Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_10-cv-00432/USCOURTS-cand-3_10-cv-00432-0/pdf.json

Nature of Suit Code: 120
Nature of Suit: Marine Contract Actions
Cause of Action: 28:1333 Admiralty

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United 

States District 

Court 

For the Northern District of California 

IN THE UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF CALIFORNIA 

APL CO. PTE., LTD. and AMERICAN 

PRESIDENT LINES, LTD., 

 Plaintiffs, 

 v. 

GLORY EXPRESS, INC., 

 Defendant. 

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Case No. 10-0432 SC 

ORDER GRANTING MOTION FOR 

DEFAULT JUDGMENT 

I. INTRODUCTION

 Plaintiffs APL Co. Pte., Ltd. and American President Lines, 

Ltd. (collectively, "Plaintiffs") seek entry of Default Judgment 

against Defendant Glory Express, Inc. ("Defendant"). Docket No. 9 

("Motion"). Plaintiffs allege Defendant breached two maritime 

service contracts by failing to meet minimum cargo commitments. 

See Docket No. 1 ("Compl."), ¶¶ 6-28. Having considered the papers 

submitted by Plaintiffs, the Court concludes that entry of Default 

Judgment against Defendant is appropriate, and GRANTS Plaintiffs' 

Motion. 

II. BACKGROUND

 Plaintiffs are ocean carriers of goods for hire between 

international ports. Compl. ¶ 6. American President Lines, Ltd. 

Case 3:10-cv-00432-SC Document 15 Filed 06/09/10 Page 1 of 8
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United 

States District 

Court

For the Northern District of California 

is a Delaware corporation moving cargo to and from the People's 

Republic of China, Japan, Taiwan, and Mexico; APL Co. Pte., Ltd. is 

an affiliated Singapore corporation moving cargo to and from other 

locations. See Vargas Decl., Ex. A ("2005 Contract") § 1(d).1 On 

or about January 29, 2005, Plaintiffs entered into a written 

service contract with Defendant in which Plaintiffs agreed to 

transport Defendant's cargo from the United States to the Republic 

of Korea. Id. ¶ 7. The 2005 Contract included a Minimum Volume 

Commitment ("MVC") requiring Defendant to tender a minimum of 

twenty-five "freight equivalent units" ("FEUs") during the contract 

term. Compl. ¶¶ 8-9; 2005 Contract § 2(b), App. B § 4. The 

Contract also included a liquidated damages or "dead freight" 

provision, requiring Defendant to pay "deadfreight in the amount of 

$350 for each FEU by which the MVC . . . exceeds the volume 

actually tendered." Id. ¶ 10; 2005 Contract § 3(6). 

 Plaintiffs allege that during the term of the 2005 Contract, 

Defendant tendered only seventeen FEUs of cargo to Plaintiffs -- 

eight fewer FEUs than the MVC -- thus obligating Defendant to pay 

Plaintiffs liquidated damages of $2800 (eight times $350). 

Id. ¶ 12; Vargas Decl. ¶ 6. Plaintiffs invoiced Defendant for 

$2800, see Vargas Decl., Ex. C ("First Invoice"), but Defendant 

failed to pay within thirty days as required by the Contract. 

Compl. ¶¶ 13-14; Vargas Decl. ¶ 7. Defendant did not respond with 

payment upon further demands by Plaintiffs. Id. 

 Plaintiffs and Defendant entered into a second written service 

 

1

 Jose Alonso Vargas ("Vargas"), a financial analyst in Plaintiffs' 

accounts receivable and collections department, has filed a 

declaration in support of the Motion. Docket No. 10. 

Case 3:10-cv-00432-SC Document 15 Filed 06/09/10 Page 2 of 8
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United 

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Court

For the Northern District of California 

contract on December 4, 2007. Id. ¶ 15; Vargas Decl., Ex. B 

("2007 Contract"). This Contract included identical MVC and dead 

freight provisions. Compl. ¶¶ 16-18; 2007 Contract § 2(b), App. B 

§ 4. Plaintiffs allege that Defendant tendered only one FEU during 

the term of this Contract -- twenty-four fewer than the MVC -- thus 

obligating Defendant to pay Plaintiffs $8400 in liquidated damages 

(twenty-four times $350). Id. ¶¶ 19-20; Vargas Decl. ¶ 10. 

