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Evolution Strategies, LLC v. Unlimited Marketing Enterprises, Inc.

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

September 27, 2019

EVOLUTION STRATEGIES, LLC Plaintiff,
v.
UNLIMITED MARKETING ENTERPRISES INC., Defendant.

          REPORT AND RECOMMENDATION

          THERESA CARROLL BUCHANAN UNITED STATES MAGISTRATE JUDGE

         THIS MATTER comes before the Court on Evolution Strategies, LLC's ("Plaintiff) Motion for Default Judgment against Unlimited Marketing Enterprises, Inc. ("Defendant") (Dkt. II).[1] For the reasons articulated below, the undersigned U.S. Magistrate Judge recommends that Plaintiffs Motion for Default Judgment be GRANTED.

         I. Background

         A. Procedural Posture

         On May 15, 2019, Plaintiff filed this lawsuit alleging causes of action for breach of contract, actual fraud, and constructive fraud. (See Compl. ¶¶ 19-38.) After Defendant failed to enter an appearance or respond in any fashion, the Court issued an Order on August 1, 2019, ordering that Plaintiff obtain an entry of default from the clerk pursuant to Federal Rule of Civil Procedure 55(a). (Dkt. 8.) The Order further required Plaintiff to file a motion for default judgment and notice a hearing before the undersigned on Friday, August 30, 2019. (Id.) Plaintiff complied by requesting the clerk's entry of default on August 7, 2019 (Dkt. 9), and the clerk entered Defendant's default on August 19, 2019 (Dkt. 10). Plaintiff then filed the instant Motion for Default Judgment and noticed the hearing for Friday, August 30, 2019. (Dkts. 11-12.) Representatives for Defendant failed to appear or otherwise respond at the hearing, and the Court took this matter under advisement for the undersigned to issue this Report and Recommendation.

         B. Jurisdiction and Venue

         Before the Court can render default judgment, it must have subject-matter jurisdiction and personal jurisdiction over the defaulting party, and venue must be proper. First, the Court has subject-matter jurisdiction over this action pursuant to 28 U.S.C. § 1332(a)(1). A federal court has subject-matter jurisdiction when a dispute involves citizens of different states and the amount in controversy exceeds $75, 000.00, exclusive of interest and costs. See 28 U.S.C. § 1332(a)(1) (2018). Here, Plaintiff is a Virginia limited liability company whose sole member and president is a resident of Virginia. (Compl. ¶ 1; Hyman Decl. ¶ 2.) Defendant is a Florida corporation with its principal place of business in Sanford, Florida. (Compl. ¶ 2.) Accordingly, Plaintiff is a citizen of Virginia and Defendant is a citizen of Florida for purposes of diversity jurisdiction, and there is complete diversity between the parties. Furthermore, the amount in controversy exceeds $75, 000 because Plaintiff, in its Complaint, sought over one million dollars in monetary relief, exclusive of interest, attorneys' fees, and costs. (See Compl. at 8.) Now, at the default judgment stage, Plaintiff seeks $949, 883.00 in money damages, exclusive of interest, attorneys' fees, and costs. (See Mem. Supp. at 13-14.)

         Second, the Court has personal jurisdiction over Defendant. The standards of federal due process and the forum state's long-arm statute must be satisfied for a federal court to have personal jurisdiction over a party. See Tire Eng'g & Distribution, 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 section 8.01-328.1, provides for personal jurisdiction to the extent that 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 standard, essentially only one inquiry is required. See Id. Furthermore, the inquiry requires the Court to either have specific jurisdiction, which is achieved when the defendant's contacts with the state give rise to the basis of the lawsuit, or general jurisdiction, which requires that the defendant have "continuous and systematic" activities in the forum state. Tire Eng'g & Distribution, 682 F.3d at 301 (internal citation omitted).

         Two bases under Virginia's long-arm statute provide for specific personal jurisdiction over Defendant in this case. Virginia has personal jurisdiction over a party (1) "[transacting any business" or (2) "[c]ontracting to supply services or things" in Virginia. Va. Code Ann. § 8.01-328.l(A)(1)-(2) (2019). Here, Defendant contracted to supply services to Plaintiff, a Virginia limited liability company. (See Compl. ¶ 1; Hyman Decl., Ex. A.) Therefore, Defendant (1) transacted business and (2) contracted to supply services in Virginia, satisfying the Commonwealth's long-arm statute.

