1 UNITED STATES DISTRICT COURT 2 DISTRICT OF NEVADA 3 BANK OF AMERICA, N.A., Case No.: 2:16-cv-00516-APG-NJK
4 Plaintiff Order Granting Motion for Default Judgment 5 v. [ECF No. 89] 6 THE VILLAS COMMUNITY ASSOCIATION, et al., 7 Defendants 8
9 Cross-claimant SFR Investments Pool 1, LLC (SFR) moves for default judgment against 10 cross-defendant Dorothy K. Lopez.1 ECF No. 89. Obtaining a default judgment under Federal 11 Rule of Civil Procedure 55 is a two-step process. See Eitel v. McCool, 782 F.2d 1470, 1471 (9th 12 Cir. 1986). First, “[w]hen a party against whom a judgment for affirmative relief is sought has 13 failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise, the clerk 14 must enter the party’s default.” Fed. R. Civ. P. 55(a). After default is entered, a party may seek 15 entry of default judgment under Rule 55(b). 16 Upon entry of default, I take as true the factual allegations in the non-defaulting party’s 17 complaint, except those related to the amount of damages. Fed. R. Civ. P. 8(b)(6); TeleVideo 18 Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987). Nonetheless, “[e]ntry of default 19 does not entitle the non-defaulting party to a default judgment as a matter of right.” Warner Bros. 20 Entm’t Inc. v. Caridi, 346 F. Supp. 2d 1068, 1071 (CD. Cal. 2004) (citation omitted). The 21 “general rule [is] that default judgments are ordinarily disfavored. Cases should be decided upon 22
23 1 I ordered SFR to establish subject matter jurisdiction over the cross-claim. Based on the information provided in SFR’s motion, diversity jurisdiction exists. 1 their merits whenever reasonably possible.” Eitel, 782 F.2d at 1472 (citing Peno v. Seguros La 2 Comercial, S.A., 770 F.2d 811, 814 (9th Cir. 1985)). Whether to grant a default judgment lies 3 within my discretion. Id. 4 I consider the following factors in determining whether to grant a default judgment: 5 (1) the possibility of prejudice to the plaintiff; (2) the merits of the plaintiff’s substantive claims;
6 (3) the sufficiency of the complaint; (4) the sum of money at stake in the action; (5) the 7 possibility of a dispute concerning material facts; (6) whether the default was due to excusable 8 neglect; and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring 9 decisions on the merits. Eitel, 782 F.2d at 1471-72. 10 The clerk of court entered default against Lopez. ECF No. 83. Lopez has not appeared in 11 this case. Thus, there is no procedural impediment to entering a default judgment. 12 The first Eitel factor considers whether SFR will suffer prejudice if a default judgment is 13 not entered. See PepsiCo, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1172, 1177 (C.D. Cal. 2002); 14 Next Gaming, LLC v. Glob. Gaming Grp., Inc., No. 214-CV-00071-MMD-CWH, 2016 WL
15 3750651, at *3 (D. Nev. July 13, 2016). Because Lopez is not participating in this case, if 16 default judgment is not entered, SFR will be unable to pursue its claim against her. This factor 17 weighs in favor of entry of default judgment. 18 The second and third Eitel factors examine whether the “plaintiff state[s] a claim on 19 which the plaintiff may recover.” Danning v. Lavine, 572 F.2d 1386, 1389 (9th Cir. 1978); see 20 also Fed. R. Civ. P. 8. SFR’s cross-complaint seeks a declaration that the HOA foreclosure sale 21 extinguished Lopez’s interest in the property. SFR alleges that it acquired the property by 22 successfully bidding for it at a properly conducted, publicly held HOA foreclosure sale. ECF No. 23 24 at 9-15. I must accept these allegations as true. Fed. R. Civ. P. 8(b)(6); TeleVideo, 826 F.2d 1 at 917-18. At the time of this foreclosure sale, a properly conducted HOA foreclosure sale 2 extinguished the prior homeowners’ interest and vested title in the purchaser “without equity or 3 right of redemption.” Nev. Rev. Stat. § 116.31166 (2014). Thus, the second and third Eitel 4 factors weigh in favor of the entry of a default judgment declaring that Lopez’s interest in the 5 property has been extinguished.
6 In assessing the fourth Eitel factor, I consider “the amount of money requested in relation 7 to the seriousness of the defendant’s conduct, whether large sums of money are involved, and 8 whether ‘the recovery sought is proportional to the harm caused by [the] defendant’s conduct.’” 9 Curtis v. Illumination Arts, Inc., 33 F. Supp. 3d 1200, 1212 (W.D. Wash. 2014) (quoting 10 Landstar Ranger, Inc. v. Earth Enters., Inc., 725 F. Supp. 2d 916, 921 (N.D. Cal. 2010)); 11 PepsiCo., 238 F. Supp. 2d at 1176. SFR’s request for a declaration that Lopez’s interest in the 12 property is extinguished is proportional to the effect of a properly conducted HOA foreclosure 13 sale. SFR does not seek any monetary relief against Lopez. Thus, the fourth Eitel factor is 14 satisfied as to the declaratory relief requested.
