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Progressive Freight, Inc. v. Framaur Associates, L.L.C.

United States District Court, D. New Jersey

February 6, 2018

PROGRESSIVE FREIGHT, INC., Plaintiff,
v.
FRAMAUR ASSOCIATES, LLC; TEE WAY LOGISTICS, LLC; and TEE WAY TRANSPORTATION, LLC, Defendants.

          ORDER AND JUDGMENT

          HON. FREDA L. WOLFSON UNITED STATES DISTRICT JUDGE.

         THIS MATTER having been opened to the Court by Kevin M. Capuzzi, Esq., counsel for Plaintiff Progressive Freight, Inc. (“Plaintiff” or “Progressive”), on a motion for default judgment against Tee Way Logistics, LLC (“Tee Way Logistics”) and Tee Way Transportation, LLC (“Tee Way Transportation”) (collectively, “Tee Way”), as well as on a motion to strike the answer of, and enter default and default judgment against, Framaur Associates, LLC (“Framaur”) (collectively with Tee Way, “Defendants”); it appearing that that Defendants, having been duly served, have failed to oppose or otherwise respond to Plaintiff's motions; the Court, having reviewed Plaintiff's submissions in connection with its motions, makes the following findings:

1. This is a contract dispute arising out of several agreements to provide transportation brokerage services for the delivery of goods. Progressive is a Georgia corporation that operates as a transportation services broker. Compl. ¶¶ 1, 6. Framaur and Tee Way Logistics are New Jersey limited liability companies that are also in the transportation brokerage industry. See Id. at ¶¶ 2-3, 6. Tee Way Transportation is a New Jersey based limited liability company that operates a trucking business. See Id. at ¶¶ 4, 6. The Complaint alleges that Framaur operates and conducts business through Tee Way Logistics and Tee Way Transportation. Id. at ¶ 9. In that regard, Plaintiff alleges that Framaur, Tee Way Logistics, and Tee Way Transportation each operate from the same principal place of business in New Jersey, and are controlled by members of the D'Agostino family. See Id. at ¶¶ 2-4.
2. According to the Complaint, non-party MillerCoors LLC contracted with Defendants to provide transportation brokerage services for the delivery of MillerCoors' beer and other alcoholic beverages (the “Goods”). Compl. ¶¶ 6, 10. The Complaint alleges that between April 2016 and October 2016, Defendants entered into several written contracts (collectively, the “Contracts”) with Plaintiff, under which Plaintiff agreed to broker the actual transportation of the Goods. See Id. at ¶¶ 11, 17. Specifically, the Complaint alleges that the Contracts were memorialized through bills of lading and invoices issued by each of the Defendants, and stated that Defendants would, collectively or separately, compensate Plaintiff for transportation services rendered, including freight and brokerage charges. Id. at ¶¶ 17-18. Importantly, as alleged, Plaintiff contracted with each of the Defendants in this regard.[1]
3. The Complaint alleges that Plaintiff retained various inline carriers to deliver the Goods to their final destinations, and fully compensated those carriers upon delivery. Id. at ¶¶ 11-13. Additionally, the Complaint alleges that MillerCoors fully compensated Defendants for delivery of the Goods. Id. at ¶ 16. However, according to the Complaint, despite the fact that Plaintiff performed all of its obligations under the Contracts, Defendants failed to pay Plaintiff $261, 195.00 allegedly due and owing under the terms of the agreements. Id. at ¶¶ 23-27.
4. On December 19, 2016, Plaintiff filed its Complaint, asserting three causes of action against Defendants. Count One asserts a claim for breach of contract, alleging that Defendants breached the Contracts by failing to compensate Plaintiff for freight and brokerage charges upon completion of Plaintiff's obligations under the Contracts. See id. at ¶¶ 21-27. Count Two asserts a related claim for account stated under New Jersey law. See Id. at ¶¶ 28-32. Finally, Count Three asserts a claim for unjust enrichment. See Id. at ¶¶ 33-40.
5. On February 3, 2017, Framaur filed its answer. ECF No. 8. On the same date, Tee Way moved to dismiss the Complaint, pursuant to Federal Rule of Civil Procedure 12(b)(6), for failure to state a claim. ECF No. 12. On September 5, 2017, this Court issued an Opinion and Order denying Tee Way's motion to dismiss. ECF Nos. 26-27.
