Storage Computer v . Worldwide CV-02-100-JM 07/17/02 P
UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF NEW HAMPSHIRE
Storage Computer Corporation
v. Civil N o . 02-100-JM
Opinion N o . 2002 DNH 134
Worldwide Domination Corporation et a l .
O R D E R
On April 2 4 , 2002, the Court entered a default for
Defendants Worldwide Domination Corporation (“Worldwide”),
Crimson Media Group, LLC (“Crimson”) and Alejandro Mascardi
(“Mascardi”) who had failed to appear in this action. The Court
scheduled an evidentiary hearing for July 9, 2002 on Plaintiff
Storage Computer Corporation’s (“Storage Computer” or
“Plaintiff”) request for a permanent injunction and damages.
Prior to the hearing, on April 3 0 , 2002, Mascardi moved for
leave to file late motions to dismiss. Pursuant to the Court’s
order, Mascardi later filed a Motion to Strike Default. At the
July 9, 2002 hearing, the Court granted Mascardi’s Motion to
Strike Default and granted Mascardi’s Motion for Leave to file a
late motion to dismiss based on Mascardi’s contention that the
Court lacks personal jurisdiction over him.1 Plaintiff then made
an oral motion under Rule 54(b) of the Federal Rules of Civil
Procedure to enter final judgment against Defendants Worldwide
and Crimson, who are still in default, and the Court held an
evidentiary hearing. For the reasons set for herein, Plaintiff’s
Rule 54(b) motion is granted.
BACKGROUND
Storage Computer is in the business of developing and custom
creating certain software and hardware connected with video
productions and internet operation. Worldwide engaged in the
business of digital video broadcasting and internet operations.
On May 2 , 2001, Storage Computer entered into a purchase
agreement (the “Purchase Agreement”) with Worldwide. Mascardi
executed the Purchase Agreement on Worldwide’s behalf. The
Purchase Agreement provided, among other things, that Storage
Computer would sell certain products, software and hardware to
Worldwide, install and train Worldwide to operate the products
and software, license Worldwide to use the products and software,
and provide Worldwide with consulting, maintenance and warranty
services. In return, Worldwide agreed to pay Storage Computer a
1
The Court’s decision on Mascardi’s Motion to Dismiss is
pending.
2
total purchase price of $1,350,000. The payments were to be made
in installments. The Purchase Agreement also provided that
Storage Computer could terminate the Agreement in the event of a
default and could accelerate the payments owed to it so that all
monies owed to Storage Computer would become due immediately.
On August 1 6 , 2001, the parties executed an Amendment N o . 1
to Agreement Between Storage Computer Corporation and Worldwide
Domination Company, LLC (“Amendment N o . 1 " ) . Crimson executed
Amendment N o . 1 on behalf of Worldwide. Amendment N o . 1 altered
the payment schedule that Worldwide was obligated to follow, but
the total purchase price remained the same.
Pursuant to the terms of the Purchase Agreement and
Amendment N o . 1 , Storage Computer provided customized products
and services to Defendants. Defendants, however, failed to make
payments that were due on November 3 0 , 2001 and December 3 0 ,
2001. Pursuant to the Purchase Agreement, Storage Computer
notified Worldwide on about January 3 , 2002 that Worldwide had
failed to make the necessary payments. As provided for in the
Purchase Agreement, Storage Computer accelerated the remaining
payments and declared the balance of $560,000 due immediately.
Defendants have not paid any of the balance due. Instead,
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on January 3 1 , 2002, Worldwide notified Storage Computer by
letter that “due to the financial crisis in Argentina”,
Defendants would “not be able to pay off the outstanding debts
and credit lines until this matter is resolved.”
Subsequently, Storage Computer learned that Worldwide lost
its financial backing, was unable to meet payroll and ceased
operations. Storage Computer also learned that Defendants’
employees left the company and took computer equipment with them.
