Free Order on Motion for Default Judgment - District Court of Arizona - Arizona

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA

NORTHERN WISCONSIN PRODUCE COMPANY, INC.,

) ) ) Plaintiff, ) ) vs. ) ) STEVE DELAPORTAS, JOANNE ) DELAPORTAS, and IONIAN FOODS, ) LLC, ) ) Defendants. ) ___________________________________)

No. 2:02-cv-2366-HRH

O R D E R Motion for Default Judgment Plaintiff moves for entry of default judgment against

defendants Steven J. and Joanne Delaportas and Ionian Foods, LLC.1 The motion is supported by an affidavit of counsel which, in a number of respects, tests the outside limits of what could

conceivably be available as damages in this case.

While the court

does not doubt that counsel has acquired considerable knowledge about this case in its long, ugly course, the court doubts that very much of what appears in the formal proof in support of the motion for summary judgment is based upon personal knowledge. In

this regard, the court expressly solicited from plaintiff a motion
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Docket No. 137. - 1 -

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for entry of default judgment, "supported by appropriate affidavits upon personal knowledge and authenticated records...."2 First, as to compensatory damages, the court is satisfied that Northern Wisconsin's warehoused cheese, worth $305,702.10 was wrongfully converted by defendant Delaportas under circumstances rendering both Mr. Delaportas, his spouse, and Ionian Foods liable for plaintiff's loss of product. Plaintiff seeks as a second item of compensatory damage recompense for defendants having expropriated shelf "slots" at various supermarkets. Plaintiff's accounting as to the initial

cost of those slots is confusing, and counsel plainly does not have personal knowledge of what plaintiff paid for the slots, or what use plaintiff actually enjoyed with respect to those slots before, during, and potentially after defendants' wrongdoing was

discovered.

It is not at all clear to the court that plaintiff is

entitled to recover the entire cost of those slots, for it seems implicit in what the court has been told that plaintiff must have received some benefit from those slots before Messrs. Bertola and Delaportas hatched their plan to substitute their own product for plaintiff's at the supermarkets in question. Similarly, it is

unclear whether the payments made by plaintiff for the slots were one-time payments, the benefit of which plaintiff may still be enjoying once the defendants' deception was discovered and

terminated.

Order re Entry of Default at 2 (Apr. 22, 2008), Docket No. 133. - 2 -

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The court is informed by counsel that plaintiff engaged an independent contractor (ML, Ltd.) in connection with this matter and "to supervise Northern Wisconsin's counsel and Northern

Wisconsin's interests in the "Lawsuits".3

The court does not doubt

the utility of ML's services, but they appear to the court to be more in the nature of litigation expenses ­ a matter that the court will take up in connection with an application for fees and costs ­ rather than an item of compensatory damage to plaintiff on account of defendants' conversion, interference with contracts, and unfair competition claims. Further with respect to compensatory claims, the court is informed that in connection with criminal proceedings against Messrs. Bertola and Delaportas, a restitution obligation of to

$162,500.00 in favor of plaintiff was imposed.

It is unclear

the court from counsel's affidavit whether plaintiff has or has not collected sums from Bertola and/or Delaportas which should be applied in reduction of damages sought by plaintiff in this case. Similarly, co-defendants (Vasilas) were originally named in this case and were dismissed. It is unclear to the court whether

plaintiff made any recovery from the defendants Vasilas that should be a credit against sums claimed as to the other defendants in this case. Finally as to compensatory damages, and apparently in

connection with plaintiff's contract interference claim, that is, expropriating the supermarket slots and substituting product other
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Affidavit of Sum Certain at 5, Docket No. 138. - 3 -

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than plaintiff's product(s) therein, plaintiff seeks lost profits of $300,000.00 per year. Not only is there a personal knowledge

problem with this item, but in addition the court has been provided with no data explaining how that sum was computed. In this regard, it strikes the court as improbable that plaintiff lost exactly $300,000.00 in sales per year, for exactly five years. The court

is not about to enter judgment for $1.5 million on so flimsy a presentation. Turning to plaintiff's claim for punitive damages, plaintiff's memorandum in support of the motion for summary judgment contains no legal analysis, and counsel's affidavit contains only a brief nod to the rapidly developing United States Supreme Court law of punitive damages. Plaintiff simply suggests that its "hard"

damages of $305,702.10 for cheese and $39,400.00 for expropriated slots be multiplied by a factor of nine, for a total amount of punitive damages of $3,105,918.90. Under any reasonable

application of the BMW of North America, Inc. V. Gore, 517 U.S. 559 (1996), factors, such an amount would not withstand constitutional scrutiny. In consideration of the foregoing, plaintiff's motion for default judgment in the amount of $305,702.10, plus interest at the federal rate from January 15, 2001, is granted as to defendants Steven J. Delaportas, Joanne Delaportas, and Ionian Foods, LLC, jointly and severally. This judgment is subject to offset by any

sums recovered by plaintiff from Steven Delaportas pursuant to the restitution obligation contained in the federal criminal judgment - 4 -

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against him, and is further subject to offset by any sum(s) recovered by plaintiff from defendant Christopher Vasilas and/or Jane Doe Vasilas on account of plaintiff's claims against them asserted in this case. The balance of plaintiff's motion for default judgment is denied with leave to renew if plaintiff believes that there is any reasonable chance of further recovery from the defendants and if adequate formal proof based upon personal knowledge supporting such further liability is assembled and provided to the court. The clerk of court shall defer entry of the judgment above specified pending further order of the court. On or before June 3, 2008, counsel for plaintiff shall notify the court whether a further motion for entry of default judgment will be filed. DATED at Anchorage, Alaska, this 20th day of May, 2008.

/s/ H. Russel Holland United States District Judge

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