*1 Before the Court are the timely objections of defendants Jeff Z. Xu (“Xu”) and Aston Technologies, Inc. (“Aston”) (collectively the “defendants”) to a Report and Recommendation (“Report”) [Dkt. No. 65] in which Magistrate Judge Theresa Carroll Buchanan recommended that plaintiff Wentao Li (“Li” or “plaintiff”)'s Renewed Motion and Supplemental Memorandum Requesting Entry of Default (“Renewed Motion”) [Dkt. No. 61] be granted. In his Renewed Motion, plaintiff requested that a default judgment be entered on only the issue of defendants' liability and that a hearing be set to determine damages. The Report concluded that a default judgment on all counts in the complaint[1] should be entered for four reasons: (1) defendants “acted in bad faith” by failing to comply with five court orders that required defendants to “fully and completely respond to Plaintiff's discovery requests”; (2) defendants' failure to provide the requested discovery prejudiced plaintiff's ability to litigate his case; (3) defendants needed to be deterred from engaging in such contemptuous conduct; and (4) given defendants' refusal to follow multiple court orders, even after being warned that failure to comply could result in a judgment being entered against them, a sanction less drastic than a default judgment was unlikely to salvage the litigation. [Dkt. No. 65]. Plaintiff has responded to defendants' objections,[2] and the Court finds that oral argument will not further the decisional process. For the reasons that follow, defendants' objections will be overruled, plaintiff's Renewed Motion and Motion to Adopt will be granted judgment as to liability will be entered against the defendants jointly and severally, and this civil action will be remanded to Judge Buchanan to conduct a hearing to determine the appropriate damages and to resolve any request by plaintiff for recovery of his attorney's fees and costs.

*2 When a party objects to a magistrate judge's Report and Recommendation, the “district court ... review[s] only those portions of the report or specified proposed findings or recommendations to which objection is made.” United States v. Midgette, 478 F.3d 616, 621 (4th Cir. 2007) (emphasis in original) (quoting 28 U.S.C. § 636(b)(1)). The statute's intent is to “focus on specific issues, not the report as a whole.” Id. “[O]bjections must be specific and particularized in order to direct the attention of the district court to ‘only those issues that remain in dispute after the magistrate judge has made findings and recommendations.’ ” United States v. Kotzev, No. 1:18-cv-1409, 2020 WL 1217153, at *3 (E.D. Va. Mar. 11, 2020) (quoting Midgette, 478 F.3d at 621). “[T]he Fourth Circuit has made clear that ‘[a] general objection to the entirety of the magistrate judge's report is tantamount to a failure to object.’ ” Id (quoting Tyler v. Wates, 84 F. App'x 289, 290 (4th Cir. 2003) (unpublished decision)) (alteration in original).

The Fourth Circuit has also held that simply restating or rehashing a previously made argument does not satisfy the requirement that an objection be specific. See Abou-Hussein v. Mabus, 414 F. App'x 518, 519 (4th Cir. 2011); see also Bennett v. Zydron, No. 2:17CV92, 2017 WL 4176972, at *2 (E.D. Va. Sept. 21, 2017) (“Objections [that] do not attempt to undermine the Magistrate Judge's findings or recommendations by presenting additional arguments .... do not require this court to make de novo determinations of the R&R findings.”) (internal quotations omitted).

The Report correctly found that subject matter jurisdiction was established under 28 U.S.C. § 133(a)(1) based on the diversity of the parties and over $75,000 being in issue, and that personal jurisdiction over the defendants as well as venue were established given that both defendants are residents of Virginia. Defendants did not object to these findings. The Report also made multiple factual findings based on the allegations in the complaint as well as the documentary evidence submitted by the plaintiff. Specifically, the Report found that:

*3 [Dkt. No. 65] at 5–7.