The products that Storage Computer provided to Defendants under
the terms of the Purchase Agreement are easily removable, and
Plaintiff is concerned that it will not be able to recover them.
Storage Computer sought immediate relief in this Court in
the form of a temporary restraining order prohibiting Defendants
from transferring or otherwise removing the products and
equipment that Plaintiff supplied to them under the Purchase
Agreement. In an Order dated April 5 , 2002, the Court granted
Storage Computer’s request for an ex parte temporary restraining
order against the Defendants enjoining them from selling,
transferring or assigning computer hardware and software
described in a May 2 , 2001 Purchase Agreement and in an August
1 6 , 2001 Amendment No. 1 to Agreement Between Storage Computer
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Corporation and Worldwide Domination Company, LLC.
Having failed to ever appear or otherwise plead, the clerk
entered a default as to Worldwide, Crimson and Mascardi on April
2 4 , 2002 and scheduled an evidentiary hearing to determine
Plaintiff’s damages. Since that time, only Mascardi moved to
have the entry of default set aside.2
At the evidentiary hearing held on July 9, 2002, Storage
Computer put forth evidence in the form of exhibits, a
declaration, and live testimony by Joseph Bamford, Storage
Computer’s corporate general counsel, establishing its damages
for breach of contract. The evidence shows that Worldwide failed
to make the following three payments pursuant to the parties’
agreement: $280,000.00 due on November 2 0 , 2001, $140,000.00 due
on December 3 0 , 2001, and $140,000.00 due on January 1 5 , 2002.
The evidence further shows that the contract provides that
interest on overdue payments accrues at a rate of one percent
(1%) per month.
2
Counsel for Mascardi entered a special appearance on behalf
of Mascardi, Worldwide and Crimson on April 3 0 , 2002. At the
July 9, 2002 hearing, however, counsel for Mascardi indicated
that Worldwide and Crimson did not intend to contest the default
or the assessment of damages against them.
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DISCUSSION
Rule 54(b) permits “the entry of a final judgment as to one
or more but fewer than all of the claims or parties only upon an
express determination that there is no just reason for delay and
upon an express direction for the entry of judgment.” Fed. R.
Civ. P. 54(b). Plaintiff moves for the entry of final judgment
under Rule 54(b) against Worldwide and Crimson only.
Plaintiff put forth evidence at the July 9, 2002 hearing
that established that there is a pressing, exceptional need to
relax the general prohibition against interim dispositions
throughout an action. See Spiegel v . Trustees of Tufts College,
843 F.2d 3 8 , 43 (1st Cir. 1988) (the district court must
determine whether the equities require relaxing the usual
prohibition against piecemeal dispositions); Consolidated Rail
Corp. v . Fore River Ry.,
861 F.2d 322, 325 (1st Cir. 1988) (Rule
54(b) authorizes the district court to exercise discretionary
power to afford a remedy in the infrequent harsh case). Based on
the record before m e , I find that the two corporate Defendants
are not active corporations and that they are holding and have
custody of assets that, which given their defaulted status, will
ultimately belong to Plaintiff. Absent a permanent injunction
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against Worldwide and Crimson, the equipment provided by Storage
Computer to Defendants is at risk of being damaged or removed.
Approximately fifteen percent of the equipment provided by
Storage Computer is in Worldwide’s Miami, Florida, offices. If
Worldwide is in default of a building lease, Plaintiff’s recovery
of the property at that location is at risk. Pursuant to the
contract between the parties, the remainder of the equipment is
being held on Worldwide and Crimson’s behalf at a network
operating center in Miami and certain point of presence
facilities located in four other cities. Those facilities may
dispose of that property to the Plaintiff’s detriment because the
Defendants have defaulted on lease agreements with those
facilities. I find that a delay in the entry of judgment will
cause an injustice to the Plaintiff because Plaintiff may be
unable to collect on the property and mitigate its damages.
