1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 ASCENTIUM CAPITAL LLC, No. 2:19-cv-01674-TLN-CKD 12 Plaintiff, 13 v. ORDER AND 14 ROTCEH COLON MALDONADO, FINDINGS AND RECOMMENDATIONS 15 Defendant. 16 17 INTRODUCTION 18 Presently pending before the court is plaintiff Ascentium Capital LLC’s motion for default 19 judgment against defendant Dr. Rotceh Colon Maldonado. (ECF No. 8.) Defendant failed to file 20 an opposition to plaintiff’s motion in accordance with Local Rule 230(c). At the hearing on the 21 motion held on December 18, 2019, plaintiff’s counsel appeared telephonically and defendant did 22 not appear. 23 BACKGROUND 24 The background facts are taken from plaintiff’s complaint, unless otherwise noted. (See 25 Plaintiff’s Complaint, ECF No. 1 [“Compl.”].) 26 In July 2017 plaintiff made a commercial loan to defendant to purchase a Coolsculpting 27 Device. (Compl. ¶ 7.) Pursuant to the finance agreement defendant was to make sixty monthly 28 payments of $3,334.90, until the loan was satisfied. (Id.) Defendant stopped making payments 1 on March 1, 2019 and has not made a payment since that date. (Id. ¶ 9.) On August 7, 2019, 2 plaintiff sent defendant a letter entitled, “NOTICE OF DEFAULT AND ACCELERATION” 3 outlining defendant’s payments that were past due, and accelerating the remaining balance to be 4 due immediately as permitted by the agreement. (Id. at 11-12.) 5 Plaintiff commenced this action on August 27, 2019, alleging only one count: breach of 6 the finance agreement. (Compl. at 1.) Defendant was personally served in Puerto Rico on 7 September 7, 2019.1 Defendant has not answered or appeared. On October 2, 2019, plaintiff 8 requested an entry of default, which the Clerk of Court granted the same day. (ECF Nos. 6, 7.) 9 Plaintiff filed the present motion for default judgment on November 8, 2019. (ECF No. 8.) 10 Following the hearing on December 18, 2019, the court ordered plaintiff to provide additional 11 briefing regarding how it reached its damages calculation, which plaintiff subsequently filed. 12 (ECF Nos. 13, 14.) 13 LEGAL STANDARDS 14 Pursuant to Federal Rule of Civil Procedure 55, default may be entered against a party 15 against whom a judgment for affirmative relief is sought who fails to plead or otherwise defend 16 against the action. See Fed. R. Civ. P. 55(a). However, “[a] defendant’s default does not 17 automatically entitle the plaintiff to a court-ordered judgment.” PepsiCo, Inc. v. Cal. Sec. Cans, 18 238 F. Supp. 2d 1172, 1174 (C.D. Cal. 2002) (citing Draper v. Coombs, 792 F.2d 915, 924-25 19 (9th Cir. 1986)). Instead, the decision to grant or deny an application for default judgment lies 20 within the district court’s sound discretion. Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 21 1980). In making this determination, the court considers the following factors: 22 (1) the possibility of prejudice to the plaintiff, (2) the merits of plaintiff’s substantive claim, (3) the sufficiency of the complaint, (4) 23 the sum of money at stake in the action[,] (5) the possibility of a dispute concerning material facts[,] (6) whether the default was due 24 to excusable neglect, and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits. 25 26
27 1 The case is before this court pursuant to a forum-selection clause in the parties’ contract. “Forum selection clauses are presumed to be valid, even in default judgment cases.” Calix, Inc. 28 v. Alfa Consult, S.A., 2015 WL 3902918, at *3 (N.D. Cal. June 24, 2015). 1 Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). Default judgments are ordinarily 2 disfavored. Id. at 1472. 