1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8
RunBu ggy OMI Incorporated, ) No. CV-23-00834-PHX-SPL ) 9 ) 10 Plaintiff, ) ORDER vs. ) ) 11 ) Direct Logistic Transport LLC, ) 12 ) 13 Defendant. ) ) 14 )
15 Before the Court is Plaintiff RunBuggy OMI, Inc.’s Third Motion for Default 16 Judgment (Doc. 20), in which it asks the Court to enter a default judgment against 17 Defendant Direct Logistic Transport, LLC. For the following reasons, the Motion is 18 granted. 19 I. BACKGROUND 20 Plaintiff runs and maintains an online technology platform that provides a 21 marketplace where those seeking to have vehicles transported, including individuals, 22 vehicle manufacturers, finance companies, leasing and rental companies, car dealerships, 23 and vehicle auctions can connect with vehicle carriers who provide transportation services 24 and self-arrange for transportation. (Doc. 1 at ¶ 2; Doc. 20-1 at ¶ 13). Defendant created an 25 account to use the Plaintiff’s online technology platform and accepted the Terms of 26 Service. (Doc. 1 at ¶ 17; Doc. 20-1 at ¶ 19). Defendant thereafter incurred charges pursuant 27 to the Terms of Service in an amount of at least $171,664.27. (Doc. 20-1 at ¶ 20). 28 On November 14, 2022, Plaintiff sent Defendant a notice demanding payment in 1 full and informing Defendant of its breach of the Terms of Service. (Doc. 1 at ¶ 21; Doc. 2 20-1 at ¶ 23). Although Defendant made partial payments, Defendant still owed at least 3 $141,664.27 for its use of the Service. (Doc. 1 at ¶¶ 24–25; Doc. 20-1 at ¶¶ 24–25). To 4 date, Defendant has failed or refused to pay the full amount due. (Doc. 20at 3; Doc. 20-1 5 at ¶ 25). 6 II. DISCUSSION 7 a. Subject Matter Jurisdiction, Personal Jurisdiction, and Service 8 When default judgment is sought against a non-appearing party, a court has “an 9 affirmative duty to look into its jurisdiction over both the subject matter and the parties.” 10 In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999) (“To avoid entering a default judgment that 11 can later be successfully attacked as void, a court should determine whether it has the 12 power, i.e., the jurisdiction, to enter judgment in the first place.”). A court has a similar 13 duty with respect to service of process. See Fishman v. AIG Ins. Co., No. CV 07-0589- 14 PHX-RCB, 2007 WL 4248867, at *3 (D. Ariz. Nov. 30, 2007) (“Because defendant has 15 not been properly served, the court lacks jurisdiction to consider plaintiff’s motions for 16 default judgment.”). These considerations are “critical because ‘[w]ithout a proper basis 17 for jurisdiction, or in the absence of proper service of process, the district court has no 18 power to render any judgment against the defendant’s person or property unless the 19 defendant has consented to jurisdiction or waived the lack of process.’” Id. (citing S.E.C. 20 v. Ross, 504 F.3d 1130, 1138–39 (9th Cir. 2007)). 21 The Court has jurisdiction over the subject matter. Pursuant to 28 U.S.C. § 22 1332(a)(1), district courts have subject-matter jurisdiction in civil matters that are between 23 citizens of different states and include an amount in controversy that exceeds $75,000. See 24 Weeping Hollow Ave. Tr. v. Spencer, 831 F.3d 1110, 1112 (9th Cir. 2016) (“[A] federal 25 court may exercise diversity jurisdiction only if there is no plaintiff and no defendant who 26 are citizens of the same State.”) (citation and quotation omitted). Here, Plaintiff and 27 Defendant are citizens of different states. Plaintiff is a Delaware corporation with its 28 principal place of business in California. (Doc. 20-1 at ¶ 4). See Johnson v. Columbia 1 Properties Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006) (“[A] corporation is a citizen 2 only of (1) the state where its principal place of business is located, and (2) the state in 3 which it is incorporated.”). Defendant, however, is a limited liability company with 4 members in only New York and Florida. (Doc. 17 at ¶¶ 3–5). Id. (“[A]n LLC is a citizen 5 of every state of which its owners/members are citizens.”). Moreover, Plaintiff has plead 6 that the amount in controversy is at least $141,664.27. (Doc. 1 at ¶ 25). Accordingly, the 7 Court has subject-matter jurisdiction. 