The remaining Defendant, Mascardi, does not challenge
Plaintiff’s claim on the merits. Worldwide holds title to the
equipment that is the subject of Storage Computer’s motion for
injunctive relief. Storage Computer’s claims against Mascardi
are strictly for money owed. Mascardi contends that he assigned
the Purchase Agreement to Worldwide prior to the default, that he
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has never been to New Hampshire, and that he has not had contacts
with the State of New Hampshire that should render him amenable
to suit here. Storage Computer’s pursuit of injunctive relief to
preserve assets, and ultimately to collect against that
equipment, may proceed as against the defaulted defendants
without affecting the jurisdictional issues raised by Mascardi.
Since the issues raised by and against Mascardi are sufficiently
distinct from those raised against the defaulted defendants, I
find that Storage Computer’s request for the entry judgment
against Worldwide and Crimson only pursuant to Rule 54(b) of the
Federal Rules of Civil Procedure should be granted.
CONCLUSION
Plaintiff’s claim for a sum certain having been established
by exhibits, a declaration, and live testimony at a hearing, and
Plaintiff having demonstrated that there is no reason for delay,
the Court directs that final judgment be entered against
Worldwide and Crimson in accordance with Fed. R. Civ. P. 54(b)
and 58 as follows:
1. Defendants Worldwide Domination Corporation
(“Worldwide”) and Crimson Media Group, LLC
(“Crimson”) are in default for failure to answer
or otherwise plead as required by Rules 8 and
12(a)(1)(A) of the Federal Rules of Civil
Procedure.
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2. Pursuant to Rule 54(b) of the Federal Rules of
Civil Procedure, the Court finds that there is no
just reason to delay the entry of judgment in
favor of Storage Computer against Defendants
Worldwide and Crimson pending the resolution of
Defendant Alejandro Mascardi’s motion to dismiss
and later proceedings, if any, concerning
Mascardi. Worldwide and Crimson have not raised
any jurisdictional issues. Worldwide holds title
to the equipment that is the subject of Storage
Computer’s motion for injunctive relief. Storage
Computer’s claims against Mascardi are strictly
for money owed. Storage Computer’s pursuit of
injunctive relief, and ultimately of collection
against that equipment, may proceed as against the
defaulted defendants without affecting the
jurisdictional issues raised by Mascardi. Since
the issues raised by and against Mascardi are
sufficiently distinct from those raised against
the defaulted defendants, the Court shall enter
judgment against Worldwide and Crimson only.
3. Defendants Worldwide and Crimson, their officers,
agents, servants, employees, and attorneys, and
any persons in active concert or participation
with them who receive actual notice of this order
by personal service or otherwise, are hereby
manently enjoined from selling, transferring,
perman
assigning, transporting or using the products,
hardware and software described in a May 2 , 2001
Purchase Agreement and in an August 1 6 , 2001
Amendment N o . 1 to Agreement Between Storage
Computer Corporation and Worldwide Domination
Company, LLC. The Court expressly finds that
Mascardi has received actual notice of this order
by his counsel’s appearance at the July 9, 2002
hearing. To the extent that Mascardi is a
director, officer or employee of either Worldwide
or Crimson he is included within the scope of the
injunction.
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4. The Clerk of Court shall enter judgment in Storage
Computer’s favor against Worldwide and Crimson in
the amount of $560,000.00 plus interest in the
amount of $37,379.75 as of July 9, 2002 pursuant
to the August 1 6 , 2001 Amendment to Purchase
Agreement. The total judgment awarded is
$597,379.75, plus 186.66 per diem in interest.
5. Storage Computer is released from the $2,000 bond
set by the Court in its April 5 , 2002 order on
Storage Computer’s motion for a temporary
restraining order.
SO ORDERED.
James R. Muirhead
United States Magistrate Judge
Date: July 1 7 , 2002
cc: Thomas J. Pappas, Esq.
Frank E . Kenison, Esq.
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