Nationstar Mortgage LLC v. Presley

Opinion

NATIONSTAR MORTGAGE LLC, Case No. 1:20-cv-00620-JLT-CDB Plaintiff, FINDINGS AND RECOMMENDATIONS DENYING PLAINTIFF’S MOTION FOR v. DEFAULT JUDGMENT, DECLINING TO EXERCISE SUPPLEMENTAL ROBERT PRESLEY, et al. JURISDICTION, AND DISMISSING PLAINTIFF’S FIRST AMENDED Defendants. COMPLAINT WITH PREJUDICE 14-DAY OBJECTION PERIOD (Doc. 68) Pending before the Court is Plaintiff Nationstar Mortgage LLC’s (“Plaintiff”) motion for default judgment against Defendants Robert Presley, Healing My People Services (“HMP”), Joyce Decormier, and Nikola Gulan. (Doc. 68).1 In support of its motion, Plaintiff filed supporting declarations of Valerie J. Schratz, an attorney representing Plaintiff in this action (Doc. 70), and Alan Blunt, an employee of Plaintiff’s who attests to personal knowledge regarding Plaintiff’s “systems of record” and certain relevant facts of this case (Doc. 72). Also, in support of its motion, Plaintiff filed a request for judicial notice (Doc. 75) that attaches eight documents consisting of filings and orders entered in other court actions involving some of the 1 The matter is referred to the undersigned pursuant to 28 U.S.C. § 636(b)(1)(B) & (C) and same defendants. Thereafter, Defendant Joyce Decormier (“Decormier”) filed an opposition to Plaintiff’s motion (Doc. 77), and Plaintiff replied (Doc. 78). The undersigned has reviewed and considered all the parties’ filings and supporting documents. For the reasons set forth herein, the Court will recommend that Plaintiff’s motion for default judgment be DENIED and that the case be DISMISSED without leave to amend. Plaintiff filed this action on April 30, 2020, for permanent injunction against Robert Presley, HMP, Joyce Decormier, Joe McHaney, Nikola Gulan, and Doe Defendants 1–10. (Doc. 1). Plaintiff brought the following causes of action against Defendants: violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”) (§§ 1962(c), 1962(d), and 1964(c)), a violation of California’s Business & Professions Code § 17200, and tortious interference with contractual relations. Id. On July 14, 2020, Plaintiff filed proof of service as to Decormier and Gulan. (Docs. 8-9). Decormier filed a motion to dismiss on July 20, 2020 (Doc. 16), and McHaney filed a motion to dismiss on July 27, 2020 (Doc. 16). Plaintiff filed oppositions to Decormier and Mchaney’s motions to dismiss and a request for judicial notice in support of its oppositions. (Docs. 20-22). On October 1, 2020, Plaintiff filed proof of service as to Presley and HMP. (Docs. 26-27). On October 2, 2020, Presley filed objections to Plaintiff’s proof of service. (Doc. 28). Plaintiff filed requests for entry of default as to Presley, HMP, and Gulan on November 6, 2020 (Docs. 29-31), and the Clerk of Court recorded entries of default against Presley, HMP, and Gulan for failing to appear, plead or answer Plaintiff’s complaint within the time allowed by law on November 9, 2020 (Docs. 32-34). On July 27, 2021, the Honorable District Judge Dale A. Drozd granted Decormier’s and McHaney’s motions to dismiss. (ECF No. 41). District Judge Drozd found Plaintiff failed to state a cognizable §§ 1962(c) and/or 1962(d) RICO claim, a tortious interference with contractual relations claim, and a claim under California’s unfair competition law. Id. at 4-8. District Judge Drozd provided Plaintiff an opportunity to file an amended complaint. Id. at 8. August 24, 2021. (Doc. 42). In the FAC, Plaintiff alleges violations of RICO §§ 1962(c) and 1964(c) by Decormier, McHaney, Gulan, and the Doe Defendants; a violation of RICO §§ 1962(d) and 1964(c) by Presley, McHaney, Decormier, Gulan, and the Doe Defendants; a violation of California Business & Professions Code § 17200 by Decormier, McHaney, Gulan, and the Doe Defendants; and tortious interference with contractual relations by McHaney, Decormier, Gulan, and the Doe Defendants. Id. at 7–12. Plaintiff seeks recovery of actual damages, punitive damages, treble damages, restitution, attorney’s fees, and costs, as well as injunctive relief and imposition of a receivership over Defendants’ enterprise. Id. at 13–14. On September 20, 2021, McHaney filed a motion to dismiss Plaintiff’s