8 Further, the Court has personal jurisdiction over Defendant. By accepting the Terms 9 of Service, Defendant agreed to submit to the personal and exclusive jurisdiction of 10 Arizona. (Doc. 20-3 at 11); see Dow Chem. Co. v. Calderon, 422 F.3d 827, 831 (9th Cir. 11 2005) (“‘parties to a contract may agree in advance to submit to the jurisdiction of a given 12 court.’”) (quoting Nat’l Equip. Rental, Ltd. v. Szukhent, 375 U.S. 311, 316 (1964)). Finally, 13 Defendant was properly served. (Doc. 10). 14 b. Default Judgment Analysis: Eitel Factors 15 “A defendant’s default does not automatically entitle a plaintiff to a default 16 judgment.” Hartford Life & Accident Ins. Co. v. Gomez, No. CV-13-01144-PHX-BSB, 17 2013 WL 5327558, at *2 (D. Ariz. Sept. 24, 2013). Instead, once a default has been entered, 18 the district court has discretion to grant a default judgment. See Fed. R. Civ. P. 55(b)(2); 19 Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). Factors the Court may consider 20 include: (1) the possibility of prejudice to the plaintiff; (2) the merits of the claim; (3) the 21 sufficiency of the complaint; (4) the amount of money at stake; (5) the possibility of a 22 dispute concerning material facts; (6) whether default was due to excusable neglect; and 23 (7) the policy favoring a decision on the merits. See Eitel v. McCool, 782 F.2d 1470, 1471– 24 72 (9th Cir. 1986). In applying the Eitel factors, “the factual allegations of the complaint, 25 except those relating to the amount of damages, will be taken as true.” Geddes v. United 26 Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977). 27 /// 28 /// 1 i. First, Fifth, Sixth, and Seventh Eitel Factors 2 In a case such as this, where the defendant has failed to meaningfully participate in 3 the litigation, the first, fifth, sixth, and seventh factors generally favor the plaintiff. See 4 Zekelman Indus. Inc. v. Marker, No. CV-19-02109-PHX-DWL, 2020 WL 1495210, at *3 5 (D. Ariz. Mar. 27, 2020). The first factor—the possibility of prejudice to Plaintiff—weighs 6 in favor of granting default judgment. Defendant has failed to appear in this action, despite 7 having been served in June 2023. (Doc. 10). If Plaintiff’s Motion is denied, then Plaintiff 8 will likely be without other recourse for recovery. See Zekelman, 2020 WL 1495210, at *3 9 (citing PepsiCo, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1172, 1177 (C.D. Cal. 2002)). 10 The fifth and sixth factors—the possibility of a dispute concerning material facts 11 and whether default was due to excusable neglect—also weigh in favor of granting default 12 judgment.
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1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8
RunBu ggy OMI Incorporated, ) No. CV-23-00834-PHX-SPL ) 9 ) 10 Plaintiff, ) ORDER vs. ) ) 11 ) Direct Logistic Transport LLC, ) 12 ) 13 Defendant. ) ) 14 )
15 Before the Court is Plaintiff RunBuggy OMI, Inc.’s Third Motion for Default 16 Judgment (Doc. 20), in which it asks the Court to enter a default judgment against 17 Defendant Direct Logistic Transport, LLC. For the following reasons, the Motion is 18 granted. 19 I. BACKGROUND 20 Plaintiff runs and maintains an online technology platform that provides a 21 marketplace where those seeking to have vehicles transported, including individuals, 22 vehicle manufacturers, finance companies, leasing and rental companies, car dealerships, 23 and vehicle auctions can connect with vehicle carriers who provide transportation services 24 and self-arrange for transportation. (Doc. 1 at ¶ 2; Doc. 20-1 at ¶ 13). Defendant created an 25 account to use the Plaintiff’s online technology platform and accepted the Terms of 26 Service. (Doc. 1 at ¶ 17; Doc. 20-1 at ¶ 19). Defendant thereafter incurred charges pursuant 27 to the Terms of Service in an amount of at least $171,664.27. (Doc. 20-1 at ¶ 20). 28 On November 14, 2022, Plaintiff sent Defendant a notice demanding payment in 1 full and informing Defendant of its breach of the Terms of Service. (Doc. 1 at ¶ 21; Doc. 2 20-1 at ¶ 23). Although Defendant made partial payments, Defendant still owed at least 3 $141,664.27 for its use of the Service. (Doc. 1 at ¶¶ 24–25; Doc. 20-1 at ¶¶ 24–25). To 4 date, Defendant has failed or refused to pay the full amount due. (Doc. 20at 3; Doc. 20-1 5 at ¶ 25). 6 II. DISCUSSION 7 a. Subject Matter Jurisdiction, Personal Jurisdiction, and Service 8 When default judgment is sought against a non-appearing party, a court has “an 9 affirmative duty to look into its jurisdiction over both the subject matter and the parties.” 