Defendants filed eleven objections to the Report. Objections 1 through 9 cited a specific factual finding and then recited as the only ground for the objection the same mantra: “Plaintiff alleged this fact in the Complaint, and both defendants denied the allegations in their answers.” That kind of generic objection clearly does not qualify as the specific objection contemplated by Fed. R. Civ. P. 72 and the requirements of the Fourth Circuit. As such, this Court “need not conduct a de novo review, but instead must ‘only satisfy itself that there is no clear error on the face of the record in order to accept the recommendation.’ ” Diamond v. Colonial Life & Acc. Ins. Co., 416 F.3d 310, 315 (4th Cir. 2005) (quoting Fed. R. Civ. P. 72 advisory committee's note). Nevertheless, the Court has reviewed the entire record including defendants' original pro se answer to the complaint, their answers (through counsel) to plaintiff's First Request for Admissions, the tortured record of the discovery disputes, and the evidence submitted by plaintiff.

That review further supports the Report's conclusion that defendants have conducted themselves in bad faith throughout this litigation and have continuously attempted to obfuscate the truth. As clear evidence of this behavior are the objections to the Report. For example, in defendants' Objection 1, they object to: “the finding that Plaintiff has established that ‘Xu then offered Plaintiff a majority ownership interest in Aston in the form of a transfer of shares in Aston and offered to make him chairman of the company's board of directors in exchange for a direct capital investment of $90,000.’ ” [Dkt. No. 66] at 1 (emphasis in original). In Objection 3, they object to “the finding that plaintiff has established that ‘Li transferred the $90,000 to Aston through an offshore company he owned on June 22, 2018.’ ” Id. (emphasis in original). The only reason given for these objections was “Plaintiff alleged this fact in his Complaint, and both defendants denied the allegation in their answers.” [Dkt. No. 66] at 1–2.

Plaintiff has responded to those objections by pointing to an April 13, 2018 email from Xu to Li stating “You will be the chairman. I will be the CEO,” [Dkt. No. 67-1], copies of two different Aston business cards—the first listing plaintiff as “Founder and Chairman” and the other listing him as “Chairman of the board,” [Dkt. No. 67-5], despite the exhibits showing that when Aston was registered as a stock corporation on March 26, 2018, only Xu was listed as an officer and as of February 15, 2020, plaintiff's name still did not appear on any of the corporate documents. [Dkt. No. 1-1]. As for the $90,000 investment, plaintiff has produced a copy of a June 22, 2018 email from Xu to Li stating “Regarding the start-up fund, if it is convenient for you, please send a round number. [It is very beneficial for us to rent the site.] ... we also need to buy forklift, etc. In the future, we can establish financial system. You raise the requirements, such as confirming with you for more than $1000.” [Dkt. No. 67-2]. Another of plaintiff's exhibits is a copy of a June 22, 2018 wire transfer from an offshore banking unit in the amount of $90,000. [Dkt. No. 67-3]. Lastly, any doubt about Li contributing $90,000 to Aston is completely refuted by defendants' admissions to plaintiff's First Request for Admissions in which they admitted to Request 18 that “on or about June 22 or 23, 2018, Li made a $90,000 direct capital investment to Aston” and to request 19 “that on or about June 23, 2018, Xu confirmed to Li that the $90,000 direct capital investment in Aston was received.” [Dkt. Nos. 27 and 28] at 4.

*4 All of defendants' other objections suffer from similar defects—they do not include any explanation for the objection and are undercut by evidence in the record. Another example of this pattern is reflected in Objections 5 and 6 to the finding that “Xu asked Li to purchase auto repair equipment from a Chinese supplier and to ship them to Aston ... and Li complied ... and used $37,850 of his own money to purchase and send the first shipment to Aston on May 24, 2019” and “used another $50,997 of his own money to purchase and send a second shipment to Aston on May 27, 2019.” [Dkt. No. 66] at 2. To defendants' general objection that “Plaintiff alleged this fact in his Complaint, and both defendants denied the allegation in their answers,” defendants add that “Exhibit 4 cannot possibly support or establish the allegation regarding what Xu asked Li to do, or whether Li complied with Xu's request, or whether Li used his own money for anything.” Id. These objections are clearly rebutted by Exhibits 4 and 5 to the Complaint [Dkt. No. 1-1] at 5 and 6, both of which are commercial invoices showing a Chinese shipment to a final United States destination in Baltimore, Maryland. Exhibit 4, which is dated May 24, 2019, describes the goods being shipped as a tire changer, car lifts, tire balancer, and car washing machine for a total of $37,385. Exhibit 5 is dated May 27, 2019, and describes more automotive related goods—tire changers, lifts, etc.—for a total of $50,997. The type and quantity of these items, for example 40 tire changers listed in the second invoice and 19 car lifts and 26 tire balancers in the first invoice, certainly supports plaintiff's claim in his complaint that he entered into an agreement with Li to form a United States company that would purchase auto parts and car repair equipment made in China and then sell them in the United States. [Dkt. No. 1] ¶¶ 6, 7, 13, 14, 15. Moreover, in the defendants' pro se answer, they admitted “All Li's investment will be calculated by a certified account [sic] for accuracy. All his investments will be returned to him after subtracting all expenses, fees, and taxes as well as all his funds for personal use.” [Dkt. No. 6] ¶¶ 6, 7.