Plaintiffs invoiced Defendant for $8400, see Vargas Decl., Ex. D 

("Second Invoice"), but Defendant never paid. Compl. ¶¶ 21-22; 

Vargas Decl. ¶ 11. 

 Both contracts included a provision in which parties consented 

to personal jurisdiction in the United States District Court for 

the Northern District of California. 2005 Contract § 4(b); 

2007 Contract § 4(b). Both contracts also included a clause 

stating that "[t]he costs and expenses of the arbitration or 

litigation (including reasonable attorney's fees and costs) shall 

be borne by the non-prevailing party." 2005 Contract § 4(a); 

2007 Contract § 4(a). 

 Plaintiffs' Complaint was filed on January 29, 2010. See

Compl. On February 22, 2010, a registered California process 

server served the Summons and Complaint on Grant Lee ("Lee"), a 

person authorized by Defendant to accept service on its behalf, at 

Defendant's corporate offices in Torrance, California. See Docket 

No. 5 ("Proof of Service"); deLangis Decl. ¶ 3.2

 Defendant did not 

respond. The Clerk of the Court entered Default against Defendant 

on April 9, 2010. Docket No. 6. Defendant has not since appeared 

 

2

 Mark deLangis ("deLangis"), counsel for Plaintiffs, has filed a 

declaration in support of the Motion. Docket No. 11. 

Case 3:10-cv-00432-SC Document 15 Filed 06/09/10 Page 3 of 8
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United 

States District 

Court

For the Northern District of California 

in this action. 

 Plaintiffs seek a Default Judgment of $11,200 in liquidated 

damages for both contracts, plus $350 in litigation costs. 

III. LEGAL STANDARD

 After entry of a default, the Court may enter a default 

judgment. Fed. R. Civ. P. 55(b)(2). Its decision whether to do 

so, while "discretionary," Aldabe v. Aldabe, 616 F.2d 1089, 1092 

(9th Cir. 1980), is guided by several factors. 

 As a preliminary matter, the Court must "assess the adequacy 

of the service of process on the party against whom default is 

requested." Bd. of Trs. of the N. Cal. Sheet Metal Workers v. 

Peters, No. 00-0395, 2000 U.S. Dist. LEXIS 19065, at *2 (N.D. Cal. 

Jan. 2, 2001). If the Court determines that service was 

sufficient, it may consider the following factors in its decision 

on the merits of a motion for default judgment: 

(1) the possibility of prejudice to the 

plaintiff, (2) the merits of plaintiff's 

substantive claim, (3) the sufficiency of the 

complaint, (4) the sum of money at stake in the 

action; (5) the possibility of a dispute 

concerning material facts; (6) whether the 

default was due to excusable neglect, and (7) 

the strong policy underlying the Federal Rules 

of Civil Procedure favoring decisions on the 

merits. 

Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). "The 

general rule of law is that upon default the factual allegations of 

the complaint, except those relating to the amount of damages, will 

be taken as true." Geddes v. United Fin. Group, 559 F.2d 557, 

560 (9th Cir. 1977). Therefore, for the purposes of this Motion, 

Case 3:10-cv-00432-SC Document 15 Filed 06/09/10 Page 4 of 8
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United 

States District 

Court

For the Northern District of California 

the Court accepts as true the facts as presented in the Complaint. 

 

IV. DISCUSSION

A. Service of Process

 Defendant is a corporation. Compl. ¶ 5. Accordingly, service 

of process is governed by Federal Rule of Civil Procedure 4(h). 

Under Rule 4(h), a corporation may be served "by delivering a copy 

of the summons and of the complaint to an officer, a managing or 

general agent, or any other agent authorized by appointment or by 

law to receive service of process." Fed. R. Civ. P. 4(h)(1)(B). 

Plaintiffs have submitted a declaration from a process server 

stating that service was effected by personal delivery of the 

Summons and Complaint to Lee, Defendant's authorized agent for 

service, at Defendant's address in Torrance, California. See Proof 

of Service. Accordingly, the Court finds service of process on 

Defendant to be proper. 