3 As a general rule, once default is entered, well-pleaded factual allegations in the operative 4 complaint are taken as true, except for those allegations relating to damages. TeleVideo Sys., Inc. 5 v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987) (per curiam) (citing Geddes v. United Fin. 6 Group, 559 F.2d 557, 560 (9th Cir. 1977) (per curiam)); accord Fair Housing of Marin v. Combs, 7 285 F.3d 899, 906 (9th Cir. 2002). In addition, although well-pleaded allegations in the 8 complaint are admitted by a defendant’s failure to respond, “necessary facts not contained in the 9 pleadings, and claims which are legally insufficient, are not established by default.” Cripps v. 10 Life Ins. Co. of N. Am., 980 F.2d 1261, 1267 (9th Cir. 1992) (citing Danning v. Lavine, 572 F.2d 11 1386, 1388 (9th Cir. 1978)); accord DIRECTV, Inc. v. Hoa Huynh, 503 F.3d 847, 854 (9th Cir. 12 2007) (noting that a defendant does not admit facts that are not well-pled or conclusions of law); 13 Abney v. Alameida, 334 F. Supp. 2d 1221, 1235 (S.D. Cal. 2004) (“[A] default judgment may not 14 be entered on a legally insufficient claim.”). A party’s default does not establish the amount of 15 damages. Geddes, 559 F.2d at 560. 16 DISCUSSION 17 Appropriateness of the Entry of Default Judgment Under the Eitel Factors 18 1. Factor One: Possibility of Prejudice to Plaintiff 19 The first Eitel factor considers whether the plaintiff would suffer prejudice if default 20 judgment is not entered, and such potential prejudice to the plaintiff militates in favor of granting 21 a default judgment. See PepsiCo, Inc., 238 F. Supp. 2d at 1177. Here, plaintiff would face 22 prejudice if the court did not enter a default judgment, because plaintiff would be without another 23 recourse against defendant. Accordingly, the first Eitel factor favors the entry of a default 24 judgment. 25 2. Factors Two and Three: The Merits of Plaintiff’s Substantive Claim and 26 the Sufficiency of the Complaint 27 The court considers the merits of plaintiff’s substantive claim and the sufficiency of the 28 complaint together because of the relatedness of the two inquiries. The court must consider 1 whether the allegations in the complaint are sufficient to state a claim on which plaintiff may 2 recover. See Danning, 572 F.2d at 1388; PepsiCo, Inc., 238 F. Supp. 2d at 1175. 3 “[T]he elements of a cause of action for breach of contract are (1) the existence of the 4 contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and 5 (4) the resulting damages to plaintiff.” E.D.C. Techs., Inc. v. Seidel, 216 F. Supp. 3d 1012, 1015 6 (N.D. Cal. 2016) (quoting Oasis West Realty, LLC v. Goldman, 51 Cal.4th 811, 821 (2011)). 7 Plaintiff has adequately pleaded the existence of the contract, plaintiff’s performance, defendant’s 8 breach, and plaintiff’s resulting damages. (Compl. ¶¶ 7-10.) 9 Accordingly, the second and third Eitel factors favor the entry of a default judgment. 10 3.
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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 ASCENTIUM CAPITAL LLC, No. 2:19-cv-01674-TLN-CKD 12 Plaintiff, 13 v. ORDER AND 14 ROTCEH COLON MALDONADO, FINDINGS AND RECOMMENDATIONS 15 Defendant. 16 17 INTRODUCTION 18 Presently pending before the court is plaintiff Ascentium Capital LLC’s motion for default 19 judgment against defendant Dr. Rotceh Colon Maldonado. (ECF No. 8.) Defendant failed to file 20 an opposition to plaintiff’s motion in accordance with Local Rule 230(c). At the hearing on the 21 motion held on December 18, 2019, plaintiff’s counsel appeared telephonically and defendant did 22 not appear. 23 BACKGROUND 24 The background facts are taken from plaintiff’s complaint, unless otherwise noted. (See 25 Plaintiff’s Complaint, ECF No. 1 [“Compl.”].) 26 In July 2017 plaintiff made a commercial loan to defendant to purchase a Coolsculpting 27 Device. (Compl. ¶ 7.) Pursuant to the finance agreement defendant was to make sixty monthly 28 payments of $3,334.90, until the loan was satisfied. (Id.) Defendant stopped making payments 1 on March 1, 2019 and has not made a payment since that date. (Id. ¶ 9.) On August 7, 2019, 2 plaintiff sent defendant a letter entitled, “NOTICE OF DEFAULT AND ACCELERATION” 3 outlining defendant’s payments that were past due, and accelerating the remaining balance to be 4 due immediately as permitted by the agreement. (Id. at 11-12.) 