10 In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999) (“To avoid entering a default judgment that 11 can later be successfully attacked as void, a court should determine whether it has the 12 power, i.e., the jurisdiction, to enter judgment in the first place.”). A court has a similar 13 duty with respect to service of process. See Fishman v. AIG Ins. Co., No. CV 07-0589- 14 PHX-RCB, 2007 WL 4248867, at *3 (D. Ariz. Nov. 30, 2007) (“Because defendant has 15 not been properly served, the court lacks jurisdiction to consider plaintiff’s motions for 16 default judgment.”). These considerations are “critical because ‘[w]ithout a proper basis 17 for jurisdiction, or in the absence of proper service of process, the district court has no 18 power to render any judgment against the defendant’s person or property unless the 19 defendant has consented to jurisdiction or waived the lack of process.’” Id. (citing S.E.C. 20 v. Ross, 504 F.3d 1130, 1138–39 (9th Cir. 2007)). 21 The Court has jurisdiction over the subject matter. Pursuant to 28 U.S.C. § 22 1332(a)(1), district courts have subject-matter jurisdiction in civil matters that are between 23 citizens of different states and include an amount in controversy that exceeds $75,000. See 24 Weeping Hollow Ave. Tr. v. Spencer, 831 F.3d 1110, 1112 (9th Cir. 2016) (“[A] federal 25 court may exercise diversity jurisdiction only if there is no plaintiff and no defendant who 26 are citizens of the same State.”) (citation and quotation omitted). Here, Plaintiff and 27 Defendant are citizens of different states. Plaintiff is a Delaware corporation with its 28 principal place of business in California. (Doc. 20-1 at ¶ 4). See Johnson v. Columbia 1 Properties Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006) (“[A] corporation is a citizen 2 only of (1) the state where its principal place of business is located, and (2) the state in 3 which it is incorporated.”). Defendant, however, is a limited liability company with 4 members in only New York and Florida. (Doc. 17 at ¶¶ 3–5). Id. (“[A]n LLC is a citizen 5 of every state of which its owners/members are citizens.”). Moreover, Plaintiff has plead 6 that the amount in controversy is at least $141,664.27. (Doc. 1 at ¶ 25). Accordingly, the 7 Court has subject-matter jurisdiction. 8 Further, the Court has personal jurisdiction over Defendant. By accepting the Terms 9 of Service, Defendant agreed to submit to the personal and exclusive jurisdiction of 10 Arizona. (Doc. 20-3 at 11); see Dow Chem. Co. v. Calderon, 422 F.3d 827, 831 (9th Cir. 11 2005) (“‘parties to a contract may agree in advance to submit to the jurisdiction of a given 12 court.’”) (quoting Nat’l Equip. Rental, Ltd. v. Szukhent, 375 U.S. 311, 316 (1964)). Finally, 13 Defendant was properly served. (Doc. 10). 14 b. Default Judgment Analysis: Eitel Factors 15 “A defendant’s default does not automatically entitle a plaintiff to a default 16 judgment.” Hartford Life & Accident Ins. Co. v. Gomez, No. CV-13-01144-PHX-BSB, 17 2013 WL 5327558, at *2 (D. Ariz. Sept. 24, 2013). Instead, once a default has been entered, 18 the district court has discretion to grant a default judgment. See Fed. R. Civ. P. 55(b)(2); 19 Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). Factors the Court may consider 20 include: (1) the possibility of prejudice to the plaintiff; (2) the merits of the claim; (3) the 21 sufficiency of the complaint; (4) the amount of money at stake; (5) the possibility of a 22 dispute concerning material facts; (6) whether default was due to excusable neglect; and 23 (7) the policy favoring a decision on the merits. See Eitel v. McCool, 782 F.2d 1470, 1471– 24 72 (9th Cir. 1986). In applying the Eitel factors, “the factual allegations of the complaint, 25 except those relating to the amount of damages, will be taken as true.” Geddes v. United 26 Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977). 