Indian Hills Holdings, LLC v. Frye

Opinion

LED 2 | NOV 17 2021 | 3 douthen US DISTRICT Gout I" 4 BY □□□□□ > 6 7 10 11 || INDIAN HILLS HOLDINGS, LLC, a ) Case No.: 3:20-cv-00461-BEN-AHG California limited liability company, ) 12 Plaintiff ) ORDER GRANTING MOTION FOR 13 ) DEFAULT JUDGMENT AS TO Vv. ) DEFENDANT CONSTRUCTION & 14 CHRISTOPHER FRYE, an individual: BESEGN FRUEE Se Sai □□□ 15 || CONSTRUCTION & DESIGN 16 |] PROFESSIONALS, CORP., an Arizona) [PCF No 15] domestic for profit (business) corporation, 17 ) Defendant. ) Ds 1. INTRODUCTION 19 Plaintiff INDIAN HILLS HOLDINGS, LLC, a California limited liability company 20 (“Plaintiff or “THH”) alleges that Defendants CONSTRUCTION & DESIGN 21 PROFESSIONALS, CORP., an Arizona corporation (“CDP”), and CHRISTOPHER 22 FRYE, an individual and the owner of CDP (“Mr. Frye”) (collectively, “Defendants”) took 23 Plaintiff's money in exchange for promising to provide Plaintiff with goods. See generally 24 Complaint, ECF No. | (“Compl.”). However, even though Plaintiff sent Defendants the 25 money, Plaintiff never received the goods, and Defendants have not refunded Plaintiff's 26 money. /d. 27 Before the Court is Plaintiff's Motion for Default Judgment against Defendant CDP 28 A.

1 ||in the amount of $47,000.00 plus attorney’s fees and costs (the “Motion”). ECF No. 15. 2 || The Motion was submitted on the papers without oral argument pursuant to Civil Local 3 || Rule 7.1(d)(1) and Rule 78(b) of the Federal Rules of Civil Procedure. ECF No. 17. After 4 || considering the papers submitted, supporting documentation, and applicable law, the Cour 5 || GRANTS Plaintiff's Motion. 7 This case involves a tripartite relationship pursuant to which IHH paid Defendants 8 ||to purchase Cultivation “Adult” Extreme Cubes (the “Cubes”),'! and Defendants, in turn. 9 ||contracted with ICT Centurion Investments, LLC, a suspended Colorado limited liability 10 company (“ICT”), to sell Defendants the Cubes it planned to sell to Plaintiff. Motion. 1] || ECF No. 15 (“Mot.”) at 2:4-14. When ICT rescinded its contract with Defendants and sold 12 ||the Cubes to another party, Defendants were unable to deliver the Cubes to Plaintiff yet 13 ||refused to refund the amounts Plaintiff had already paid. Id. 14 A. Statement of Facts° LS a The Cubes at issue in this case are modular cubes used to cultivate, grow, and/or 16 || produce marijuana. ECF No. 7-4 at 63, 69. 7 The Court takes judicial notice of these publicly available facts from the Colorado Secretary of State website. FED. R. EVID. 201(c)(1) (allowing courts to take judicial notice 18 || sua sponte); L'Garde, Inc. v. Raytheon Space and Airborne Sys., 805 F. Supp. 2d 932, 937- 19 (C.D. Cal. 2011) (taking judicial notice of records from the California Secretary of State website); see also https://www.sos.state.co.us/ucc/pages/biz/bizSearch.xhtml 20 || (showing ICT’s corporate status). After the Court enters a defendant’s default, it must accept “‘the well-pleaded factual allegations’ in the complaint ‘as true.’”” DIRECTV, Inc. v. Hoa Huynh, 503 F.3d 847, 854 22 Cir. 2007). Thus, the Court relies on the facts in the Complaint along with the facts 93 established from other evidence in the record, such as the declarations submitted in support of Plaintiffs previous motions to serve Defendants via substitute service. See ECF Nos. 24 115, 7. However, the “defendant is not held to admit facts that are not well-pleaded or to 25 admit conclusions of law.” DIRECTV, 503 F.3d at 854. The Court also relies on certain facts in Mr. Frye’s Motion to Dismiss, which confirm facts discussed in the Complaint. As 26 | discussed below, that motion references many facts that were not discussed or referenced 27 the Complaint. In reviewing that motion, the Court is mindful that “[a] document filed pro se is to be liberally construed ... and a pro se [pleading], however inartfully pleaded, 28 be held to less stringent standards than formal pleadings drafted by lawyers.”

1 IHH is a California limited liability company organized in July 2019, with two 2 ||managing members: Vincent Espinoza and Armand Nannicola.* Declaration of Armand 3 ||Nannicola in Support of Plaintiff's Motion for Order Authorizing Substitute Service of 4 ||Summons, ECF No. 7-2 (“Nannicola Decl. No. 1”) at 1, {§ 1-2; Declaration of Vincent 5 ||Espinoza in Support of Plaintiff's Motion for Order Authorizing Substitute Service of 6 ||Summons, ECF No. 7-3 (“Espinoza Decl. No. 1”) at 1, § 1. 7 On October 23, 2019, at 10:32 a.m., Mr. Espinoza sent Mr. Frye an e-mail stating 8 || that IHH “would like to submit [a letter of intent] regarding 15 cultivation cubes that are 9 || for sale and located in the Palm Springs area.” Exhibit I to Declaration of Daniel Heilbrun 10 Support of Plaintiff's Motion for Order Authorizing Substitute Service of Summons, 11 |}ECF No. 7-4 (“Heilbrun Decl. No. 1”) at 69. He stated that once he received that 12 . . ee 3 Erickson v. Pardus, 551 U.S. 89, 94 (2007) (internal quotation marks and citation omitted). 14 || With that being said, “[g]enerally, unless the court converts the Rule 12(b)(6) motion into 15 ||@ Summary judgment motion, it cannot consider material outside the complaint (e.g., facts presented in briefs, affidavits or discovery materials).” Phillips & Stevenson, California 16 || Practice Guide: Federal Civil Procedure Before Trial § 9:211 (The Rutter Group April 17 ||2920). Courts may “consider exhibits attached to a complaint and incorporated by reference to be part of the complaint.” Petrie v. Elec. Game Card, Inc., 761 F.3d 959, 964 18 Cir. 2014) (affirming the lower court’s consideration of exhibits attached to a 19 complaint on a motion to dismiss); see also FED. R. Civ. P. 10(C) (explaining that “[a] copy of a written instrument that is an exhibit to a pleading is a part of the pleading for all 20 || purposes”). Thus, “[a] copy of a written instrument that is an exhibit to a pleading,” like 21 ||the agreement attached to Plaintiffs Complaint in this case, “is a part of the pleading for all purposes.” Coto Settlement v. Eisenberg, 593 F.3d 1031, 1038 (9th Cir. 2010). 22 |) However, the Court cannot consider Mr. Frye’s statements in his Motion to Dismiss that 3 ||rely on material outside the complaint in ruling on this Motion. Where the facts in Mr. Frye’s Motion to Dismiss confirm or elaborate on facts in the Complaint and Motion for 24 || Default Judgment, however, the Court refers to and relies on such facts. 95 ||" The Court also takes judicial notice of these publicly available facts from the California Secretary of State website. See July 21, 2019, Articles of Organization, 26 |! California Secretary of State (https://businesssearch.sos.ca.gov/Document/RetrievePDF? 27 || 1d=201920510423-26606203); August 23, 2019, Statement of Information, California Secretary of State (https://businesssearch.sos.ca.gov/Document/RetrievePDF?7Id=2019 28 |/20510423-26771506). As

