Pamela Day v. Dustin Boyer

District Court, C.D. California·Decided January 21, 2020·No. 2:19-cv-01669·Unknown

Opinion

O JS-6

United States District Court Central District of California PAMELA DAY, Case No. 2:19-cv-01669-ODW (RAOx) Plaintiff, ORDER GRANTING PLAINTIFF’S v. RENEWED MOTION FOR DUSTIN BOYER, DEFAULT JUDGMENT [20] Defendant. Plaintiff Pamela Day moves for entry of default judgment against Defendant Dustin Boyer (“Motion”). (Renewed Mot. for Default J. (“Mot.”), ECF No. 20.) For the reasons discussed below, the Court GRANTS Plaintiff’s Motion.1 Plaintiff Pamela Day initiated this action against Defendant Dustin Boyer on March 7, 2019. (Compl., ECF No. 1.) Day asserts a dozen claims against Boyer for violations of federal securities law and state law related to a cryptocurrency investment she made with Boyer in December 2017. (See Compl. ¶¶ 3–10.) Day alleges that Boyer represented to her that Day could purchase an allocation of MobileCoin’s initial

1 After carefully considering the papers filed in support of the Motion, the Court deemed the matter appropriate for decision without oral argument. Fed. R. Civ. P. 78; C.D. Cal. L.R. 7-15. cryptocurrency coin offering. (Compl. ¶¶ 5–7.) For that purpose, Day wired Boyer $97,165 and, on January 5, 2018, Boyer confirmed receipt of the funds and Day’s ownership of “$97,165 or 97,165 Mobilecoin tokens.” (Compl. ¶ 7.) However, Day alleges that Boyer did not invest her money as promised but instead kept it for himself, comingled it with his own funds, and refuses to return her money. (Compl. ¶¶ 9–10.) On May 13, 2019, on Day’s request, the Clerk entered default against Boyer. (Req. for Clerk to Enter Default, ECF No. 12; Default by Clerk, ECF No. 13.) Following the Court’s Order to Show Cause, Day filed an Application for Default Judgment against Boyer. (See Appl. for Default J., ECF No. 15.) After the Court denied Day’s first Application, Day filed the instant Renewed Motion for Entry of Default Judgment. (See Mot.) Federal Rule of Civil Procedure (“FRCP”) 55(b) authorizes a district court to grant a default judgment after the Clerk enters default under Rule 55(a). Fed. R. Civ. P. 55(b). Before a court can enter a default judgment against a defendant, the plaintiff must satisfy the procedural requirements set forth in FRCP 54(c) and 55, as well as Local Rules 55-1 and 55-2. Fed. R. Civ. P. 54(c), 55; C.D. Cal. L.R. 55-1, 55-2. Local Rule 55-1 requires that the movant submit a declaration establishing: (1) when and against which party default was entered; (2) identification of the pleading to which default was entered; (3) whether the defaulting party is a minor, incompetent person, or active service member; (4) that the Servicemembers Civil Relief Act, 50 U.S.C. § 3931, does not apply; and that (5) the defaulting party was properly served with notice, if required under Rule 55(b)(2). C.D. Cal. L.R. 55-1. If these procedural requirements are satisfied, a district court has discretion to enter default judgment. Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). “[A] defendant’s default does not automatically entitle the plaintiff to a court-ordered judgment.” PepsiCo, Inc., v. Cal. Sec. Cans, 238 F. Supp. 2d 1172, 1174 (C.D. Cal 2002). In exercising discretion, a court must consider several factors (the “Eitel Factors”): (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 [FRCP] favoring decisions on the merits. Eitel v. McCool, 782 F.2d 1470, 1471–72 (9th Cir. 1986). Generally, after the Clerk enters default, the defendant’s liability is conclusively established, and the well-pleaded factual allegations in the complaint are accepted as true, except those pertaining to damages. TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917–18 (9th Cir. 1987) (per curiam) (quoting Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977)). The Court will first address the threshold procedural requirements and then turn to the substantive factors for default judgment. A. Procedural Requirements The Court finds that Day has complied with the relevant procedural requirements for the entry of a default judgment. Day submits declarations attesting that: the Clerk entered a default on May 13, 2019, against Boyer as to the original Complaint; Boyer is not a minor or incompetent person; the Servicemembers Civil Relief Act does not apply; and Day served Boyer with notice of this Motion, although not required under Rule 55(b)(2). (Decl. of Jim Bauch (“Bauch Decl.”) ¶¶ 2–5, ECF No. 20-2; Decl. of Pamela Day (“Day Decl.”) ¶ 3, ECF No. 20-1.) Accordingly, the procedural requirements are satisfied. B. Factors The Court finds that the Eitel factors weigh in favor of entering a default judgment as to certain of Day’s causes of action, as discussed below. The Court addresses each factor in turn. 1. Possibility of Prejudice to Plaintiff The first Eitel factor asks whether the plaintiff will suffer prejudice if a default judgment is not entered. Eitel, 782 F.2d at 1471. Denial of default leads to prejudice when it leaves a plaintiff without a remedy or recourse to recover compensation. Landstar Ranger, Inc. v. Parth Enters., Inc., 725 F. Supp. 2d 916, 920 (C.D. Cal. 2010); PepsiCo, 238 F. Supp. 2d at 1177. Boyer has failed to appear or participate in this action. Absent entry of default judgment, Day is without recourse to recover. Accordingly, this factor weighs in favor of default judgment. 2. Substantive Merits & 3. Sufficiency of the Complaint The second and third Eitel factors “require that a plaintiff state a claim on which the [plaintiff] may recover.” Philip Morris USA, Inc. v. Castworld Prods., Inc., 219 F.R.D. 494, 499 (C.D. Cal. 2003) (alteration in original) (quoting PepsiCo, 238 F. Supp. 2d at 1175). Although well-pleaded allegations in the complaint are admitted by defendant’s failure to respond, “necessary facts not contained in the pleadings, and claims which are legally insufficient, are not established by default.” Cripps v. Life Ins. Co. of N. Am., 980 F.2d 1261, 1267 (9th Cir. 1992). To weigh these two factors, the Court must evaluate the merits of each cause of action. i. Sale of Unregistered Securities in Violation of Federal Law Day alleges a first claim against Boyer for selling unregistered securities in violation of federal statute 15 U.S.C. § 77l. (Compl. ¶¶ 11–16.) Per section 771, “any person who offers or sells a security in violation of section 77e of this title . . . shall be liable . . . to the person purchasing such security.” 15 U.S.C.

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