5 Plaintiff commenced this action on August 27, 2019, alleging only one count: breach of 6 the finance agreement. (Compl. at 1.) Defendant was personally served in Puerto Rico on 7 September 7, 2019.1 Defendant has not answered or appeared. On October 2, 2019, plaintiff 8 requested an entry of default, which the Clerk of Court granted the same day. (ECF Nos. 6, 7.) 9 Plaintiff filed the present motion for default judgment on November 8, 2019. (ECF No. 8.) 10 Following the hearing on December 18, 2019, the court ordered plaintiff to provide additional 11 briefing regarding how it reached its damages calculation, which plaintiff subsequently filed. 12 (ECF Nos. 13, 14.) 13 LEGAL STANDARDS 14 Pursuant to Federal Rule of Civil Procedure 55, default may be entered against a party 15 against whom a judgment for affirmative relief is sought who fails to plead or otherwise defend 16 against the action. See Fed. R. Civ. P. 55(a). However, “[a] defendant’s default does not 17 automatically entitle the plaintiff to a court-ordered judgment.” PepsiCo, Inc. v. Cal. Sec. Cans, 18 238 F. Supp. 2d 1172, 1174 (C.D. Cal. 2002) (citing Draper v. Coombs, 792 F.2d 915, 924-25 19 (9th Cir. 1986)). Instead, the decision to grant or deny an application for default judgment lies 20 within the district court’s sound discretion. Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 21 1980). In making this determination, the court considers the following factors: 22 (1) the possibility of prejudice to the plaintiff, (2) the merits of plaintiff’s substantive claim, (3) the sufficiency of the complaint, (4) 23 the sum of money at stake in the action[,] (5) the possibility of a dispute concerning material facts[,] (6) whether the default was due 24 to excusable neglect, and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits. 25 26
27 1 The case is before this court pursuant to a forum-selection clause in the parties’ contract. “Forum selection clauses are presumed to be valid, even in default judgment cases.” Calix, Inc. 28 v. Alfa Consult, S.A., 2015 WL 3902918, at *3 (N.D. Cal. June 24, 2015). 1 Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). Default judgments are ordinarily 2 disfavored. Id. at 1472. 3 As a general rule, once default is entered, well-pleaded factual allegations in the operative 4 complaint are taken as true, except for those allegations relating to damages. TeleVideo Sys., Inc. 5 v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987) (per curiam) (citing Geddes v. United Fin. 6 Group, 559 F.2d 557, 560 (9th Cir. 1977) (per curiam)); accord Fair Housing of Marin v. Combs, 7 285 F.3d 899, 906 (9th Cir. 2002). In addition, although well-pleaded allegations in the 8 complaint are admitted by a defendant’s failure to respond, “necessary facts not contained in the 9 pleadings, and claims which are legally insufficient, are not established by default.” Cripps v. 10 Life Ins. Co. of N. Am., 980 F.2d 1261, 1267 (9th Cir. 1992) (citing Danning v. Lavine, 572 F.2d 11 1386, 1388 (9th Cir. 1978)); accord DIRECTV, Inc. v. Hoa Huynh, 503 F.3d 847, 854 (9th Cir. 12 2007) (noting that a defendant does not admit facts that are not well-pled or conclusions of law); 13 Abney v. Alameida, 334 F. Supp. 2d 1221, 1235 (S.D. Cal. 2004) (“[A] default judgment may not 14 be entered on a legally insufficient claim.”). A party’s default does not establish the amount of 15 damages. Geddes, 559 F.2d at 560. 