Shellmound-Christie Corp., a corporation v. CA/SCC 5850 LS JV, LLC, a limited liability company

• Court: District Court, N.D. California
• Decided: August 27, 2025
• Docket: 4:23-cv-05192
• Status: Unknown

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 SHELLMOUND-CHRISTIE CORP., A Case No. 23-cv-05192-KAW CORPORATION, 8 Plaintiff, ORDER GRANTING IN PART AND 9 DENYING IN PART MOTION FOR v. DEFAULT JUDGMENT 10 CA/SCC 5850 LS JV, LLC, A LIMITED Re: Dkt. No. 56 11 LIABILITY COMPANY, et al.,

12 Defendants.

13 14 On October 11, 2023, Plaintiff Shellmound-Christie Corp. filed the instant case against 15 Defendants CA/SCC 5850 (“CA 5850) and CA-Ventures Holdings, LLC (“CA-Ventures”), 16 asserting a single claim for breach of contract. (Compl., Dkt. No. 1.) Pending before the Court is 17 Plaintiff’s motion for default judgment. (Mot. for Default J., Dkt. No. 56.) 18 The Court held a hearing on August 7, 2025, at which Defendants did not appear. Having 19 considered Plaintiff’s filings and the relevant legal authority, the Court GRANTS IN PART and 20 DENIES IN PART Plaintiffs’ motion for default judgment.1 21 I. BACKGROUND 22 On June 7, 2021, Plaintiff and Defendant CA 5850 entered into a written purchase sale 23 agreement whereby Defendant CA 5850 would purchase commercial property located at 5850 24 Shellmound Way (“Subject Property”). (Compl. ¶ 7.) On December 14, 2022, Defendant CA 25 5850 elected to terminate the sale agreement. (Compl. ¶ 8.) On January 13, 2023, Plaintiff and 26 Defendants entered into a written “standstill” agreement. (Compl. ¶¶ 8, 11.) In exchange for 27 1 Plaintiff allowing Defendant CA 5850 to continue to attempt to obtain the rights necessary to 2 proceed with its planned development of the Subject Property, Defendant CA 5850 agreed to pay 3 Plaintiff all outstanding monthly option payments owned as part of the purchase sale agreement, 4 as well as a $250,000 “Break Up Fee.” (Compl. ¶ 8.) Defendant CA 5850 also acknowledged and 5 agreed that it owed Plaintiff $649,999.97. (Compl. ¶ 8.) To satisfy this obligation, the parties 6 agreed to release to Plaintiff the $400,000, plus interest, that was being held in escrow. (Compl. ¶ 7 9.) The remaining balance was due on or before February 28, 2023; any amount outstanding after 8 that date would accrue interest at the rate of 9% per annum. (Compl. ¶ 9.) The January 13, 2023 9 agreement also included an attorney’s fees provision providing for reasonable attorney’s fees and 10 costs to a prevailing party should legal action be required to enforce the agreement. (Compl. ¶ 11 10.) Defendant CA-Ventures was also a signatory to the January 13, 2023 agreement, whereby it 12 guaranteed payment on behalf of Defendant CA 5850. (Compl. ¶ 11.) 13 As required by the January 13, 2023 agreement, the escrow amount was released to 14 Plaintiff. (Compl. ¶ 14.) The remaining amount due, however, was not paid by February 28, 15 2023. (Compl. ¶¶ 14-15.) On June 23, 2023, the parties entered into another agreement, in which 16 Plaintiff agreed not to immediately file a lawsuit in exchange for full payment of the outstanding 17 balance by July 15, 2023. (Compl. ¶ 16.) As part of the agreement, Defendants acknowledged 18 that as of June 19, 2023, the outstanding balance was $303,259.32, plus $7,464.50 in attorney’s 19 fees, for a total amount due of $310,723.82.2 (Compl. ¶ 16.) Defendants further agreed the 20 outstanding balance would continue to accrue interest until paid in full, and that Defendants would 21 owe an additional $50,000 late-payment fee if Defendants did not pay in full by July 15, 2023. 22 (Compl. ¶¶ 16-17.) 23 Defendants did not make any payments by July 15, 2023. (Compl. ¶ 19.) On October 11, 24 2023, Plaintiff brought this action against Defendants, asserting a single cause of action for breach 25 of contract. On January 23, 2024, Defendants filed their answers. (Dkt. Nos. 8-9.) At the time, 26 Defendants were represented by Attorney Andrew C. Harris. (Id.) 27 1 On August 19, 2024, Attorney Harris moved to withdraw as counsel for Defendant. (Dkt. 2 No. 27.) On November 1, 2024, the Court granted Attorney Harris’s motion to withdraw as 3 counsel. (Dkt. No. 36.) The Court warned that because Defendants were LLCs, they were unable 4 to appear in federal court except by counsel. (Id. at 3.) Defendants did not obtain counsel, and on 5 April 17, 2025, the Court granted Plaintiff’s motion to strike Defendants’ answers. (Dkt. No. 53.) 