Pasha Hawaii Holdings LLC v. Neptune Construction Group Inc.

• Court: District Court, N.D. California
• Decided: May 21, 2025
• Docket: 3:24-cv-07417
• Status: Unknown

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 PASHA HAWAII HOLDINGS, LLC, Case No. 4:24-cv-07417-KAW

8 Plaintiff, REPORT AND RECOMMENDATION TO GRANT IN PART AND DENY IN 9 v. PART PLAINTIFF’S MOTION FOR DEFAULT JUDGMENT; ORDER 10 NEPTUNE CONSTRUCTION GROUP REASSIGNING CASE TO A DISTRICT INC., JUDGE 11 Defendant. Re: Dkt. No. 13 12 13 On February 10, 2025, Plaintiff Pasha Hawaii Holdings, LLC filed a motion for default 14 judgment. 15 On April 17, 2025, the Court held a hearing, but Defendant did not appear. Since 16 Defendant, by virtue of being in default, has not consented to magistrate judge jurisdiction, the 17 Court REASSIGNS this action to a district judge with the RECOMMENDATION that Plaintiff’s 18 motion for default judgment be GRANTED IN PART AND DENIED IN PART. 19 I. BACKGROUND 20 Plaintiff Pasha Hawaii Holdings LLC is an ocean freight common carrier that operates 21 container ships carrying container freight between Hawaii and California for hire. (Compl., Dkt. 22 No. 1 ¶ 6.) Plaintiff had an ongoing relationship with Defendant Neptune Construction Group 23 Inc., in which Defendant repeatedly used Plaintiff to carry containers of ocean freight on 24 Plaintiff’s ships from California to Hawaii. (Compl. ¶ 7.) 25 A typical request from Defendant for container freight to be carried by Plaintiff would 26 originate by Defendant logging into Plaintiff’s online portal, where Defendant would enter 27 booking confirmation of a requested shipment. (Compl. ¶ 8.) The electronic booking confirmation 1 confirmations could also be supplemented by telephone calls, emails or other electronic 2 communications between the parties. Id. 3 There are 14 booking confirmation entries from Defendant Neptune Construction Group 4 Inc. for container freight, which were booked between July 15, 2023 and December 10, 2023. 5 (Compl. ¶ 9.) After the booking confirmation, Plaintiff took possession of the container 6 referenced by Defendant, loaded it onto one of its ocean-going container ships and transported the 7 container to the destination specified by the Defendant. (Compl. ¶ 10.) 8 Upon arrival, an invoice was generated by Plaintiff and sent to Defendant for each 9 individual container shipment. (Compl. ¶ 11.) There were 14 invoices sent to Defendant that have 10 not been paid. Id. Copies of the unpaid invoices are attached to Complaint. (Compl. ¶ 11, Ex. C.) 11 Plaintiff alleges that it has performed all its obligations under the Tariff, the booking 12 confirmations, and the invoices. (Compl. ¶ 14.) Defendant is alleged to have materially breached 13 the terms of the contracts entered between the parties and the Tariff by failing to pay on 14 14 separate occasions. (Compl. ¶ 15.) 15 On October 24, 2024, Plaintiff filed the instant action alleging breach of contract and 16 common count claims. On November 6, 2024, Plaintiff served Defendant by personally serving 17 Defendant via substituted service on Kelly Bagla, Esq., who is the registered agent for service of 18 process. (Dkt. No. 9.) The service packet was mailed on November 8, 2024, so service was 19 deemed complete on November 18, 2024. See id. at 5. Defendant’s deadline to respond to the 20 complaint was December 9, 2024. See id. After Defendant failed to respond, Plaintiff requested 21 entry of default on December 12, 2024. (Dkt. No. 10.) On December 13, 2024, the Clerk entered 22 default as to Defendant. (Dkt. No. 11.) 23 On February 10, 2025, Plaintiff filed the instant motion for default judgment. (Mot., Dkt. 24 No. 13.) Plaintiff’s motion and supporting documents were served on Defendant. (Dkt. No. 13 at 25 52.) To date, Defendant has neither appeared nor filed an opposition to Plaintiff’s motion for 26 default judgment. 27 II. LEGAL STANDARD 1 following a defendant’s default. Shanghai Automation Instrument Co. v. Kuei, 194 F. Supp. 2d 2 995, 999 (N.D. Cal. 2001). Whether to enter a judgment lies within the court’s discretion. Id. at 3 999 (citing Draper v. Coombs, 792 F.2d 915, 924-25 (9th Cir. 1986)). 4 Before assessing the merits of a default judgment, a court must confirm that it has subject 5 matter jurisdiction over the case and personal jurisdiction over the parties, as well as ensure the 6 adequacy of service on the defendant. See In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999). If the 7 court finds these elements satisfied, it turns to the following factors (“the Eitel factors”) to 8 determine whether it should grant a default judgment:

9 (1) the possibility of prejudice to the plaintiff, (2) the merits of plaintiff’s substantive claim, (3) the sufficiency of the complaint, (4) 10 the sum of money at stake in the action[,] (5) the possibility of a dispute concerning material facts[,] (6) whether the default was due 11 to excusable neglect, and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring decision on the merits. 12 13 Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986) (citation omitted). In this analysis, “the 14 well-pleaded allegations of the complaint relating to a defendant’s liability are taken as true.” 15 Pepsico, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1172, 1175 (C.D. Cal. 2002) (citing Televideo 16 Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987)). Nevertheless, default does not 17 compensate for essential facts not within the pleadings and those legally insufficient to prove a 18 claim. Cripps v. Life Ins. Co. of N. Am., 980 F.2d 1261, 1267 (9th Cir. 1992). 19 III. DISCUSSION 20 A. Jurisdiction and Service of Process 21 In considering whether to enter default judgment, a district court must first determine 22 whether it has jurisdiction over the subject matter and the parties to the case. In re Tuli, 172 F.3d 23 707, 712 (9th Cir. 1999). 24 i. Subject Matter Jurisdiction 25 In this action, Plaintiff asserts Admiralty claims. This Court has jurisdiction over this 26 action under 28 U.S.C. §1333, which vests district courts with original jurisdiction over “any civil 27 case of admiralty or maritime jurisdiction.” (28 U.S.C. §1333). Further, jurisdiction exists in this 1 ii. Personal Jurisdiction 2 The Court can exercise personal jurisdiction over Defendant pursuant to the terms of 3 Plaintiff’s Sea Freight Tariff (hereinafter “Tariff”), which contains a “Law & Jurisdiction” 4 provision in which the parties agree to submit to the jurisdiction of the United States District Court 5 for the Northern District of California and agree that it is the proper venue for all claims and 6 lawsuits arising between the parties. (Compl. ¶ 2, Ex. A § 21.) Plaintiff carried the container 7 ocean freight for Defendant pursuant to the Tariff, which is confirmed by the electronic 8 confirmations from Defendant and Invoices from Plaintiff to Defendant. (Compl. ¶¶ 7-11.) 9 Defendant consented to the Tariff when placing orders with Plaintiff for ocean going sea freight. 10 (See Compl. ¶¶ 8, 15.) 11 Thus, the Court has personal jurisdiction over Defendant and venue is proper. 12 iii. Service of Process 13 A domestic corporation may be served by delivering a copy of the summons and the 14 complaint to the agent authorized by appointment or by law to receive service of process. Fed. R. 15 Civ. P. 4(h)(1)(B). Here, Plaintiff served the summons and complaint on Defendant’s registered 16 agent by substituted service. (Dkt. No. 9.) After Defendant failed to respond to the complaint, 17 default was entered by the Clerk’s Office on December 13, 2024. (Dkt. No. 11.) 18 Thus, service was proper. 19 B. Application to the case at bar 20 Since the Court has jurisdiction in this matter, this Court must turn to the Eitel factors to 21 determine whether the entering of a default judgment is appropriate in this matter. 22 i. Prejudice to Plaintiff 23 Under the first factor, the Court must determine whether Plaintiff will be prejudiced if the 24 Court denies its motion for default judgment. Eitel, 782 F.2d at 1471-72. As set forth in the 25 complaint, Plaintiff provided contracted freight services, and despite its demand for payment, has 26 been unable to recover the outstanding amounts owed. (Compl. ¶¶ 7-11.) Thus, if the Court were 27 to deny Plaintiff’s motion, Plaintiff would be unable to recover the amounts owed. See United 1 Cal. Sept. 16, 2008), report and recommendation adopted, No. 2:07-CV-2378-GEB-EFB, 2008 2 WL 11391411 (E.D. Cal. Sept. 30, 2008). Plaintiff would, therefore, be prejudiced if the Court 3 did not enter default judgment. 