16 DISCUSSION 17 Appropriateness of the Entry of Default Judgment Under the Eitel Factors 18 1. Factor One: Possibility of Prejudice to Plaintiff 19 The first Eitel factor considers whether the plaintiff would suffer prejudice if default 20 judgment is not entered, and such potential prejudice to the plaintiff militates in favor of granting 21 a default judgment. See PepsiCo, Inc., 238 F. Supp. 2d at 1177. Here, plaintiff would face 22 prejudice if the court did not enter a default judgment, because plaintiff would be without another 23 recourse against defendant. Accordingly, the first Eitel factor favors the entry of a default 24 judgment. 25 2. Factors Two and Three: The Merits of Plaintiff’s Substantive Claim and 26 the Sufficiency of the Complaint 27 The court considers the merits of plaintiff’s substantive claim and the sufficiency of the 28 complaint together because of the relatedness of the two inquiries. The court must consider 1 whether the allegations in the complaint are sufficient to state a claim on which plaintiff may 2 recover. See Danning, 572 F.2d at 1388; PepsiCo, Inc., 238 F. Supp. 2d at 1175. 3 “[T]he elements of a cause of action for breach of contract are (1) the existence of the 4 contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and 5 (4) the resulting damages to plaintiff.” E.D.C. Techs., Inc. v. Seidel, 216 F. Supp. 3d 1012, 1015 6 (N.D. Cal. 2016) (quoting Oasis West Realty, LLC v. Goldman, 51 Cal.4th 811, 821 (2011)). 7 Plaintiff has adequately pleaded the existence of the contract, plaintiff’s performance, defendant’s 8 breach, and plaintiff’s resulting damages. (Compl. ¶¶ 7-10.) 9 Accordingly, the second and third Eitel factors favor the entry of a default judgment. 10 3. Factor Four: The Sum of Money at Stake in the Action 11 Under the fourth factor cited in Eitel, “the court must consider the amount of money at 12 stake in relation to the seriousness of Defendant’s conduct.” PepsiCo, Inc., 238 F. Supp. 2d at 13 1176-77; see also Philip Morris USA, Inc. v. Castworld Prods., Inc., 219 F.R.D. 494, 500 (C.D. 14 Cal. 2003). In this case, plaintiff is requesting $142,457.61, which includes $138,403.31 for the 15 principal-loan amount, late fees of $1,536.80, and attorneys’ fees of $2,517.50. The sum in 16 question was contemplated by the contract defendant signed, is the direct loss as a result of 17 defendant’s breach, and is not out of proportion to the seriousness of defendant’s conduct. 18 Therefore, the sum of money at stake does not preclude the entry of a default judgment. 19 4. Factor Five: The Possibility of a Dispute Concerning Material Facts 20 The court may assume the truth of well-pleaded facts in the complaint following the 21 clerk’s entry of default, and defendant has not appeared. Thus, there is no likelihood that any 22 genuine issue of material fact exists. See, e.g., Elektra Entm’t Group Inc. v. Crawford, 226 23 F.R.D. 388, 393 (C.D. Cal. 2005) (“Because all allegations in a well-pleaded complaint are taken 24 as true after the court clerk enters default judgment, there is no likelihood that any genuine issue 25 of material fact exists”); accord Philip Morris USA, Inc., 219 F.R.D. at 500; PepsiCo, Inc., 238 F. 26 Supp. 2d at 1177. As such, the court concludes that the fifth Eitel factor favors a default 27 judgment. 28 ///// 1 5. Factor Six: Whether the Default Was Due to Excusable Neglect 2 In this case, there is no indication in the record that defendant’s default was due to 3 excusable neglect. Despite having been served with plaintiff’s complaint, the request for entry of 4 default, and the instant motion for default judgment, defendant failed to appear. (ECF Nos. 5, 6, 5 8.) Thus, the record suggests that defendant has chosen not to defend himself in this action, and 6 that the default did not result from excusable neglect. Accordingly, this Eitel factor favors the 7 entry of a default judgment. 