         Furthermore, federal courts have personal jurisdiction over a party that contractually consented to it or waived it pursuant to a valid forum selection clause. See W.L. Gore & Assocs., Inc. v. Medtronic, Inc., U.S. F.Supp.2d 667, 671 (E.D. Va. 2011). Here, Defendant consented to the exclusive jurisdiction of Virginia courts to adjudicate a dispute about the contract. (Hyman Decl., Ex. A § 18, at 6.) Section 18 of the parties' contract provides that "suit to enforce any provision of this Agreement may be brought in a court of competent jurisdiction within the Commonwealth of Virginia, and for this purpose the Parties hereby expressly and irrevocably consent[] to the jurisdiction of said court." (Id.) Because Virginia's long-arm statute is satisfied, and Defendant consented to Virginia's jurisdiction, the undersigned finds that the Court has personal jurisdiction over Defendant.

         Lastly, Plaintiff filed this lawsuit in the proper venue. Venue is proper in a federal judicial district in which a substantial part of the events or omissions giving rise to the action occurred. 28 U.S.C. § 1391(b)(2) (2018). Here, venue is proper for many of the same reasons why personal jurisdiction over Defendant is proper. Defendant transacted business with a company incorporated under Virginia law and located in Alexandria, Virginia, which is within the Eastern District of Virginia. (Compl. ¶¶ 1, 5.) As such, Defendant's work (or lack thereof) pursuant to the parties' contract constitutes a substantial part of the events or omissions giving rise to this litigation. Accordingly, the undersigned finds that venue is proper.

         C. Service of Process

         Before the Court can render default judgment, it must be satisfied that the defaulting party has been properly served. Under Federal Rule of Civil Procedure 4(h)(1) and (e)(1), a plaintiff can serve a corporation pursuant to the state's law in which the federal district court is located. See Fed. R. Civ. P. 4(e)(1), (h)(1). Under Virginia Code sections 8.01-329(A) and (B), a plaintiff can serve a nonresident corporation via the Secretary of the Commonwealth by filing an affidavit stating that the corporation to be served is a nonresident and setting forth the corporation's last-known address. See Va. Code Ann. § 8.01-329(A)-(B) (2019). The Secretary is then charged with the duty to send service of process by certified mail to the defendant's last-known address, including the notice of service, a copy of the process or notice, and a copy of the affidavit. Id. § 8.01-329(C). Service is deemed effective on the date the plaintiff served the Secretary. Id.

         On May 23, 2019, Plaintiffs counsel submitted to the Secretary of the Commonwealth of Virginia an Affidavit for Service of Process on the Secretary of the Commonwealth, along with the summons, complaint, and attachments, denoting that Defendant was a nonresident foreign corporation. (Bustos Decl. ¶ 8; Dkt. 7.) Pursuant to Virginia Code section 8.01-329(C)(3), the Secretary completed a Certificate of Compliance, certifying that on June 5, 2019, the Secretary forwarded the affidavit, summons, and complaint to Defendant by certified mail, return receipt requested. (Bustos Decl. ¶ 9; Dkt. 7.) Plaintiff then filed a copy of the affidavit and the Secretary's Certificate of Compliance with the Court. (Bustos Decl. ¶ 10; Dkt. 7.) Accordingly, the undersigned finds that Defendant received proper service of process.[2]

         II. Findings of Fact

         Upon a full review of the pleadings and record in this case, the undersigned finds that Plaintiff has established the following facts.

         Plaintiff if a limited liability company located in Alexandria, Virginia and organized under Virginia law. (Compl. ¶ 1; Hyman Decl. ¶ 2.) Ellis Hyman is Plaintiffs sole member and president, and he is resident of Virginia. (Compl. ¶ 1; Hyman Decl. ¶ 2.) Plaintiffs services include placing mass telephone calls on behalf of political campaigns, political party committees, and nonprofit organizations. (Compl. ¶ 1.) Defendant is a Florida corporation that provides equipment and personnel needed to place mass call campaigns. (Id. ΒΆ 2.) On September 5, 2016, Plaintiff and Defendant entered into a contract ...


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