1 ||information, IHH “will decide whether to move forward with a purchase.” Jd. Z On October 25, 2019, Mr. Frye responded at 3:57 p.m., asking Mr. Espinoza to 3 ||“please respond to this email if you can agree to my requests,” which included the 4 || following: 5 1. You are not responsible for paying me and this is coming from the Seller.° However, I do request that you require my approval of any final 6 purchase agreement confirming that all parties have been adequately 2 compensated. 2. When I do [is to] identify and introduce all parties that you further agree 8 to keep me up to date and comprised of any significant events, unless, of course, I am in the actual discussions. ? 3. You are not, in any way, bound to use my company to dismantle, 10 transport or set-up the Cubes, or even solicit a bid from me, however we are available for this. ECF No. 7-4 at 68 (emphasis added). Mr. Frye also represented to Mr. Espinoza that he 12 was “the sole shareholder of his business[,] CDP.” Espinoza Decl. No. | at 1, § 2, 2,97. 13 On November 7, 2019, Mr. Frye shared a quote with Mr. Espinoza for Mr. Frye to 14 perform work in California City, California. Espinoza Decl. No. | at 1,93. THH alleges 15 that on the same day, it entered into an agreement with Defendants to purchase eight Cubes 16 for $182,000.00. Compl. at 3:12-4:9; Declaration of Armand Nannicola in Support of 17 Mot., ECF No. 15-3 (“Nannicola Decl. No. 2”) at 1-2, q 2. 18 This agreement, or Asset Purchase Agreement (the “APA”), was attached both to 19 the Complaint as well as IHH’s Motion for Default Judgment and states that it is between 20 21 Plaintiff states in its Motion that at some time after signing the contract on November 22 2019, it discovered that the Cubes it was purchasing were never in the possession of Mr. 23 || Frye or CDP, but instead, Defendants were simultaneously buying the Cubes from ICT for $109,000.00, a difference of $73,000.00. Nannicola Decl. No. 2 at 2,94. In his Motion 24 || to Dismiss, Mr. Frye also states that Plaintiff “never signed the Asset Purchase Agreement, 25 || knew Defendant did not have Title to the Cannabis Grow Rooms and they were located on Real Property (owned by Abdel Maldonado) not owned or under the control of Defendant.” 26 |IECF No. 19 at 3:1-3. The above e-mail, along with others, indicates Plaintiff knew 27 Defendants did not own the Cubes and were, instead, being hired as a broker for IHH. Thus, the Court rejects Plaintiff's argument that it was unaware Defendants did not own 28 || the Cubes. -4.

1 and an undefined buyer; however, the APA did include a signature line for Vinny 2 ||Espinoza. ECF Nos. 1-2 and 15-4 at 2, 7. The APA required the seller, or CDP, to “sell 3 Buyer,” and “Buyer [to] purchase from Seller, on the terms and conditions set forth in 4 ||this Agreement, the specific property described below, as determined by a complete 5 ||inventory and accounting to be taken as shown on the attached inventory (Exhibit A).” 6 || ECF Nos. 1-2 and 15-4 at 2. The total costs to be paid under the APA were as follows: 7 Quantity: | 2 eseriptions □□□ 8 12’°x24’x12’ Cultivation “Adult” Extreme Cube $50,050.00 9 12’x24’x12’ Cultivation “Adult” Extreme Cube $42,235.00 10 12’x24’x12’ Cultivation “Adult” Extreme Cube $42,235.00 11 12°x24’x12’ Cultivation “Adult” Extreme Cube $47,480.00

13 |] ECF Nos. 1-2 and 15-4 at 3. 14 The APA required the buyer to deposit $50,000.00 into a specified bank account by 15 || November 21, 2019, leaving a balance of $132,000.00 to be paid on the closing date, when 16 inventory, equipment, and fixtures to be transferred [would] be located at Santa Maria, 17 || California, and [would] not be removed without the written consent of the Buyer.” ECF 18 || Nos, 1-2 and 15-4 at 3. The APA also includes the following representations: 19 a. That Seller is the sole owner of the Assets with full right to sell or dispose of it as Seller may choose, and no other person has 20 any claim, right, title, interest, or lien in, to, or on the Business 2] or Assets.° b. That Seller has no undischarged obligations affecting the Assets being sold under this Agreement. 23 24 25 ————————— This representation contradicts the e-mails between the parties indicating that 26 || Defendants were acting as a broker. However, the Court finds it unreasonable to believe 47 || that Plaintiff was unaware Defendants were procuring the Cubes from a third-party in light of the e-mails exchanged between the parties pre-dating the APA. Exhibit I to Heilbrun 28 ||Decl., ECF No. 7-4 at 68. -5.

1 c. That there are presently and will be at the time of closing, no liens or security interests against the property and Assets being 2 transferred herein. 3 d. Consents. No consent from or other approval of a governmental entity, board of directors, or any other person is necessary in 4 connection with the execution of the Agreement, or the 5 consummation by Seller of the Assets by Buyer in the manner previously conducted by Seller. 6 e. Inventory. The Inventory is merchantable and fit for its intended 7 use and is free of any material defects in workmanship. The finished goods Inventory is of a type, quantity, and quality usable 8 and salable in the ordinary course of business. 9 noes b. Seller assumes all risk of loss, damage, or destruction to the 10 Assets subject to this Agreement until the closing. If the Assets 11 are damaged or lost prior to Closing such that their valuation is affected, Seller agrees to negotiate in good faith a reasonable 12 reduction in the Payment Purchase Price to account for the lost 13 value of the Assets. 14 ECF Nos. 1-2 and 15-4 at 3, 5. 15 The APA also requires the Seller to “jointly and severally indemnify and hold Buyer 16 its assigns harmless from any and all claims of any nature whatsoever.” ECF Nos. 1- 17 and 15-4 at 4. It further provides that it “shall be construed under and in accordance with 18 the laws of the State of California.” ECF Nos. 1-2 and 15-4 at 6. It also provides for 19 ||Tecovery of attorney’s fees by providing that “[s]hould any arbitration or litigation be 20 commenced between the parties to this Agreement concerning the rights and duties of 21 either party in relation to the Business or this Agreement, the prevailing party in the ... litigation shall be entitled to (in addition to any other relief that may be granted) a 3 ||teasonable sum and attorneys’ fees in the ... litigation.” ECF Nos. 1-2 and 15-4 at 6. 4 Finally, it states that it will “be executed on behalf of Construction & Design Professionals 5 by Chris Frye and on behalf of by Vinny Espinoza.” ECF No. 15-4 6 || at 27 On November 15, 2019, at 7:32 a.m., Mr. Frye sent Mr. Espinoza, Mr. Nannicola, 28 and Mr. Waheed an e-mail stating the following: af.

1 This is a Go, at the price we discussed upon your approval and execution of this Agreement. If possible, and convenient for 2 you, I can meet with you on-site Tuesday, November 19th. As a 3 reminder, we can do complete Facility Development for you; including electrical, foundation work, (as I hold both a C-10 4 Electrical and General Engineering “A” license) 5 Assembling these Cubes and any others you are purchasing is 6 also within our areas of expertise. 7 We can provide you with a turnkey operation, ready for them to get to work for you. 8 Best Regards, 9 Chris Frye 10 || Exhibit I to Heilbrun Decl. No. 1, ECF No. 7-4 at 71. Attached to this e-mail is a document entitled, “Asset Purchase Agreement DRAFT (XCubes) Rev 3 15_07_2019.pdf.”” Id. 12 Several months later, on January 2, 2020, at 10:17 a.m., Mr. Espinoza e-mailed Mr. 13 Frye, asking, “OK, so these PODS[,] you [are] just basically buying them and then reselling 14 them to us?” Exhibit H to Heilbrun Decl. No. 1, ECF No. 7-4 at 63. Mr. Frye responded 15 to Mr. Espinoza and Mr. Nannincola that day stating: 16 Yes, buy/selling of surplus Cannabis equipment is part of our 17 business. Our value added is to quality check, work with the Sellers on a realistic price, work with our Buyers to make sure re they are a good fit and to work with all Parties to make sure we 19 have a win/win transaction—no hangovers or after-purchase 20 problems. Most everything we sell we offer ancillary services, start-up, 21 adding any missing components, customizing, modifying etc. 22 23 fp” Although this e-mail indicates that the APA had not been signed as of November 15, 24 |/2019, the APA also contains a term stating that it “shall be effective as of the date first 25 || written above,” which was November 7, 2019. ECF Nos. 1-2 and 15-4 at 7. However, Mr. Espinoza’s Declaration also states that in early 2020, he met Mr. F rye in Campo, California 26 |/to negotiate the terms of the sale of goods, implying that the contract at issue could not 27 || have been final in November 2019, if the terms were stil] subject to negotiation. Espinoza Decl. No. 1 at 1,2. As discussed later, the Court finds that because the APA falls under 28 || various exceptions to the Statute of Frauds, it may enforce the APA. iff.

