid from Uniper, and ECI verbally communicated this bid to SMP.

         ECI claims, “After ECI and [SMP] engaged in negotiations regarding the purchase of the reclaimed coal located at Mississippi Power, on the morning of July 22, 2016 at 9:35 a.m., ECI sent an email to [SMP] confirming the material terms of the agreement reached between the parties.” The email ECI sent to SMP provided, “We are pleased to confirm the following deal between Exporting Commodities International, LLC (Buyer) and Southern Minerals (Seller) as follows . . . . Sometime next week, I will send a draft contract, which shall be this confirmation plus terms and conditions.”

         That same morning at 11:49 a.m., ECI claims that SMP “confirmed via email that it accepted ECI's proposal for the purchase of the reclaimed coal (the “Contract”).” The email sent from SMP to ECI provided, “Everything looks good from our standpoint. We accept you [sic] proposal and look forward to doing business with you.” That afternoon, ECI claims that after SMP “had confirmed the Contract between the parties, ECI entered into a contract with Uniper to purchase the reclaimed coal that ECI was buying from [SMP].”

         ECI claims that at 5:00 p.m. on that same day, Frank Kolojeski, a representative of ECI, received a call from Brandon Hodges, the owner of SMP, “claiming that a third party had approached [SMP] with an offer to buy the reclaimed coal at Mississippi Power at a substantially higher price than the Contract reached between ECI and [SMP].” According to ECI, Hodges told Kolojeski that he was in a “‘quandary' as to what to do because [SMP] wanted to take the higher price being offered by the other third party.”[3] ECI claims that Kolojeski told Hodges that “the parties had reached a deal for the sale/price of the reclaimed coal and that ECI and [SMP] had a legal binding agreement, ” and that ECI had already entered into an agreement to resell the coal to Uniper. ECI claims that despite repeated requests and demands, SMP has failed or refused to ship the coal to ECI, and ECI is still obligated to ship the coal to Uniper.

         As a result, ECI claims that SMP's actions have breached the parties' contract, breached the covenant of good faith and fair dealing, constitute unjust enrichment, and implicate the doctrine of promissory estoppel.

         ECI has filed a motion for default judgment against SMP, while SMP has objected to the entry of default against it, opposed ECI's motion for default judgment, and lodged a motion to dismiss ECI's complaint, primarily on the basis that ECI's complaint should be dismissed for lack of personal jurisdiction. Thus, the procedural history of this case is as relevant to the pending motions as the claims in ECI's complaint.

         ECI filed its complaint on December 8, 2016, but due to an improper signature, ECI was directed by the Clerk's office to resubmit the complaint. ECI filed an amended complaint with a proper signature on December 9, 2016.[4]

         On January 4, 2017, ECI filed an affidavit of service, indicating that it served SMP with the summons and complaint on December 24, 2016.[5] On that same day, counsel for SMP entered his appearance.

         On February 23, 2017, ECI filed a revised affidavit of service. On March 6, 2017, ECI requested the entry of default, which the Clerk granted on the same day. Later that day, SMP filed an objection the Clerk's entry of default against it, noticing its intent to file a motion to dismiss for lack of personal jurisdiction and insufficient service of process, among other grounds. SMP also objected to the entry of default because the record did not indicate that ECI had effectuated proper service.

         On April 19, 2017, ECI filed its motion for default judgment. Two days later on April 21, 2017, SMP filed a motion to dismiss.[6] On May 1, 2017, SMP filed a motion to correct its motion to dismiss, seeking to also set aside the Clerk's entry of default.

         On May 10, 2017, the Court issued an order to show cause, finding that ECI failed to properly allege the citizenship of the parties, specifically as to pleading the citizenship of the two limited liability companies. The Court directed that ECI file an amended complaint with the citizenship properly averred, or the complaint would be dismissed for lack of subject matter jurisdiction.

         On June 2, 2017, ECI complied with the Court's order, and filed what is now its second amended complaint and the operative pleading, which concretely establishes the complete diversity of the parties. On June 7, 2017, the Court ordered that the parties' pending motions would be deemed filed as to ECI's second amended complaint. The parties have opposed each other's motions.


         A. Subject Matter Jurisdiction

         This Court may exercise subject matter jurisdiction over the action pursuant to 28 U.S.C. § 1332 because there is complete diversity of citizenship between the parties and the amount in controversy exceeds $75, 000. ECI is a citizen of New Jersey, Germany, and Spain; SMP is a citizen of Alabama.

         B. Analysis

         1. ECI's motion for default judgment

         Federal Civil Procedure Rule 55 governs the entry of default and default judgments. “When a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise, the Clerk must enter the party's default.” Fed.R.Civ.P. 55(a). After the Clerk's entry of default, a plaintiff may seek default judgment, by either applying to the Clerk if plaintiff's claim is for a sum certain, or by applying to the Court. Fed.R.Civ.P. 55(b)(1), (2). Rule 55(c) provides that the Court may set aside an entry of default for good cause, and it may set aside a final default judgment under Fed.R.Civ.P. 60(b).

         The same three factors govern whether a default judgment should be entered, and whether a default or default judgment should be set aside: 1. Whether the plaintiff will be prejudiced; 2. Whether the defendant has a meritorious defense; and 3. Whether culpable conduct of the defendant led to the default. Feliciano v. Reliant Tooling Co., Ltd., 691 F.2d 653, 656 (3d Cir. 1982) (quoting Farnese v. Bagnasco, 687 F.2d 761 (3d Cir. 1982)) (explaining that the factors to be applied for entering and vacating default and default judgment are the same, but further explaining that “[l]ess substantial grounds may be adequate for setting aside a default than would be required for opening a judgment”). It is the Court's discretion to grant default judgment or set aside default or default ...

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