FAC. (Doc. 43). Plaintiff filed a request for entry of default as to Decormier on September 24, 2021 (Doc. 45), and that same day, the Clerk of Court recorded an entry of default against Decormier for failing to appear, plead or answer Plaintiff’s FAC within the time allowed by law (Doc. 46). On October 11, 2021, Plaintiff filed an opposition to McHaney’s motion to dismiss, and in the alternative a request for leave to amend the FAC and a request for judicial notice in support of its opposition. (Docs. 48-49). McHaney filed a reply to Plaintiff’s opposition and a response to Plaintiff’s request for judicial notice (Docs. 50-51). On May 16, 2022, the Honorable District Judge Jennifer L. Thurston issued an order granting McHaney’s motion to dismiss. (Doc. 58). District Judge Thurston found that none of Plaintiff’s four causes of action properly stated claims against McHaney. Id. The Court reluctantly granted Plaintiff’s request for leave to amend the complaint, largely because Plaintiff represented to the Court that it “has a number of additional supportive facts and allegations it can add in the Complaint regarding the lack of consent and the RICO allegations.” Id. at 9. The Court concluded: “The Court is at a loss to understand why Nationstar has not included these allegations before now. To be perfectly clear, this [is] Nationstar’s last opportunity to plead the claims.” Id. at p. 9 n.2. Approximately three weeks after the Court granted Plaintiff leave to amend, instead of amending its complaint, Plaintiff noticed its intent to dismiss McHaney (Doc. 61). On November (Doc. 68). That same day and November 14, 2022, Plaintiff filed supplemental material in support of its motion for default judgment. (Docs. 70, 72, 75-76). Decormier filed an opposition/motion to dismiss on November 21, 2022 (Doc. 77), and Plaintiff filed a reply on November 30, 2022 (Doc. 78). GOVERNING LAW UNDER RULE 55 Under Rule 55 of the Federal Rules of Civil Procedure, default judgment is a two-step process. See Eitel v. McCool, 782 F.2d 1470, 1471 (9th Cir. 1986). Prior to entry of default judgment, there must be an entry of default. See Fed. R. Civ. P. 55. Upon entry of default, the factual allegations of the complaint, save for those concerning damages, are deemed to have been admitted by the defaulting party. Fed. R. Civ. P. 8(b)(6); see Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977). Allegations regarding damages are not taken as true and must be independently proven. Geddes, 559 F.2d at 560. In addition, “a defendant is not held to admit facts that are not well-pleaded or to admit conclusions of law.” United States v. Cathcart, 2010 WL 1048829, *4 (N.D. Cal. Feb. 12, 2010); accord DirecTV, Inc. v. Hoa Huynh, 503 F.3d 847, 854 (9th Cir. 2007) (allegations that do no more than “parrot” the elements of a claim not deemed admitted). “[I]t follows from this that facts ... not established by the pleadings of the prevailing party, or claims ... not well-pleaded, are not binding and cannot support the judgment.” Danning v. Lavine, 572 F.2d 1386, 1388 (9th Cir. 1978). Default judgments are “ordinarily disfavored” as “[c]ases should be decided upon their merits whenever reasonably possible.” NewGen, LLC v. Safe Cig, LLC, 840 F.3d 606, 616 (9th Cir. 2016) (quoting Eitel, 782 F.2d at 1472). A district court has discretion to grant or deny a motion for default judgment. Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). The Ninth Circuit has set out seven factors to be considered by courts in reviewing a motion for default judgment: “(1) the possibility of prejudice to the plaintiff, (2) the merits of plaintiff’s substantive claim (3) the sufficiency of the complaint, (4) the sum of money at stake in the action, (5) the possibility of a dispute concerning material facts, (6) whether the default was due to excusable neglect, and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring appropriate where the second and third factors weigh against plaintiff. See Mnatsakanyan v. Goldsmith & Hull APC, 2013 WL 10155707, *10 (C.D. Cal. May 14, 2013) (“The fact that factors two and three weigh against the entry of default judgment is particularly significant, as courts often treat these