Summary
This federal district court order addresses a plaintiff's motion for default judgment against multiple defendants in a commercial dispute over unpaid invoices. The court examines whether proper service of process was effectuated on each defendant under Michigan state rules, ultimately finding service defective for all defendants except International Paper Solutions Co. d/b/a Northstar Sourcing. Consequently, the court grants the motion for default judgment solely against International Paper Solutions, awarding the plaintiff $213,883.24 plus costs and interest for breach of contract, while denying the motion without prejudice as to the remaining defendants.
Topics
Practice areas
Questions Presented
- Whether service of process was proper on John Koussa through service on his attorney.
- Whether service of process was proper on Northstar Sourcing LLC and Kooka USA, LLC through certified mail to the Michigan Bureau of Commercial Services or through service on Koussa.
- Whether service of process was proper on International Paper Solutions Co. d/b/a Northstar Sourcing under Michigan Court Rule 2.105(D)(4).
- Whether default judgment could be entered against a properly served defendant based on the admitted allegations concerning unpaid invoices.
- Whether plaintiff could recover on unjust enrichment and statutory conversion claims in addition to its breach-of-contract claim.
- Whether plaintiff was entitled to damages, costs, attorney fees, and prejudgment and postjudgment interest.
Holdings
- Service of process was not properly effectuated on John Koussa by serving his attorney because plaintiff neither obtained authorization for substituted service nor established that the attorney was authorized to accept service on Koussa's behalf.
- Service was not properly made on Northstar Sourcing LLC or Kooka USA, LLC, and default judgment could not enter against either entity at that time.
- Service on International Paper Solutions was proper under Michigan Court Rule 2.105(D)(4), so default judgment could be entered against that defendant.
- After default, the well-pleaded allegations were admitted, and those allegations established International Paper Solutions' liability for breach of contract based on its failure to pay the seven invoices.
- Plaintiff was not entitled to default judgment on its unjust enrichment or statutory conversion claims.
- International Paper Solutions was liable for $213,833.24, plus costs, reasonable attorney fees, and prejudgment and postjudgment interest calculated from the complaint-filing date.
Key quotations
“Once default is entered, Defendant is treated as having admitted to the complaint’s well-pleaded allegations.”
“In Michigan, substitute service ‘is not an automatic right.’”
“Thus, Plaintiff is limited to its breach of contract claims and attendant remedies and is not entitled to default judgment on the statutory conversion claim or the unjust enrichment claim.”
Factual background
Powers Paper entered into six purchase orders with International Paper Solutions and shipped paper products to third-party companies on International Paper Solutions’ behalf. International Paper Solutions received payment from the third parties but failed to pay Powers Paper’s seven invoices, which plaintiff alleged totaled $213,883.24. International Paper Solutions was dissolved in July 2024, had not filed an annual report since 2021, and apparently lacked a valid resident-agent address.
Procedural history
Powers Paper filed a diversity action seeking payment on seven unpaid invoices and asserting breach of contract, unjust enrichment, and statutory conversion. The Clerk entered defaults against the defendants on September 5, 2024. After a November 13, 2024 hearing and supplemental briefing, the court determined that service was proper only as to International Paper Solutions and entered default judgment in part, while directing plaintiff to submit a proposed judgment and stating that the order did not close the case.
Remand instructions
No remand. Plaintiff was directed to submit a proposed judgment reflecting the order within seven days. The court retained jurisdiction to resolve enforcement disputes.