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Precision Franchising LLC v. District Heights CCS LLC

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

August 29, 2018

PRECISION FRANCHISING LLC, Plaintiff,
v.
DISTRICT HEIGHTS CCS LLC, et al., Defendants.

          REPORT AND RECOMMENDATION

          Theresa Carroll Buchanan, United States Magistrate Judge.

         THIS MATTER comes before the Court on Plaintiffs Motion for Default Judgment (Dkt. 8). After representatives for Defendants failed to respond to Plaintiffs motion or to appear at the hearing on August 10, 2018, the matter was taken under advisement.[1] For the reasons stated below, the undersigned U.S. Magistrate Judge recommends that Plaintiffs Motion for Default Judgment be GRANTED.

         I. INTRODUCTION

         A. Background

         On May 16, 2018, Precision Franchising LLC ("Plaintiff) filed this lawsuit against District Heights CCS LLC ("DHCCS") and Sean Alewine ("Mr. Alewine") (together "Defendants"), alleging that Defendants breached the Precision Tune Auto Care Franchise Agreement (the "Franchise Agreement") that they entered into with Plaintiff. Plaintiff now seeks an entry of default judgment that awards it monetary damages and attorney's fees and costs. (Pl.'s Mot. Default J. at 1, 7-10.)

         B. Jurisdiction and Venue

         Before the Court can render default judgment, it must have both subject-matter jurisdiction and personal jurisdiction over the defaulting parties, and venue must be proper.

         The Court has subject-matter jurisdiction over this action. A court shall have subject-matter jurisdiction when an action involves a dispute between citizens of different states and the amount in controversy exceeds the sum of $75, 000.00. See 28 U.S.C. § 1332(a). In this case, Plaintiff is Virginia limited liability company with its principal place of business in Leesburg, Virginia, and therefore a citizen of Virginia. (Compl. ¶ 3.) Defendant DHCCS is a Maryland limited liability company with an apparently principal place of business in Maryland and is therefore a citizen of Maryland. (Id. ¶ 4.) Defendant Mr. Alewine is a natural person who is a resident of Maryland and is therefore a citizen of Maryland. (Id.) With regards to the amount in controversy, the amount sought by Plaintiff exceeds $75, 000.00. (Id. ¶¶ 4, 33, 36.) Accordingly, with Plaintiff and Defendants being citizens of different states and Plaintiff seeking more than $75, 000.00, the Court has subject-matter jurisdiction over this action.

         The Court has personal jurisdiction over Defendants in this action. For personal jurisdiction over a defendant, the standards of both federal due process and the forum state's long-arm statute and must be satisfied. See Tire Eng'g & Distrib., LLC v. Shandong Linglong Rubber Co., 682 F.3d 292, 301 (4th Cir. 2012). Federal due process permits personal jurisdiction where a defendant has "certain minimum contacts with [the forum state] such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'" Int'l Shoe Co. v. Washington. 326 U.S. 310, 316 (1945) (quoting Milliken v. Meyer. 311 U.S. 457, 463 (1940)). Virginia's long-arm statute, Virginia Code § 8.01-328.1, "extends the jurisdiction of its courts as far as federal due process permits." ePlus Tech.. Inc. v. Aboud, 313 F.3d 166, 176 (4th Cir. 2002). With federal due process and Virginia's long-arm statute requiring the same standards, essentially only one personal jurisdiction inquiry is required. See id. The inquiry to find personal jurisdiction requires either specific jurisdiction "based on conduct connected to the suit" or general jurisdiction based on "continuous and systematic" activities in the forum state. Tire Eng'g & Distrib.. 682 F.3d at 301 (quoting ALS Scan. Inc. v. Dig. Serv. Consultants. Inc.. 293 F.3d 707, 711 (4th Cir. 2002)). A reasonable forum-selection clause in a contract is sufficient for a court to have personal jurisdiction over the parties to the contract that agreed to litigate claims in such a selected forum. See Albemarle Corp. v. AstraZeneca UK Ltd.. 628 F.3d 643, 649-50 (4th. Cir. 2010). Defendants have caused injury in Virginia to Plaintiff, a Virginia resident, as a result of their acts and omissions related to their duties under the Franchise Agreement. (Compl. ¶ 6.) Further, Defendants have agreed to litigate claims related to the Franchise Agreement in this Court, pursuant to a forum-selection clause in the Franchise Agreement. (Id.) Therefore, Defendants maintained sufficient contacts with Virginia based on conduct connected to this case for personal jurisdiction to be proper in Virginia courts, and so the Court has personal jurisdiction over Defendants under the specific jurisdiction inquiry.

         Venue in this action is proper in this Court. Venue in a court is proper when the action is brought in a judicial district in which a substantial part of the events or omissions giving rise to the action occurred. See 28 U.S.C. § 1391(b). In this case, venue in this Court is proper because a substantial part of the events giving rise to the claims in this case, specifically, Defendants' acts and omissions related to the Franchise Agreement, resulted in harm to Plaintiff in this Court's judicial district. (Compl. ¶ 7.) Further, with regards to venue, a reasonable forum-selection clause agreed to by parties is sufficient to set venue in a specific court's judicial district. See Albemarle Corp., 628 F.3d at 649-50. Therefore, venue is further proper in accordance with the reasonable forum-selection clause in the Franchise Agreement that Defendants had agreed to. (Compl. ¶ 7.)

         C. Service of Process

         Before the Court can render default judgment, it must be satisfied that all defaulting parties have been properly served. As a general rule, a defendant must be served with the summons and complaint filed with a federal court. See Fed.R.Civ.P. 4. However, various avenues exist to serve a defendant.

         In serving process to an individual, a plaintiff may effectuate service by delivering a copy of the summons and copy of the complaint to the individual personally. See Fed.R.Civ.P. 4(e)(2)(A). In serving process to a business entity such as a limited liability corporation, a plaintiff may effectuate service by delivering a copy of the summons and a copy of the complaint to an officer or managing agent of the business entity. See Fed.R.Civ.P. 4 (h)(1)(B). Here, Plaintiff had a private process server provide a copy of the summons and a copy of the complaint in this case to Mr. Alewine, who is the sole member and owner of DHCCS, which is a limited liability corporation. (Dkt. 4.) Therefore, service of process on both Defendants was proper in accordance with the Federal Rules of Civil Procedure.

         D. Grounds for Default Judgment

         The entry of default judgment may be appropriate when a defendant has failed to appear in a case. See Fed.R.Civ.P. 55. To date, Defendants have not appropriately appeared or otherwise participated in these proceedings. On June 21, 2018, Plaintiff filed its Motion for Entry of Default (Dkt. 6), seeking entries of default for Defendants. On June 25, 2018, the Clerk of the Court issued the Entry of Default (Dkt. 15) for Defendants. On July 17, 2018, Plaintiff filed its Motion for Default Judgment. The Court then held a hearing on Plaintiffs Motion for Default Judgment on August 9, 2018, at which no ...


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