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LLC v. Obi

United States District Court, E.D. Virginia, Alexandria Division

November 7, 2016

360 PAINTING, LLC, Plaintiff,
v.
CELESTINE OBI, Defendant.

          REPORT AND RECOMMENDATION

          Ivan D. Davis United States Magistrate Judge

         This matter is before the Court on Plaintiffs Motion for Default Judgment against Defendant Celestine Obi ("Defendant") pursuant to Federal Rule of Civil Procedure 55(b)(2). (Dkt. No. 12.) After neither Defendant nor a licensed attorney for Defendant appeared at the hearing on August 26, 2016, the undersigned Magistrate Judge took this matter under advisement to issue this Report and Recommendation. Upon consideration of the Complaint, the Motion for Entry of Default Judgment, and the supporting documents, the undersigned Magistrate Judge makes the following findings and recommends that Plaintiffs Motion be GRANTED.

         I. INTRODUCTION

         Plaintiff 360 Painting, LLC ("Plaintiff) filed the Complaint on August 20, 2015, for breach of contract seeking damages and injunctive relief. Plaintiff has moved for default judgment against Defendant and seeks damages in the amount of $265, 000; an injunction permanently enjoining Defendant from utilizing Plaintiffs trade secrets or holding itself out to the public as a franchise of Plaintiff 360 Painting; and an Order requiring Defendant to file with the Court a report under oath setting forth in detail the manner in which Defendant has complied with the injunction, including returning Plaintiffs trade secrets. (Dkt. No. 12 at 3.)

         A. Jurisdiction and Venue

         Rule 55 of the Federal Rules of Civil Procedure provides for the entry of default judgment when "a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend." Fed.R.Civ.P. 55(a). The court must have both subject matter and personal jurisdiction over a defaulting party before it can render a default judgment.

         This Court has subject matter jurisdiction over the claims pursuant to 28 U.S.C. § 1332(a)(1) because diversity of citizenship exists between Plaintiff and Defendant and the amount in controversy exceeds $75, 000. The Complaint alleges damages in the amount of $265, 000 exclusive of interest and fees, thus meeting the amount in controversy requirement. (Compl. ¶ 3.) As to citizenship, Plaintiff is a Virginia corporation, wholly owned and Operated by Paul E. Flick, whose principal residence is in Virginia; additionally, 360 Painting, LLC's principal place of business is also in Virginia. (Compl. ¶ 1.) Defendant Celestine Obi is an individual whose principal residence is in Florida. (Compl. ¶ 1.) Because Plaintiff and Defendant have complete diversity of citizenship and the amount in controversy exceeds $75, 000 (Compl. ¶ 3), this Court has subject matter jurisdiction over this case.

         This Court has personal jurisdiction over Defendant pursuant to the forum selection clause in the contract. (Compl. ¶¶ 3, 29.) Forum selection clauses are prima facie valid. Insight Holding Grp., LLC v. Sitnasuak Native Corp., 685 F.Supp.2d 582, 587 (E.D. Va. 2010) (citing Paul Bus. Sys., Inc. v. Canon U.S.A., Inc., 397 S.E.2d 804, 807 (Va. 1990) (holding that a forum selection clause should be enforced unless the objecting party establishes otherwise)). A valid forum selection clause "may act as a waiver to objections to personal jurisdiction." Consulting Eng'rs Corp. v. Geometric Ltd., 561 F.3d 273, 281 n.ll (4th Cir. 2009) (citing Nat'l Equip. Rental, Ltd. v. Szukhent, 375 U.S. 311, 315-16 (1964)). Defendant has not contested the validity of the forum selection clause. Therefore, the forum selection clause is valid, and this Court has personal jurisdiction over Defendant.

         Venue is proper in this District pursuant to 28 U.S.C. § 1391(b)(2) because a substantial part of the omissions giving rise to the claims occurred in this judicial district. (Compl. ¶ 3.) Furthermore, forum selection clauses are generally enforced as to selection of venue. Albemarle Corp. v. AstraZeneca UK Ltd., 628 F.3d 643, 649 (4th Cir. 2010). Defendant has consented to this venue by prior agreement and has agreed to be subject to the jurisdiction of this Court. (Compl. ¶¶ 3, 29.) Venue and jurisdiction are therefore proper in this Court.

         B. Service of Process

         For a court to have personal jurisdiction over a defendant for the purpose of entering default judgment, the plaintiff must properly serve the defendant under federal or state law. Miss. Publ'g Corp. v. Murphree, 326 U.S. 438, 444-45 (1946) (stating that "service of summons is the procedure by which a court having venue and jurisdiction of the subject matter of the suit asserts jurisdiction over the person of the party served"); Cent. Operating Co. v. Util. Workers of Am., 491 F.2d 245, 249-51 (4th Cir. 1974) (reversing the district court's entry of default judgment because the court lacked personal jurisdiction where the plaintiff failed to effectively serve the defendant with summons and complaint). The Federal Rules of Civil Procedure provide the manner in which service must occur.

         Federal Rule of Civil Procedure 4(e) governs service upon an individual and allows service by "delivering a copy of the summons and of the complaint to the individual personally [or] leaving a copy of each at the individual's dwelling or usual place of abode with someone of suitable age and discretion who resides there." Fed.R.Civ.P. 4(e)(2)(A)-(B). On September 24, 2015, a certified process server served the Defendant with the Summons and Complaint at his dwelling. (Dkt. No. 4.) Therefore, Plaintiff properly served Defendant pursuant to Rule 4(e).

         C. Grounds for Default

         On August 20, 2015, Plaintiff filed its Complaint against Defendant seeking damages and injunctive relief. (Dkt. No. 1.) A certified process server served Defendant on September 24, 2015. (Dkt. No. 4.) On April 20, 2016, after Defendant failed to respond, the Clerk of Court entered default against Defendant. (Dkt. No. 8.) On August 11, 2016, Plaintiff filed the pending Motion for Default Judgment. (Dkt. No. 12.) This Court held a hearing on the Motion on August 26, 2016. (Dkt. No. 18.) After Defendant failed to appear at the August 26, 2016 hearing, the undersigned Magistrate Judge took this matter under advisement to issue this Report and Recommendation.

         II. FINDINGS OF FACT

         Upon a full review of the pleadings, the undersigned Magistrate Judge finds that Plaintiff has established the following facts. Plaintiff 360 Painting is the licensor of the 360° Painting System service. (Compl. ¶ 4.) Plaintiff has licensed others to operate painting system services businesses identified with the 360° Painting service mark designated by 360 Painting as part of the 360° Painting system (the "Proprietary Mark"), and to utilize confidential methods and procedures developed by 360 Painting for the operation of 360° Painting franchises. (Id.) The Proprietary Mark is registered with the United States Patent and Trademark Office and the registration is in full force and effect. (Compl. ΒΆ 5.) Plaintiff has given public notice of the registration and Proprietary Mark as provided in 15 ...


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