4 ii. Merits of Plaintiff’s Claims and the Sufficiency of the Complaint 5 The second and third Eitel factors focus on the merits of Plaintiff’s substantive claim and 6 the sufficiency of the Complaint. Eitel, 782 F.2d at 1471–72. A party seeking default judgment 7 must state a valid claim upon which it may recover. Walters v. Statewide Concrete Barrier, Inc., 8 2005 U.S. Dist. LEXIS 49433, at *8 (N.D. Cal. Sept. 2, 2005). 9 Here, Defendant contracted with Plaintiff for ocean freight services between California and 10 Hawaii. (Compl. ¶ 7-16.) After Plaintiff performed all of its obligations under the Tariff, booking 11 confirmations, and invoiced Defendant, Defendant failed to pay 14 invoices for services. (Compl. ¶¶ 12 13-14.) Thus, the Court finds that Plaintiff has sufficiently stated a claim against Defendant for breach 13 of contract. 14 iii. Sum of Money at Stake 15 The fourth Eitel factor assesses the reasonableness of the potential award if a default 16 judgment is entered. In making this assessment, the Court must consider the amount of money at 17 stake in relation to the seriousness of Defendant’s conduct. Eitel, 782 F.2d at 1471. If the sum of 18 money at issue is reasonably proportionate to the harm caused by Defendant’s actions, properly 19 documented, and contractually justified, then default judgment is warranted. Bd. of Trs. of Cal. 20 Metal Trades v. Pitchometer Propeller, 1997 WL 797922, at *2 (N.D. Cal. Dec. 15, 1997). A 21 default judgment is only disfavored when a large amount of money is involved or is unreasonable 22 in light of Defendant’s actions. Truong Giang Corp. v. Twinstar Tea Corp., 2007 WL 1545173, at 23 *12 (N.D. Cal. May 29, 2007). In determining if the amount at stake is reasonable, the Court may 24 consider a plaintiff’s declarations, calculations, and other documentation of damages. Id. 25 Here, Plaintiff seeks $120,506.94, which is the unpaid total balance of the 14 separate sea 26 freight shipments requested by Defendant and carried by Plaintiff. (Mot. at 3, 6; Compl. Prayer ¶ 27 1.) This sum is specifically tied to the value of the services provided by Plaintiff to Defendant 1 Thus, the invoices issued are reasonable for services provided by Plaintiff, i.e., transport of 2 Defendant’s goods via ship between California and Hawaii See ids. 3 Accordingly, this factor weighs in favor of default judgment. 4 iv. The Possibility of a Dispute Concerning Material Facts 5 The fifth Eitel factor considers the possibility of dispute as to any material facts of the 6 case. Defendant has not participated in this action and has not made any attempt to contest any of 7 Plaintiff’s material facts or legal assertions or moved to set aside the entry of default despite being 8 served with all papers, including the instant motion for default judgment. Thus, the possibility of a 9 dispute regarding Defendant’s liability for damages is unlikely. 10 Thus, this factor weighs in favor of default judgment. 11 v. Whether Default was a Result of Excusable Neglect 12 The sixth Eitel factor contemplates the possibility that Defendant’s default was the result 13 of excusable neglect. Under this analysis, the Court considers whether Defendant was put on 14 adequate notice to apprise it of the pendency of the action brought against it. Phillip Morris USA, 15 Inc. v. Castworld Prod., Inc., 219 F.R.D. 494, 500 (C.D. Cal. 2003). In addition, the Court also 16 considers whether the circumstances surrounding Defendant’s failure to answer the complaint are 17 sufficient to excuse or justify its default. Shanghai Automation Instrument Co. v. Kuei, 194 F. 18 Supp. 2d 995, 1005 (N.D. Cal. 2001) (default cannot be attributed to excusable neglect where 19 defendants were properly served with the complaint, the notice of entry of default, and the papers 20 in support thereof). 21 Here, Defendant was properly served with the summons and complaint, as well as with the 22 instant motion for default judgment, and has still failed to appear in this action. Consequently, 23 there is nothing to suggest that Defendant’s failure to appear and litigate this matter is based on 24 excusable neglect. 