Defendants' Objection 10 disputes the finding that “the minimal documents [Defendants] did produce evidenced undisclosed bank accounts” simply by stating “[b]oth Xu and Aston have produced full and complete bank statements, including Aston's Bank of America savings and checking account statements for 2018, 2019 and 2020, and Xu's Wells Fargo checking account statements for 2018, 2019 and 2020.” [Dkt. No. 66] at 3. Plaintiff responds that this objection amounts to nothing more than defendants disagreeing with the previous findings by the magistrate judge during the multiple discovery disputes in which the magistrate judge found that “Defendants continued to insist that many of these documents were unavailable or did not exist, even though the minimal documents they did produce evidenced undisclosed bank accounts and transfers through Amazon, eBay, PayPal, and others where retrieval of such records should have been feasible.” [Dkt. No. 65] at 8. Based on that finding, the magistrate judge concluded that defendants have clearly demonstrated “a pattern of indifference and disrespect to the authority of the court that supports a finding of bad faith.” Id. (citing Mut. Fed. Sav. & Loan Ass'n v. Richards & Assocs., Inc., 872 F.2d 88, 93 (4th Cir. 1989)) (internal quotations omitted).

Having reviewed this very problematic record, this Court is fully satisfied that defendants have not complied with plaintiff's reasonable and appropriate discovery requests and appropriate orders of the magistrate judge, as well as this Court's order. As such, any sanction less than entering a default judgment as to liability would not be appropriate. Moreover, the evidence in the record fully supports plaintiff's claims that he was defrauded by the defendants and is entitled to recover his losses. Accordingly, plaintiff's Renewed Motion [Dkt. No. 61] and Motion to Adopt [Dkt. No. 67] are GRANTED, defendants' objections to the Report are overruled, and the Report is fully adopted by this Court; and it his hereby

ORDERED that a default judgment only as to liability be and is entered against the defendants jointly and severally, and it is further

ORDERED that this civil action be and is remanded to Judge Buchanan for a Supplemental Report and Recommendation addressing the issues of damages and attorney's fees. In that Supplemental Report and Recommendation, Judge Buchanan should indicate the counts for which she is recommending damages and which, if any, counts she finds should be dismissed as redundant.

The Clerk is directed to forward copies of this Order to Judge Buchanan and to counsel of record.

Entered this 12th day of May, 2021.

Alexandria, Virginia

On March 3, 2020, plaintiff filed a six-count complaint alleging actual and constructive fraud (Count I), civil liability under Va. Code § 13.1-522 (Count II), conversion (Count III), fraud in the inducement (Count IV), breach of contract (Count V), and unjust enrichment (Count VI). The relief sought by plaintiff was the return of the $189,278.15 he invested in Aston along with prejudgment interest, with $350,000 in punitive damages and recovery of his attorney's fees and costs. [Dkt. No. 1] at 10.

In his Motion to Adopt the December 8, 2020 Report and Recommendation and Response to Defendants' Objections to that Report and Recommendation (“Motion to Adopt”) [Dkt. No. 67], plaintiff again requested a hearing to establish damages. Id. at 1. Defendants filed an objection to the Motion to Adopt arguing that plaintiff's responses to defendants' objections to the Report were untimely. [Dkt. No. 68]. Plaintiff's response [Dkt. No. 69] to that motion established good cause for the plaintiff's delay. Moreover, defendants did not establish any prejudice from the late filing. Accordingly, defendants' objection is overruled and the Court will consider plaintiff's Motion to Adopt.