BASF Corporation v. SJS Collision Center

• Court: District Court, C.D. California
• Decided: March 14, 2023
• Docket: 2:22-cv-05018
• Status: Unknown

Opinion

Case 2:22-cv-05018-RSWL-MRW Documenti16 Filed 03/14/23 Pagelof19 Page ID #:86

1 "0" 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 12 BASF CORPORATION, CV 22-5018-RSWL-MRWx

13 Plaintiff, PLAINTIFF’ S MOTION for 14 v. DEFAULT JUDGMENT [14] be SJ’S COLLISION CENTER, et 16] al., 17 Defendants. 3 | _ 19 Plaintiff BASF Corporation (“Plaintiff”) initiated 20 this Action against Defendants SJ’s Collision Center 31 (“Defendant SJ”) and Grigor Garibyan 22 (“Defendant Garibyan”) (collectively, “Defendants”) 53 alleging breach of contract and unjust enrichment. DA Currently before the Court is Plaintiff’s Motion for 25 Default Judgment against Defendants on the breach of 26 contract and unjust enrichment claims. 27 Having reviewed all papers submitted pertaining to 28 the Motion, the Court NOW FINDS AND RULES AS FOLLOWS:

Case 2:22-cv-05018-RSWL-MRW Document 16 Filed 03/14/23 Page 2 of 19 Page ID #:87

1 the Court GRANTS in part and DENIES in part Plaintiff’s

2 Motion for Default Judgment.

3 I. BACKGROUND 4 A. Factual Background 5 The Complaint Alleges: 6 Plaintiff is a business that sells refinishing, 7 conditioning, and paint products (“Refinish Products”) 8 to distributors who in turn sell these products to 9 automotive body shops. Compl. ¶ 4, ECF No. 2. 10 Defendant Garibyan is the owner of Defendant SJ, an 11 autobody shop engaged in the business of refinishing 12 vehicles. Id. ¶¶ 5-6. 13 Plaintiff and Defendants entered a requirements 14 agreement (the “Agreement”). Id. ¶ 10. Pursuant to the 15 Agreement, Defendant SJ was required to fulfill with 16 Plaintiff 100% of its requirements for Refinish Products 17 up to a minimum purchase requirement of $326,500.00 (the 18 “Minimum Purchase Requirement”). Id. ¶ 11. Defendant 19 Garibyan guaranteed Defendant SJ’s performance and 20 further promised to perform in Defendant SJ’s absence. 21 Id. ¶ 14. 22 Plaintiff paid Defendants $20,000.00 in 23 consideration (the “Consideration”) in exchange for 24 Defendants’ contractual obligations. Id. ¶ 12. If 25 Defendants did not fulfill the Minimum Purchase 26 Requirement, then Defendants had to refund the 27 Consideration in accordance with a schedule. Id. ¶ 13. 28 Per the schedule, if Defendants purchased less than 20% 2 Case 2:22-cv-05018-RSWL-MRW Document 16 Filed 03/14/23 Page 3 of 19 Page ID #:88

1 of the Minimum Purchase Requirement, then Defendants had

2 to refund Plaintiff 110% of Plaintiff’s Consideration,

3 or $22,000.00. Id. 4 In 2020, Defendant SJ terminated its contract with 5 Plaintiff without purchasing the Minimum Purchase 6 Requirement from Plaintiff as set out in the contract. 7 Id. ¶ 15. Defendant SJ only purchased about $50,651.00 8 in Refinish Products from Plaintiff. Id. ¶ 16. 9 Defendant Garibyan refused to refund or cover for 10 Defendant SJ’s breach. Id. ¶ 18. As specified in the 11 contract, Defendants purchased less than 20% of the 12 Minimum Purchase Requirement, which triggered a 13 consideration repayment of $22,000.00. Id. ¶ 17. 14 Plaintiff has fulfilled its obligations and remains 15 ready and willing to perform under the contract. 16 Id. ¶ 19. 17 B. Procedural Background 18 On July 21, 2022, Plaintiff filed its Complaint [2] 19 alleging claims for breach of contract and unjust 20 enrichment. On July 26, 2022, Plaintiff served 21 Defendant SJ with the Summons and Complaint upon its 22 agent for service of process [11], with a response due 23 by August 16, 2022. On August 4, 2022, Plaintiff served 24 Defendant Garibyan with the Summons and Complaint upon 25 the designated person in charge at Defendant Garibyan’s 26 business address [10], with a response due by August 25, 27 2022. Both Defendants failed to respond to the 28 Complaint by the applicable deadlines. 3 Case 2:22-cv-05018-RSWL-MRW Document 16 Filed 03/14/23 Page 4 of 19 Page ID #:89