25 vi. Federal Rules Preference for a Decision on the Merits 26 After an examination of these facts in the aggregate, this Court finds that Eitel factors one 27 through six outweigh the Federal Rules of Civil Procedure’s preference for a decision on the IV. DAMAGES AND INJUNCTIVE RELIEF 1 After entry of default, well-pleaded factual allegations in the complaint are taken as true, 2 except as to the amount of damages. Fair Hous. of Marin v. Combs, 285 F.3d 899, 906 (9th Cir. 3 2002). To recover damages after securing a default judgment, a plaintiff must prove the relief it 4 seeks through testimony or written affidavit. Bd. of Trs. of the Boilermaker Vacation Trust v. 5 Skelly, Inc., 389 F. Supp. 2d 1222, 1226 (N.D. Cal. 2005); see Pepsico, Inc., 238 F. Supp. 2d at 6 1175 (citing Televideo Sys., Inc., 826 F.2d at 917-18). 7 Plaintiff seeks a judgment requiring Defendant 8 A. Damages 9 Plaintiff seeks judgment in the amount of $120,506.94, which is the total of the 14 unpaid 10 invoices attached to the complaint. (Mot. at 3, 6; Decl. of Martin B. Greenbaum, “Greenbaum 11 Decl.,” Dkt. No. 13 at 10 ¶ 2, Exs. B & C; Compl., Exs. B & C.) 12 Additionally, Plaintiff seeks prejudgment interest in the amount of accrued interest 13 calculated on the unpaid invoice total from the date of the last unpaid invoice through the present 14 day. (See Mot. at 6.) Plaintiff did not, however, provide a legal basis for the award of prejudgment 15 interest in its six-page motion. See id. In its proposed order, however, Plaintiff cites to Alkmeon 16 Naviera, S.A. v. M/V Marina L., 633 F.2d 789, 797 (9th Cir. 1980) for the proposition that, “[i]n 17 admiralty cases, prejudgment interest is awarded at the [court’s] [discretion] and should generally 18 be awarded absent peculiar or exceptional circumstances.” (Proposed Order, Dkt. No. 22 at 10.) 19 While this does not correct the oversight in the motion itself, Plaintiff’s reliance on Alkmeon 20 Naviera, S.A. is also misplaced, because that case involved the loss of a vessel, and the Ninth 21 Circuit has found it proper to limit the trial court’s discretion in denying prejudgment interest in 22 those cases, because, “in admiralty collisions, prejudgment interest is an element of compensation 23 and not a penalty.” Alkmeon Naviera, S.A., 633 F.2d at 797. This is essentially a breach of 24 contract case, and Plaintiff has failed to provide a sufficient legal basis for the award of 25 prejudgment interest. When this issue was brought to Plaintiff’s attention at the hearing, Plaintiff 26 withdrew its request for an award of prejudgment interest. 27 For the reasons set forth above, the Court finds that Plaintiff is entitled to an award of the 1 unpaid invoices in the amount of $120,506.94 but declines to recommend that Plaintiff be awarded 2 || prejudgment on that amount. 3 B. Costs 4 Plaintiff requests an award of costs in the amount of $477.61 for the costs incurred in 5 || connection with this lawsuit. (Mot. at 6.) Specifically, Plaintiff spent $405 for the filing fee and 6 $72.61 for service of process. (Greenbaum Decl. 4 4.) The Court finds that these costs are 7 reasonable and recommends that they be awarded. 8 Vv. CONCLUSION 9 For the reasons set forth above, the Court RECOMMENDS that Plaintiff Pasha Hawaii 10 || Holdings, LLC’s motion for default judgment against Defendant Neptune Construction Group Inc. 11 be GRANTED IN PART AND DENIED IN PART. Specifically, in recommending that the 12 motion be GRANTED IN PART, the Court recommends that Plaintiff be awarded $120,984.55, 5 13 which consists of the $120,506.94 in unpaid invoices and $477.81 in costs. 14 To the extent that Plaintiff seeks an award of prejudgment interest, the Court 3 15 RECOMMENDS that the request be DENIED. a 16 Finally, no later than 3 days from the date of this report and recommendation, Plaintiff is 3 17 instructed to serve Defendant with a copy by any means reasonably calculated to provide actual 18 notice, and file proof of service to that effect. Any party may file objections to these 19 || recommendations within 14 days of being served with a copy. See 28 U.S.C. § 636(b); See 28 20 U.S.C. § 636(b)(); Fed. R. Civ. P. 72(b); N.D. Civil L.R. 72-3. The parties are advised that 21 failure to file objections within the specified time may waive the right to appeal the District 22 Court's order. IBEW Local 595 Trust Funds v. ACS Controls Corp., No. C-10-5568, 2011 WL 23 1496056, at *3 (N.D. Cal. Apr. 20, 2011). 24 IT IS SO RECOMMENDED. 25 || Dated: May 21, 2025 .

27 United States Magistrate Judge 28