as the most important factors.”) (citing cases). “If the court determines that the allegations in the complaint are sufficient to establish liability, it must then determine the ‘amount and character’ of the relief that should be awarded.” Landstar Ranger, Inc. v. Parth Enters., Inc., 725 F. Supp.2d 916, 920 (C.D. Cal. 2010) (quoting 10A Charles Alan Wright et al., Fed. Prac. and Proc. § 2688, at 63 (3d ed. 1998)). However, courts may decline to enter default judgment if a party’s claim lacks merit. See, e.g., Alan Neuman Productions v. Albright, 862 F.2d 1388, 1392–93 (9th Cir.1988) (reversing default judgment for plaintiff on RICO claims because the complaint failed properly to allege such claims), cert. denied, 493 U.S. 858 (1989); Aldabe, 616 F.2d at 1092-93 (“Given the lack of merit in appellant’s substantive claims, we cannot say that the district court abused its discretion in declining to enter a default judgment in favor of appellant”). Under the first step of Rule 55’s two-part analysis, the Court concludes Plaintiff has satisfied the procedural requirements for default judgment. Pursuant to Rule 55(a), the Clerk of Court properly entered default against Presley, Gulan, and HMP on November 11, 2020 (Docs. 32, 33, 34), and against Decormier on September 24, 2021 (Doc. 46). Plaintiff’s motion for default judgment complies with Rule 54(c) in that it requests a remedy that is not different from that prayed for in the FAC. (Docs. 42, 68). Thus, the Court, in its discretion, may order a default judgment against Defendants based on the Eitel factors. The Court will consider the seven Eitel factors in determining whether to grant Plaintiff’s motion for default judgment. The Court begins with and places particular emphasis on factors two and three (e.g., the merits of Plaintiff's substantive claims and the sufficiency of the complaint). Eitel, 782 F.2d at 1471–72; Mnatsakanyan, 2013 WL 10155707, *10 (C.D. Cal. May 14, 2013) (noting that courts often treat these two factors “as the most important” in an Eitel I. PLAINTIFF’S RICO CAUSES OF ACTION FAIL TO STATE A CLAIM RICO makes it “unlawful for any person employed by or associated with” an enterprise engaged in or affecting interstate commerce “to conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs through a pattern of racketeering activity.” 18 U.S.C. § 1962(c). To state a cause of action under RICO, a plaintiff must allege (1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity (5) causing injury to plaintiff’s business or property. Living Designs, Inc. v. E.I. Dupont de Nemours & Co., 431 F.3d 353, 361 (9th Cir.2005).2 A. Plaintiff Fails to Properly Plead an Enterprise To establish liability under § 1962(c), a plaintiff must allege and prove the existence of two distinct entities: (1) a person; and (2) an enterprise that is not simply the same person referred to by a different name. Cedric Kushner Promotions, Ltd. v. King, 533 U.S. 158, 161 (2001); see Moran v. Bromma, 675 Fed. Appx. 641, 645 (9th Cir. 2017) (quoting River City Mkts., Inc. v. Fleming Foods W., Inc., 960 F.2d 1458, 1461-62 (9th Cir. 1992) (“a single individual or entity cannot be both the RICO enterprise and an individual RICO defendant”)). Section 1961(4) defines an enterprise as including “any induvial, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity.” 18 U.S.C. § 1961(4). An enterprise that is not a legal entity is commonly known as an “association-in-fact” enterprise. Ellis v. J.P. Morgan Chase & Co., 950 F. Supp.2d 1062, 1088 (N.D. Cal. 2013). An association-in-fact enterprise is “any union or group of individuals…associated together for a common purpose of engaging in a course of conduct.” United States v. Turkette, 452 U.S. 576, 580, 583 (1981) (emphasis added). To show an association-in-fact enterprise, Plaintiff must allege facts establishing three elements: (1) a common purpose of engaging in a

