On Friday, the Northern District of Texas issued an Opinion and Order which granted in part and denied in part Crown Distributing LLC’s Motion for Entry of Default Judgment in the case they brought arising from a contract for the purchase of hemp biomass by Crown from the defendants, Josh Becker, Ice Suppz, LLC and Nalpdog, LLC.
The opinion states that Crown is a Dallas based manufacturer and distributor of hemp derived goods, Becker brokers transactions for sourcing and purchasing of raw hemp, Ice Suppz is a brokerage firm and supplier that offers and provides raw hemp, and Nalpdog is a business that offers and provides services for sourcing and providing raw hemp. The opinion further states that Becker is the sole member of Ice Suppz, and Ice Suppz is the sole member of Nalpdog.
According to the opinion, in 2020, Crown hired Becker to broker a purchase of 38,000 pounds of hemp biomass, and Becker informed Crown that Ice Suppz could supply the material and invoiced Crown through Nalpdog, indicating payment should be made directly to Ice Suppz. The opinion purports that Crown was unaware of the relationship between Becker, Ice Suppz and Nalpdog.
Further, the opinion states that in May 2020, Crown wired $200,000 directly to Ice Suppz, and a week later, some of the material was delivered, but it did not conform to the contracts quality parameters. The defendants admitted to the mistake and represented that they would rectify the situation, but about six months later, the defendants delivered approximately 15,000 pounds of nonconforming hemp material again. Crown again rejected the material and was never provided with acceptable substitute material or the return of its $200,000.
On May 10, 2021, Crown filed its complaint against the defendants alleging fraud, negligent misrepresentation and unjust enrichment against all defendants, breach of oral contract against Becker and Ice Suppz and negligence against Ice Suppz. The opinion states that the defendants never responded to the complaint, and the court clerk made entry of default against Ice Suppz and Nalpdog on August 3, 2021 and against Becker on October 26, 2021. Subsequently, Crown moved for default judgment against all the defendants on November 19, 2021.
In its opinion and order, the court granted default judgment against Becker and Ice Suppz on the breach of contract claim and awarded actual damages of $200,000 and post judgment interest. However, the court denied the motion as to the fraud negligence, negligent-misrepresentation, and unjust-enrichment claims because the defendants did not owe Crown any independent duty beyond performance under the contract. Further, the court denied without prejudice an award of prejudgment interest, costs and attorneys’ fees but is allowing the Crown to file a supplemental motion seeking prejudgment interest, costs and attorneys’ fees recoverable on the breach of contract claim.
Crown is represented by Lynn Pinker Hurst & Schwegmann and Ritter Spencer.