1 I do have a grow-expert on our staff who can outfit these for you and he is actually based in Riverside County, CA. Id.; see also Exhibit B to the APA, ECF Nos. 1-2 and 15-4 at 9 (stating “Seller is a full- 4 services engineering and construction company, experienced and qualified to set up, ir 5 working order, the Asset”). 6 On January 27, 2020, Mr. Nannicola hired movers to pick up the Cubes from an agreed upon location at a cost of $5,000.00. Nannicola Decl. No. 2 at 2, § 3. However g Upon arrival, the Cubes were not in Defendants’ possession. /d. at 2,94. Instead, Plaintifi 9 argues that it discovered at some later date, that Defendants were simultaneously buying 10 these Cubes from ICT for $109,000.00, resulting in an alleged profit to Defendants of $73,000. Jd. at 2,94. However, ICT had found another buyer and never transferred the 1D Cubes to Defendants, resulting in ICT refusing to honor its contract with Defendants, and 13 Defendants failing to transfer the Cubes to Plaintiff. Jd. at 2, 9 5. 14 Approximately four months later, on March 9, 2020, at 5:16 p.m., Defendants’ 15 attorney at the time, Karen O’Neil, Esq. (“Ms. O’Neil”), sent Plaintiff's counsel an e-mail, 16 indicating that while the original seller of the cubes did not perform, IHH had also failed 17 to timely perform. Exhibit F to Heilbrun Decl. No. 1, ECF No. 7-4 at 26. This e-mail 1g provides as follows: 19 There is a good deal of frustration on all sides of this transaction, that could have been avoided had the Seller properly performed 20 and had your client performed more timely. Had your client >] performed timely, and not required an extension, it is unlikely that the Seller would have unilaterally terminated the 22 agreement. 23 ||/d. (emphasis added). 24 Mr. Nannicola states that he “personally caused Indian Hills Holdings to tender 25 $182,000.00 in reliance of the contract negotiated regarding the sale of goods that is the 26 || subject of this dispute.” Nannicola Decl. No. | at 1,93. However, even though Defendants 27 || were paid in full, they never delivered the Cubes negotiated in the APA. /d. at 1, 3. 28 || Further, when asked to return the money, Mr. Frye claimed he did not have the total amount -8.

1 ||tendered, having misplaced $42,000.00 and still has not returned the entire amount to IHH 2 ||Nannicola Decl. No. | at 1, § 4. However, shortly after filing this instant lawsuit 3 ||Defendants returned $140,000.00 to IHH, meaning IHH is still owed an outstanding 4 $42,000.00. Nannicola Decl. No. 2 at 2, 9§ 6-7. 5 Plaintiff's attorney, Daniel P. Heilbrun, Esq. (“Mr. Heilbrun”), states that he has 6 || spent 26.9 hours of work on this case at a rate of $300.00 per hour, resulting in total fees 7 || of $8,070.00. Declaration of Daniel P. Heilbrun in Support of Plaintiff's Motion □□□ 8 || Default Judgment, ECF No. 15-2 (“Heilbrun Decl. No. 2”) at 2,95. He also advises □□□□ 9 ||his client incurred costs totaling $2,646.05, which consist of a $400.00 filing fee and 10 ||$2,246.05 for service of process. Jd. at 2,96. He also states that he informed Mr. Frye ot 11 ||CDP’s default, and Mr. Frye acknowledged that CDP would be defaulted, and that “he was 12 ||not going to file a response on behalf of [CDP] and that he was prepared for [CDP] to be 13 || defaulted.” Jd. at 2,8. Mr. Heilbrun explains that additional attorney’s fees were incurred 14 |/in this case due to Defendants’ avoiding service of process for over a year, forcing Plaintifi 15 ||to file additional motions for service. Jd. at 2, 9 9. 16 B. Procedural History 17 On March 11, 2020, Plaintiff filed the Complaint against Defendants alleging claims 18 || for relief for (1) breach of written contract; (2) fraud; and (3) unjust enrichment. Compl. 19 || That same day, the Clerk of the Court issued the summons in this case. ECF No. 2. 20 On May 30, 2020, Plaintiff filed a Motion for Service by Publication, seeking to 21 |/serve both the individual and corporate defendants by publication. ECF No. 5. On 22 || November 18, 2020, this Court denied that Motion without prejudice because, inter alia, 23 ||(1) Plaintiff's attempts to serve Defendants by mail did not effectuate service of process, 24 Plaintiff had failed to show reasonable diligence in attempting to serve the individual 25 || Defendant, Mr. Frye, and (3) service on a foreign corporation may not be accomplished by 26 || publication. See Indian Hills Holdings, LLC v. Frye, 337 F.R.D. 293, 299 (S.D. Cal. 2020). 27 || The Court gave Plaintiff a final ninety (90) day extension to serve Defendants. 28 On March 25, 2021, the Court issued an order granting Plaintiff's motion for an -9.

1 ||}order to serve CDP by service upon the Secretary of State, which had been filed or 2 ||February 17, 2021. ECF Nos. 7, 8. On April 26, 2021, Plaintiff filed a Proof of Service by personal service, showing i 4 served CDP on April 20, 2021, by service upon the Arizona Secretary of State 5 || Corporations Commission. ECF No. 9. 6 On August 5, 2021, Plaintiff filed a Request to Enter CDP’s Default on the basis thai 7 ||CDP failed to file a responsive pleading within twenty-one (21) days. ECF No. 11; see 8 || also FED. R. Civ. P. 12(a)(1), 55. On August 6, 2021, the Clerk of the Court entered CDP’: 9 || default accordingly. ECF No. 12. 10 On August 18, 2021, Mr. Frye signed a Waiver of Service, meaning he had sixty 11 days from signing the waiver, or until Monday, October 18, 2021, to respond to the 12 ||Complaint. ECF No. 13; see also FED. R. Civ. P. 4(d)(3). 13 On September 8, 2021, Plaintiff filed a Motion for Default Judgment against CDP. 14 || which was scheduled to be heard on Monday, October 18, 2021, which was also the 15 ||deadline for Mr. Frye to respond to the Complaint. ECF No. 15. On October 6, 2021, 16 || before the hearing date and deadline, Plaintiff filed a Request for Entry of Default as to Mr. 17 Frye. ECF No. 16. However, because Mr. Frye had until October 18, 2021 to respond, the 18 |} Court did not enter Mr. Frye’s default. 19 On October 14, 2021, the Court took the pending Motion for Default Judgment 20 against CDP under submission. ECF No. 17. On October 15, 2021, the Friday before the 21 |/hearing on Plaintiff's Motion for Default Judgment against CDP, Mr. F rye filed an 22 ||“Answer to Complaint and Motion to Dismiss.” ECF Nos. 18, 19. This document was 23 ||deficient in a number of respects*; however, the Court issued a Discrepancy Order, 24 jj 95 ||° Among other issues, Mr. Frye’s filing (1) had no proof of service, see S.D. Cal. Civ. R. 5.2; (2) had no time and date on the motion and/or supporting documentation, see id. at 26 (3) was submitted as both an answer and a motion to dismiss when Rule 12 of the 27 || Federal Rules of Civil Procedure requires a responding party to submit either an answer or a Rule 12 motion, but not both; and (4) to the extent the filling was meant to be a Rule 12 28 || motion, Mr. Frye failed to request a hearing date from the clerk, see id. at Rule 7. □□□□□ See -10-

] accepting it Nunc Pro Tunc and setting a hearing date of Monday, November 15, 2021, a 2 10:30 a.m. ECF No. 18. 4 “When a party against whom a judgment for affirmative relief is sought has failec 5 ||to plead or otherwise defend, and that failure is shown by affidavit or otherwise, the clerk 6 must enter the party’s default.” FED. R. Civ. P. 55(a). Upon entry of default, Federal Rule 7 || of Civil Procedure 55(b)(2) provides for the entry of default judgment by the Court. Courts 8 || considering a motion for default judgment begin their analysis by deferring to “the genera 9 that default judgments are ordinarily disfavored” because “[c]ases should be decidec 10 |}upon their merits whenever reasonably possible.” NewGen, LLC v. Safe Cig, LLC, 84( 11 || F.3d 606, 616 (9th Cir. 2016) (quoting Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 12 || 1986)). Consequently, “[a] defendant’s default does not automatically entitle the plaintif: 13 || to a court-ordered judgment.” DFSB Kollective Co. v. Bourne, 897 F. Supp. 2d 871, 877 14 || (N.D. Cal. 2012) (quoting PepsiCo, Inc. v. Cal. Sec. Cans, 238 F.Supp.2d 1172, 1174 (C.D, 15 || Cal. 2002)). However, courts have discretion to grant a default judgment were appropriate. 16 || See Alan Neuman Prods., Inc. v. Albright, 862 F.2d 1388, 1392 (9th Cir. 1988). The Ninth 17 || Circuit has set forth seven factors, known as the Eite/ factors, that a district court should 18 |} consider when evaluating a motion for default judgment: 19 viet: a (1) the possibility of prejudice to plaintiff, (2) the merits of 20 plaintiff's substantive claim, (3) the sufficiency of the complaint, 21 (4) the sum of money at stake in the action, (5) the possibility of a dispute concerning the material facts, (6) whether the default 22 was due to excusable neglect, and (7) the strong policy 3 underlying the Federal Rules of Civil Procedure favoring decisions on the merits. 24 25 |) Eitel, 782 F.2d at 1471-72. “None of the factors is dispositive in itself; instead, [courts] ee 27 || also FED. R. Civ. P. 12(a)(4) (noting that “[u]nless the court sets a different time, serving a motion [to dismiss] alters these [time] periods” by requiring that an answer must be filed 28 || within 14 days of the court’s order denying a motion to dismiss). «T'l-