6 The Court also directed the Clerk of the Court to enter default as to Defendants because 7 Defendants could not defend themselves in the case without counsel. (Id. at 2.) On April 18, 8 2025, the Clerk of the Court entered default as to both Defendants. (Dkt. No. 54.) Attorney 9 Harris’s firm served the entry of default on Defendants, but did not receive any response or 10 communications from Defendants. (Dkt. No. 60.) 11 On June 16, 2025, Plaintiff filed the instant motion for default judgment. Plaintiff also 12 served the motion for default on Defendants. (Mot. for Default J. at 7.) To date, Defendants have 13 not filed an opposition to Plaintiff’s motion for default judgment. 14 II. LEGAL STANDARD 15 Federal Rule of Civil Procedure 55(b)(2) permits a court to enter a final judgment in a case 16 following a defendant’s default. Shanghai Automation Instrument Co. v. Kuei, 194 F. Supp. 2d 17 995, 999 (N.D. Cal. 2001). Whether to enter a judgment lies within the court’s discretion. Id. at 18 999 (citing Draper v. Coombs, 792 F.2d 915, 924-25 (9th Cir. 1986)). 19 Before assessing the merits of a default judgment, a court must confirm that it has subject 20 matter jurisdiction over the case and personal jurisdiction over the parties, as well as ensure the 21 adequacy of service on the defendant. See In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999). If the 22 court finds these elements satisfied, it turns to the following factors (“the Eitel factors”) to 23 determine whether it should grant a default judgment:

24 (1) the possibility of prejudice to the plaintiff, (2) the merits of plaintiff’s substantive claim, (3) the sufficiency of the complaint, (4) 25 the sum of money at stake in the action[,] (5) the possibility of a dispute concerning material facts[,] (6) whether the default was due 26 to excusable neglect, and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring decision on the merits. 27 1 well-pleaded allegations of the complaint relating to a defendant’s liability are taken as true.” 2 Pepsico, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1172, 1175 (C.D. Cal. 2002) (citing Televideo 3 Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987)). Nevertheless, default does not 4 compensate for essential facts not within the pleadings and those legally insufficient to prove a 5 claim. Cripps v. Life Ins. Co. of N. Am., 980 F.2d 1261, 1267 (9th Cir. 1992). 6 III. DISCUSSION 7 A. Jurisdiction and Service of Process 8 In considering whether to enter default judgment, a district court must first determine 9 whether it has jurisdiction over the subject matter and the parties to the case. In re Tuli, 172 F.3d 10 707, 712 (9th Cir. 1999). 11 i. Subject Matter Jurisdiction 12 The Court has subject matter jurisdiction over this complaint pursuant to 28 U.S.C. § 1332, 13 as there is complete diversity among the parties. Specifically, Plaintiff is a California corporation. 14 (Compl. ¶ 1.) In turn, Defendant CA 5850 is an LLC organized in and with its principal place of 15 business in Delaware, while Defendant CA-Ventures is a LLC organized in and with its principal 16 place of business in Illinois. (Compl. ¶¶ 2-3.) The amount in controversy is also well over 17 $75,000. (Compl. ¶ 19 (asserting damages of at least $362,723.02).) 18 ii. Personal Jurisdiction and Venue 19 The Court finds that personal jurisdiction is satisfied. “Under general contract principles, a 20 forum selection clause may give rise to waiver of objections to personal jurisdiction, provided that 21 the defendant agrees to be so bound.” Holland Am. Line, Inc. v. Wartsila N. Am., Inc., 485 F.3d 22 450, 458 (9th Cir. 2007). Here, the June 19, 2023 agreement specifically states that Defendants 23 agree “that the exclusive jurisdiction and venue of any action relating to the Agreement . . . will 24 exclusively lie in the U.S. Federal Court located in the City and County of San Francisco.” 25 (Wilson Decl., Exh. A, Dkt. No. 56-1 at 17.) Defendants signed the June 19, 2023 agreement. 