6. On September 14, 2017, Tee Way applied for an extension of time to file their answer or otherwise respond to the Complaint. ECF No. 28. On September 15, 2017, the Clerk of the Court entered an Order directing Tee Way to file an answer to the Complaint on or before October 3, 2017. ECF No. 29. As a result of Tee Way's failure to file an answer before that date, Plaintiff moved for the entry of default against Tee Way on October 4, 2017. ECF No. 31. Default was entered against Tee Way on October 5, 2017. ECF No. 32.
7. On October 6, 2017, Plaintiff filed the instant motion for default judgment against Tee Way, which Tee Way has not opposed. ECF No. 33.
8. On October 10, 2017, James K. Webber, Esq. and Webber McGill, LLC moved to withdraw as counsel for all Defendants, on the basis that Defendants had incurred substantial debts, and had ignored counsel's numerous correspondences. ECF No. 34. On October 26, 2017, the Magistrate Judge granted the motion to withdraw as counsel for all Defendants, [2] and further ordered Framaur to retain replacement counsel within twenty-one (21) days thereof. ECF No. 36. In his Order, the Magistrate Judge warned Framaur that failure to timely obtain replacement counsel could lead to Framaur being held in default. Id.
9. Framaur did not timely retain substitute counsel.[3] As a result, on November 22, 2017, Plaintiff moved to strike Framaur's answer and enter default and default judgment against Framaur. ECF No. 37. That motion is unopposed.
10. Having set forth the facts underlying this dispute, the Court turns, first, to Plaintiff's motion to strike Framaur's answer and enter default against Framaur for Framaur's failure to comply with the Magistrate Judge's Order to retain new counsel. The Federal Rules of Civil Procedure authorize district courts to impose sanctions against a party that fails to comply with a court order. See Fed. R. Civ. P. 16(f) (“On motion or on its own, the court may issue any just orders, including those authorized by Rule 37(b)(2)(A)(ii)-(vii), if a party or its attorney . . . fails to obey a scheduling or other pretrial order.”); Fed.R.Civ.P. 37(b)(2) (setting forth sanctions for failure to comply with a court order). In that regard, where a party fails to comply with a pretrial order, Rule 37(b)(2)(A) provides specifically that a court may, inter alia, “strik[e] pleadings in whole or in part” and “render[] a default judgment against the disobedient party.” Fed.R.Civ.P. 37(b)(2)(A). Additionally, courts have “inherent equitable powers to dismiss actions or enter default judgments for failure to prosecute, contempt of court, or abusive litigation practices.” Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153, 1179 n. 4 (3d Cir. 1993) (citation omitted). The Third Circuit has recognized that sanctionable conduct includes the failure of a party to comply with an order to obtain substitute counsel. See Hoxworth v. Blinder, Robinson & Co., 980 F.2d 912, 918 (3d Cir. 1992) (recognizing that a district court may “impose[] a default judgment . . . for failure to comply with its own unambiguous orders to obtain substitute counsel.”).
11. To determine whether sanctions that “deprive a party of the right to proceed with or defend against a claim, ” are appropriate, id. at 919, courts apply the six factor test set forth in Poulis v. State Farm Fire & Cas. Co., 474 F.2d 863 (3d Cir. 1984). To that end, in deciding whether to strike Framaur's answer and to enter default against Framaur in this case, the Court must consider: “(1) the extent of the party's personal responsibility; (2) the prejudice to the adversary caused by the failure to meet scheduling orders and respond to discovery; (3) a history of dilatoriness; (4) whether the conduct of the party or the attorney was willful or in bad faith; (5) the effectiveness of sanctions other than dismissal, which entails an analysis of alternative sanctions; and (6) the meritoriousness of the claim or defense.” Id. at 868 (emphasis in original).
12. Upon consideration of the Poulis factors, the Court finds that striking Framaur's answer and entering ...

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