1 ||must balance all seven.” Core-Vent Corp. v. Nobel Indus. AB, 11 F.3d 1482, 1488 □□□□ 2 ||Cir. 1993), holding modified on other grounds by Yahoo! Inc. v. La Ligue Contre □□ 3 || Racisme Et L’Antisemitisme, 433 F.3d 1199 (9th Cir. 2006). In determining the merits of a motion for default judgment, the well-pleaded factua 5 allegations are taken as true, except as to allegations regarding the amount of damages 6 || See Fair Housing of Marin v. Combs, 285 F.3d 899, 906 (9th Cir. 2002); TeleVideo Sys.. 7 ||Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987). 8 ||TV. DISCUSSION 9 As a preliminary matter, and because it implicates the instant Motion for Defaul 10 || Judgment as to CDP, the Court notes that Mr. Frye’s recent filing does not indicate or 11 || whose behalf it is filed. See ECF No. 19. Instead, it states that “[wJhen used herein, the 12 ‘Defendant,’ may refer to one or both Defendants at any point” and does not specify 13 whose behalf (i.e., Christopher Frye, or his corporation, CDP) it was filed. However. 14 |) under the Local Rules, “[o]nly natural persons representing their individual interests in 15 || propria persona may appear in court without representation by an attorney permitted to 16 || practice pursuant to Civil Local Rule 83.3.” S.D. Cal. Civ. R. 83.3(k) (emphasis added). 17 other parties, including corporations, partnerships and other legal entities, may 18 || appear in court only through an attorney permitted to practice pursuant to Civil Local 19 ||Rule 83.3.” S.D. Cal. Civ. R. 83.3(k) (emphasis added). see also Laskowitz v. 20 || Shellenberger, 107 F. Supp. 397, 398 (S.D. Cal. 1952) (“Since a corporation cannot 21 practice law, and can only act through the agency of natural persons, it follows that it can 22 || appear in court on its own behalf only through a licensed attorney.”). Thus, even if Mr. 23 || Frye intended to file his filing on behalf of CDP, he could not do so because (1) he is not 24 || licensed and (2) even if retained counsel to appear on CDP’s behalf, that attorney could 25 |/not file a motion to dismiss a complaint against a party that has already been defaulted, like 26 CDP, but would, instead, need to move to set aside CDP’s default pursuant to Rule 55(c) 27 || of the Federal Rules of Civil Procedure. Thus, the Court treats the filing as having been 28 || filed on Mr. Frye’s behalf as an individual only. a] oe

1 Next, the Court notes that when ruling on a motion for default judgment, “a distric 2 court has an affirmative duty to look into its jurisdiction over both the subject matter anc 3 parties” given that “[a] judgment entered without personal jurisdiction over the parties 4 void.” In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999). Thus, “[t]o avoid entering a defaul 5 ||judgment that can later be successfully attacked as void, a court should determine □□□□□□□ 6 || it has the power, i.e., the jurisdiction, to enter the judgment in the first place.” Jd.; see alsc 7 || Facebook, Inc. v. Pedersen, 868 F. Supp. 2d 953, 961 (N.D. Cal. 2012) (adopting the report g |jand recommendation of the magistrate judge to “deny Facebook’s motion for defaul g ||judgment and ... dismiss this action for lack of personal jurisdiction”). “The Court is alsc 10 ||fequired to assess the adequacy of the service of process on the party against whom default 11 || 18 requested.” DFSB, 897 F. Supp. 2d at 877-78 (internal quotations omitted). 12 As to jurisdiction, generally, federal subject matter jurisdiction exists due to the 13 Presence of a federal question, see 28 U.S.C. § 1331, or complete diversity between the 14 parties, see 28 U.S.C. § 1332. In cases arising out of diversity jurisdiction, section 1331 15 || vests district courts with “original jurisdiction of all civil actions where the matter in 16 controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is 7 between . . . citizens of different States.” 28 U.S.C. § 1331(a)(1). Plaintiff's Complaint 18 pleads jurisdiction exists because Plaintiff is a California corporation suing Mr. Frye, an 19 Arizona citizen, and CDP, an Arizona corporation. Compl. at 2, 4 1. In his Motion to 20 Dismiss,’ Mr. Frye argues this Court should dismiss this case because “(t]he matter before the Court is less than $75,000.00.” ECF No. 19 at 6:27. However, Mr. Frye does not dispute living in Arizona or that CDP is an Arizona corporation. ECF No. 19 at 7:1-2. 33 Thus, complete diversity exists. Further, as to the amount in controversy, courts evaluate 34 the existence of diversity jurisdiction—including but not limited to the satisfaction of the amount in controversy—at the time of the filing of the complaint. See, e. g., Reav. Michaels 26 The Court acknowledges Mr. Frye’s motion is not presently at issue but 27 || acknowledges his arguments as part of the Court’s duty to investigate whether jurisdiction exists before entering default judgment. The Court will still address any arguments raised 28 in the opposition and reply briefs for that motion, which have yet to be submitted. Lia

1 || Stores Inc., 742 F.3d 1234, 1237 (9th Cir. 2014) (noting that “post-filing developments d 2 ||not defeat jurisdiction if jurisdiction was properly invoked as of the time of filing” 3 || (quoting Visendi v. Bank of America, N.A., 733 F.3d 863, 868 (9th Cir. 2013) (interna 4 || quotation marks omitted); see also Barefield v. HSBC Holdings PLC, 356 F. Supp. 3d 977 5 ||985 (E.D. Cal. 2018). Thus, the fact that Mr. Frye paid Plaintiff $140,000.00 following 6 || the filing of the Complaint in this case, thereby reducing the amount in controversy from 7 || $182,000.00 to $42,000.00, does not defeat the Court’s original diversity jurisdiction ove g case at the time of filing. 9 The Court must also examine the propriety of service of process. However, the 19 Court finds that not only were Defendants properly served, ample evidence exists in the 11 ||tecord to show Defendants’ awareness of this lawsuit. See Heilbrun Decl. No. 2 at 2, 98 12 || Accordingly, the Court continues by analyzing the Eitel factors. 13 A. Eiitel Factors 14 Plaintiff fails to discuss the Eite/ factors or indicate how or why they would weigh 15 in favor of entry of a default judgment. However, the Court upon weighing the factors 16 itself, finds entry of default judgment is warranted. 17 1. The Possibility of Prejudice to the Plaintiff 18 “Under the first Eitel factor, the Court must examine whether Plaintiff will be 19 || Prejudiced if the Court denies its request for entry of default judgment.” JO Grp., Inc. v. 90 Zordon, 708 F. Supp. 2d 989, 997 (N.D. Cal. 2010) (citing Eitel, 782 F.2d at 1471-72). Here, separate and aside from whether Defendants were securing the Cubes from 7 ||Someone else, and whether that third-party (i.e., ICT) breached a separate contract, the fact 93 |}remains that (1) Plaintiff paid $182,000.00 in exchange for the Cubes; (2) Defendants 4 received payment in full; (3) Defendants never provided the goods; and (4) Defendant has 5 only reimbursed $140,000.00, leaving a balance of $42,000.00. As a result, Plaintiff would 6 || Suffer prejudice if the Court denies its request for entry of default judgment. 17 2. Lhe Merits of the Substantive Claim and Sufficiency of the Complaint 28 The second and third Eite/ factors “require that a plaintiff state a claim on which the -14.

