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Receivables Exchange, LLC v. Advanced Technology Services, Inc.

United States District Court, E.D. Louisiana

November 6, 2014




Before the Court is a Motion for Default Judgment (R. Doc. 20). For the following reasons, the Motion is GRANTED.


This is a civil action for breach of contract. Plaintiff The Receivables Exchange, LLC ("TRE") operates an exchange in New Orleans, Louisiana through which businesses can sell certain debts owed to the business by its customers ("receivables"). A business wishing to sell receivables through TRE must enter into a contract. This contract, which all buyers and sellers execute, governs the sale of receivables through TRE. Defendant, Advanced Technology Services, Inc. ("ATS"), executed this contract and registered several receivables for sale through TRE. The contract provides, inter alia, that a seller may be obliged to repurchase a receivable sold through TRE if the debtor fails to make timely payment after the receivable is sold. ATS successfully sold several receivables through TRE. After the receivables were sold, the debtors on the receivables failed to tender timely payment to the buyers. This obligated ATS to repurchase the receivables as provided in the contract. When ATS failed to do so, TRE filed the instant suit to collect the repurchase price.[1] Despite being served with the complaint, ATS failed to answer or otherwise respond. Upon motion of TRE, the clerk of court entered default. TRE now moves for default judgment.


Rule 55(a) requires the clerk of court to enter default against a party that has failed to plead or otherwise respond to the plaintiff's complaint.[2] Once the clerk has entered default, the plaintiff may move for default judgment.[3] If the plaintiff's claim is for a sum certain and the defendant has not appeared in court and is neither a minor nor an incompetent, the motion may be directed to the clerk of court.[4] "In all other cases, " the motion must be filed with the district court.[5] The district court may not enter default judgment without a hearing unless the sum claimed is liquidated or capable of mathematical calculation.[6] In adjudicating the instant Motion, the Court is mindful that "[d]efault judgments are a drastic remedy" and should only be entered in "extreme situations."[7]


Before entering default judgment, the Fifth Circuit has admonished district courts to examine the basis of jurisdiction "both over the subject matter and the parties."[8] In accordance with this mandate, the Court first examines jurisdiction.

I. Jurisdiction

Subject matter jurisdiction in this case is premised upon diversity of citizenship. The Court may not exercise diversity jurisdiction unless the parties are completely diverse and the amount in controversy exceeds $75, 000.[9] As explained more fully below, both of these requirements are met.

"The concept of complete diversity requires that all persons on one side of the controversy be citizens of different states than all persons on the other side."[10] A corporation is deemed a citizen of (1) its state of incorporation, and (2) the state in which its principal place of business is located.[11] Unlike corporations, the "citizenship of a LLC is determined by the citizenship of all of its members."[12]

TRE alleges that it is an LLC. The sole member of TRE is The New Orleans Exchange, Inc., a Delaware corporation with its principal place of business in New York City. TRE further alleges that ATS is a Georgia Corporation with its principal place of business in Georgia. Accepting these allegations as true, [13] TRE is a citizen of Delaware and New York, and ATS is a citizen of Georgia. Thus, the parties are completely diverse. Moreover, the amount in controversy clearly exceeds $75, 000 as TRE seeks a judgment in excess of one million dollars.

The Court may also exercise personal jurisdiction over ATS. Jurisdiction over a non-resident defendant is proper when (1) the defendant is amenable to service of process under the long-arm statute of the forum state; and (2) the exercise of personal jurisdiction is consistent with the Due Process Clause of the Fourteenth Amendment.[14] In the instant case, "these two inquiries merge into one because Louisiana's long-arm statute permits service of process coterminous with the scope of the due process clause."[15]

"The Due Process Clause of the Fourteenth Amendment protects a corporation, as it does an individual, against being made subject to the binding judgments of a forum with which it has established no meaningful contacts, ties, or relations.'"[16] A court may exercise personal jurisdiction over a non-resident defendant when (1) the defendant has purposefully availed itself of the benefits and protections of the forum state by establishing "minimum contacts" with the forum state; and (2) ...

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