1 Since Defendants failed to answer, Plaintiff

2 applied for the Clerk to enter Default against

3 Defendants [12] on September 27, 2022. On September 29, 4 2022, the Clerk entered Default [13]. On January 6, 5 2023, Plaintiff filed a Motion for Default Judgment 6 (“Motion”) [14] against Defendants. On that same day, 7 Plaintiff served Defendants with notice of the Entry of 8 Default Judgment and notice of the Motion. Defendants 9 did not file an opposition. 10 For Defendants’ failure to purchase the Minimum 11 Purchase Requirement under the Agreement, Plaintiff 12 seeks $275,849.00 in expectation damages. Plaintiff 13 additionally seeks $22,000 in liquidated damages. 14 Lastly, Plaintiff seeks filing fees in the amount of 15 $402.00 and fees for service of process in the amount of 16 $240.90. In total, Plaintiff seeks $298,491.90. 17 II. DISCUSSION 18 A. Legal Standard 19 The granting of default judgment is within the 20 discretion of the district court. Aldabe v. Aldabe, 616 21 F.2d 1089, 1092 (9th Cir. 1980); see Fed. R. Civ. P. 55. 22 Procedural and substantive requirements must be 23 satisfied. 24 Procedurally, the requirements set forth in Federal 25 Rules of Civil Procedure (“FRCP” or “Rule”) 54(c) and 26 55(b), and Local Rule 55-1 must be met. See Vogel v. 27 Rite Aid Corp., 992 F. Supp. 2d 998, 1006 (C.D. Cal 28 2014). Local Rule 55-1 provides: 4 Case 2:22-cv-05018-RSWL-MRW Document 16 Filed 03/14/23 Page 5 of 19 Page ID #:90

1 When an application is made to the Court for a

2 default judgment, the application shall be

3 accompanied by a declaration in compliance with 4 [Rule] 55(b)(1) and/or (2) and include the 5 following: (a) when and against what party the 6 default was entered; (b) the identification of 7 the pleading to which default was entered; 8 (c) whether the defaulting party is an infant 9 or incompetent person, and if so, whether that 10 person is represented by a general guardian, 11 committee, conservator or other representative; 12 (d) that the Service Members Civil Relief Act, 13 50 U.S.C. App. § 521, does not apply; and 14 (e) that notice has been served on the 15 defaulting party, if required by Rule 55(b)(2). 16 L.R. 55-1. 17 Courts should also consider the following factors 18 in determining whether to grant a motion for default 19 judgment: “(1) the possibility of prejudice; (2) the 20 merits of [the] substantive claims; (3) the sufficiency 21 of the complaint; (4) the sum of money at stake; (5) the 22 possibility of a dispute concerning material facts; (6) 23 excusable neglect; and (7) the strong public policy 24 favoring decisions on the merits.” Eitel v. McCool, 782 25 F.2d 1470, 1471-72 (9th Cir. 1986). 26 If the court determines that the defendant is in 27 default, “‘the factual allegations of the complaint, 28 other than those relating to damages, are taken as 5 Case 2:22-cv-05018-RSWL-MRW Document 16 Filed 03/14/23 Page 6 of 19 Page ID #:91