2 Because as set forth below, Plaintiff’s RICO claims fail for three independent reasons, Plaintiff cannot state a claim for conspiracy to violate RICO. E.g., Ellis v. J.P. Morgan Chase & Co., 950 F. Supp.2d 1062, 1090 (N.D. Cal. 2013) (citing Howard v. America Online Inc., 208 F.3d 741, 751 (9th Cir. 2000)); Chang v. Noh, 2017 WL 7411155, *5 (C.D. Cal. Nov. 27, 2017) course of conduct; (2) an ongoing organization, either formal or informal; and (3) an association that functions as a continuing unit. Odom v. Microsoft Corp., 486 F.3d 541, 553 (9th Cir. 2007) (citing Turkette, 452 U.S. at 583). Plaintiff alleges “on information and belief”3 that Presley and HMP “employed” the other, individually named Defendants, and that together, they constituted a “fraudulent enterprise.” (Doc. 42 at ¶¶ 1-2); see id. at ¶ 28 (“On information and belief, McHaney, Decormier, and Gulan were employees and/or agents of Presley and HMP”). But an “enterprise” consisting only of a corporation and its employees and board members acting on its behalf fails for lack of distinctiveness because the person (the corporate entity) and the enterprise are “one and the same.” Greenstein v. Peters, 2009 WL 722067, *2 (C.D. Cal. Mar. 16, 2009); Living Designs, Inc., 431 F.3d at 361 (noting if the enterprise consisted only of a company and its employees, the pleading would fail for lack of distinctiveness). Thus, Plaintiff has failed to allege Defendants are sufficiently distinct to constitute a RICO enterprise. Assuming arguendo, Plaintiff has sufficiently pled an enterprise that is distinct for RICO purposes, Plaintiff’s claim still fails as it has not plausibly alleged that the individual borrower- defendants, Decormier and Gulan, shared a “common purpose” with Presley and HMP. Nowhere in the FAC does Plaintiff allege facts giving rise to a plausible inference that borrower-defendant members of the enterprise, Decormier, and Gulan, were in any way involved in the actual decisions relating to or conduct of the alleged fraudulent arbitrations. Nor are the borrower- defendant members of the enterprise alleged to have participated in the creation of the fraudulent arbitration awards attached to Plaintiff’s FAC. See Crichton v. Golden Rule Ins. Co., 576 F.3d 392, 400 (7th Cir. 2009) (“A RICO enterprise is more than a combination of persons who commit alleged predicate acts of racketeering; there must be an organization with a structure and goals separate from the predicate acts themselves.”) (internal quotations omitted) Indeed, Plaintiff’s allegations undermine any notion that the individually alleged members of the enterprise share a common purpose. For instance, Plaintiff alleges that “Defendants”

3 Under Rule 9(b), allegations based on “information and belief” are not usually sufficiently particular unless they accompany a statement of facts on which the belief is founded. (defined as Presley and HMP) “have victimized defaulted borrowers by taking fees in exchange for issuing sham arbitration awards.” (Doc. 42 at ¶ 1). But Decormier and Gulan are alleged in the same paragraph to have been defaulted borrowers that “solicited” Presley and HMP to obtain arbitration awards. Id. at ¶¶ 1(a), 1(C). Thus, passing over the FAC’s wholly conclusory claims, Plaintiff’s FAC inconsistently paints Decormier and Gulan as both victims and the primary instigators of the purported fraud. See Roberts v. C.R. England, Inc., 318 F.R.D. 457, 487 (D. Utah 2017) (courts have “declined to include victims as part of the enterprise because victims could hardly have shared a common purpose with [an] association designed to defraud them.”) (citing cases). In either case, victim or instigator, Plaintiff has provided no plausible allegation that the borrower-defendant members (Decormier and Gulan) of the enterprise knowingly cooperated with the other alleged members of the enterprise (Presley and HMP) in a joint fraud scheme. B. Plaintiff Fails to Properly Plead Racketeering Activity RICO defines “racketeering activity” as any of the predicate acts listed in 18 U.S.C. § 1961(1). Those acts include mail and wire fraud, which are the predicates Plaintiff plead in its FAC. (Doc. 42 ¶¶ 39-41). To establish the predicate acts of mail and wire fraud, a plaintiff must show a scheme to defraud, involving use of the U.S. wires or mail, with the specific intent to defraud. Schreiber Distrib. Co. v. ServWell Furniture Co., 806 F.2d 1393, 1399-1400 (9th Cir. 1986); Eclectic Properties E., LLC v. Marcus & Millichap Co., 751 F.3d 