1 || [plaintiff] may recover.” PepsiCo, 238 F. Supp. 2d at 1175 (alteration in original); see alsc 2 || Danning v. Lavine, 572 F.2d 1386, 1388 (9th Cir. 1978). A complaint satisfies this tes 3 || when the claims “cross the line from conceivable to plausible.” Ashcroft v. Iqbal, 556 U.S 4 || 662, 680 (2009). As noted, the Court may treat as true those allegations in the complain 5 ||except those relating to damages. TeleVideo, 826 F.2d at 917-18. The Court analyzes the 6 three claims for relief pled in the Complaint in turn. 7 a. First Claim for Relief for Breach of Contract 8 A plaintiff pleading a claim for relief under California law must show (1) a legally 9 || enforceable contract between the parties; (2) the plaintiff's performance or excuse for non- 10 performance; (3) the defendant’s breach of that contract (e.g., by failing to perform o1 11 || performing inadequately); and (3) damage to the plaintiff caused by the defendant’s breach. 12 || Hickcox-Huffman v. US Airways, Inc., 855 F.3d 1057, 1062 (9th Cir. 2017); see alse 13 || Kingsley Mgmt., Corp. v. Occidental Fire & Cas. Co. of N. Carolina, 441 F. Supp. 3d 1016. 14 || 1024 (S.D. Cal. 2020) (Curiel, J.) (citing Reichert v. General Ins. Co., 68 Cal.2d 822 15 (1968)). 16 Plaintiff's First Claim for Relief for Breach of Contract pleads that (1) □□□□□□□□□□ 17 entered into a contract with Defendants Construction & Design Professionals Corp. and 18 || Christopher Frye,” Compl. at 7, 21; (2) “Plaintiff performed all relevant obligations under 19 contract,” id. at 7, § 22; (3) “Defendants failed to perform their obligations under the 20 ||contract,” id. at 7, § 23; and (4) “Defendant’s failure to perform its obligations under the 21 contract has resulted in damages to Plaintiff,” /d. at 7, 9 24. 22 First, in order to evaluate whether Plaintiff has stated a valid claim for relief for 23 || breach of contract, the Court must first evaluate whether the APA, which is not signed by 24 || Plaintiff, is enforceable against Defendants. The Court previously took judicial notice of 25 |/the fact that the APA was never signed by Mr. Espinoza although it appears to be signed 26 || but not dated by Mr. Frye.!° Order, ECF No. 6 at 13:25-27. As previously noted, see id. 27 No Plaintiff seems to admit that it never signed the APA because Mr. Nannicola states 28 his declaration that Mr. Frye “executed the document and returned it to him.” Nannicola 15.

] 13:12-20, Section 2201 of the California Commercial Code requires contracts for the 2 || sale of goods “for the price of $500 or more” to (1) be in writing “sufficient to indicate tha 3 |/a contract for sale has been made between the parties” and (2) “signed by the party agains 4 || whom enforcement is sought.” CAL. COM. CODE§ 2201(1); see also CAL. COM. CODE S || § 1201(b)(37) (noting that “‘signed’ includes using any symbol executed or adopted witt 6 present intention to adopt or accept a writing”). Here, the contract was for $182,000.00 7 || As such, the contract exceeded $500.00 and needed to be in writing, signed by the party tc 8 || be bound, or Defendants. 9 Even if Mr. Frye had not signed the Contract (he did), however, the Court finds the 10 || APA enforceable. There are several exceptions to the Statute of Frauds requirement se 11 forth in section 2201, where “[a] contract which does not satisfy the requirements o1 12 || subdivision (1) but which is valid in other respects is enforceable.” These exceptions 13 |/include where (1) “the goods are to be specially manufactured for the buyer and are not 14 suitable for sale to others in the ordinary course of the seller’s business and the seller. . . 15 ||has made either a substantial beginning of their manufacture or commitments for their 16 ||procurement”; (2) “the party against whom enforcement is sought admits . . . in court that 17 ||a contract for sale was made”; and/or (3) payment for the goods has already been made and 18 ||accepted. CAL. COM. CODE § 2201(3). 19 Here, by interpreting the evidence in Defendants’ favor, the first exception would 20 ||not apply because the APA, which Plaintiff attached to the Complaint, states that “It]he 21 finished goods Inventory is of a type, quantity, and quality usable and salable in the 22 ||ordinary course of business.” ECF No. 1-2 at 2, §5(e). However, the second and third 23 exceptions do apply. In Mr. Frye’s Motion to Dismiss, however, he states that “the Parties 24 |/acted upon the APA about Q4, 2019 when the first payment was made by Plaintiffs to 25 Defendant.” ECF No. 19 at 2:19-22. He also advises that IHH “drafted both Asset 26 Purchase Agreements.” Jd. at 2:24-27. Finally, he seeks to compel arbitration, thus, 27 28 No. 1 at 1-2, § 2. He never states he signed it or addresses who prepared the APA. -16-

1 ||indicating he seeks to enforce the APA. Jd. at 6:9-14. Thus, Mr. Frye, by seeking tc 2 |jenforce the APA, admits a contract was made. Thus, the second exception allowing 3 enforcement of a contract where “the party against whom enforcement is sought admits .. 4 court that a contract for sale was made” applies. 5 The third exception would also apply as Plaintiff alleges that “[i]n reliance and ir 6 ||conformity with the Agreement at issue, Plaintiff provided $182,000.00 to Defendants as 7 || full payment in accordance with the terms of the Agreement for the purchase of items.’ 8 ||Compl. at 5:11-13. As noted, the APA attached to the Complaint provides that “a balance 9 || of $132,000.00” shall be paid on the Closing Date, when the inventory, equipment, anc 10 || fixtures are transferred to a location in Santa Monica. ECF No. 1-2 at 2,§ 4. Thus, the 11 || APA attached to the complaint indicates that full payment was not due until Plaintif 12 |/received the goods, which also proves the second element of a breach of contract claim 13 |) performance by the plaintiff. See also CAL. CoM. CODE § 2310(a) (providing that unless 14 || the contract provides otherwise, “[p]ayment is due at the time and place at which the □□□□□□ 15 to receive the goods even though the place of shipment is the place of delivery”). Mr. 16 ||Frye’s Motion to Dismiss admits that “[t]here were three payments made to Defendant by 17 |) Plaintiff.” Jd. at 3:10-12. Thus, it appears “payment for the goods had already been made 18 accepted,” allowing enforcement of the APA under the third exception to the Statute 19 || of Frauds as well. 20 Finally, the Complaint adequately pleads that CDP breached the contract by failing 21 deliver the Cubes, which caused Plaintiff damages. Compl. at 7, □□ 23-24. Thus, the 22 || Court finds that the Complaint sufficiently pleads a claim for relief for breach of contract, 23 that claim for relief has merit in satisfaction of the first and second Eitel factors. 24 b. Second Claim for Relief for Fraud 25 As to the second claim for relief, “[t]he elements of fraud are (1) misrepresentation; 26 ||(2) knowledge of falsity; (3) ‘intent to defraud, i.e., to induce reliance;’ (4) justifiable 27 ||reliance; and (5) resulting damage.” Engalla v. Permanente Med Grp., Inc., 15 Cal. 4th 28 ||951 (1997) , as modified (July 30, 1997); see also Dent v. Nat’! Football League, 902 F.3d

1 || 1109, 1125 (9th Cir. 2018) (citing Engalla, 15 Cal. 4th at 974 (“The elements of fraud tha’ 2 || will give rise to a tort action for deceit are: (a) misrepresentation (false representation 3 || concealment, or nondisclosure); (b) knowledge of falsity (or scienter); (c) intent to defraud 4 ||i.e. to induce reliance; (d) justifiable reliance; and (e) resulting damage.”) (interna 5 || quotations omitted), 6 “[C]laims sounding in fraud are subject to the heightened pleading requirements 7 ||of Rule 9(b) of the Federal Rules of Civil Procedure, which requires that a plaintifi 8 || alleging fraud ’must state with particularity the circumstances constituting fraud.” 9 || Goldstein v. Gen. Motors LLC, 445 F. Supp. 3d 1000, 1010 (S.D. Cal. 2020); see also FED. 10 |/R. Civ. P. 9(b) (requiring that “[i]n alleging fraud or mistake, a party must state with 11 particularity the circumstances constitute fraud or mistake”). Pleading claims for relief fot 12 |/fraud requires “an account of the time, place, and specific content of the false 13 || representations as well as the identities of the parties to the misrepresentations.” Swartz v. 14 || KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007) (per curiam) (internal quotation marks 15 omitted); see also Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003) 16 ||(“Averments of fraud must be accompanied by the who, what, when, where, and how of 17 ||the misconduct charged.”) (internal quotation marks omitted). 18 Here, Plaintiff's Complaint alleges that (1) “Defendants fraudulently represented, 19 || inter alia, that Defendants were the full and unencumbered owner of the Items which is a 20 || material misrepresentation,” Compl. at 7, § 16; (2) “[iJn reliance [on] the representations 21 |}made by Defendants and pursuant to the terms of the Agreement, Plaintiff wired the 22 obligation of $182,000.00 to Defendants,” but “Defendants have failed to deliver the 23 || Items,” id. at 7, | 27; (3) “[i]f Plaintiff knew that Defendants were not the owners of the 24 |/Items, Plaintiff would not have entered or, even more so, complete Plaintiffs 25 || obligations under the Agreement,” id. at 7, § 28; and (4) “[t]here is now due, owing, and 26 |/unpaid from Defendants to Plaintiff the sum of $182,000.00 in the form of a refund 27 || together with interest thereon at the rate of 10 percent per year,” id. at 7, § 29. 28 The Court finds that first, the Complaint fails to sufficiently plead the fraud claim -18.