1 true.’” Televideo Sys., Inc. v. Heidenthal, 826 F.2d

2 915, 917-18 (9th Cir. 1987) (quoting Geddes v. United

3 Fin. Group, 559 F.2d 557, 560 (9th Cir. 1977)). 4 Additionally, “[w]hen entry of judgment is sought 5 against a party who has failed to plead or otherwise 6 defend, a district court has an affirmative duty to look 7 into its jurisdiction over both the subject matter and 8 the parties.” In re Tuli, 172 F.3d 707, 712 (9th Cir. 9 1999). 10 If the Court determines that the allegations in the 11 complaint are sufficient to establish liability, the 12 plaintiff must provide proof of all damages sought in 13 the complaint, and the Court must determine the “amount 14 and character” of the relief that should be awarded. 15 Vogel, 992 F. Supp. 2d at 1005-06 (citations omitted). 16 “A default judgment must not differ in kind from, or 17 exceed in amount, what is demanded in the pleadings.” 18 Fed. R. Civ. P. 54(c). 19 B. Discussion 20 1. Jurisdiction and Service of Process 21 a. Subject Matter Jurisdiction 22 In evaluating whether to enter default judgment, 23 the Court first determines whether it has jurisdiction 24 over the subject matter and the parties. See In re 25 Tuli, 172 F.3d at 712. 26 Pursuant to 28 U.S.C. § 1332(a)(1), district courts 27 have original jurisdiction over “all civil actions where 28 the matter in controversy exceeds the sum or value of 6 Case 2:22-cv-05018-RSWL-MRW Document 16 Filed 03/14/23 Page 7 of 19 Page ID #:92

1 $75,000, exclusive of interest and costs, and is between

2 . . . citizens of different States[.]” In determining

3 whether diversity exists, a corporation is a citizen of 4 the state it was incorporated in and the state where it 5 has its principal place of business. 28 U.S.C. § 6 1332(c)(1). 7 Here, the requirements for diversity jurisdiction 8 are satisfied. Plaintiff seeks more than $75,000.00. 9 See generally Compl. Additionally, Plaintiff and 10 Defendants are citizens of different states. Plaintiff 11 is incorporated in Delaware and has its principal place 12 of business in New Jersey. Id. ¶ 1. Defendant SJ is 13 incorporated and has its principal place of business in 14 California. Id. ¶ 2. Defendant Garibyan resides and is 15 domiciled in California. Id. ¶ 3. Thus, Plaintiff is a 16 citizen of Delaware and New Jersey, while Defendants are 17 citizens of California. 18 Therefore, the Court has diversity jurisdiction 19 over this claim under 28 U.S.C. § 1332. 20 b. Personal Jurisdiction 21 Personal jurisdiction is also satisfied. 22 Defendants are citizens of California, where this Action 23 is brought. Defendants conduct a substantial portion of 24 their business and own property in California. Thus, 25 Defendants have “certain minimum contacts” with 26 California such that exercising personal jurisdiction 27 over Defendants would not “offend traditional notions of 28 fair play and substantial justice.” Calder v. Jones, 7 Case 2:22-cv-05018-RSWL-MRW Document 16 Filed 03/14/23 Page 8 of 19 Page ID #:93

1 465 U.S. 783, 788 (1984).

2 c. Service of Process Is Proper

3 Service of process is met because Plaintiff served 4 Defendant SJ with the Summons and Complaint on July 26, 5 2022. Plaintiff served the Summons and Complaint on 6 Defendant SJ’s agent for service of process. 7 Furthermore, Plaintiff served Defendant Garibyan on 8 August 4, 2022. Plaintiff served the Summons and 9 Complaint on Defendant Garibyan at Defendant Garibyan’s 10 office or usual place of business. 11 2. Procedural Requirements 12 Plaintiff has met the procedural requirements for 13 default judgment pursuant to Federal Rules of Civil 14 Procedure 55 and Central District Local Rule 55-1. 15 Under Rule 55(a), the Clerk properly entered default 16 against Defendants on September 29, 2022 [13]. 17 Plaintiff moved pursuant to Rule 55(b) for entry of 18 default judgment on January 6, 2023 [14]. 19 Plaintiff has also established the Local Rule 55-1 20 requirements. The Clerk entered default against 21 Defendants on September 29, 2022. Defendants are 22 neither minors, nor incompetent persons nor in the 23 military service nor otherwise exempted under the 24 Servicemembers Civil Relief Act, 50 U.S.C. App. § 521. 25 Furthermore, Defendants were properly served with the 26 Motion for Default Judgment. 27 3. Eitel Factors 28 In considering whether entry of default judgment is 8 Case 2:22-cv-05018-RSWL-MRW Document 16 Filed 03/14/23 Page 9 of 19 Page ID #:94