B. Merits of the Motion

 Accepting the allegations in the Complaint as true, as it 

must, the Court finds that the Eitel factors favor default 

judgment. 

 Plaintiffs would be prejudiced absent entry of default 

judgment. Defendant's failure to meet the contractually obligated 

MVC triggered the liquidated damages provisions in the contracts. 

Plaintiffs have properly served Defendant with notice of this 

action, and Defendant has chosen not to respond. Parties consented 

to personal jurisdiction in the Northern District of California in 

the 2005 and 2007 contracts. 2005 Contract § 4(b); 2007 Contract 

Case 3:10-cv-00432-SC Document 15 Filed 06/09/10 Page 5 of 8
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United 

States District 

Court

For the Northern District of California 

§ 4(b). Plaintiffs would be left without a legal remedy if it were 

denied an entry of default judgment. 

 Plaintiffs have properly alleged the necessary elements for 

their causes of action in its Complaint. Plaintiffs and Defendant 

entered into two facially valid contracts; Defendant breached both 

by failing to meet the MVC, triggering the liquidated damages 

provisions. The Complaint identifies the contracts at issue (the 

January 2005 and December 2007 contracts), the specific instances 

of breach (failure to meet the MVC of twenty five FEUs per contract 

term), and the appropriate remedy (liquidated damages of $350 for 

each FEU by which the MVC exceeds the volume actually tendered). 

The liquidated damages provisions of $350 per FEU are not so 

unreasonable as to render the contracts unenforceable. See

Cal. Civ. Code § 1671(b) ("a provision in a contract liquidating 

the damages for the breach of the contract is valid unless the 

party seeking to invalidate the provision establishes that the 

provision was unreasonable under the circumstances existing at the 

time the contract was made").3

 Accordingly, Plaintiffs' Complaint 

is sufficient. 

 The amount of money at stake in this action -- $11,200 plus 

$350 in litigation costs -- is not so great as to preclude default 

judgment. The amount at issue is also unambiguous and easily 

calculable in light of the relevant contract provisions. 

 There is some potential for a dispute concerning material 

facts in this action; in particular, whether Defendant failed to 

 

3

 Maritime contract actions are governed by state law, provided 

state law does not clearly conflict with federal maritime law. See

Aqua-Marine Constructors, Inc. v. Banks, 110 F.3d 663, 667-68 (9th 

Cir. 1997). 

Case 3:10-cv-00432-SC Document 15 Filed 06/09/10 Page 6 of 8
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United 

States District 

Court

For the Northern District of California 

meet its MVC of twenty-five FEUs per contract term. However, 

Vargas declares, under penalty of perjury, that Defendant failed to 

tender the required number of FEUs. Vargas Decl. ¶¶ 6, 10. Thus 

this factor favors default judgment. 

 In addition, no facts suggest Defendant's failure to 

participate in this action is a case of excusable neglect. 

Defendant was served with notice of the present action and did not 

participate. See Service of Process. This factor favors entry of 

default judgment. 

 Finally, while it is preferable to decide cases on the merits 

whenever possible, this preference is not dispositive. Where a 

party fails to defend against a complaint, as Defendant has failed 

here, Rule 55 authorizes the Court to enter default judgment. 

Kloepping v. Fireman's Fund, No. 94-2684, 1996 U.S. Dist. LEXIS 

1786, at *10 (N.D. Cal. Feb. 14, 1996). 

C. Remedy

 Plaintiffs request liquidated damages of $11,200 plus $350 in 

costs. The Court finds that Plaintiffs' calculation of liquidated 

damages to be reasonable and correct in light of the facts alleged 

and the terms of the 2005 and 2007 contracts. The contracts also 

provide for litigation costs to be paid by the non-prevailing 

party. 2005 Contract § 4(a); 2007 Contract § 4(a). While 

Plaintiffs have not provided an itemized account of litigation 

costs incurred, the Court finds the $350 sought is reasonable given 

the $350 filing fee imposed by 28 U.S.C. § 1914(a). 

/// 

/// 

Case 3:10-cv-00432-SC Document 15 Filed 06/09/10 Page 7 of 8
United 

States District 

Court

For the Northern District of California 

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Case 3:10-cv-00432-SC Document 15 Filed 06/09/10 Page 8 of 8