15 The fifth Eitel factor weighs the possibility of a dispute regarding material facts in the 16 case. PepsiCo., 238 F. Supp. 2d at 1177. Lopez’s failure to respond suggests there are no 17 disputed material facts. Thus, the fifth Eitel factor weighs in favor of entry of default judgment. 18 The sixth Eitel factor considers whether the defendants’ defaults are due to excusable 19 neglect. PepsiCo., 238 F. Supp. 2d at 1177. SFR made multiple attempts to serve Lopez and 20 ultimately had to serve by publication. ECF Nos. 46, 51, 52. The clerk of court entered default 21 against Lopez in August 2019 and she still has not appeared. ECF No. 83. There is no evidence 22 before me that the failure to respond is due to excusable neglect. See United States v. High 23 Country Broad. Co., 3 F.3d 1244, 1245 (9th Cir. 1993) (per curiam) (holding that it was “perfectly appropriate” for the district court to enter default judgment against a corporation that 2\| failed to appear in the action). Given the time period during which Lopez had notice of this case yet failed to appear, it is unlikely that she failed to respond due to excusable neglect. Thus, the sixth Eitel factor weighs in favor of entry of default judgment. 5 Finally, the seventh Eitel factor takes into account the policy favoring a decision on the merits. “Cases should be decided on their merits whenever reasonably possible.” Eitel, 782 F.2d 1472. But Lopez’s failure to respond to the complaint “makes a decision on the merits impractical, if not impossible.” PepsiCo, Inc., 238 F. Supp.
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1 UNITED STATES DISTRICT COURT 2 DISTRICT OF NEVADA 3 BANK OF AMERICA, N.A., Case No.: 2:16-cv-00516-APG-NJK
4 Plaintiff Order Granting Motion for Default Judgment 5 v. [ECF No. 89] 6 THE VILLAS COMMUNITY ASSOCIATION, et al., 7 Defendants 8
9 Cross-claimant SFR Investments Pool 1, LLC (SFR) moves for default judgment against 10 cross-defendant Dorothy K. Lopez.1 ECF No. 89. Obtaining a default judgment under Federal 11 Rule of Civil Procedure 55 is a two-step process. See Eitel v. McCool, 782 F.2d 1470, 1471 (9th 12 Cir. 1986). First, “[w]hen a party against whom a judgment for affirmative relief is sought has 13 failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise, the clerk 14 must enter the party’s default.” Fed. R. Civ. P. 55(a). After default is entered, a party may seek 15 entry of default judgment under Rule 55(b). 16 Upon entry of default, I take as true the factual allegations in the non-defaulting party’s 17 complaint, except those related to the amount of damages. Fed. R. Civ. P. 8(b)(6); TeleVideo 18 Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987). Nonetheless, “[e]ntry of default 19 does not entitle the non-defaulting party to a default judgment as a matter of right.” Warner Bros. 20 Entm’t Inc. v. Caridi, 346 F. Supp. 2d 1068, 1071 (CD. Cal. 2004) (citation omitted). The 21 “general rule [is] that default judgments are ordinarily disfavored. Cases should be decided upon 22
23 1 I ordered SFR to establish subject matter jurisdiction over the cross-claim. Based on the information provided in SFR’s motion, diversity jurisdiction exists. 1 their merits whenever reasonably possible.” Eitel, 782 F.2d at 1472 (citing Peno v. Seguros La 2 Comercial, S.A., 770 F.2d 811, 814 (9th Cir. 1985)). Whether to grant a default judgment lies 3 within my discretion. Id. 4 I consider the following factors in determining whether to grant a default judgment: 5 (1) the possibility of prejudice to the plaintiff; (2) the merits of the plaintiff’s substantive claims;
6 (3) the sufficiency of the complaint; (4) the sum of money at stake in the action; (5) the 7 possibility of a dispute concerning material facts; (6) whether the default was due to excusable 8 neglect; and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring 9 decisions on the merits. Eitel, 782 F.2d at 1471-72. 10 The clerk of court entered default against Lopez. ECF No. 83. Lopez has not appeared in 11 this case. Thus, there is no procedural impediment to entering a default judgment. 12 The first Eitel factor considers whether SFR will suffer prejudice if a default judgment is 13 not entered. See PepsiCo, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1172, 1177 (C.D. Cal. 2002); 14 Next Gaming, LLC v. Glob. Gaming Grp., Inc., No. 214-CV-00071-MMD-CWH, 2016 WL
15 3750651, at *3 (D. Nev. July 13, 2016). Because Lopez is not participating in this case, if 16 default judgment is not entered, SFR will be unable to pursue its claim against her. This factor 17 weighs in favor of entry of default judgment. 18 The second and third Eitel factors examine whether the “plaintiff state[s] a claim on 19 which the plaintiff may recover.” Danning v. Lavine, 572 F.2d 1386, 1389 (9th Cir. 1978); see 20 also Fed. R. Civ. P. 8. SFR’s cross-complaint seeks a declaration that the HOA foreclosure sale 21 extinguished Lopez’s interest in the property. SFR alleges that it acquired the property by 22 successfully bidding for it at a properly conducted, publicly held HOA foreclosure sale. ECF No. 23 24 at 9-15. I must accept these allegations as true. Fed. R. Civ. P. 8(b)(6); TeleVideo, 826 F.2d 1 at 917-18. At the time of this foreclosure sale, a properly conducted HOA foreclosure sale 2 extinguished the prior homeowners’ interest and vested title in the purchaser “without equity or 3 right of redemption.” Nev. Rev. Stat. § 116.31166 (2014). Thus, the second and third Eitel 4 factors weigh in favor of the entry of a default judgment declaring that Lopez’s interest in the 5 property has been extinguished.