1 warranted, courts consider several factors: “(1) the

2 possibility of prejudice; (2) the merits of plaintiff’s

3 substantive claims; (3) the sufficiency of the 4 complaint; (4) the sum of money at stake; (5) the 5 possibility of a dispute concerning the material facts; 6 (6) excusable neglect; and (7) the strong public policy 7 favoring decisions on the merits.” Eitel, 782 F.2d at 8 1471-72. 9 a. Risk of Prejudice to Plaintiff 10 “The first Eitel factor considers whether a 11 plaintiff will suffer prejudice if a default judgment is 12 not entered.” Vogel, 992 F. Supp. 2d at 1007. 13 This factor weighs in favor of granting default 14 judgment. Defendants neither filed nor requested an 15 extension to submit an opposition. As such, Defendants 16 have failed to participate in the litigation and, 17 without default judgment, Plaintiff would be unable to 18 recoup damages for harm suffered. IO Grp., Inc. v. 19 Jordon, 708 F. Supp. 2d 989, 997 (N.D. Cal. 2010). 20 b. Sufficiency of the Complaint and Likelihood 21 of Success on the Merits 22 The second and third Eitel factors consider the 23 merits of the plaintiff’s substantive claims and the 24 sufficiency of the complaint. “Under an [Eitel] 25 analysis, [these factors] are often analyzed together.” 26 Dr. JKL Ltd. V. HPC IT Educ. Ctr., 749 F. Supp. 2d 1038, 27 1048 (N.D. Cal. 2010). Here, while Plaintiff has 28 asserted a meritorious claim for breach of contract, 9 Case 2:22-cv-05018-RSWL-MRW Document 16 Filed 03/14/23 Page 10 of 19 Page ID #:95

1 Plaintiff has not asserted a meritorious claim for

2 unjust enrichment.

3 i. Breach of Contract 4 To properly plead a breach of contract claim, a 5 plaintiff must prove: (1) the existence of a valid 6 contract; (2) plaintiff performed its obligations under 7 the contract; (3) defendant failed to perform its 8 obligations under the contract; and (4) this non- 9 performance resulted in damages to the plaintiff. 10 Sheldon Abend Revocable Tr. v. NBC Universal, Inc., 11 No. CV 11-37 DSF (SHX), 2011 WL 13220378, at *1 (C.D. 12 Cal. June 28, 2011). 13 Here, Plaintiff and Defendants entered a valid 14 contract, the Agreement, to buy and sell Refinish 15 Products. See generally Mot.; Ex. A, ECF No. 2. There 16 is no evidence to suggest that Defendants did not intend 17 to be legally bound by the Agreement and its terms. 18 Moreover, Plaintiff alleges it has performed and 19 fulfilled all obligations and conditions required under 20 the Agreement. Compl. ¶ 28. 21 Furthermore, Plaintiff alleges Defendants failed to 22 meet their obligations as required by the Agreement. 23 Id. ¶¶ 24-25. Specifically, Defendants failed to meet 24 the Minimum Purchase Requirement under the Agreement, 25 with an outstanding balance of $275,849.00 owed. Id. 26 As part of the Agreement, Defendants also failed to 27 refund 110% of the Consideration. Id. ¶ 26. Therefore, 28 Plaintiff has sufficiently alleged a breach of contract 10 Case 2:22-cv-05018-RSWL-MRW Document 16 Filed 03/14/23 Page 11 of 19 Page ID #:96

1 claim against both Defendants.