27 /// 28 /// 1 i. First, Fifth, Sixth, and Seventh Eitel Factors 2 In a case such as this, where the defendant has failed to meaningfully participate in 3 the litigation, the first, fifth, sixth, and seventh factors generally favor the plaintiff. See 4 Zekelman Indus. Inc. v. Marker, No. CV-19-02109-PHX-DWL, 2020 WL 1495210, at *3 5 (D. Ariz. Mar. 27, 2020). The first factor—the possibility of prejudice to Plaintiff—weighs 6 in favor of granting default judgment. Defendant has failed to appear in this action, despite 7 having been served in June 2023. (Doc. 10). If Plaintiff’s Motion is denied, then Plaintiff 8 will likely be without other recourse for recovery. See Zekelman, 2020 WL 1495210, at *3 9 (citing PepsiCo, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1172, 1177 (C.D. Cal. 2002)). 10 The fifth and sixth factors—the possibility of a dispute concerning material facts 11 and whether default was due to excusable neglect—also weigh in favor of granting default 12 judgment. Given the allegations of the Complaint (further discussed below) and 13 Defendant’s default, the Court finds that no genuine dispute of material facts would 14 preclude granting the Motion. And because Defendant was properly served and has never 15 appeared in this case, the Court finds it unlikely that Defendant’s failure to appear and the 16 resulting default was the result of excusable neglect. See id. at *4 (“Due to Defendants’ 17 failure to participate, there is no dispute over material facts (except as to damages) and no 18 indication that default is due to excusable neglect.”). 19 The seventh factor—the policy favoring a decision on the merits—generally weighs 20 in favor of denying default judgment because “[c]ases should be decided upon their merits 21 whenever reasonably possible.” Eitel, 782 F.2d at 1472. But the mere existence of FRCP 22 55(b) “indicates that this preference, standing alone, is not dispositive.” PepsiCo, 238 F. 23 Supp. 2d at 1177 (citation omitted). Moreover, Defendant’s unexplained absence at this 24 juncture of the case makes it impractical to decide on the merits. See id. Thus, the Court is 25 not precluded from entering default judgment against Defendant. See Emp. Painters’ Tr. v. 26 Ethan Enters., Inc., 480 F.3d 993, 1000–01 (9th Cir. 2007); Zekelman, 2020 WL 1495210, 27 at *4 (citation omitted) (“[T]he default mechanism is necessary to deal with wholly 28 unresponsive parties who could otherwise cause the justice system to grind to a halt. 1 Defendants who appear to be ‘blowing off’ the complaint should expect neither sympathy 2 nor leniency from the court.”). 3 ii. Second and Third Eitel Factors 4 The second and third factors—the merits of the claims and the sufficiency of the 5 Complaint—weigh in favor of granting default judgment. “These two factors are often 6 analyzed together and require courts to consider whether a plaintiff has stated a claim on 7 which it may recover.” Zekelman, 2020 WL 1495210, at *5 (citation omitted). When the 8 complaint sufficiently states a claim for relief, these factors favor a default judgment. See 9 Danning v. Lavine, 572 F.2d 1386, 1388–89 (9th Cir. 1978). “Of all the Eitel factors, courts 10 often consider the second and third factors to be the most important.” Zekelman, 2020 WL 11 1495210, at *5 (citation omitted). 12 Taking Plaintiff’s factual allegations as true, this Court finds that the Complaint 13 sufficiently states a claim for relief against Defendant for breach of contract.1 “To state a 14 cause of action for breach of contract, the Plaintiff must plead facts alleging (1) a contract 15 exists between the plaintiff and defendant; (2) the defendant breached the contract; and (3) 16 the breach resulted in damage to plaintiff.” Little v. Grand Canyon Univ., 516 F. Supp. 3d 17 958, 964 (D. Ariz. 2021) (internal citations omitted). As to the first element, Plaintiff pleads 18 in the Complaint that a contract (the Terms of Service) exists between the parties. (Doc. 1 19 at ¶¶ 4, 6, 17, 29; Doc. 20-1 at ¶¶ 13–19). Plaintiff also meets the second element because 20 it alleges that Defendant breached the contract by failing to pay for the services rendered. 21 (Doc. 1 at ¶¶ 7, 8, 24–27, 30–32; Doc. 20-1 at ¶¶ 20, 25). Finally, as to the third element, 22 the Complaint sets forth damages Plaintiff has suffered because of Defendant’s breach. 23 (Doc. 1 at ¶¶ 21, 25–26, 33; Doc. 1-2; Doc. 20-1 at ¶¶ 12, 25–27). Accordingly, Plaintiff’s 24 claims are meritorious and sufficiently plead in the Complaint. 25 /// 26 27 1 The Complaint asserts two counts, however, Plaintiff explained that Count Two of the Complaint was filed in the alternative to Count One and therefore need not be ruled 28 upon. (Doc. 20 at n.2). 