990, 997 (9th Cir. 2014) (collecting civil RICO cases). The “scheme to defraud” element requires “an affirmative, material misrepresentation.” United States v. Green, 592 F.3d 1057, 1064 (9th Cir. 2010) (quoting United States v. Benny, 786 F.2d 1410, 1418 (9th Cir. 1986)). The misrepresentation does not need to be made through the mail or wires; rather, the use of the mail or wires only needs to be “a step in the plot.” United States v. Garlick, 240 F.3d 789, 792 (9th Cir. 2001) (internal quotation marks omitted). The misrepresentation also does not need to be made to the RICO plaintiff, but instead may be made to a third party. See Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639, 660 (2008) (“RICO’s mail and wire fraud must be pleaded with particularity as to the time, place, content of, and parties to the fraudulent communications. See Fed. R. Civ. P. 9(b); Edwards v. Marin Park, Inc., 356 F.3d 1058, 1066 (9th Cir. 2004). Here, as noted in the Court’s prior orders dismissing the original complaint and a moving defendant from the FAC, there is not a single allegation that the defaulted borrower Defendants (Decormier and Gulan) knew the scheme allegedly orchestrated by Presley and HMP was fraudulent or otherwise intended to defraud. (Doc. 41 at 5-6); (Doc. 58 at 5). That is fatal to the pleading of a mail or wire fraud count. E.g., Schreiber Distrib. Co., 806 F.2d at 1399-1400. Moreover, aside from vague and conclusory allegations that Defendants committed mail and wire fraud (Doc. 42 ¶¶ 32-34, 39-41), there are no specific allegations identifying specific wires or mailings in furtherance of the scheme within the FAC. Thus, Plaintiff fails to plead with particularity Defendants purported racketeering activity. Plaintiff does attach to the FAC two purported mailings that Pressley and/or HMP may have been involved with and which may have been transmitted by a Defendant in furtherance of the alleged fraud scheme. (Doc. 42). First, Exhibit A to the FAC is a document titled “Arbitration Award” in the case of Decormier and appears to be signed by Presley on a signature line that lists his title as “Sole Arbitrator.” (Doc 42 at Ex. A). The document represents that the “Arbitrator” “reviewed and verified” three purported mailings, each of which are identified in the document with purported USPS-receipt numbers. Id. The document also includes an image of an apparent USPS-certified mailing envelope addressed to Cormier with a return address of “HMP” in Bakersfield. Id. The postage date (May 15, 2019) is close in time to the date Defendant Presley signed the Arbitration Award (May 13, 2019). Id. Second, Exhibit C to the FAC is a document titled “Final Arbitration Award” in the case of Gulan and appears to be signed by Presley, identified as “Director” of “Healing My People Arbitration Association” (presumably, HMP). (Doc 42 at Ex. C). The document represents that “HMP Arbitration Association” mailed the document to Gulan. Id. Like Exhibit A, Exhibit C includes an image of an apparent USPS-certified mailing envelope addressed to “Mr. Cooper” close in time to the date Defendant Presley signed the Arbitration Award (July 22, 2019). Id. Notwithstanding that the Court may consider attachments to a complaint in determining the sufficiency of the pleadings, it is not required to do so. E.g., United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003). It is not the Court’s province or burden to rummage and sift through voluminous attachments to a complaint to rehabilitate inadequate pleadings, particularly where (as here) the pleadings are required to be made with particularity under Rule 9(b). See Fed. R. Civ. P. 9(b) (under Rule 9(b)’s requirement, plaintiff must plead with particularity, the time, place, and manner of each act of fraud, as well as the role of each defendant in each scheme). Plaintiff failed to plead the time, place, manner, and parties involved to the alleged mailings and wires with particularity within its FAC. Thus, the Court concludes that the FAC insufficiently alleges racketeering activity. See Diallo v. Redwood Investments, LLC, 2019 WL 3574449, *8-9 (S.D. Cal. Aug. 6, 2019) (denying plaintiffs’ motion for default judgment on civil