2 ii. Unjust Enrichment

3 Generally, California law does not permit a 4 standalone cause of action for unjust enrichment. 5 Paracor Fin., Inc. v. Gen. Elec. Capital Corp., 96 F.3d 6 1151, 1167 (9th Cir. 1996). Unjust enrichment is a 7 quasi-contract that is implied by law to return the 8 aggrieved party to the position they were in before they 9 provided the benefit to the unjustly enriched party. 10 Id. An unjust enrichment cause of action also fails if 11 the parties are bound by an enforceable express 12 contract. Durell v. Sharp Healthcare, 183 Cal. App. 4th 13 1350, 1370 (2010). Here, because the Court finds the 14 Agreement to be an existing valid contract, Plaintiff’s 15 unjust enrichment claim fails as a matter of law. 16 For these reasons, the Court DENIES Plaintiff’s 17 Motion with respect to Plaintiff’s claim for unjust 18 enrichment. 19 c. Sum of Money at Stake in the Action 20 “Under the [fourth] Eitel factor, the court must 21 consider the amount of money at stake in relation to the 22 seriousness of [the] [d]efendant’s conduct.” PepsiCo, 23 Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1172, 1176 (C.D. 24 Cal. 2002). The Court will review declarations, 25 calculations, and other damages documentation to 26 determine whether the sum of money at stake is 27 appropriate. HICA Educ. Loan Corp. v. Warne, No. 11-CV- 28 04287-LHK, 2012 WL 1156402, at *3 (N.D. Cal. Apr. 6, 11 Case 2:22-cv-05018-RSWL-MRW Document 16 Filed 03/14/23 Page 12 of 19 Page ID #:97

1 2012).

2 Here, Plaintiff requests $275,849.00 in expectation

3 damages for the Defendants’ non-fulfillment of the 4 Minimum Purchase Requirement, as well $22,000.00 as 5 liquidated damages pursuant to the Consideration 6 repayment term in the Agreement. Mot. at 8:26-28. 7 While the Court finds that Plaintiff’s request for 8 a refund on the Consideration is reasonable considering 9 Defendants’ alleged breach, an award of the remaining 10 balance does not reflect the actual damages incurred by 11 Plaintiff. 12 An award of contract damages is meant to compensate 13 the aggrieved party “for the loss of his ‘expectational 14 interest’ — the benefit of his bargain which full 15 performance would have brought.” Runyan v. Pac. Air 16 Indus., Inc., 2 Cal. 3d 304, 316 n.15 (1970). “The goal 17 is to put the plaintiff in as good a position as [it] 18 would have occupied if the defendant had not breached 19 the contract.” Lewis Jorge Constr. Mgmt., Inc. v. 20 Pomona Unified Sch. Dist., 34 Cal. 4th 960, 967 (2004) 21 (internal quotation marks omitted). However, “[d]amages 22 must, in all cases, be reasonable, and where an 23 obligation of any kind appears to create a right to 24 unconscionable and grossly oppressive damages, contrary 25 to substantial justice, no more than reasonable damages 26 can be recovered.” Cal. Civ. Code § 3359. 27 Here, Plaintiff fails to support its request for 28 expectation damages in the amount of $275,849.00. The 12 Case 2:22-cv-05018-RSWL-MRW Document 16 Filed 03/14/23 Page 13 of 19 Page ID #:98

1 measure of damages here should be for the profit

2 Plaintiff would have made had Defendants fulfilled the

3 Agreement and purchased the Minimum Purchase 4 Requirement. Plaintiff does not offer any evidence or 5 calculation method for determining its lost profit. See 6 generally Mot. Instead, Plaintiff fails to explain how 7 awarding $275,849.00 would not amount to a windfall, in 8 that Plaintiff would possess both (1) compensation for 9 the products not actually sold to Defendants, as well as 10 (2) retain the Refinish Products, which Plaintiff may 11 now sell to another buyer. 12 Therefore, the Court finds that awarding Plaintiff 13 $275,849.00 is unsupported, unreasonable, and would be 14 “oppressive” and “contrary to substantial justice.” 15 Cal. Civ. Code § 3359. Accordingly, the Court DENIES 16 Plaintiff’s request for $275,849.00 in expectation 17 damages. 18 Given Plaintiff’s failure to substantiate why it 19 should recover the remaining balance on the Refinish 20 Products it did not actually supply, the Court finds 21 that the fourth Eitel factor does not weigh in favor of 22 entering default. See generally Compl.; Mot. 23 d. The Possibility of a Dispute Concerning the 24 Material Facts 25 The fifth Eitel factor examines the likelihood of a 26 dispute between the parties regarding the material facts 27 in the case. A defendant is “deemed to have admitted 28 all well-pleaded factual allegations” in the complaint 13 Case 2:22-cv-05018-RSWL-MRW Document 16 Filed 03/14/23 Page 14 of 19 Page ID #:99

