United States District Court, E.D. Michigan, Southern Division
D. Borman District Judge.
REPORT AND RECOMMENDATION
STEVEN WHALEN UNITED STATES MAGISTRATE JUDGE.
the Court is Defendant/Cross-Defendant American Industrial
Acquisition Corp.'s (“AIAC's”) Motion to
Dismiss Plaintiff's Second Amended Complaint and
Cross-Claimant's Cross Complaint Pursuant to Fed.R.Civ.P.
12(b)(6) [Doc. #91], which has been referred for a Report and
Recommendation under 28 U.S.C. § 636(b)(1)(B). For the
reasons discussed below, I recommend that the motion be
Grammer Industries, Inc., (“Plaintiff”) is a
South Carolina corporation, with its principal place of
business in Troy, Michigan, that supplies automotive
assemblies to automotive manufacturers. Defendant Beach Mold
and Tool, Inc. (“Beach Mold, Inc.”) is a
corporation located in Indiana that manufactures tooling and
parts that are molded from that tooling. Plaintiff filed a
Third Amended Complaint (“TAC”)[Doc. #68],
alleging that it contacted Beach Mold, Inc. regarding a quote
to build tools, and for future consideration to build parts
with those tools, that Plaintiff would use in a potential
contract with a Fiat Chrysler, LLC (“FCA”)
program. TAC, ¶ 17. Plaintiff alleges that Beach Mold,
Inc. issued a price quotation to Grammer, providing that the
tooling would be built at Beach Mold's Indiana facility,
and the parts would be “manufactured at our Queretaro,
Mexico Facility.” Id. ¶ 18. Plaintiff
also contracted with Advance Mold Incorporated to manufacture
a fixture that would be used to produce parts at the Mexico
facility, and that fixture was delivered to Beach Mold.
Id. ¶ 21.
states that FCA placed the program on hold, and in 2015
requested proof of possession of the tooling; in turn,
Plaintiff requested the tooling from Beach Mold, Inc..
Id. ¶ 27. In response, Beach Mold, Inc.
informed Plaintiff “that the assets of the Mexico
Facility, including the Tooling, had been sold and/or
transferred to iP3 Mexico.” Id. ¶ 28.
Plaintiff claims that because Beach Mold, Inc. did not return
the tooling to it, or even provide evidence that it was
available for possession, Plaintiff had to reimburse FCA for
the tooling. Id. ¶ 29.
alleges that around August of 2012, “owners or
controlling interests common to Beach Mold and Beachmold
Mexico transferred interest in Beachmold Mexico to PIO and
PIH, ” Id. ¶ 34, and that upon
information and belief, “PIH n/k/a iP3 North America is
or was an inactive entity, and AIAC is the successor to
PIH.” Id. ¶ 35. Plaintiff alleges that
the assets of Beachmold Mexico (which would include the
tooling at issue) were sold, that the proceeds from the sale
“are or will be distributed to the owner members, PIO
and iP3, ” and that in turn, “such proceeds will
or have been distributed to the member of PIO and iP3 North
America, who upon information and belief, is AIAC.”
Id. ¶ 37.
March 6, 2019, I granted attorney Eric C. Stein and Kopka
Pinkus Dolin PLC's motion to withdraw as counsel for AIAC
[Dkt. #165]. Because a corporation must be represented in
court by an attorney, I ordered AIAC to obtain new counsel
within 30 days, warning that its failure to do so would
result in entry of default against it. AIAC did not obtain
new counsel, and did not respond the March 6, 2019 order. On
May 6, 2019, I ordered the Clerk to enter a default against
AIAC [Doc. #177], and the Clerk entered the default on the
same day [Doc. #178].
55(a) provides for a Clerk's entry of default:
(A) Entering a Default. When a party against
whom a judgment for affirmative relief is sought has failed
to plead or otherwise defend, and that failure is shown by
affidavit or otherwise, the clerk must enter the party's
case, Defendant AIAC, a corporation, was ordered to obtain
counsel, and was warned that its failure to do so would
result in an entry of default. By not doing so, AIAC failed
to “otherwise defend” the case, and that failure
was “otherwise shown” by its disregard of this
Court's order. Therefore, I ordered the Clerk to enter a
default against AIAC, and the default was duly entered.
clerk has entered a default against a defendant, a court must
treat all well-pleaded allegations in the complaint as true.
Thomas v. Miller, 489 F.3d 293, 299 (6th Cir. 2008)
(entry of default judgment “conclusively establishes
every factual predicate of a claim for relief”);
Goldman, Antonetti, Ferraiuoli, Axtmayer & Hertell v.
Medfit Int'l, Inc, 982 F.2d 686, 693 (1st
Cir. 1993)(“Defendant's argument ignores the maxim
that an entry of default against a defendant establishes the
defendant's liability;” AF Holdings LLC v.
Bossard, 976 F.Supp.2d 927, 928 (W.D. Mich.
2013)(“[B]y virtue of the Clerk's entry of a
default against [defendant] in this matter, [plaintiff] has
conclusively established that [defendant] is liable of all
four counts of [plaintiff's] Complaint”)(citing
Brockton Savings Bank v. Peat, Marwick, Mitchell &
Co., 771 F.2d 5 (1st Cir. 1985)(“There
is no question that, default having been entered, each of
[plaintiff's] allegations of fact must be taken as true
and each of its  claims must be considered established as a
matter of law.”)).
Rule 12(b)(6) motion is based on the argument that
Plaintiff's and counter-claimant's complaints are
factually insufficient to state a claim on which relief can
be granted. That argument is defeated by virtue of the
Clerk's entry of default, which, pursuant to the above
cases, conclusively establishes the truth of the
Plaintiff's and counter-claimants ...