RICO cause of action where plaintiffs adequately pleaded the time, place, manner, and parties to the first predicate act of mail fraud but failed sufficiently to allege these facts as to the second predicate act).4 C. Plaintiff Fails to Properly Plead a Pattern “A ‘pattern’ of racketeering activity ... requires proof that the racketeering predicates are related and ‘that they amount to or pose a threat of continued criminal activity.’” Turner v. Cook, 362 F.3d 1219, 1229 (9th Cir.2004) (quoting H.J. Inc. v. Nw. Bell Tel. Co., 492 U.S. 229, 239 (1989)). A pattern can be shown through either open or closed-ended continuity. Turner, 362 F.3d at 1229. To plead open-ended continuity, a plaintiff “must charge a form of predicate misconduct that ‘by its nature projects into the future with a threat of repetition.’” Id. (quoting Religious Tech. Ctr. v. Wollersheim, 971 F.2d 364, 366 (9th Cir.1992)). To allege closed-ended continuity, a plaintiff must aver a “series of related predicates” that extends “over a substantial

4 Plaintiff’s claim that non-party Sybil Joy Ehninger High’s conduct as a notary demonstrates the enterprise had undertaken racketeering activity lacks merit. See, e.g., Gardner v. Starkist Co., 418 F. Supp. 3d 443, 461 (N.D. Cal. 2019) (plaintiffs “failed to plausibly allege facts that show StarKist and RICO Co-Conspirators committed acts towards this alleged common period of time” and threatens future criminal conduct. Id. (citing Howard v. Am. Online, Inc., 208 F.3d 741, 750 (9th Cir.2000) (quotation marks omitted)). As set forth above, Plaintiff arguably pleaded at most two predicate acts of mail fraud occurring during a discrete four-month period. (Doc 42 at Ex. A, C). “[T]wo instances of alleged wire fraud do not establish closed-ended continuity.” Ice Cream Distributors of Evansville, LLC v. Dreyer’s Grand Ice Cream, Inc., 2010 WL 2198200, *4 (N.D. Cal. May 28, 2010) (quoting Turner, 362 F.3d at 1231)). Even assuming Plaintiff pleaded predicate acts with sufficient particularity, Plaintiff also fails to demonstrate closed-ended continuity because the alleged actions occurred during a relative short timeframe (between May 13, and July 31, 2019). (See Doc 42 at Ex. A, C). Plaintiff, therefore, fails to allege a pattern extending over a “substantial period of time.” H.J. Inc., 492 U.S. at 242; see Religious Tech. Ctr. v. Wollersheim, 971 F.2d 364, 366–67 (9th Cir. 1992) (affirming dismissal of RICO claim for failing to establish closed-ended continuity where the alleged predicate acts took place over a period of six months); Ice Cream Distributors of Evansville, LLC, 2010 WL 2198200, *4 (“mail and wire fraud over a four-month period would not constitute a series of related predicates extending over a substantial period of time.”) (internal quotation marks omitted) Plaintiff fares no better in establishing open-ended continuity. Plaintiff’s conclusory allegations that Decormier and Gulan were “recruited” to be employees and/or agents of Presley and HMP to issue additional “sham arbitration awards” is not supported by facts. (Doc. 42 ¶¶ 19, 23-29). See Ice Cream Distributors of Evansville, LLC, 2010 WL 2198200, *4 (a plaintiff asserting that defendant’s present fraudulent conduct evidences a purported propensity to engage in future racketeering activity “must allege facts with specificity”). And, as set forth above, Plaintiff has not pled – and it is difficult to conceive – that defaulted borrower-victims of the alleged fraud scheme would continue to participate in the venture for any amount of time following their engagement of Pressley and HMP to assist with their individual mortgages. See Roberts, 318 F.R.D. at 487 (citing cases where courts declined to find that victims would share a common purpose with enterprises designed to defraud them). Thus, there is no threat of “past 1229. In short, Plaintiff has failed to properly plead an enterprise and a pattern of racketeering activity under 18 U.S.C. § 1962(c). Accordingly, Plaintiff the second and third Eitel factors weigh against granting default judgment. The first Eitel factor considers whether a plaintiff will suffer prejudice if a default judgment is not entered, and such potential