1 upon entry of default. DirecTV, Inc. v. Hoa Huynh, 503

2 F.3d 847, 851 (9th Cir. 2007).

3 This factor weighs towards granting default 4 judgment. There is a low possibility of dispute as the 5 Complaint aptly demonstrates that Defendants breached 6 the Agreement by not fulfilling the Minimum Purchase 7 Requirement and in turn, not refunding the Consideration 8 it was required to return. See generally Compl. 9 Additionally, due to Defendants’ lack of response after 10 default was entered against them, they have failed to 11 dispute any material facts. 12 e. The Possibility of Excusable Neglect 13 Excusable neglect considers factors such as 14 “prejudice . . ., the length of the delay and its 15 potential impact on judicial proceedings, the reason for 16 the delay, including whether it was within the 17 reasonable control of the movant, and whether the movant 18 acted in good faith.” J.L. v. Moreno Valley Unified 19 Sch. Dist., No. CV 09-1978 ODW (PJWx), 2010 WL 1708839, 20 at *1 (C.D. Cal. Apr. 20, 2010) (internal quotation 21 marks and citations omitted). 22 Excusable neglect is negligible, as Defendants 23 received the Summons, Complaint, and instant Motion. 24 Defendants failed to either oppose the Motion or request 25 an extension to file an opposition. Thus, this factor 26 weighs in favor of default. 27 /// 28 /// 14 Case 2:22-cv-05018-RSWL-MRW Document 16 Filed 03/14/23 Page 15 of 19 Page ID #:100

1 f. Public Policy Favoring Decisions on the

2 Merits

3 The Ninth Circuit has stated that “[c]ases should 4 be decided upon their merits whenever reasonably 5 possible.” Eitel, 782 F.2d at 1472. However, “this 6 preference, standing alone, is not dispositive.” 7 PepsiCo, 238 F. Supp. 2d at 1177. The breach of 8 contract claim cannot be adjudicated, as Defendants 9 failed to answer or appear in this Action. While this 10 factor may weigh against entering default judgment, in 11 total, the Eitel factors weigh towards granting in part 12 and denying in part default judgment. 13 Therefore, the Court GRANTS in part and DENIES in 14 part the Motion considering the remaining factors. 15 4. Character and Amount of Plaintiff’s Recovery 16 Plaintiff requests $275,849.00 in expectation 17 damages, $22,000.00 in liquidated damages, $402.00 for 18 filing fees in accordance with Local Rule 54-3.1, and 19 $240.90 for service of process fees in accordance with 20 Local Rule 54-3.2. See generally Mot. 21 a. Breach of Contract Damages 22 Where there is a successful claim for a breach of 23 contract, the baseline measurement for damages is 24 determined by what would make the prevailing, non- 25 breaching party “‘whole,’ that is, enough to place the 26 non-breaching party in the same position as if the 27 breach had not occurred.” Postal Instant Press, Inc. v. 28 Sealy, 43 Cal. App. 4th 1704, 1709 (1996) (quoting 15 Case 2:22-cv-05018-RSWL-MRW Document 16 Filed 03/14/23 Page 16 of 19 Page ID #:101

1 Applied Equip. Corp. v. Litton Saudi Arabia, Ltd., 7

2 Cal. 4th 503, 515 (1994)).

3 In this case, these damages are addressed as 4 expectation damages. As previously discussed above, 5 Plaintiff’s request for $275,849.00 in expectation 6 damages is unsupported, and it would be unreasonable or 7 “contrary to substantial justice” to award Plaintiff 8 such damages. Cal. Civ. Code § 3359; see BASF Corp. v. 9 ENS, Inc., No. 2:22-cv-00577-ODW (GJSx), 2022 U.S. Dist. 10 LEXIS 208357, at *12-13 (C.D. Cal. Nov. 16, 2022) 11 (holding under very similar facts that a plaintiff’s 12 request for expectation damages was unsupported and 13 unreasonable because the plaintiff offered no evidence 14 or calculation method in determining said damages). 15 Therefore, Plaintiff’s request for expectation 16 damages of $275,849.00 is DENIED. 17 b. Liquidated Damages 18 Plaintiff’s request for the return of the 19 Consideration pursuant to a provision in the Agreement 20 qualifies as a request for liquidated damages. See BASF 21 Corp. v. Al’s Body Shop of Huntington Park, Inc., No. CV 22 19-4306-RSWL-JPR, 2019 U.S. Dist. LEXIS 194985, at *15 23 (C.D. Cal. Nov. 7, 2019). “Liquidated damages 24 constitute a sum which a contracting party agrees to pay 25 or a deposit which he agrees to forfeit for breach of 26 some contractual obligation.” ABI, Inc. v. City of Los 27 Angeles, 153 Cal. App. 3d 669, 684. 28 To determine whether liquidated damages are 16 Case 2:22-cv-05018-RSWL-MRW Document 16 Filed 03/14/23 Page 17 of 19 Page ID #:102