26 (Id. at 19.) Thus, per the June 19, 2023 agreement at issue in this case, the Court has personal 27 jurisdiction over Defendants and venue is proper. 1 There is no dispute that Defendants were served with the complaint, and that both 2 Defendants filed answers. (See Dkt. Nos. 8-9, 12.) After Defendants’ counsel withdrew and 3 Defendants failed to obtain new counsel, Defendants’ answers were stricken and default was 4 entered. (See Dkt. Nos. 53-54.) 5 B. Application to the Case at Bar 6 Since the Court has jurisdiction in this matter, this Court must turn to the Eitel factors to 7 determine whether the entering of a default judgment is appropriate in this matter. 8 i. Prejudice to Plaintiff 9 The Court finds that Plaintiff will suffer prejudice if default judgment is not entered. If 10 default judgment is not entered, Plaintiff will have no recourse to obtain the unpaid balances owed 11 under the agreements it entered into with Defendants. See Fudy Printing Co. v. Aliphcom, Inc., 12 Case No. 17-cv-3863-JSC, 2019 U.S. Dist. LEXIS 86791, at *7 (N.D. Cal. Mar. 7, 2019). 13 ii. Merits of Plaintiff’s Claims and the Sufficiency of the Complaint 14 The second and third Eitel factors focus on the merits of Plaintiff’s substantive claim and 15 the sufficiency of the Complaint. Eitel, 782 F.2d at 1471–72. A party seeking default judgment 16 must state a valid claim upon which it may recover. Walters v. Statewide Concrete Barrier, Inc., 17 2005 U.S. Dist. LEXIS 49433, at *8 (N.D. Cal. Sept. 2, 2005). 18 Here, Plaintiff brings a single cause of action for breach of contract. To prevail on a 19 breach of contract claim, Plaintiff must establish: (1) the existence of the contract, (2) Plaintiff’s 20 performance or excuse for nonperformance, (3) Defendants’ breach, and (4) the resulting damages 21 to Plaintiff. See Oasis W. Realty, LLC v. Goldman, 51 Cal. 4th 811, 821 (2011). As laid out in the 22 complaint, on January 13, 2023, the parties entered into a “standstill” agreement in which 23 Defendants agreed to pay the amounts due and a $250,000 break up fee, for a total of $649,999.97. 24 (Compl. ¶ 8.) In exchange, Plaintiff permitted Defendant CA 5850 to continue its efforts to obtain 25 the necessary rights to proceed with its planned development of the Subject Property. (Compl. ¶ 26 8.) Defendants did not pay the full amount, resulting in the June 23, 2023 agreement in which 27 Plaintiff agreed not to immediately file a lawsuit for breach of contract in exchange for 1 agreement, Defendants acknowledged that the outstanding balance was $303,259.32, plus 2 $7,464.50 in attorney’s fees, for a total of $310,723.82. (Compl. ¶ 16; see also Wilson Decl., Exh. 3 A, Dkt. No. 56-1 at 17.) Although Plaintiff performed by not filing suit, Defendants failed to pay 4 by July 15, 2023, incurring an additional $50,000 late fee. (Compl. ¶¶ 17, 19.) Plaintiff continues 5 to suffer damages, as Defendants have still not paid. Thus, the Court finds that Plaintiff has 6 sufficiently stated a claim for breach of contract. 7 iii. Sum of Money at Stake 8 The fourth Eitel factor assesses the reasonableness of the potential award if a default 9 judgment is entered. In making this assessment, the Court must consider the amount of money at 10 stake in relation to the seriousness of Defendant’s conduct. Eitel, 782 F.2d at 1471. If the sum of 11 money at issue is reasonably proportionate to the harm caused by Defendant’s actions, properly 12 documented, and contractually justified, then default judgment is warranted. Bd. of Trs. of Cal. 13 Metal Trades v. Pitchometer Propeller, 1997 WL 797922, at *2 (N.D. Cal. Dec. 15, 1997). A 14 default judgment is only disfavored when a large amount of money is involved or is unreasonable 15 in light of Defendant’s actions. Truong Giang Corp. v. Twinstar Tea Corp., 2007 WL 1545173, at 16 *12 (N.D. Cal. May 29, 2007). In determining if the amount at stake is reasonable, the Court may 17 consider a plaintiff’s declarations, calculations, and other documentation of damages. Id. 18 Here, Plaintiff seeks $362,723.02, as well as interest and attorney’s fees and costs. (Mot. 19 for Default J. at 5.) After some minor adjustments as discussed below, the Court concludes that 20 the amount is reasonable because it is based on the contractual terms of the Agreements at issue, 21 which Defendants agreed to and under which Defendants are now liable. Accordingly, this factor 22 weighs in favor of default judgment. 