6 In assessing the fourth Eitel factor, I consider “the amount of money requested in relation 7 to the seriousness of the defendant’s conduct, whether large sums of money are involved, and 8 whether ‘the recovery sought is proportional to the harm caused by [the] defendant’s conduct.’” 9 Curtis v. Illumination Arts, Inc., 33 F. Supp. 3d 1200, 1212 (W.D. Wash. 2014) (quoting 10 Landstar Ranger, Inc. v. Earth Enters., Inc., 725 F. Supp. 2d 916, 921 (N.D. Cal. 2010)); 11 PepsiCo., 238 F. Supp. 2d at 1176. SFR’s request for a declaration that Lopez’s interest in the 12 property is extinguished is proportional to the effect of a properly conducted HOA foreclosure 13 sale. SFR does not seek any monetary relief against Lopez. Thus, the fourth Eitel factor is 14 satisfied as to the declaratory relief requested.
15 The fifth Eitel factor weighs the possibility of a dispute regarding material facts in the 16 case. PepsiCo., 238 F. Supp. 2d at 1177. Lopez’s failure to respond suggests there are no 17 disputed material facts. Thus, the fifth Eitel factor weighs in favor of entry of default judgment. 18 The sixth Eitel factor considers whether the defendants’ defaults are due to excusable 19 neglect. PepsiCo., 238 F. Supp. 2d at 1177. SFR made multiple attempts to serve Lopez and 20 ultimately had to serve by publication. ECF Nos. 46, 51, 52. The clerk of court entered default 21 against Lopez in August 2019 and she still has not appeared. ECF No. 83. There is no evidence 22 before me that the failure to respond is due to excusable neglect. See United States v. High 23 Country Broad. Co., 3 F.3d 1244, 1245 (9th Cir. 1993) (per curiam) (holding that it was “perfectly appropriate” for the district court to enter default judgment against a corporation that 2\| failed to appear in the action). Given the time period during which Lopez had notice of this case yet failed to appear, it is unlikely that she failed to respond due to excusable neglect. Thus, the sixth Eitel factor weighs in favor of entry of default judgment. 5 Finally, the seventh Eitel factor takes into account the policy favoring a decision on the merits. “Cases should be decided on their merits whenever reasonably possible.” Eitel, 782 F.2d 1472. But Lopez’s failure to respond to the complaint “makes a decision on the merits impractical, if not impossible.” PepsiCo, Inc., 238 F. Supp. 2d at 1177. Thus, while this final 9|| Eitel factor always weighs against an entry of default judgment, it does not preclude me from 10]| entering a default judgment. A decision on the merits is desirable, but under these circumstances, default judgment is warranted. 12 I THEREFORE ORDER that the cross-claimant SFR Investments Pool 1, LLC’s motion 13]| for default judgment against cross-defendant Dorothy K. Lopez (ECF No. 89) is GRANTED. The clerk of court is instructed to enter judgment in favor of SFR Investments Pool 1, LLC and 15|| against Dorothy K. Lopez as follows: It is hereby declared that the homeowners association’ □ non-judicial foreclosure sale conducted on September 12, 2014 extinguished any interest 17|| Dorothy K. Lopez had in the property located at 6627 Babys Tear in Las Vegas, Nevada. 18 I FURTHER ORDER the clerk of the court to enter judgment consistent with this order 19]/ and my prior order on summary judgment (ECF No. 88) and to close this case. 20 DATED this 20th day of February, 2020. 21 ZL 22 ANDREW P. GORDON 73 UNITED STATES DISTRICT JUDGE