prejudice to the plaintiff weighs in favor of granting a default judgment. PepsiCo, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1172, 1177 (C.D. Cal. 2002). In this case, Plaintiff would suffer prejudice if the Court did not enter a default judgment because it would be without recourse for recovery. Accordingly, this factor weighs in favor of granting default judgment. Next, the Court considers the sum of money at stake in the action, with a lower sum weighing in favor of default judgment. See G & G Closed Circuit Events, LLC v. Nguyen, 2012 WL 2339699, *2 (N.D. Cal. May 30, 2012) (noting that “default judgment is generally disfavored when the sum of money at stake is either too large or unreasonable in light of the defendant’s actions”). Plaintiff seeks actual damages in the amount of $179,907.70, punitive damages in the amount of $539,723.10, treble damages in the amount of $539,723.10, consequential damages in the amount of $66,049.67, and attorneys’ fees and costs in the amount of $110,831.04. (Doc. 68 at 18-19). In sum, Plaintiff seeks $1,436,234.61 from Defendants. Id. Generally, courts have found that this factor presents no barrier to default judgment even when millions of dollars were at stake, as long as the potential damages were proportional to the harm alleged. Global Commodities Trading Group, Inc., et al. v. Beneficio De Arroz Choloma, S.A., et al., No. 2:16-cv- 1045-TLN-CKD, 2022 WL 1439499, *5 (E.D. Cal. May 6, 2022) (citations omitted) (order adopted on July 19, 2022) (unpublished). Here, Plaintiff requests substantial damages for claims this Court has determined were not adequately pled. Accordingly, the Court finds that this factor IV. THE POSSIBILITY OF A DISPUTE CONCERNING MATERIAL FACTS “[A]llegations in a well-pleaded complaint are taken as true following the clerk’s entry of default.” Elektra Entm’t Group Inc. v. Crawford, 226 F.R.D. 388, 393 (C.D. Cal. 2005) (emphasis added). As previously discussed, Plaintiff’s FAC is conclusory, speculative, and cannot be considered “well-pleaded.” There is ample room for factual dispute. Thus, the Court finds that this factor weighs in favor of denying default judgment. Due process requires that interested parties be given notice of the pendency of the action and be afforded an opportunity to present their objections before a final judgment is rendered. Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950). Upon review of the record before the court, there is clear indication that the default was not the result of excusable neglect. Defendants have had ample notice of this action and have responded, albeit inadequately and nonsensically, to this action. (Docs. 19, 28, 77). Accordingly, this factor weighs in favor of granting default judgment. “Cases should be decided upon their merits whenever reasonably possible.” Eitel, 782 F.2d at 1472. Defendants’ failures to adequately answer Plaintiff’s complaints and/or appropriately respond to the Court’s orders and Plaintiff’s pleadings make a decision on the merits “impractical if not impossible.” PepsiCo, Inc., 238 F. Supp. at 1177. Accordingly, this factor weighs in favor of granting default judgment. * * * * * Upon consideration of the Eitel factors, the Court concludes that Plaintiff has failed to establish the merits of any alleged federal cause of action as would be required for entry of default judgment against Defendants. See, e.g., Alan Neuman Productions, 862 F.2d at 1392–93 (reversing default judgment for plaintiff on RICO claims because the complaint failed properly to allege such claims). In its discretion, the Court should decline to exercise supplemental jurisdiction and address the merits of Plaintiff’s state law claims. Moreover, the remaining Eitel recommend Plaintiff's motion for default judgment be denied. The Eitel factors equally weigh against granting default judgment to Plaintiff on its state law claims. In all events, when a district court has original jurisdiction over a case it also acquires supplemental jurisdiction over factually related state claims. 28 U.S.C. § 1367(a) (“the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy”). When a court has dismissed all remaining federal claims, it may properly refuse supplemental jurisdiction over the related state claims. 