1 || by failing to plead the “who, when, where, and how” of the misconduct charged. Vess, 317 2 || F.3d at 1106. Even if the Complaint had sufficiently plead such information, the evidence 3 ||in this case—namely, that submitted by Plaintiff—refutes a finding of fraud given it shows 4 || Plaintiff was well aware Defendants never owned the Cubes and were, instead, acting as ¢ 5 broker. Thus, the Court DENIES Plaintiffs Motion as to the fraud claim. 6 c. Third Claim for Relief for Unjust Enrichment 7 As to the third claim for relief for unjust enrichment, the Court notes that while 8 || “California does not recognize unjust enrichment as a claim for relief,” see Astiana v. Hair 9 || Celestial Grp., Inc., 25 783 F.3d 753,762 (9th Cir. 2015) (citing Durell v. □□□□□ 10 || Healthcare, 183 Cal. App. 4th 26 1350, 1370 (2010)), federal courts have declinec 11 || dismissal of such a claim for relief on the basis that it may constitute a plausible claim fot 12 || quasi-contractual relief, Jordan v. Wonderful Citrus Packing LLC, No. 118CV00401A 13 || WISAB, 2018 WL 4350080, at *3 (E.D. Cal. Sept. 10, 2018). 14 “The elements for a claim of unjust enrichment are [1] receipt of a benefit and [2] 15 unjust retention of the benefit at the expense of another.” Lyles v. Sangadeo-Patel, 225 16 App. 4th 759, 769 (2014) (quoting Prakashpalan v. Engstrom, Lipscomb & Lack, 223 17 ||Cal. App. 4th 1105, 1132 (2014)) (internal quotations omitted). “The theory of unjust 18 enrichment requires one who acquires a benefit which may not justly be retained, to return 19 |/ either the thing or its equivalent to the aggrieved party so as not to be unjustly enriched.” 20 || Prakashpalan, 223 Cal. App. 4th at 1132. 21 Plaintiff's Third Claim for Relief pleads that (1) “Defendants were unjustly enriched 22 || because they received the benefit of the Agreement in the tendered amount of $182,000.00 23 || after refusing to abide by the terms of the Agreement by not delivering the Items that were 24 subject of the Agreement,” Compl. at 8, § 33; (2) “[t]he full amount Plaintiff] ] tendered as 25 |ja part of the Agreement would not have been achieved except for Defendants[’] 26 misappropriation,” id. at 8, § 34; and (3) “Plaintiff has incurred attorney’s fees in 27 ||connection with this matter, in an amount to be determined at trial, which fees plaintiff is 28 |/entitled to recover from pursuant to terms in the Agreement,” id. at 8, § 35. These “19.

1 allegations sufficiently plead that (1) Defendants received a benefit and (2) retaining the 2 || benefit would be unjust and at the expense of Plaintiff. Lyles, 225 Cal. App. 4th at 769. 3 || On that basis, the Court finds that merit exists to Plaintiff's claim for unjust enrichment. 4 3. The Sum of Money at Stake in the Action 5 Under the fourth Eite/ factor, a court considers the amount of money at stake ir 6 ||relation to the seriousness of a party’s conduct. PepsiCo, 238 F. Supp. 2d at 1176-77 7 || “Default judgment is disfavored when a large amount of money is involved,” or the amount 8 ||sought appears “unreasonable in light of the potential loss caused by the defendant’s 9 |jactions.” HICA Educ. Loan Corp. v. Warne, Case No. 11-cv-04287-LHK, 2012 WL 10 || 1156402, at *3 (N.D. Cal. Apr. 6, 2012) (citations and internal quotation marks omitted). 11 In this case, the stake of money involved, $42,000.00 plus attorney’s fees and costs 12 reasonable, especially in light of the potential loss caused by Defendants’ actions. Thus, 13 || this factor weighs in favor of a default judgment. 14 4. The Possibility of a Dispute Concerning the Material Facts 15 CDP has not filed an answer or otherwise responded to the operative complaint. Its 16 || failure to appear leaves the Court with an absence of any facts—let alone material facts— 17 dispute. In such cases, courts routinely find that no factual dispute exists, and that 18 || therefore, this Eitel factor weighs in favor of granting default judgment. See, e.g., Garcia 19 || Pacheco, 2019 WL 2232957, at *4; G&G Closed Circuit Events, LLC v. A guilar, Case No. 20 || 18-cv-0465-JM-BGS, 2018 WL 3656118, at *2 (S.D. Cal. Jul. 31, 2018). Further, Mr. 21 ||Frye’s Motion to Dismiss does not dispute most, if not all, of the facts alleged in the 22 ||Complaint (other than the amount in dispute given both parties now agree Mr. Frye repaid 23 portion of the amount sought since Plaintiff filed suit, making the amount plead in the 24 || Complaint improper). 25 As such, the possibility of a good faith dispute of material facts is low, and the fifth 26 || Zitel factor weighs in favor of granting this motion for entry of default judgment. ot 5. Whether the Default was due to Excusable Neglect 28 While courts “may consider whether there are circumstances surrounding a party’s LG.

1 failure to respond [that] constitute[] excusable neglect . . . a court may find excusable 2 ||neglect to be lacking where a defendant was properly served with the complaint and notice 3 || of default judgment.” H..S.C., Inc. v. Franmar Int'l Importers, Ltd., Case No. 16-cv-480- 4 || BEN-WVG, 2018 WL 8648381, at *3 (S.D. Cal. Apr. 4, 2018) (citations omitted). 5 Here, shortly after filing this lawsuit, Defendants returned $140,000.00 to Plaintiff 6 || Nannicola Decl. No. 2 at 2, 6-7. Mr. Nannicola of IHH also previously advised that he 7 been “in constant and continuous communication” with Defendants, who have 8 confirmed their awareness of this lawsuit. Nannicola Decl. No. 1 at 1, 95. In fact, in the 9 ||Court’s order on the previous motions to serve Defendants via substituted service, it 10 ||acknowledged that Ms. O’Neil had requested that Plaintiff refrain from attempting to 11 default Mr. Frye but also refused to respond to repeated requests by Mr. Heilbrun to accept 12 ||service of process on Mr. Frye’s behalf. Exhibit G to Heilbrun Decl. No. 1, ECF No. 7-4 13 22, 24, 28, 35. Mr. Heilbrun also states that he informed Mr. Frye of CDP’s default, and 14 Frye acknowledged CDP would be defaulted, and that “he was not going to file a 15 || response on behalf of [CDP] and that he was prepared for [CDP] to be defaulted.” Heilbrun 16 Decl. No. 2 at 2, 9 8. Thus, no excusable neglect occurred here. 17 As such, the sixth Eite/ factor is met and weighs in favor of granting this Motion. 18 6. The Strong Policy Underlying the Federal Rules of Civil Procedure Favoring a Decision on the Merits 20 The policy favoring resolution of a case on the merits always weighs against default > judgment. NewGen, 840 F.3d at 616. In this case, however, the other Lite! factors outweigh this policy because Defendant’s “failure to answer Plaintiff's Complaint makes 73 decision on the merits impractical, if not impossible.” PepsiCo, 238 F. Supp. 2d at 1177. 44 In light of CDP’s decision not to appear, default judgment is appropriate despite the policy 95 favoring decisions on the merits. Accordingly, Plaintiffs Motion for Default Judgment 6 against CDP is GRANTED as to the claims for breach of contract and unjust enrichment. 7 B. Damages 28 Plaintiff seeks to recover damages incurred as a result of CDP’s breach as well as -21-

