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Asphalt v. Bagela Baumaschinen GmbH & Co. KG

United States District Court, E.D. Michigan, Northern Division

March 30, 2017

YEAGER ASPHALT, Plaintiff,
v.
BAGELA BAUMASCHINEN GMBH & CO. KG, et al., Defendants.

          ORDER GRANTING MOTION TO QUASH WRIT OF GARNISHMENT

          Honorable Thomas L. Ludington, Judge

         Plaintiff Yeager Asphalt initiated the above-captioned action on March 10, 2014 by filing its complaint against Bagela Baumaschinen GmbH & Co. KG (“Bagela Germany”), Veneta Technologie (“Vaneta”), and individuals Bagela and Dragan Stevanovic for breach of contract. See ECF No. 1. Plaintiff claimed it contacted Bagela Germany regarding the purchase of an asphalt machine, and that Bagela directed Plaintiff to purchase the machine through its agent, Veneta. See Compl. ¶¶ 5-12. Plaintiff alleges that it wired Veneta $69, 100 for the purchase of the machine, and that Vaneta in turn forwarded the money to Bagela Germany. See Compl. ¶¶ 13-15. Despite receipt of payment, Plaintiff alleged that Defendants never delivered the asphalt machine, and incurred consequential damages. See Compl. ¶¶ 16-17.

         After Plaintiff secured default judgment for $120, 354.00 against Bagela Germany, Plaintiff requested issuance of a non-periodic writ of garnishment against Bagela Germany and Garnishee Bagela USA, LLC. Apparently Plaintiff then mailed the writ of garnishment to Shelton, Connecticut by certified mail, rather than registering the judgment in Connecticut and having process issued in Connecticut. Bagela USA now moves to quash the writ of garnishment for lack of personal jurisdiction. See ECF No. 38. For the reasons stated below, Bagela USA's motion will be granted.

         I.

         After filing its complaint, on February 26, 2015 Plaintiff served Defendant Bagela Germany with summons pursuant to Article 6 of the Hague Convention. Defendant Bagela Germany did not respond to Plaintiff's complaint or otherwise appear to defend the action. Therefore, on April 22, 2015, Plaintiff requested and received a clerk's entry of default as to Defendant Bagela Germany. See ECF No. 21. On April 29, 2015, Plaintiff filed a motion for default judgment against Bagela Germany. See ECF No. 23. The Court conducted an evidentiary hearing on June 30, 2015, during which Mark Yeager (the owner of Yeager Asphalt) testified that Defendants had agreed to deliver an asphalt machine in exchange for $69, 180.00 dollars. When Defendants failed to deliver the machine, Mr. Yeager was forced to cover for the breach by repairing his old asphalt machine at a cost of $50, 000.00.

         Following the hearing, Plaintiff's motion for default judgment was granted. Plaintiff was awarded $69, 180.00 for actual damages; $50, 000.00 for consequential damages; $400.00 for filing fees; $450.00 for international service of process fees; and $324.4312 in interest (calculated at a rate of .27% from the date of service to the date of judgment). In total, a default judgment was entered against Defendant Bagela Germany in the amount of $120, 354.40. The remaining Defendants were dismissed without prejudice because they were not timely served with the summons under Federal Rule of Civil Procedure 4(m). See ECF No. 25.

         Plaintiff subsequently requested and received the issuance of a non-periodic writ of garnishment as to Bagela Germany and Garnishee Bagela USA, LLC. On December 14, 2016 the president of an entity called Dankov Enterprises Inc. (“DKE Inc.”), Dan Kovalick, filed an objection to a request for writ of garnishment purportedly on behalf of the corporation. See ECF No. 31. DKE Inc. is an Ontario company that identifies itself as the North American distributor and importor of asphalt recycling equipment, accessories, and parts for Defendant Bagela Germany. Because corporations may only be represented in federal court by a licensed attorney, Mr. Kovalick's objections were stricken on January 5, 2017. See ECF No. 34.

         II.

         On February 16, 2017, Garnishee Bagela USA filed the current motion to quash the writ of garnishment for lack of personal jurisdiction. See ECF No. 38. Bagela USA is a limited liability company formed under Connecticut law and with a principle place of business in Connecticut. In its motion to quash, Bagela USA alleges that it is a sub-distributor for DKE, Inc., and has no direct legal affiliation with Bagela Germany. It alleges that it does not maintain a registered agent for service in Michigan, is not registered to do business in Michigan, and does not have offices, employees, accounts, property, or assets in Michigan. It also alleges that it has not derived a significant part of its revenue from goods sold or services used in Michigan, and has not engaged in any advertising or marketing activities directed to anyone in Michigan. Finally, Bagela USA argues that it has not entered into any contracts or transaction in Michigan that are related to the above-captioned matter, as it was not involved in the underlying sale of the asphalt machine to Plaintiff by Veneta Technologies.

         In response, Plaintiff argues that Bagela USA does business as Pavement Recyclers LLC. Plaintiff further notes that Pavement Recycler's website identifies it as “the exclusive distributor of Bagela® Asphalt Recyclers parts and accessories in the United States and Caribbean.” See ECF No. 42 Ex. B. Finally, Plaintiff argues that Bagela USA has engaged in repeated business in the state of Michigan.

         A.

         The parties agree that Michigan law supplies the rule of decision concerning garnishment in this diversity action pursuant to Federal Rule of Civil Procedure 64. See Fed. R. Civ. P. 64(a) (“[a]t the commencement of and throughout an action, every remedy is available that, under the law of the state where the court is located, provides for seizing a person or property to secure satisfaction of the potential judgment. But a federal statute governs to the extent it applies.”); Fed.R.Civ.P. 64(b) (specifying that the rule applies to garnishment). However, Plaintiff first argues that it need not establish personal jurisdiction under Michigan law. This argument is without merit.

         By statute, garnishment may be effected where “[p]ersonal property belonging to the person against whom the claim is asserted but which is in the possession or control of a third person if the third person is subject to the judicial jurisdiction of the state and the personal property to be applied is within the boundaries of this state.” Mich. Comp. Laws § 600.4011(1)(a) (emphasis added). Similarly, an obligation owed to a defendant may be garnished from the obligor “if the obligor is subject to the judicial jurisdiction of the state.” Mich. Comp. Laws § 600.4011(1)(b) (emphasis added). The plain language of these provisions requires a party seeking to ...


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