1 appropriate, the Court must examine whether the

2 liquidated damages clause would be unenforceable as a

3 penalty. See McGuire v. More-Gas Invs., LLC, 220 Cal. 4 App. 4th 512, 522 (2013). If the liquidated damages are 5 disproportionate compared to the actual damages 6 anticipated, then the provision is considered a penalty. 7 Howard v. Babcock, 6 Cal. 4th 409, 425 (1993). As a 8 result, the penalty is deemed ineffective, and the 9 plaintiff can only recover the actual damages sustained. 10 Perdue v. Crocker Nat’l Bank, 38 Cal. 3d 913, 931 11 (1985). 12 Here, Defendants fulfilled less than 20% of the 13 Minimum Purchase Requirement, and therefore Plaintiff 14 may recover $22,000.00 as liquidated damages, provided 15 the liquidated damages term does not constitute a 16 penalty. The Agreement sets forth decreasing 17 percentages of a refund in the event that Defendants 18 fulfilled a greater portion of the Minimum Purchase 19 Requirement. Thus, the total refund amount is 20 reasonably proportionate to anticipated actual damages 21 and directly linked to the circumstances of any breach. 22 Accordingly, the Court concludes the liquidated damages 23 term is not disproportionate to the actual damages 24 anticipated and is not viewed as a penalty. See, e.g., 25 BASF Corp. v. SSM Auto. Grp., Inc., No. 5:21-cv-01191- 26 MEMF (SHKx), 2022 U.S. Dist. LEXIS 119750, at *14-15 27 (C.D. Cal. May 17, 2022) (finding that a similar 28 liquidated damages provision was not disproportionate 17 Case 2:22-cv-05018-RSWL-MRW Document 16 Filed 03/14/23 Page 18 of 19 Page ID #:103

1 and should not be viewed as a penalty).

2 Therefore, Plaintiff’s request of liquidated

3 damages pursuant to the provision in the Agreement is 4 GRANTED in the amount of $22,000.00. 5 c. Clerk’s Fees and Fees for Service of 6 Process 7 Finally, Plaintiff seeks to recover $402.00 for 8 Clerk’s filing fees and $240.90 for service of process 9 on Defendants. Mot. at 10:1-2. Local Rule 54-1 and 10 Federal Rule of Civil Procedure 54(d) provide that a 11 prevailing party is entitled to an award of costs 12 incurred. 13 Accordingly, Plaintiff’s request for Clerk’s filing 14 fees and service of process is GRANTED in the amount of 15 $642.90. 16 /// 17 /// 18 /// 19 /// 20 /// 21 /// 22 /// 23 /// 24 /// 25 /// 26 /// 27 /// 28 /// 18 Case 2:22-cv-05018-RSWL-MRW Document 16 Filed 03/14/23 Page 19 of 19 Page ID #:104

1 III. CONCLUSION

2 Based on the foregoing, the Court GRANTS

3 Plaintiff’s Motion for Default Judgment as to the breach 4 of contract claim and DENIES Plaintiff’s Motion as to 5 the unjust enrichment claim. In sum, Plaintiff has 6 sufficiently pled breach of contract and is awarded 7 $22,642.90: $22,000.00 in liquidated damages; $402.00 in 8 Clerk’s fees pursuant to Local Rule 54-3.1; and $240.90 9 in fees for service of process pursuant to Local Rule 10 54-3.2. 11 12 IT IS SO ORDERED. 13 14 DATED: March 14, 2023 /s/Ronald S.W. Lew HONORABLE RONALD S.W. LEW 15 Senior U.S. District Judge 16

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