1 iii. Fourth Eitel Factor 2 Under the fourth factor, this Court “must consider the amount of money at stake in 3 relation to the seriousness of Defendant’s conduct.” Philip Morris USA, Inc. v. Castworld 4 Prods., Inc., 219 F.R.D. 494, 500 (C.D. Cal. 2003) (citation omitted). “[A] default 5 judgment must be supported by specific allegations as to the exact amount of damages 6 asked for in the complaint.” Id. at 499. “When the money at stake in the litigation is 7 substantial or unreasonable, default judgment is discouraged.” Zekelman, 2020 WL 8 1495210, at *4 (internal quotations omitted) (citation omitted). Here, Plaintiff asserts that 9 “Defendant [owes] at least $141,664.27 for its use of the Service.” (Doc. 20 at 3 (emphasis 10 added)). This amount is derived from the total of the invoice for the services rendered less 11 the amount Defendant has already paid. (Doc. 1-2 at 12; Doc. 1 at ¶¶ 21–25). Plaintiff is 12 not claiming punitive damages or other special damages. (Doc. 20 at 6). Given the 13 supporting documentation and the overall reasonableness of Plaintiff’s requested relief, the 14 Court finds that the fourth factor, too, weighs in favor of default judgment. 15 c. Relief Sought 16 Unlike the Complaint’s other factual allegations, those pertaining to damages are 17 not taken as true upon default. Geddes, 559 F.2d at 560. Thus, a plaintiff “is required to 18 prove all damages sought in the complaint.” Tolano v. El Rio Bakery, No. CV-18-00125- 19 TUC-RM, 2019 WL 6464748, at *6 (D. Ariz. Dec. 2, 2019) (internal quotations omitted) 20 (quoting Philip Morris USA, Inc, 219 F.R.D. at 498). A plaintiff must “provide evidence 21 of its damages, and the damages sought must not be different in kind or amount from those 22 set forth in the complaint.” Fisher Printing Inc. v. CRG LTD II LLC, No. CV-16-03692- 23 PHX-DJH, 2018 WL 603299, at *3 (D. Ariz. Jan. 22, 2018) (citing Amini Innovation Corp. 24 v. KTY Int’l Mktg., 768 F. Supp. 2d 1049, 1054 (C.D. Cal. 2011)). Courts may rely on 25 declarations submitted by the plaintiff in determining appropriate damages. Tolano, 2019 26 WL 6464748, at *6 (citing Philip Morris USA, Inc., 219 F.R.D. at 498). 27 Here, Plaintiff submitted a sworn declaration asserting that Defendants failed to pay 28 the remaining amount due for the services rendered. The total on the invoice was 1 $171,664.27. (Doc. 20-1 at ¶ 22; Doc. 20-6 at 12). However, Defendant has only made six 2 partial payments to Plaintiff in the amount of $5,000 each for the total of $30,000. (Doc. 3 20-1 at ¶ 24). Based on these figures, Plaintiff asserts it is owed the remaining $141,664.27. 4 (Id. at ¶ 25). Accordingly, the Court finds that Plaintiff has proven actual damages in the 5 amount of $141,664.27. 6 Additionally, Plaintiff asserts that the Terms of Service entitles Plaintiff to recover 7 attorneys’ fees and costs. (Doc. 20 at 2). More specifically, the Terms of Service provides 8 that “[i]n the event a dispute arises regarding this Agreement or the use of the RunBuggy 9 Service, the prevailing party shall be entitled to recover reasonable attorneys’ fees and costs 10 incurred.” (Doc. 20-3 at 11). Plaintiff has not made it clear whether it intends to file a 11 motion to recover attorneys’ fees and costs incurred in this action upon entry of default 12 judgment. To the extent that it does, the Court directs Plaintiff to file a motion for attorneys’ 13 fees and costs in accordance with FRCP 54(d) and LRCiv 54.2. 14 III. CONCLUSION 15 Having reviewed Plaintiff’s motion and supporting documents, and having 16 considered the Eitel factors as a whole, the Court concludes that the entry of default 17 judgment is appropriate. Accordingly, 18 IT IS ORDERED: 19 1. That Plaintiff’s Third Motion for Default Judgment (Doc. 20) is granted. 20 Default judgment, pursuant to FRCP 55(b)(2), is entered in favor of Plaintiff 21 RunBuggy OMI Incorporated—and against Defendant Direct Logistic Transport 22 LLC—on Count One, Breach of Contract. 23 2. That Plaintiff shall be awarded $141,664.27 in actual damages. 24 /// 25 /// 26 /// 27 /// 28 /// 1 3. That Plaintiff shall have until January 30, 2024 to file a motion for attorneys’ 2 fees in accordance with FRCP 54(d)(2) and LRCiv 54.2; and 3 4. That the Clerk of Court shall enter judgment accordingly and terminate this 4 action. 5 Dated this 16th day of January, 2024. 6 - 7 Ls 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28