8 6. Factor Seven: The Strong Policy Underlying the Federal Rules of Civil 9 Procedure Favoring Decisions on the Merits 10 “Cases should be decided upon their merits whenever reasonably possible.” Eitel, 782 11 F.2d at 1472. However, district courts have concluded with regularity that this policy, standing 12 alone, is not dispositive, especially where a defendant fails to appear or defend itself in an action. 13 PepsiCo, Inc., 238 F. Supp. 2d at 1177; see also Craigslist, Inc. v. Naturemarket, Inc., 694 F. 14 Supp. 2d 1039, 1061 (N.D. Cal. 2010). Accordingly, although the court is cognizant of the policy 15 in favor of decisions on the merits—and consistent with existing policy would prefer that this 16 case be resolved on the merits—that policy does not, by itself, preclude the entry of default 17 judgment. 18 In sum, upon consideration of all the Eitel factors, the court concludes that plaintiff is 19 entitled to a default judgment against defendant and recommends that such a default judgment be 20 entered. All that remains is a determination of the specific relief to which plaintiff is entitled. 21 Terms of the Judgment to be Entered 22 After determining that a party is entitled to entry of default judgment, the court must 23 determine the terms of the judgment to be entered. See Craigslist, Inc., 694 F. Supp. 2d at 1061. 24 Plaintiff’s motion for default judgment requests damages in the amount of $142,457.61, 25 reflecting the principal amount of $138,403.31; late fees in the amount of $1,536.80; and 26 attorneys’ fees and costs of $2,517.50. (ECF No. 8-1 at 7-8.) 27 After additional briefing from plaintiff, the court concludes that plaintiff’s request for 28 $142,457.61 is the amount contemplated in the contract entered between the parties, plus 1 | attorneys’ fees and costs, and is therefore supported by the evidence plaintiff provided in its 2 | motion for default. Under the contract, plaintiff was entitled to accelerate the amount due to be 3 | payable immediately and, also pursuant to the agreement, plaintiff discounted the amount owed to 4 | present value. (See Compl. at 9, ECF No. 14 at 2.) Additionally, the agreement provides that 5 | plaintiff is entitled to attorneys’ fees and costs as a result of defendant’s loan default. (Compl. at 6 | 9.) Accordingly, the court recommends plaintiff be awarded $142,457.61. 7 | CONCLUSION 8 For the foregoing reasons, IT IS HEREBY RECOMMENDED that: 9 1. Plaintiff's motion for default judgment (ECF No. 8) be GRANTED. 10 2. Judgment be entered in plaintiffs favor and against defendant. ll 3. Plaintiff be awarded $142,457.61. 12 4. The Clerk of Court be directed to close this case. 13 These findings and recommendations are submitted to the United States District Judge 14 | assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(). Within fourteen (14) 15 | days after being served with these findings and recommendations, any party may file written 16 | objections with the court and serve a copy on all parties. Such a document should be captioned 17 || “Objections to Magistrate Judge’s Findings and Recommendations.” Any reply to the objections 18 || shall be served on all parties and filed with the court within fourteen (14) days after service of the 19 | objections. The parties are advised that failure to file objections within the specified time may 20 | waive the right to appeal the District Court’s order. Turner v. Duncan, 158 F.3d 449, 455 (9th 21 | Cir. 1998); Martinez v. YIst, 951 F.2d 1153, 1156-57 (9th Cir. 1991). 22 Additionally, IT IS HEREBY ORDERED that within five days after these findings and 23 | recommendations are filed, plaintiff shall serve a copy of these Findings and Recommendations 24 | defendant by mail at the address where service of process was effected, or at any more recent 25 | address known to plaintiff, and shall file a proof of such service forthwith. 26 | Dated: January 9, 2020 bh rdf ht / {a— 7 CAROLYN K DELANEY 28 | asce.1674 UNITED STATES MAGISTRATE JUDGE