28 U.S.C. § 1367(c)(3) (“The district courts may decline to exercise supplemental jurisdiction over a claim under subsection (a) if—the district court has dismissed all claims over which it has original jurisdiction”); Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 350 n.7 (1988). In fact, the Ninth Circuit notes “that state law claims ‘should’ be dismissed if federal claims are dismissed before trial.” Acri v. Varian Assocs., 114 F.3d 999, 1000 (9th Cir. 1997) (quoting United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 726 (1966)). The court’s decision on whether to exercise jurisdiction should be informed by values of judicial economy, convenience, fairness, and comity. Acri, 114 F.3d at 1002 (citing Cohill, 484 U.S. at 350). Further, “primary responsibility for developing and applying state law rests with the state courts.” Curiel v. Barclays Capital Real Estate Inc., No. S-09-3074 FCD/KJM, 2010 WL 729499, *1 (March 2, 2010) (unpublished). Accordingly, to the extent the Court has discretion to retain supplemental jurisdiction over Plaintiff’s state law claims, the undersigned recommends declining to do so. A court should freely give leave to amend when “justice so requires.” AmerisourceBergen Corp. v. Dialysist West, Inc., 465 F.3d 946, 951 (9th Cir. 2006); see Chodos v. W. Publ. Co., 292 F.3d 992, 1003 (9th Cir. 2002) (“it is generally our policy to permit amendment with ‘extreme liberality’”) (citing Morongo Band of Mission Indians v. Rose, 893 is in the discretion of the court. Swanson v. United States Forest Service, 87 F.3d 339, 343 (9th Cir. 1996). In its May 2022 Order dismissing McHaney, the Court pointed out deficiencies to Plaintiff’s RICO claims and identified why the related state law causes of action were fatally deficient. (Doc. 58). Nevertheless, the Court reluctantly granted Plaintiff’s request for leave to amend, principally because Plaintiff represented to the Court that it “has a number of additional supportive facts and allegations it can add in the Complaint regarding its lack of consent and the RICO allegations.” (Doc. 58 at 9). The Court also commented that it was “at a loss to understand why Nationstar has not included these allegations before now,” and warned in granting leave to amend that it would be Plaintiff’s “last opportunity to plead the claims.” Id. at n. 2. For whatever strategic or tactical reason or otherwise, instead of curing the deficiencies, Plaintiff chose instead to voluntarily dismiss McHaney and file the instant motion for default judgment. (Docs. 61, 68). Because Plaintiff chose not to replead, the Court can only conclude at this juncture that any amendment to cure these additional deficiencies would be futile. The Court concludes that Plaintiff cannot state a federal claim and that any amendment would be futile. The Court will recommend that this action be dismissed with prejudice and to decline supplemental jurisdiction of Plaintiff’s state law claims. Based on the foregoing, the Court HEREBY RECOMMENDS that: 1. Plaintiff’s motion for default judgment (Doc. 68) be DENIED; 2. Plaintiff’s RICO claims under §§ 1962(c), 1962(d), and 1964(c) be dismissed with prejudice; 3. The Court decline to exercise supplemental jurisdiction for Plaintiff’s claims for a violation of California’s Business & Professions Code § 17200, and tortious interference with contractual relations; 4. Plaintiff’s FAC (Doc. 42) be dismissed with prejudice; and 5. The Clerk of Court be directed to close this case. assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(1). Within 14 days after being served with these findings and recommendations, Plaintiff may file written objections with the Court. Local Rule 304(b) (E.D. Cal. 2022). The document should be captioned “Objections to Magistrate Judge’s Findings and Recommendations.” Plaintiff is advised that failure to file objections within the specified time may result in the waiver of rights on appeal. Wilkerson v. Wheeler, 772 F.3d 834, 839 (9th Cir. 2014) (citing Baxter v. Sullivan, 923 F.2d 1391, 1394 (9th Cir. 1991)). IT IS SO ORDERED. Dated: _ January 6, 2023 | by UNITED STATES MAGISTRATE JUDGE 16