| reasonable attorney’s fees and costs incurred in bringing this lawsuit. See ECF No. 15 at 2 ||3-5. As outlined below, the Court finds it appropriate to award these damages. 3 1. Compensatory Damages 4 Plaintiff discusses damages recoverable under the California Civil Code. However. 5 || under California law, the California Commercial Code applies to any contract for the sale 6 ||of goods. See, e.g., CAL. COM. CODE § 2102 (“Unless the context otherwise requires, “this 7 division applies to transactions in goods”). As stated, Plaintiff alleges that in November 8 2019, they entered into contracts to purchase the Cubes for $182,000.00, Compl. at 3:12- 9 which qualify as goods. See CAL. COM. CODE § 2105(1) (defining “goods” as “all 10 |/things (including specially manufactured goods) which are movable at the time of 11 ||identification to the contract for sale other than the money in which the price is to be 12 ||paid...”). Thus, the California Commercial Code applies to this case. 13 Sections 2711 and 2713 of the California Commercial Code addresses damages 14 available to a buyer for non-delivery or repudiation of a contract for the sale of goods. 15 Section 2711 states that “[w]here the seller fails to make delivery or repudiates ... then 16 || with respect to any goods involved, ... the buyer may cancel and whether or not he has 17 || done so may[,] in addition to recovering so much of the price as has been paid|,]” recover 18 following amounts as well: (1) the cost of cover or (2) damages for nondelivery as 19 || provided in Section 2713. (Emphasis added). Section 2713, in turn, provides that “the 20 ||measure of damages for nondelivery ... by the seller is the difference between the market 21 || price at the time when the buyer learned of the breach and the contract price together with 22 || any incidental and consequential damages provided in this division (Section 271 5), but less 23 ||expenses saved in consequence of the seller’s breach.” CAL. CoM. CODE § □□□□□□□□□□ 24 || These amounts breakdown as follows in this case: .SSO—C— Where the seller fails to deliver the goods, as was the case here, the buyer also has 26 || the right to (1) recover the goods if they have been identified to the contract, see CAL. 27 COM. CODE §§ 2711(2)(a), 2502, or (2) demand specific performance, see id. at §§ 2711(2)(b), 2716. Because Plaintiff has not demanded these alternative remedies, the 28 || Court does not analyze them.

1 $182,000.00 (Price Paid) 2 || $182,000.00 (Market Price of Goods at the Time Buyer Learned of Breach!’) 3 |} - $182,000.00 (Contract Price) +$ 5,000.00 (Incidental Damages!) 5 || + 0.00 (Consequential Damages!) 6 || - 0.00 = (Expenses Saved in Consequence of the Seller’s Breach) $187,000.00 (Total Damages) 8 || - $140,000.00 = (Amounts Paid After the Filing of the Complaint) = 9 $ 47,000.00 (Recoverable Damages) 10 Thus, the Court awards Plaintiff the requested $47,000.00 in damages. 11 2. Costs 12 Rule 54(d) of the Federal Rules of Civil Procedure creates a presumption favoring 13 || an award of costs to the prevailing party. See, e.g., Marx v. Gen. Revenue Corp., 568 U.S. 14 ||371, 375-76 (2013) (“describing the ‘venerable’ presumption that prevailing parties are 15 |/entitled to costs); see also Oracle USA, Inc. v. Rimini St., Inc., 879 F.3d 948, 966 (9th 16 Cir.), cert. granted, 139 S. Ct. 52, (2018), and rev'd in part, 139 S. Ct. 873 (2019) (noting 17 ||that Marx remains binding precedent on the Ninth Circuit). Courts may award “taxable sre rete 19 “Market price is to be determined as of the place for tender or, in cases of rejection after arrival or revocation of acceptance, as of the place of arrival.” CAL. Com. □□□□□ § 20 ||2713(2). Because Plaintiff provided no evidence as to the market price of the goods, the 41 || Court uses the contract price and assumes the market price did not change. “Incidental damages resulting from the seller’s breach include expenses reasonably 22 |lincurred in inspection, receipt, transportation and care and custody of goods rightfully 73 ||rejected, ... and any other reasonable expense incident to the delay or other breach.” CAL. CoM. CODE § 2715(1). In the present case, the only known incidental damages are the 24 |! $5,000.00 Plaintiff spent to pick up the Cubes. Nannicola Decl. No. 2 at 2, § 3. 95 ||" “Consequential damages resulting from the seller’s breach include: (a) [a]ny loss resulting from general or particular requirements and needs of which the seller at the time 26 of contracting had reason to know and which could not reasonably be prevented by cover 27 || or otherwise; and (b) [i]njury to person or property proximately resulting from any breach of warranty.” CAL. COM. CODE § 2715(2). Plaintiff has not provided any evidence of 28 consequential damages. oa,

1 ||costs” such as: (1) fees of the clerk and marshal; (2) fees for transcripts; (3) fees □□□ 2 disbursements for printing and witnesses; (4) fees for exemplification and copying costs 3 |/necessarily obtained; (5) docket fees; and (6) compensation of court appointed experts and 4 |linterpreters. 28 U.S.C. § 1920; see also Grove v. Wells Fargo Fin. Cal., Inc., 606 F.3¢ 5 ||577, 579 (9th Cir. 2010) (noting that these expenses are known as “taxable costs”). Rule 6 ||4(d)(2) of the Federal Rules of Civil Procedure also expressly provides that “[i]f 7 || defendant located within the United States fails, without good cause, to sign and return a 8 || waiver requested by a plaintiff located within the United States, the court must impose or 9 ||the defendant” any (1) “expenses later incurred in making service” and (2) “reasonable 10 ||expenses, including attorney’s fees, of any motion required to collect those service 11 |/expenses.” See also Est. of Darulis v. Garate, 401 F.3d 1060, 1063 (9th Cir. 2005). 12 In this case, Plaintiff seeks to recover the following costs:

$2,246.05 52,646.05 16 || See Heilbrun Decl. No. 2 at 2, 6. 17 Although Plaintiff provides no documentation for these costs, the Court 18 |) acknowledges Defendants intentionally evaded service of process, and despite temporarily 19 || retaining an attorney, refused to allow her to accept service on their behalf. This forced 20 || Plaintiff to incur increased costs to serve Defendants. Thus, the Court awards all costs 21 || sought for filing fees and service of process in the amount of $2,646.05. 3. Attorney’s Fees 23 Plaintiff also seeks attorney’s fees. California entitles a prevailing party to 24 |/reasonable attorney’s fees “[i]n any action on a contract, where the contract specifically 25 || provides that attorney’s fees and costs, which are incurred to enforce that contract,” are 26 |/recoverable. CAL. Civ. CODE § 1717(a). Here, Section 15(e) of the APA provides that 27 ||“[s]hould any ... litigation be commenced between the parties to this Agreement 28 ||concerning the rights and duties of either party in relation to ... this Agreement, the 34.

1 || prevailing party in the ... litigation shall be entitled to .... a reasonable sum and attorneys’ 2 || fees in the ... litigation.” ECF No. 1-2 at 7. Plaintiff argues that this provision entitles it 3 ||to attorney’s fees and costs incurred in enforcing the APA. ECF No. 15 at □□□□□□□□ 4 || Because the Court has determined that the APA is enforceable, the Court agrees. 5 “Once a party is found eligible for fees, the district court must then determine what 6 || fees are reasonable.” Klein v. City of Laguna Beach, 810 F.3d 693, 698 (9th Cir. 2016) 7 ||(citation omitted). “To determine the amount of a reasonable fee, district courts typically 8 ||proceed in two steps: first, courts generally apply the lodestar method to determine what 9 constitutes a reasonable attorney fee; and second, the district court may then adjust the 10 || lodestar upward or downward based on a variety of factors, including the degree of success 11 || obtained by the plaintiffs.” Bravo v. City of Santa Maria, 810 F.3d 659, 665-66 (9th Cir. 12 ||2016). The Supreme Court has indicated that the degree of success obtained is “‘the most 13 ||critical factor’ in determining the reasonableness of a fee award.” Farrar v. Hobby, 506 14 103, 114 (1992) (quoting Hensley v. Eckerhart, 461 U.S. 424, 436 (1983)). “It is an 15 |/abuse of discretion for the district court to award attorneys’ fees without considering the 16 ||relationship between the extent of success and the amount of the fee award.” McGinnis v. 17 || Ky. Fried Chicken, 51 F.3d 805, 810 (9th Cir. 1994) (internal quotations omitted). 18 “The Supreme Court has instructed that the initial estimate of a reasonable attorney’s 19 || fee is properly calculated by multiplying the number of hours reasonably expended on the 20 litigation times a reasonable hourly rate, an approach commonly known as the 21 ||lodestar method.” Vargas v. Howell, 949 F.3d 1188, 1194 (9th Cir. 2020) (internal 22 || quotations omitted) (citing Blum v. Stenson, 465 U.S. 886, 888 (1984)); see also Hensley, 23 U.S. at 433. The party seeking attorneys’ fees bears the burden of “submitting 24 || evidence of the hours worked,” the rate charged, and that “the rate charged is in line with 25 || the prevailing market rate of the relevant community.” Carson v. Billings Police Dep’t., 26 ||470 F.3d 889, 891 (9th Cir. 2006) (internal quotation omitted). “Where the documentation 27 || of hours is inadequate, the district court may reduce the award accordingly.” Hensley, 461 28 || U.S. at 433. =? 5;