23 iv. The Possibility of a Dispute Concerning Material Facts 24 The fifth Eitel factor considers the possibility of dispute as to any material facts of the 25 case. The contracts (which acknowledge the amounts due) have been provided and were signed 26 by Defendants. (See Wilson Decl., Exh. A, Dkt. No. 56-1 at 11-14 (Jan. 13, 2023 Agreement), 16- 27 19 (June 23, 2023 Agreement).) Further, although Defendants originally participated in the action, 1 Rather, they ultimately stopped communicating with their own counsel, resulting in the 2 withdrawal of counsel, the striking of Defendants’ answers, and the entry of default against both 3 Defendants. Under such circumstances, the possibility of Defendants raising a dispute regarding 4 their liability for damages is unlikely. 5 Thus, this factor weighs in favor of default judgment. 6 v. Whether Default was a Result of Excusable Neglect 7 The sixth Eitel factor contemplates the possibility that Defendant’s default was the result 8 of excusable neglect. Under this analysis, the Court considers whether Defendant was put on 9 adequate notice to apprise it of the pendency of the action brought against it. Phillip Morris USA, 10 Inc. v. Castworld Prod., Inc., 219 F.R.D. 494, 500 (C.D. Cal. 2003). In addition, the Court also 11 considers whether the circumstances surrounding Defendant’s failure to answer the complaint are 12 sufficient to excuse or justify its default. Shanghai Automation Instrument Co. v. Kuei, 194 F. 13 Supp. 2d 995, 1005 (N.D. Cal. 2001) (default cannot be attributed to excusable neglect where 14 defendants were properly served with the complaint, the notice of entry of default, and the papers 15 in support thereof). 16 Here, Defendants were not only served with the complaint, but obtained counsel in order 17 to file answers and participate in this litigation. Thus, there can be no dispute that Defendants 18 were aware of the litigation, and that Defendants’ failure to oppose the instant motion is not based 19 on excusable neglect. 20 vi. Federal Rules Preference for a Decision on the Merits 21 After an examination of these facts in the aggregate, this Court finds that Eitel factors one 22 through six outweigh the Federal Rules of Civil Procedure’s preference for a decision on the 23 merits. The Court therefore recommends that default judgment be granted. 24 IV. DAMAGES 25 After entry of default, well-pleaded factual allegations in the complaint are taken as true, 26 except as to the amount of damages. Fair Hous. of Marin v. Combs, 285 F.3d 899, 906 (9th Cir. 27 2002). To recover damages after securing a default judgment, a plaintiff must prove the relief it 1 Skelly, Inc., 389 F. Supp. 2d 1222, 1226 (N.D. Cal. 2005); see Pepsico, Inc., 238 F. Supp. 2d at 2 1175 (citing Televideo Sys., Inc., 826 F.2d at 917-18). 3 A. Outstanding Balance and Interest 4 Plaintiff seeks $362,723.02, the amount purportedly owed as of July 15, 2023. (Mot. for 5 Default J. at 5; Compl. ¶ 19.) This amount is based on the outstanding balance of $303,259.32 6 plus attorney’s fees of $7,464.50 as of June 19, 2023, plus interest at a rate of 9% per annum and 7 an additional $50,000 late-payment fee. (Compl. ¶¶ 9, 16-17, 19.) 8 As previously noted, the complaint incorrectly states that the amount due on June 19, 2023 9 was $310,724.82, as it should be $310,723.82. Based on the Court’s calculations, the amount 10 purportedly owed as of July 15, 2023 would be $362,715.86. This was calculated as follows:

11 June 23, 2023 Outstanding Balance: $303,256 + $7,464.50 $310,723.82 9% Annual Interest: $310,723.82 x .09 $27,965.14 12 Daily Interest: $27,965.14/365 Days $76.62 13 Interest Due between June 19, 2023 $76.62 x 26 Days $1,992.04 and July 15, 2023: 14 July 15, 2023 Outstanding Balance $310,723.82 outstanding balance + $362,715.86 $1,992.04 interest + $50,000 late- 15 payment fee 16 The Court finds Plaintiff is entitled to $362,715.86. In addition, the Court finds that 17 Plaintiff is entitled to interest on this amount at the rate of 9% per annum since July 15, 2023, as 18 stated in the June 19, 2023 agreement. (See Wilson Decl., Exh. A, Dkt. No. 56-1 at 17.) 19 B. Attorney’s Fees and Costs 20 Plaintiff seeks $29,935.00 in attorney’s fees. (See Dkt. No. 59 at 9.) Per the June 19, 2023 21 agreement, Plaintiff is entitled to “ongoing attorney’s fees” in the event that payment in full is not 22 made by July 15, 2023. (Wilson Decl., Exh. A, Dkt. No. 56-1 at 17.) 23 To determine the appropriate lodestar amount, the reasonableness of the hourly billing rate 24 must be assessed. Credit Managers Ass’n of S. Cal., 25 F.3d at 750. In doing so, the court must 25 look to the prevailing market rates in the relevant community for similar work by attorneys of 26 comparable skill, experience, and reputation. Camacho v. Bridgeport Fin., Inc., 523 F.3d 973, 979 27 (9th Cir.2008). Generally, the relevant community is the forum where the district court sits. Id. 1 Here, Plaintiff seeks hourly rates of $400 for Attorney Richard W. Osman and $325 for 2 Attorneys Corey C. Wilson and Ana Sanderson. (July 7, 2025 Wilson Decl. ¶ 2, Dkt. No. 59-1.) 3 The Court finds that the rates are reasonable. Attorney Osman is the managing partner and has 4 over 30 years of experience and has previously been awarded hourly rates as high as $900. (See 5 July 7, 2025 Wilson Decl. ¶ 3, Exh. B.) Attorneys Wilson and Sanderson, in turn, have five years 6 of experience. (See July 7, 2025 Wilson Decl., Exhs. C-D.) Courts in this district have awarded 7 similar rates in breach of contract cases. See Fooksman v. Abramson, No. 20-cv-07109-TSH, 8 2021 U.S. Dist. LEXIS 65883, at *31-32 (N.D. Cal. Mar. 11, 2021) (awarding hourly rate of $425 9 for attorney with six years of experience); Marshall Wealth Mgmt. Grp. v. Santillo, No. 18-CV- 10 03510-LHK, 2019 U.S. Dist. LEXIS 569, at *29 (N.D. Cal. Jan. 2, 2019) (awarding hourly rate of 11 $355 with over five years of experience). 12 Additionally, the Court has reviewed the billing records and finds that they are reasonable. 13 (See July 7, 2025 Wilson Decl. ¶ 7, Exh. E.) Accordingly, the Court finds Plaintiff is entitled to 14 $29,935.00 in attorney’s fees. 15 Finally, Plaintiff seeks $1,238.11 in costs, which are comprised of the filing fee, service 16 costs, copying costs, and online research. Such costs are recoverable. See Pension Plan for 17 Pension Tr. Fund for Operating Eng’rs v. J&K Sweeping, No. 14-cv-01179-JCS, 2014 U.S. Dist. 18 LEXIS 129691, at *22 (N.D. Cal. Aug. 22, 2014) (“With respect to Plaintiffs’ request for costs for 19 messenger service, legal research, and investigation, such costs are available on the basis that they 20 are generally billed as attorney’s fees.”). Thus, Plaintiff is entitled to $1,238.11 in costs. 21 The Court notes that in the conclusion of the motion for default judgment, Plaintiff also 22 seeks post-judgment interest on the attorney’s fees and costs from the date of the judgment to the 23 date of payment at a rate of 9% per annum. (Mot. for Default J. at 9.) Plaintiff, however, does not 24 appear to provide any legal basis for this award. Rather, the June 19, 2023 contract provides that 25 Defendants shall pay “the Outstanding Balance Due, plus interest in the amount of 9% per 26 annum[.]” (Wilson Decl., Exh. A, Dkt. No. 56-1 at 17.) Outstanding Balance Due, in turn, is 27 defined as the $303,259.32 outstanding amount and $7,465.50 in attorney’s fees. (Id. at 16.) It is 1 interest on the attorney’s fees and costs incurred thereafter, including in this litigation. At the 2 || hearing, Plaintiffs counsel confirmed there was no apparent basis in the contract for awarding 3 interest on the attorney’s fees and costs incurred in this litigation. 4 Vv. CONCLUSION 5 For the reasons stated above, the Court GRANTS IN PART and DENIES IN PART 6 || Plaintiffs motion for default judgment. Judgment is entered against Defendants, who are jointly 7 and severally liable to Plaintiff for the following amounts: 8 (1) $362,715.86; 9 (2) Interest on that amount from July 15, 2023 to the date of payment at a rate of 9% per 10 annum; ll (3) Attorney’s fees in the amount of $29,935.00; and 12 (4) Costs in the amount of $1,238.11. 13 || ITIS SO ORDERED. 14 |] Dated: August 27, 2025

A 16 United States Magistrate Judge

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