l If the moving party in a fee motion “satisfies its burden of showing that the claimec 2 ||rate and number of hours are reasonable, the resulting product is presumed to be the 3 ||reasonable fee.” Intel Corp. v. Terabyte Int’l, Inc., 6 F.3d 614, 622-23 (9th Cir. 1993) 4 || However, “[i]n determining the reasonableness of the award, there must be some evidence 5 support the reasonableness of, inter alia, the billing rate charged, and the number ot 6 ||hours expended.” Lam, Inc. v. Johns-Manville Corp., 718 F.2d 1056, 1068 (Fed. Cir. 7 || 1983). In this regard, courts consider twelve factors: 8 (1) the time and labor required; (2) the novelty and difficulty of 9 the questions; (3) the skill requisite to perform the legal service properly; (4) the preclusion of employment by the attorney due 10 to acceptance of the case; (5) the customary fee; (6) whether the fee is fixed or contingent; (7) time limitations imposed by the client or the circumstances; (8) the amount involved and results 12 obtained; (9) the experience, reputation, and ability of the 3 attorneys; (10) the ‘undesirability’ of the case; (11) the nature and length of the professional relationship with the client; and 14 (12) awards in similar cases. 15 || Hensley, 461 U.S. at 430 n.3. 16 First, the Court evaluates whether Mr. Heilbrun seeks a reasonable hourly rate. “In 17 ||establishing the reasonable hourly rate, the Court may take into account: (1) the novelty 18 complexity of the issues; (2) the special skill and experience of counsel; (3) the quality 19 || of representation; and (4) the results obtained.” Kilopass Tech., Inc. v. Sidense Corp., 82 20 ||F. Supp. 3d 1154, 1170 (N.D. Cal. 2015). “A reasonable hourly rate is typically based 21 || upon the prevailing market rate in the community for ‘similar work performed by attorneys 22 comparable skill, experience, and reputation.’” Loomis v. Slendertone Distribution, 23 No. 19-CV-854-MMA (KSC), 2021 WL 873340, at *10 (S.D. Cal. Mar. 9, 2021) 24 || (Anello, J.) (quoting Chalmers v. City of Los Angeles, 796 F.2d 1205, 1211 (9th Cir. 1986)). 25 Mr. Heilbrun advises that his hourly rate is $300.00 per hour. Heilbrun Decl. No. 2 26 2, 5. He also advises that he has been practicing law since his admission into the 27 || California State Bar in 2012 but submits no other evidence as to how this rate is reasonable. 28 || Compare id. with Roberts v. City of Honolulu, 938 F.3d 1020, 1024 (9th Cir. 2019) (“It is -26-

1 || the responsibility of the attorney seeking fees to submit evidence to support the requestec 2 || hourly rate.”). However, the Southern District of California recently found reasonable « 3 || lead counsel’s hourly rate of $450.00 in February 2018. See, e.g., T.B. v. San Diego Unifiec 4 || Sch. Dist., 293 F. Supp. 3d 1177, 1190 (S.D. Cal. 2018) (Anello, J.) (adopting the special 5 |}master’s recommendation that $450.00 per hour constituted a reasonable hourly rate fot 6 || the two lead attorneys on the case). Similarly, the Court finds the hourly rate sought in this 7 reasonable in light of the market rate for firms in Southern California. See, □□□□ 8 || Antoninetti v. Chipotle Mexican Grill, Inc., 49 F. Supp. 3d 710, 718 (S.D. Cal. 2014) 9 || (Moskowitz, J.), aff'd sub nom. Goldkorn v. Chipotle Mexican Grill, Inc., 669 F. □□□□ 10 ||920 (9th Cir. 2016) (adjusting a requested hourly rate of $525.00 and $620.00 per hou 11 ||down to $420.00 per hour because there was “insufficient evidence that there was an 12 |/intervening change in the local prevailing rate” for similar services to justify the higher 13 |/rate). Thus, the Court finds $300.00 per hour is a reasonable hourly rate for an attorney 14 |) with nine (9) years of experience, including under all twelve factors discussed in Hensley. 15 ||461 U.S. at 430 n.3. 16 Second, having determined Mr. Heilbrun’s hourly rate was reasonable, the Court 17 ||must determine whether the number of hours expended on the case was reasonable. In 18 || Seeking attorneys’ fees, counsel must exercise proper “billing judgment” and exclude hours 19 ||that are “excessive, redundant, or otherwise unnecessary.” Hensley, 461 U.S. at 434. 20 || District courts must “conduct a ... thorough and detailed inquiry concerning application[s] 21 ||[of a] fee request [to] the twelve factors listed in Kerr, particularly with respect to the 22 ||number of hours reasonably expended by attorneys ... and the prevailing fees for work of 23 similar nature and quality in the area.” See Sealy, Inc. v. Easy Living, Inc., 743 F.2d 1378, 24 || 1385 (9th Cir. 1984) (reversing the district court’s award of attorney’s fees and remanding 25 || for further proceedings). In demonstrating their hours are reasonable, counsel “should have 26 ||maintained records to show the time spent on the different claims, and the general subject 27 ||matter of the time expenditures ought to be set out with sufficient particularity, so the 28 || district court can assess the time claimed for each activity.” Norman v. Hous. Auth. of the oo fi

1 || City of Montgomery, 836 F.2d 1292, 1303 (11th Cir. 1988). 2 Mr. Heilbrun advises that he has spent 26.9 hours of work on this case at a rate o 3 || $300.00 per hour, resulted in total fees of $8,070.00. He explains that additional attorney’: 4 || fees were incurred in this case due to Defendants’ avoiding service of process for over « 5 || year, forcing Plaintiff to file additional motions for service. Jd. at 2, 4] 9. However, Plaintif 6 || fails to file any support for these fees such as invoices to the client showing billing entries 7 ||invoices for the costs of service of process, or filing fee statements from CM-ECF. See 8 Hensley, 461 U.S. at 433 (noting “[t]he party seeking an award of fees should submi 9 || evidence supporting the hours worked and rates claimed,” and “[w]here the documentatior 10 || of hours is inadequate, the district court may reduce the award accordingly”). On the one 11 || hand, the Court acknowledges that some of the hours billed pertained to Plaintiff's initia 12 ||Motion for Publication, which the Court denied because (1) the law does not allow ¢ 13 || corporation, like CDP, to be served by publication and (2) Plaintiff failed to submit the 14 || declarations required by statute to allow the Court to authorize service on the individual 15 ||defendant. Had Plaintiff researched substituted service more diligently, he could have 16 avoided having to file a subsequent motion. On the other hand, the Court acknowledges 17 || that the only reason Plaintiff had to spent time pertaining to substitute service at all was 18 || due to the fact that Mr. Frye refused to accept service himself and also did not authorize 19 ||his attorney to accept service of process on his behalf. Thus, despite the fact that Mr. 20 || Heilbrun has failed to provide the Court with evidence of the fees and costs incurred in this 21 the Court finds the number of hours expended in this case reasonable in light of the 22 || additional work created and caused by Defendants’ attempts to evade service of process. 23 || Accordingly, the Court awards the full amount of attorney’s fees sought in the amount of 24 || $8,070.00." +... ... . Although the Court has no evidence as to whether Mr. Heilbrun’s fee was fixed or 26 contingent, this amount is reasonable in light of (1) the time and labor required; (2) the 27 novelty and difficulty of the questions; (3) the skill requisite to perform the legal service properly; (4) the preclusion of employment by the attorney due to acceptance of the case; 28 (5) the customary fee; (7) time limitations imposed by the client or the circumstances; (8) tO

2 For the above reasons, the Court ORDERS as follows: 3 li. Plaintiff's Motion for Default Judgment as to Defendant CDP is GRANTED 4 to Plaintiffs claims for relief for breach of contract and unjust enrichment but DENIED 5 to the fraud claim. The Clerk of the Court shall enter judgment in favor of □□□□□□□□□ 6 || INDIAN HILLS HOLDINGS, LLC and against Defendant CONSTRUCTION & DESIGN 7 ||PROFESSIONALS CORP., an Arizona corporation (“CDP”) as to Plaintiff's claims for g relief for breach of contract and unjust enrichment in the following amounts:

2. The Court orders Plaintiff and Mr. Frye to participate in an Early Neutral M4 Evaluation Conference before the Hon. Allison H. Goddard on January 7, 2022, at 2:00 IS p.m. DATED: November , 2021 [ / My ROGER 7 BENITEZ 19 nited States District Judge 20 21 22 23 24 25 ase 27 ||the amount involved and results obtained; (9) the experience, reputation, and ability of the attorneys; (10) the ‘undesirability’ of the case; (11) the nature and length of the professional 28 relationship with the client; and (12) awards in similar cases. Hensley, 461 U.S. at 430 n.3. Lag: