1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA
9 Southwest Heritage Bank, No. CV-25-00047-PHX-JZB
10 Plaintiff, REPORT AND RECOMMENDATION
11 v.
12 Steven C Coury, et al.,
13 Defendants. 14 15 TO THE HONORABLE STEPHEN M. MCNAMEE, UNITED STATES DISTRICT 16 JUDGE: 17 Pending before the Court are Plaintiff’s “Motion for Entry of Default Judgment 18 Against Defendants Lincoln J. Moore” (Motion for Default Judgment”) (doc. 38) and 19 “Motion for Award of Attorney Fees and Costs” (“Motion for Attorneys’ Fees”) (doc. 40). 20 In its Motion for Default Judgment, Plaintiff seeks entry of default judgment against 21 Defendant Lincoln J. Moore (“Defendant Moore”) “for the net overdrawn funds of 22 $683,430.42, full indemnification of the claim brought by 1st Bank for $422,682.86, . . . 23 for pre-judgment interest accruing until the date of this judgement at the legal rate of 10% 24 per annum, [and] for post-judgment interest accruing at the date of this judgement at the 25 federal judgement rate per diem[.]” (Doc. 38 at 5.) In its Motion for Attorneys’ Fees, 26 Plaintiff “requests an award of attorney’s fees in the amount of $8,771.10, recoverable 27 costs in the amount of $1,371.38, and anticipated fees to take this matter to judgement in 28 the amount of $2,500, for a total of $12,642.48.” (Doc. 40 at 2.) 1 This Report and Recommendation is filed pursuant to General Order 21-25.1 2 Because the Eitel factors weigh against entry of default judgment, the Court recommends 3 Plaintiff’s Motion for Default Judgment be denied without prejudice. Consequently, 4 because there is no entry of judgment against Defendant Moore, the Court recommends 5 Plaintiff’s Motion for Attorneys’ Fees be denied without prejudice. Considering 6 Plaintiff’s Complaint—with every claim sounding in fraud—does not satisfy Rule 9(b)’s 7 heightened pleading standard, the Court recommends that Plaintiff be granted 30 days to 8 file an amended complaint. 9 I. Factual Background.2 10 Plaintiff’s action arose out of an alleged “check kiting scheme”3 involving 11 transactions by Defendant Moore from a Steve Coury Ford, LLC (“SCF”) small business 12 checking account number 4000059893 (the “Account”). (Doc. 1 at 3.) The allegations in 13 the Complaint and Plaintiff’s filings are summarized as follows. 14 On July 17, 2024, Defendant Moore was added as a signer on the Account. (Id.) 15 Plaintiff alleges that, following his addition as a signer, activity on the Account “escalated
16 1 General Order 21-25 provides:
17 When a United States Magistrate Judge to whom a civil action has been assigned pursuant to Local Rule 3.7(a)(1) considers dismissal to be 18 appropriate but lacks the jurisdiction to do so under 28 U.S.C. § 636(c)(1) due to incomplete status of election by the parties to consent or not consent 19 to the full authority of the Magistrate Judge,
20 IT IS ORDERED that the Magistrate Judge will prepare a Report and Recommendation for the Chief United States District Judge or designee. 21 IT IS FURTHER ORDERED designating [Senior United States District 22 Judge Stephen M. McNamee] to review and, if deemed suitable, to sign the order of dismissal . . . . 23 2 The factual background of this action largely mirror’s that of 1st Bank Yuma v. Southwest Heritage Bank, No. CV-25-00252-PHX-JZB. This is because both actions 24 “share questions of fact and legal issues . . . . [namely,] the alleged check kiting scheme perpetrated by Defendant Moore between Plaintiffs First Bank and Southwest Heritage.” 25 (Doc. 32 at 6.) 3 “Check kiting is a scheme designed to separate the bank from its money by tricking 26 it into inflating bank balances and honoring checks drawn against accounts with insufficient funds.” United States v. Frydenlund, 990 F.2d 822, 824 (5th Cir. 1993) 27 (cleaned up); Williams v. United States, 458 U.S. 279, 281 n.1 (1982) (noting that “[i]n effect, the check kiter” profits off the scheme by “tak[ing] advantage of the several-day 28 period required for the transmittal, processing, and payment of checks from accounts in different banks”). 1 dramatically, with approximately $114.9 million and over 1,000 checks cycled through the 2 Account from May to October 2024.4 (Id.) This cycling involved transferring funds 3 between the Account and SCF accounts at Arizona Financial Credit Union and 1st Bank 4 Yuma. (Id.) 5 Starting in October 2024, Plaintiff alleges that Defendant Moore requested multiple 6 stop payments on checks deposited at other financial institutions shortly after depositing 7 checks drawn on those financial institutions into the Account at Southwest Heritage Bank. 8 (Id.) Plaintiff asserts that such activity resembles a check kiting scheme. (Id.) 9 “From October 16, 2024, onward, the Account maintained a significant negative 10 balance, despite repeated promises by SCF to deposit funds.” (Id.) By November 27, 2024, 11 the Account’s negative balance totaled –$703,845.42. See (id.); see also (doc. 52 at 7.) On 12 the same day, Plaintiff allegedly sent letters to Defendants Coury, Moore, and SCF 13 notifying them of the account’s negative balance and requested payment. (Doc. 1 at 4.) 14 II. Procedural Background. 15 Plaintiff initiated this action on January 1, 2025, when it filed its ten-page 16 Complaint. (Id. at 4–8.) The Complaint is composed of seven counts—all of which apply 17 to Defendant Moore. (Id.) Those counts are: (1) a bank fraud claim under 12 U.S.C. §§ 18 1833a, 1344; (2) a Racketeer Influenced and Corrupt Organizations (“RICO”) claim under 19 18 U.S.C. §§ 1962, 1964(c); (3) an Arizona RICO claim under A.R.S. §§ 13-2314.04, 13- 20 2312(A); (4) a conversion claim; (5) a fraud claim; (6) a negligent misrepresentation claim; 21 and (7) an unjust enrichment claim. (Id.) All counts are either fraud claims or are grounded 22 in fraud. See (id.) All seven counts are “[a]gainst [a]ll Defendants.” (Id.) Plaintiff did not 23 differentiate their allegations amongst the Defendants, nor identify the role each Defendant 24 played beyond averring that Defendant Moore cycled checks through Southwest Heritage 25 Bank, First Bank Yuma, and Arizona Financial Credit Union. See (id. at 3–8.) 26 Service was subsequently executed on Defendants SCF, Moore, Steven C. Coury,
27 4 Plaintiff provides an example of $1,708,624 in checks from notices and chargeback notices. See (doc. 52 at 10–59.) However, Plaintiff: (1) does not assert whether all of the 28 checks related to the overdrawn balance; (2) filed these exhibits after two requests for supplemental briefing; and (3) did not attach any of these checks to its ten-page Complaint. 1 and Julie Ann Coury. See (docs. 6–9.) Service was returned unexecuted for Defendant Jane 2 Doe Moore. See (doc. 10.) 3 Although four of the Defendants were served, they did not timely answer, resulting 4 in Plaintiff filing an application for default. See (doc. 11.) On February 5, 2025, the Clerk 5 of Court entered default against all Defendants. See (doc. 13.) On February 6, 2025, 6 Defendants Steven C. Coury and SCF filed a late answer. See (docs. 14, 15.) On February 7 13, 2025, they filed a motion to set aside default. (Doc. 23.) Noting the dispositive nature 8 of the motion, and the fact that not all parties had consented to the jurisdiction of the 9 Magistrate Judge, this Court filed a Report and Recommendation to Senior United States 10 District Judge Stephen M. McNamee recommending the motion be granted. (Doc. 30.) 11 Judge McNamee adopted the Court’s Report and Recommendation in full on July 10, 2025. 12 (Doc. 31.) 13 On July 29, 2025, this Court granted a Stipulation to Consolidate in part, transferring 14 this action’s sister case, 1st Bank Yuma v. Southwest Heritage Bank, No. CV-25-00252- 15 PHX-JZB, to this Court. (Doc. 32 at 6.) 16 On October 6, 2025, Plaintiff filed both its Motion for Default Judgment and Motion 17 for Attorneys’ Fees. See (docs. 38, 40.) On October 21, 2025, this Court, finding that 18 Plaintiff’s Motion for Attorneys’ Fees insufficient, requested additional briefing from 19 Plaintiff to supplement its Motion. See (doc. 41.) On October 29, 2025, this Court, finding 20 that Plaintiff’s Motion for Default Judgment insufficient, requested additional briefing 21 from Plaintiff to support its Motion. See (doc. 42.) 22 On November 3, 2025, this Court filed a Report and Recommendation to Senior 23 United States District Judge Stephen M. McNamee recommending Plaintiff’s and 24 Defendants Steven C. Coury’s and SCF’s Stipulated Motion for Entry of Stipulated 25 Judgment (doc. 35)—filed on August 25, 2025—be granted. See (doc. 44.) Senior United 26 States District Judge Stephen M. McNamee adopted the Court’s Report and 27 Recommendation in full on November 17, 2025. (Doc. 47.) 28 Plaintiff filed its additional briefings October 29, 2025, and November 6, 2025, 1 respectively. (Docs. 43, 45.) On November 13, 2025, this Court, again finding the Motions 2 and additional briefings insufficient, provided Plaintiff with a second opportunity to 3 supplement its Motions for Default Judgment and for Attorneys’ Fees. See (doc. 46.) On 4 December 4, 2025, Plaintiff filed its supplements for both Motions. (Docs. 49–52.) 5 To date, Defendant Moore has not answered the Complaint. Finding no reason to 6 further delay this action, nor any reason to request further supplemental briefings, the Court 7 will accordingly address Plaintiff’s Motions. 8 III. Motion for Default Judgment. 9 The first matter the Court will address is whether entry of default judgment in the 10 amount of $1,106,119.28 and pre- and post-judgment interest against Defendant Moore is 11 warranted. 12 A. Legal Standards. 13 Rule 55 states that “[w]hen a party against whom a judgment for affirmative relief 14 is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or 15 otherwise, the clerk must enter the party’s default.” Fed. R. Civ. P. 55(a). After entry of 16 default, the district court has discretion to grant default judgment. See Fed. R. Civ. P. 17 55(b)(2); see also Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). 18 The Court’s “starting point is the general rule that default judgments are ordinarily 19 disfavored.” Eitel v. McCool, 782 F.2d 1470, 1472 (9th Cir. 1986). In considering default 20 judgment against parties that have “failed to plead or otherwise defend, a district court has 21 an affirmative duty to look into its jurisdiction over both the subject matter and the parties.” 22 In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999). A default judgment entered by a district court 23 devoid of personal or subject matter jurisdiction is void. Id. A court has personal 24 jurisdiction over a party where that party has sufficient “minimum contacts” with the 25 territory “such that the maintenance of the suit does not offend ‘traditional notions of fair 26 play and substantial justice.’” Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) 27 (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)). A court has federal-question subject 28 matter jurisdiction where, “on the face of the plaintiff’s properly pleaded complaint,” the 1 civil action in question “aris[es] under the Constitution, laws, or treaties of the United 2 States.” Caterpillar Inc. v. Williams, 482 U.S. 386, 392, 392 n.6 (1987) (quoting 28 U.S.C. 3 § 1331). 4 After personal and subject matter jurisdiction have been established, the court must 5 consider whether default judgment is proper under the Eitel factors. See Eitel, 782 F.2d at 6 1471–72. The Eitel factors are: 7 (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 8 money at stake in the action; (5) the possibility of a dispute concerning 9 material facts; (6) whether the default was due to excusable neglect[;] and (7) the strong policy underlying the Federal Rules of Civil Procedure 10 favoring decisions on the merits. 11 Id. 12 In applying the Eitel factors, the Court notes that, “for default judgment purposes[,] 13 . . . ‘well-pled allegations in the complaint regarding liability are deemed true.’” Ariz. Bd. 14 of Regents v. Doe, 555 F. Supp. 3d 805, 815 (D. Ariz. 2021) (emphasis added), aff’d sub 15 nom. Arizona Bd. of Regents for and on behalf of Arizona State U. v. Doe, No. 21-16525, 16 2022 WL 1514649 (9th Cir. May 13, 2022) (quoting Fair Hous. of Marin v. Combs, 285 17 F.3d 899, 906 (9th Cir. 2002)). “However, necessary facts not contained in the pleadings, 18 and claims which are legally insufficient, are not established by default.” Cripps v. Life 19 Ins. Co. of N. Am., 980 F.2d 1261, 1267 (9th Cir. 1992) (emphasis added); DIRECTV, Inc. 20 v. Hoa Huynh, 503 F.3d 847, 854 (9th Cir. 2007) (“[A] defendant is not held to admit facts 21 that are not well-pleaded or to admit conclusions of law.”) (quoting Nishimatsu Constr. 22 Co., Ltd. v. Hou. Nat’l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975)). 23 Regarding damages sought in default judgment motions, they “must not differ in 24 kind from, or exceed in amount, what is demanded in the pleadings.” Fed. R. Civ. P. 54(c). 25 The movant bears the burden of establishing the damages requested because, as a “general 26 rule,” damages sought in the complaint are not taken as true upon entry default. See 27 TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917–18 (9th Cir. 1987) (“The general 28 rule of law is that upon default the factual allegations of the complaint, except those relating 1 to the amount of damages, will be taken as true.”). “It is well settled that a default judgment 2 for money may not be entered without a hearing unless the amount claimed is a liquidated 3 sum or capable of mathematical calculation.” Davis v. Fendler, 650 F.2d 1154, 1161 (9th 4 Cir. 1981). 5 B. Discussion. 6 The Court will proceed as follows. First, the Court will analyze whether it has proper 7 jurisdiction over this matter. Second, the Court will analyze whether default judgment is 8 proper under the Eitel factors. 9 1. Jurisdiction. 10 For the following reasons, the Court finds that: (1) subject-matter jurisdiction is 11 proper in this action; (2) it has personal jurisdiction over Defendant Moore; and (3) venue 12 is proper. 13 a. Subject-Matter Jurisdiction. 14 In its Complaint, Plaintiff asserts that the Court has federal question jurisdiction 15 over this action under 28 U.S.C. § 1331 because some of the claims arise under federal 16 law. (Doc. 1 at 2.) Specifically, Plaintiff asserts that its claims under “18 U.S.C. § 1962 17 and 1964, and 12 U.S.C. §§ 1833a and 1344” convey federal question jurisdiction. (Id.) 18 The Court agrees that 18 U.S.C. §§ 1962 and 1964 conveys federal question jurisdiction,5 19 but not 12 U.S.C. §§ 1833a and 1344.6 Because the Court has federal question jurisdiction, 20 and Plaintiff’s state law claims are “so related to claims in the action within such original 21 jurisdiction that they form part of the same case or controversy[,]” the Court has 22 supplemental jurisdiction over Plaintiff’s state law claims. 28 U.S.C. § 1367(a); Royal 23 Canin U.S.A., Inc. v. Wullschleger, 604 U.S. 22, 31 (2025) (citation omitted). 24 5 See infra section III.B.2.b.ii. While discussed in greater detail below, the Court does 25 not find that Plaintiff has averred a sufficient Civil RICO claim. However, the failure to successfully aver a federal claim does not defeat federal question jurisdiction. See Bell v. 26 Hood, 327 U.S. 678, 682 (1946); see also Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 89 (1998) (“Dismissal for lack of subject-matter jurisdiction because of the inadequacy 27 of the federal claim is proper only when the claim is so insubstantial, implausible, foreclosed by prior decisions of this Court, or otherwise completely devoid of merit as not 28 to involve a federal controversy.”) (citation omitted). 6 See infra section III.B.2.b.i. 1 b. Personal Jurisdiction. 2 The next issue is whether the Court has personal jurisdiction over Defendant Moore. 3 “Federal courts ordinarily follow state law in determining the bounds of their jurisdiction 4 over persons.” Daimler AG v. Bauman, 571 U.S. 117, 125 (2014). Arizona state law 5 permits the exercise of personal jurisdiction over parties “to the extent permitted under the 6 United States Constitution.” Morrill v. Scott Fin. Corp., 873 F.3d 1136, 1141 (9th Cir. 7 2017) (citing Ariz. R. Civ. P. 4.2(a)). “Therefore, the determination whether the District 8 Court had personal jurisdiction over Defendants is subject to the terms of the Due Process 9 Clause of the Fourteenth Amendment.” Morrill, 873 F.3d at 1141. The Due Process Clause 10 requires that, for a Court to exercise personal jurisdiction over a defendant, that defendant 11 must have sufficient minimum contacts with the forum state “such that the maintenance of 12 the suit does not offend traditional notions of fair play and substantial justice.” Int’l Shoe 13 Co., 326 U.S. at 316 (cleaned up). 14 There are two categories of personal jurisdiction, namely, general and specific. 15 Freestream Aircraft (Bermuda) Ltd. v. Aero Ltd. Grp., 905 F.3d 597, 602 (9th Cir. 2018). 16 While Plaintiff has not stated whether the Court has general or specific jurisdiction, seeing 17 as Defendant Moore was served in Oklahoma, see (doc. 7), and there is a dearth of evidence 18 establishing that he is a domiciliary of Arizona, the proper category is specific jurisdiction. 19 See Yahoo! Inc. v. La Ligue Contre Le Racisme Et L’Antisemitisme, 433 F.3d 1199, 1205 20 (9th Cir. 2006) (“Unless a defendant’s contacts with a forum are so substantial, continuous, 21 and systematic that the defendant can be deemed to be ‘present’ in that forum for all 22 purposes, a forum may exercise only ‘specific’ jurisdiction—that is, jurisdiction based on 23 the relationship between the defendant’s forum contacts and the plaintiff’s claim.”). 24 “The inquiry whether a forum State may assert specific jurisdiction over . . . 25 nonresident defendant[s] focuses on the relationship among the defendant[s], the forum, 26 and the litigation.” Walden v. Fiore, 571 U.S. 277, 283–84 (2014). “The ‘primary concern’ 27 in assessing [specific] personal jurisdiction is ‘the burden on the defendant[s].’” Bristol- 28 Myers Squibb Co. v. Superior Ct. of Cal., S.F. Cnty., 582 U.S. 255 (2017) (quoting World- 1 Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292 (1980)). Specifically, the Court 2 analyzes the following three factors to determine whether a defendant had sufficient 3 contacts with the forum state to be subject to specific personal jurisdiction: 4 (1) The non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; or perform 5 some act by which he purposefully avails himself of the privilege of 6 conducting activities in the forum, thereby invoking the benefits and protections of its laws; (2) the claim must be one which arises out of or relates 7 to the defendant’s forum-related activities; and (3) the exercise of jurisdiction 8 must comport with fair play and substantial justice, i.e. it must be reasonable. 9 Morrill, 873 F.3d at 1142. The Plaintiff bears the burden of establishing the first two 10 Morrill elements. Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir. 11 2004). If the Plaintiff satisfies the first two elements, “the burden then shifts to the 12 defendant to ‘present a compelling case’ that the exercise of jurisdiction would not be 13 reasonable.” Id. (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 477 (1985)). 14 In analyzing the first Morrill element, courts generally apply the Dole purposeful 15 direction test where the claims arise from alleged tortious conduct. Morrill, 873 F.3d at 16 1142. The purposeful direction test “requires that the defendant allegedly have (1) 17 committed an intentional act, (2) expressly aimed at the forum state, (3) causing harm that 18 the defendant knows is likely to be suffered in the forum state.” Dole Food Co., Inc. v. 19 Watts, 303 F.3d 1104, 1111 (9th Cir. 2002). 20 Because the claims alleged against Defendant Moore arise from tortious acts— 21 namely, alleged defrauding a federally insured institution, racketeering and other financial 22 malfeasance—the Court will apply the Dole purposeful direction test as a supplement to 23 the first Morrill factor when analyzing whether the Court has specific personal jurisdiction 24 here. 25 Establishing specific personal jurisdiction over Defendant Moore is rather clear in 26 this action. Turning to the first Morrill specific personal jurisdiction element, the Court 27 finds that Defendant Moore had purposefully directed his acts towards Arizona—i.e., the 28 forum state. Under the first Dole factor, Defendant Moore allegedly committed fraudulent 1 transactions with an alleged intent to defraud a federal insured Arizona bank. Such 2 allegations appear sufficient to establish the first Dole factor. Under the second Dole factor, 3 the Court finds that such act was expressly aimed at the forum state considering that the 4 acts were committed in Arizona against Southwest Heritage Bank and other Arizona 5 financial institutions. Next, applying the third Dole factor, Plaintiff’s pleadings and filings 6 make it clear that its entire financial loss caused by Defendant was incurred in Arizona. 7 Seeing as the three-part Dole test is satisfied, the first Morrill specific personal jurisdiction 8 element is likewise satisfied. 9 The second Morrill element is satisfied just as easily as the first. Defendant Moore’s 10 alleged activity of cycling checks through the Account and thereafter requesting stop 11 payments directly led to this action. (Doc. 1 at 3.) In short, but for Defendant Moore’s acts, 12 this action would not have arisen. 13 Because the first two Morrill elements are satisfied, the burden of proof for rebutting 14 reasonableness falls upon Defendant Moore, which—considering his failure to litigate— 15 he has failed to do. But, regardless of his failure to litigate, the Court concludes that the 16 exercise of specific personal jurisdiction does comport with fair play and substantial justice 17 for the foregoing reasons.7 Therefore, the Court finds personal jurisdiction as to Defendant 18 Moore proper in this case. 19 c. Venue. 20 Venue is proper in the present case. Venue is proper in “a judicial district in which 21 any defendant resides, if all defendants are residents of the State in which the district is 22 located.” quoting 28 U.S.C. § 1391(b)(1). “Additionally, “[v]enue is proper in any district 23 ‘in which a substantial part of the events or omissions giving rise to the claim occurred.’” 24 Noodles Dev., LP v. Hui, No. CV-12-01165-PHX-ROS, 2013 WL 12111103, at *6 (D. 25 Ariz. July 22, 2013) (quoting 28 U.S.C. § 1391(b)(2)). Because a substantial part of the 26 events in this action occurred in Arizona, venue is satisfied.
27 7 As a final note, the Court finds that service was proper here. (Doc. 7.) Accordingly, proper service is not a bar to personal jurisdiction here. See Jackson v. Hayakawa, 682 F.2d 28 1344, 1347 (9th Cir. 1982) (“Defendants must be served in accordance with Rule 4(d) . . . , or [else] there is no personal jurisdiction.”). 1 2. Default Judgment. 2 Plaintiff seeks entry of default judgment against Defendant Moore. While Plaintiff’s 3 Motion fails to consider the seven Eitel factors, the Court will accordingly analyze whether 4 default judgment is proper pursuant to the Eitel factors. 5 a. The Possibility of Prejudice to the Plaintiff. 6 The first factor favors granting Plaintiff’s motion for default judgment because 7 Plaintiff will be prejudiced if default judgment is not entered. Defendant Moore “has failed 8 to appear, and there is no basis to believe this is due to excusable neglect.” (Doc. 38 at 4.) 9 “If Plaintiff’s motion for default judgment is not granted, Plaintiff ‘will likely be without 10 other recourse for recovery.’” United States v. $86,496.00 in U.S. Currency, 2008 WL 11 2687141, at *2 (D. Ariz. 2008) (quoting PepsiCo, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 12 1172, 1177 (C.D. Cal. 2002). 13 b. The Merits of Plaintiff’s Substantive Claim and the Sufficiency of the 14 Complaint. 15 The second and third Eitel factors “are often analyzed together and require courts to 16 consider whether a plaintiff has stated a claim on which it may recover.” Ent. USA Inc. v. 17 Baldinsky, No. CV-22-00970-PHX-DWL, 2023 WL 8185673, at *3 (D. Ariz. Nov. 27, 18 2023) (citation omitted). Where Plaintiff’s Complaint states a claim upon which they may 19 recover, the second and third factors “weigh in favor of default judgment.” Joe Hand 20 Promotions Inc. v. Alvarez, No. CV-23-01924-PHX-DJH, 2025 WL 1707915, at *2 (D. 21 Ariz. June 18, 2025) (citing Dr. JKL Ltd. v. HPC IT Educ. Ctr., 749 F. Supp. 2d 1038, 1048 22 (N.D. Cal. 2010)). 23 Plaintiff asserts the following seven counts against Defendant Moore: (i) bank fraud 24 under 12 U.S.C. §§ 1833a and 1344; (ii) civil Racketeer Influenced and Corrupt 25 Organizations (“RICO”) claim under 18 U.S.C. §§ 1962 and 1964(c); (iii) Arizona state 26 law RICO under A.R.S. §§ 13-2314.04 and 13-2312(A); (iv) conversion; (v) fraud; (vi) 27 negligent misrepresentation; and (vii) unjust enrichment. See (doc. 1 at 4–8.) The Court 28 will address each claim in turn. 1 i. Bank Fraud. 2 The Court finds that Plaintiff’s bank fraud claim is legally deficient because 12 3 U.S.C. § 1833a, part of the Financial Institutions Reform, Recovery, and Enforcement Act 4 of 1989 (“FIRREA”), does not create a private right of action. 12 U.S.C. § 1833a(e) (“A 5 civil action to recover a civil penalty under this section shall be commenced by the Attorney 6 General.”). As several sister courts have held, “FIRREA does not create a private cause of 7 action.” Conry v. Barker, No. 14-cv-02672-CMA-KLM, 2015 WL 5636405, at *4 n.18 (D. 8 Colo. Aug. 11, 2015), report and recommendation adopted, No. 14-cv-02672-CMA-KLM, 9 2015 WL 5608133 (D. Colo. Sept. 24, 2015); U.S. ex rel. Houpt v. Wells Fargo Bank, N.A., 10 No. 4:17-CV-00377-CWD, 2019 WL 591441 (D. Idaho Feb. 13, 2019) (noting that a non- 11 government plaintiff “may not pursue civil penalties under FIRREA”), aff’d sub nom. 12 Houpt v. Wells Fargo Bank, N.A., 800 Fed. App’x 533 (9th Cir. 2020); Ford v. Suntrust 13 Mortg., 282 F. Supp. 3d 227, 233 (D.D.C. 2017) (“[A]ny action under 12 U.S.C. § 1833a 14 must be brought by the government.”); Knight v. CitiFinancial, Inc., No. CV 24-1938- 15 BAH, 2024 WL 5186699, at *2 (D. Md. Dec. 20, 2024) (“While § 1833a concerns civil 16 penalties under FIRREA, it does not create a private right of action.”), aff’d, No. 25-1046, 17 2025 WL 2170735 (4th Cir. July 31, 2025); Lundstedt v. Deutsche Bank Nat’l Tr. Co., No. 18 3:13-CV-001423 (JAM), 2016 WL 3101999, at *5 (D. Conn. June 2, 2016) (“These 19 provisions do not explicitly permit [a non-government] plaintiff to bring his claims under 20 FIRREA.”). 21 Although Plaintiff is a federally insured financial institution, it is not the 22 government. Therefore, Plaintiff has no right of action under 12 U.S.C. § 1833a. 23 ii. Federal Civil RICO. 24 For the following reasons, the Court finds that Plaintiff’s Federal Civil RICO claim 25 is insufficient under Rule 9(b)’s heightened pleading standard. 26 “RICO is primarily a criminal statute aimed specifically at curtailing the infiltration 27 of business enterprises by organized crime.” Harper v. New Japan Secs. Int’l, Inc., 545 F. 28 Supp. 1002, 1004 (C.D. Cal. 1982). While the RICO act is primarily a criminal statute in 1 nature, it does provide “a private right of action for treble damages to anyone injured ‘by 2 reason of’ a violation of the Act.” Id. (quoting 18 U.S.C. § 1964(c)); Planned Parenthood 3 of Columbia/Willamette, Inc. v. Am. Coal. of Life Activists, 945 F. Supp. 1355, 1383 (D. 4 Or. 1996) (“Private litigants have standing under RICO only to the extent that they have 5 been injured in their business or property by the conduct constituting the RICO violation.”). 6 RICO’s private right of action provision, § 1964(c), states that: 7 Any person injured in his business or property by reason of a violation of section 1962 of this chapter may sue therefor in any appropriate United States 8 district court and shall recover threefold the damages he sustains and the cost 9 of the suit, including a reasonable attorney’s fee, except that no person may rely upon any conduct that would have been actionable as fraud in the 10 purchase or sale of securities to establish a violation of section 1962. The 11 exception contained in the preceding sentence does not apply to an action against any person that is criminally convicted in connection with the fraud, 12 in which case the statute of limitations shall start to run on the date on which 13 the conviction becomes final. 14 18 U.S.C. § 1964(c) (emphasis added). 15 In this action, the operative § 1962 provision appears to be sub-section (c), which 16 states that: 17 [i]t shall be unlawful for any person employed by or associated with any 18 enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of 19 such enterprise’s affairs through a pattern of racketeering activity or collection of unlawful debt. 20 21 18 U.S.C. § 1962(c). 22 A violation of § 1962(c) requires “(1) conduct (2) of an enterprise (3) through a 23 pattern (4) of racketeering activity.” Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479, 496 24 (1985). The Ninth Circuit has added a fifth factor to this list, namely, the conduct must be 25 the probable cause of a party’s injury. See Eclectic Props. E., LLC v. Marcus & Millichap 26 Co., 751 F.3d 990, 997 (9th Cir. 2014). 27 “To show the existence of an enterprise under the second element, plaintiffs must 28 plead that the enterprise has (A) a common purpose, (B) a structure or organization, and 1 (C) longevity necessary to accomplish the purpose.” Id. (citing Boyle v. United States, 556 2 U.S. 938, 946 (2009)). The third requirement, a pattern, requires—at a minimum—“two 3 acts of racketeering activity” conducted within 10 years of one another. H.J. Inc. v. Nw. 4 Bell Tel. Co., 492 U.S. 229, 237 (1989) (quoting 18 U.S.C. § 1961(5)). The fourth element 5 requires the defendant to have committed “any act indictable under several provisions of 6 Title 18 of the United States Code,” such as bank fraud. See Rothman v. Vedder Park 7 Mgmt., 912 F.2d 315, 316 (9th Cir. 1990); see also 18 U.S.C. § 1961(1) (noting that 8 racketeering activity includes “financial institution fraud” under 18 U.S.C. § 1344). While 9 the acts of racketeering under § 1961 are criminally indictable, the defendant need-not be 10 convicted for a plaintiff to assert a Civil RICO claim against them. See Sedima, S.P.R.L., 11 473 U.S. at 490. 12 Underpinning the five § 1962(c) elements is Fed. R. Civ. P. 9, which requires that 13 “[i]n alleging fraud or mistake, a party must state with particularity the circumstances 14 constituting fraud or mistake.” Fed. R. Civ. P. 9(b); Edwards v. Marin Park, Inc., 356 F.3d 15 1058, at 1065–66 (9th Cir. 2004) (noting that Rule 9(b) “applies to civil RICO fraud 16 claims”) (emphasis added). This requires a plaintiff to state both the predicate act and act 17 at issue with particularity in their complaint. See Alan Neuman Prods., Inc. v. Albright, 862 18 F.2d 1388, 1392 (9th Cir. 1988) (“The allegations of predicate acts in the complaint 19 concerning those elements of RICO are entirely general; no specifics of time, place, or 20 nature of the alleged communications are pleaded. This is a fatal defect under Fed. R. Civ. 21 P. 9(b), which requires that circumstances constituting fraud be stated with particularity.”) 22 (emphasis added); see also Nutrition Distrib. LLC v. Custom Nutraceuticals LLC, 194 F. 23 Supp. 3d 952, 957 (D. Ariz. 2016) (“The plaintiff must adequately plead the elements of 24 each predicate act, satisfying the pleading standard that would apply if the predicate act 25 were a stand-alone claim.”). 26 To state a sufficient Civil RICO claim under Rule 9(b), the Plaintiff cannot just 27 “lump multiple defendants together[.]” Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th Cir. 28 2007). Rather, the Plaintiff must “differentiate their allegations when suing more than one 1 defendant[,]” identifying the role of each defendant in the alleged fraudulent scheme. Id. 2 at 765–66. 3 Plaintiff patently fails to comport its Complaint with Rule 9(b). Regarding the 4 pattern of racketeering activity which Defendant Moore allegedly committed, Plaintiff 5 does not plead any exact time or place in which an act occurred. Instead, Plaintiff asserts 6 that “[b]eginning in October 2024, Moore engaged in suspicious activity, including 7 requesting multiple stop payments on checks deposited at other institutions shortly after 8 depositing checks drawn on those institutions into the Account.” (Doc. 1 at 3.) Plaintiff 9 does not assert what checks lead to the negative $703,845.42 balance in the Account, does 10 not differentiate their claims as to each Defendant, nor provide specific dates that 11 Defendant Moore allegedly requested stop payments. In fact, Plaintiff does not attach a 12 single exhibit to its ten-page—albeit only eight pages contain operative information— 13 Complaint substantiating its allegations. 14 Such a failure to plead with any specificity has been fatal in other cases in this 15 circuit. For example, in Dhaliwal v. Singh, the District Court for the Eastern District of 16 California dismissed a plaintiff’s RICO claims for failure to plead the elements of § 1962(c) 17 with specificity. See Dhaliwal v. Singh, No. CV F 13-0484 LJO SKO, 2013 WL 2664336, 18 at *16–20, *22 (E.D. Cal. June 12, 2013). Additionally, in Skane v. Wells Fargo Home 19 Mortgage, Inc., The District Court for the Southern District of California dismissed a RICO 20 claim because it failed to plead either the predicate act or the act in question with 21 specificity. See Skane v. Wells Fargo Home Mortgage, Inc., No. 06-CV-1174 - IEG, 2007 22 WL 9776707, at *9 (S.D. Cal. Apr. 11, 2007). 23 In the case at hand, Plaintiff’s failure to comport its Complaint with Rule 9(b) is 24 fatal to its Motion for Default Judgment. See Alan Neuman Prods., Inc., 862 F.2d at 1393 25 (“We believe that pleading requirements should be enforced strictly when default 26 judgments are sought under RICO.”). Compounding this error is the rule that “necessary 27 facts not contained in the pleadings, and claims which are legally insufficient, are not 28 established by default.” Cripps, 980 F.2d at 1267. Consequently, Plaintiff’s federal Civil 1 RICO claim does not state a claim upon which relief may be granted, and can only be 2 redeemed via an amended complaint. 3 iii. Arizona Civil RICO. 4 Just as the heightened pleading standard inhibited Plaintiff’s federal RICO claim, 5 so too does it inhibit its Arizona RICO claim.8 See Steinberger v. McVey ex rel. Cnty. of 6 Maricopa, 318 P.3d 419, 435 (Ariz. App. 2014) (“Claims based on fraud must be pled with 7 particularity.”) (citing Ariz. R. Civ. P. 9(b)9). Because Plaintiff’s Arizona RICO claim is 8 predicated on fraud—e.g., that “Defendants conducted or participated, directly or 9 indirectly, the affairs of an enterprises by asserting false and fraudulent claims in their 10 check kiting scheme, (doc. 1 at 5)—Plaintiff’s claim must have been pled with 11 particularity. This, Plaintiff did not do. 12 iv. Conversion. 13 Plaintiff has not stated a sufficient claim for conversion under Arizona law. 14 Conversion is defined as “an intentional exercise of dominion or control over a chattel 15 which so seriously interferes with the right of another to control it that the actor may justly 16 be required to pay the other the full value of the chattel.”10 Universal Mktg. & Ent., Inc. v. 17 Bank One of Ariz., N.A., 53 P.3d 191, 193 (Ariz. App. 2002). Because Plaintiff’s 18 conversion claim is grounded in alleged fraudulent acts by the Defendants, Plaintiff must 19 satisfy Rule 9(b)’s heightened pleading standard. See Vess v. Ciba-Geigy Corp. USA, 317 20 F.3d 1097, 1103–04 (9th Cir. 2003) (“In cases where fraud is not a necessary element of a 21 claim, a plaintiff may choose nonetheless to allege in the complaint that the defendant has 22 engaged in fraudulent conduct. . . . In that event, the claim is said to be ‘grounded in fraud’ 23 8 In short, “[w]hat’s done cannot be undone.” WILLIAM SHAKESPEARE, MACBETH act 24 5, sc. 1, l. 71. 9 Ariz. R. Civ. P. 9(b) and Fed. R. Civ. P. 9(b) are mirror images of one another. 25 10 To state a conversion claim, a plaintiff must show that they “had the right to immediate possession of the personal property at the time of the alleged conversion.” 26 Mountains of Spices LLC v. Lafrenz, 653 F. Supp. 3d 665, 677 (D. Ariz. 2023) (citation omitted), vacated in part, No. CV-21-01497-PHX-JAT, 2023 WL 3230989 (D. Ariz. May 27 3, 2023), on reconsideration, No. CV-21-01497-PHX-JAT, 2023 WL 3819293 (D. Ariz. June 5, 2023). “Additionally, where the property allegedly converted is money, a plaintiff 28 must allege facts showing both that the money can be described, identified, or segregated, and an obligation to treat it in a specific manner.” Id. (citation omitted). 1 or to ‘sound in fraud,’ and the pleading of that claim as a whole must satisfy the 2 particularity requirement of Rule 9(b).”) (citation omitted). Because Plaintiff failed to plead 3 Defendant Moore’s alleged fraudulent acts with specificity, the Court finds that Plaintiff 4 has failed to state a sufficient conversion claim pursuant to Rule 9(b). 5 v. Fraud. 6 Because Plaintiff has not met Rule 9(b)’s heightened pleading standard,11 it has not 7 stated a sufficient claim for fraud12 upon which relief may be granted. See Gould v. M & I 8 Marshall & Isley Bank, 860 F. Supp. 2d 985, 988 (D. Ariz. 2012) (noting that, when 9 asserting a fraud claim, a party must comply with rule 9(b)). Particularly, Plaintiff’s failure 10 to provide any specific details on the exact dates on which the Defendant Moore placed 11 stop payments on the checks in question or provide any specific details about the checks 12 leading up to the negative $703,845.42 balance is fatal to its claim. See, e.g., Moore v. 13 Kayport Package Exp., Inc., 885 F.2d 531 (9th Cir. 1989) (“A pleading is sufficient under 14 rule 9(b) if it identifies the circumstances constituting fraud so that a defendant can prepare 15 an adequate answer from the allegations. While statements of the time, place and nature of 16 the alleged fraudulent activities are sufficient, mere conclusory allegations of fraud are 17 insufficient.”) (cleaned up and emphasis added). In essence, Plaintiff’s general facts and 18 conclusory statements, without any particularity as to the specific checks in question, is 19 insufficient under Rule 9. Consequently, Plaintiff has not stated a fraud claim upon which 20 relief may be granted. 21 // 22 //
23 11 See supra section III.B.2.b.ii. 12 Plaintiff has not specifically noted what flavor of fraud it is asserting—i.e., fraud in 24 the inducement, common law fraud, etc. Regardless, fraud claims under Arizona law generally require a party to establish the following nine elements: 25 (1) a representation; (2) its falsity; (3) its materiality; (4) the speaker’s 26 knowledge of its falsity or ignorance of its truth; (5) the speaker's intent that it be acted upon by the recipient in the manner reasonably contemplated; (6) 27 the hearer’s ignorance of its falsity; (7) the listener’s reliance on its truth; (8) the right to rely on it; and (9) his consequent and proximate injury. 28 See Meritage Homes Corp. v. Hancock, 522 F. Supp. 2d 1203, 1218 (D. Ariz. 2007). 1 vi. Negligent Misrepresentation. 2 Plaintiff has not stated a sufficient claim for negligent misrepresentation. “Under 3 Arizona law, a claim for negligent misrepresentation13 must meet the particularity 4 requirements of Rule 9(b).” In re Ariz. Theranos, Inc., Litig., 256 F. Supp. 3d 1009, 1032 5 (D. Ariz. 2017) (cleaned up). Because Plaintiff has not met Rule 9(b)’s heightened pleading 6 standard by pleading, with specificity, facts about the alleged misrepresentation,14 its 7 negligent misrepresentation claim is insufficient. 8 vii. Unjust Enrichment. 9 Because Plaintiff has not met Rule 9(b)’s heightened pleading standard, its 10 alternative unjust enrichment claim is insufficient. “Unjust enrichment occurs when one 11 party has and retains money or benefits that in justice and equity belong to another.”15 12 Cheatham v. ADT Corp., 161 F. Supp. 3d 815, 832 (D. Ariz. 2016). Because Plaintiff’s 13 claim is grounded in fraud—e.g., “the result of the check kiting fraud is nothing short of 14 an unjust enrichment[,]” (doc. 1 at 7) (emphasis added)—it must meet Rule 9(b)’s 15 13 The elements of negligent misrepresentation under Arizona law are: 16 (1) the defendant provided false information in a business transaction; (2) the 17 defendant intended for the plaintiff to rely on the incorrect information or knew that it reasonably would rely; (3) the defendant failed to exercise 18 reasonable care in obtaining or communicating the information; (4) the plaintiff justifiably relied on the incorrect information; and (5) resulting 19 damage.
20 In re Ariz. Theranos, Inc., Litig., 256 F. Supp. 3d 1009, 1032 (D. Ariz. 2017) (citation omitted). 21 14 See supra sections III.B.2.b.ii, v. 15 To prevail on an Arizona state law unjust enrichment claim, “a plaintiff must allege: 22 ‘(1) an enrichment; (2) an impoverishment; (3) a connection between the enrichment and the impoverishment; (4) absence of justification for the enrichment and the 23 impoverishment; and (5) an absence of a remedy provided by law.’” SPUS8 Dakota LP v. KNR Contractors LLC, 641 F. Supp. 3d 682, 699 (D. Ariz. 2022) (quoting Perez v. First 24 Am. Title Ins. Co., 810 F. Supp. 2d 986, 991 (D. Ariz. 2011)). “A claim for unjust enrichment may exist where a person confers a benefit to his detriment on another and 25 allowing the other to retain that benefit would be unjust.” SPUS8 Dakota LP, 641 F. Supp. 3d at 699 (citation omitted). 26 Unjust enrichment claims are commonly plead in the alternative, because recovery under unjust enrichment is barred where recovery is had under another theory of liability. 27 See Isofoton, S.A. v. Giremberk, No. CV-04-0798-PHX-ROS, 2006 WL 1516026, at *3 (D. Ariz. May 30, 2006). “[T]here are no requirements to include the magic words ‘in the 28 alternative’ in making alternative claims.” Arnold & Assocs., Inc. v. Misys Healthcare Sys., 275 F. Supp. 2d 1013, 1029 (D. Ariz. 2003). 1 heightened pleading standard. See Vess, 317 F.3d at 1103–04; see e.g., Puri v. Khalsa, 674 2 F. App’x 679, 690 (9th Cir. 2017) (“Because the unjust enrichment claim is based on fraud, 3 it too is subject to Rule 9(b).”). This, Plaintiff does not do. 4 c. Remaining Four Eitel Factors. 5 In light of Plaintiff’s failure to state a claim for failure to meet Rule 9(b)’s 6 heightened pleading standard, it is unnecessary to address the remaining four Eitel factors 7 in depth. Turning to the fourth Eitel factor, the Court finds that Plaintiff has not 8 substantiated its claimed damages, militating against entry of default judgment. See 1st 9 Bank Yuma v. Sw. Heritage Bank, No. CV-25-00252-PHX-JZB, 2026 WL 248335, at *1 10 (D. Ariz. Jan. 30, 2026) (“In a default judgment, the Court will not award damages based 11 solely on the complaint; a plaintiff bears the burden of substantiating their claimed 12 damages. . . . The Court may award damages without an evidentiary hearing when ‘the 13 amount claimed is a liquidated sum or is capable of mathematical calculation.’”) (quoting 14 Davis v. Fendler, 650 F.2d 1154, 1161 (9th Cir. 1981)). Regarding the fifth and sixth Eitel 15 factors, the Court finds that they weigh in favor of default because: (1) the Court does not 16 foresee a dispute concerning material facts; and (3) the Court does not find that default was 17 due to excusable neglect. The seventh factor, policy favoring decisions on the merits, 18 weighs against granting default judgment. 19 Even though the Court finds that the first, fifth, and sixth factors favor entry of 20 default judgment, these factors are insufficient to overcome the deficiencies contained 21 within Plaintiff’s Complaint. Accordingly, the Court recommends Plaintiff’s Motion for 22 Default Judgment be denied without prejudice. 23 IV. Motion for Attorneys’ Fees. 24 Next, the Court addresses Plaintiff’s Motion for Attorneys’ fees. Because the Court 25 recommends Plaintiff’s Motion for Default Judgment be dismissed without prejudice, there 26 has not been an entry of judgment. Consequently, Plaintiff’s Motion for Attorneys’ fees is 27 unwarranted under Rule 54. See Fed. R. Civ. P. 54(d)(2)(B)(i) (“Unless a statute or a court 28 order provides otherwise, the motion [for attorneys’ fees] must . . . be filed no later than 14 1 days after the entry of judgment.”) (emphasis added) Therefore, the Court recommends 2 Plaintiff’s Motion for Attorneys’ fees be denied without prejudice of refiling. 3 Although the Court recommends Plaintiff’s Motion for Attorneys’ Fees be denied 4 without prejudice, it shall provide Plaintiff—in an attempt to avoid requiring future 5 supplemental briefings on attorneys’ fees—with the legal standards for addressing 6 reasonableness of requested fees in federal court. 7 LEGAL STANDARDS 8 Pursuant to Rule 54, a party may move for attorneys’ fees and related non-taxable 9 expenses via motion that: (a) is filed within “14 days after the entry of judgment”; (b) 10 specifies the “grounds entitling the movant to the award”; (c) “state[s] the amount sought”; 11 and (d) “disclose, if the court so orders, the terms of any agreement about fees for the 12 services for which the claim is made.” Fed. R. Civ. P. 54(d)(2)(B); see also LRCiv. 54.2. 13 Plaintiff only asserts one ground entitling it to attorneys’ fees: 18 U.S.C. § 1964(c). 14 See (doc. 45 at 4); see also (doc. 49 at 4.) Section 1964(c) states that: 15 Any person injured in his business or property by reason of a violation of section 1962 of this chapter may sue therefor in any appropriate United States 16 district court and shall recover threefold the damages he sustains and the cost 17 of the suit, including a reasonable attorney’s fee, except that no person may rely upon any conduct that would have been actionable as fraud in the 18 purchase or sale of securities to establish a violation of section 1962. The 19 exception contained in the preceding sentence does not apply to an action against any person that is criminally convicted in connection with the fraud, 20 in which case the statute of limitations shall start to run on the date on which 21 the conviction becomes final. 22 18 U.S.C. § 1964(c) (emphasis added). 23 Plaintiff asserts that the determination of reasonableness is governed by Arizona 24 state law. See (doc. 45 at 4); see also (doc. 49 at 4.) Such statement is inapposite, as this 25 district and her sister districts have held time and time again that the Lodestar method is 26 used to calculate reasonableness under Section 1964(c). See Zwicky v. Diamond Resorts 27 Inc., No. CV-20-02322-PHX-DJH, 2024 WL 1717553, at *5 (D. Ariz. Apr. 22, 2024) 28 (applying the Lodestar method) (emphasis added); see also Sys. Mgmt., Inc. v. Loiselle, 1 154 F. Supp. 2d 195, 208–11 (D. Mass. 2001) (same); Meier v. UHS of Del., Inc., No. 4:18- 2 CV-615, 2023 WL 7164909 (E.D. Tex. Oct. 31, 2023) (same). 3 The Lodestar method is a two-step process whereby the court first “multiplies the 4 number of hours reasonably expended on a case by a reasonable hourly rate.” Roberts v. 5 City of Honolulu, 938 F.3d 1020,1023 (9th Cir. 2019) (cleaned up). “Second, the court 6 determines whether to modify the lodestar figure, upward or downward, based on factors 7 not subsumed in the lodestar figure.” Kelly v. Wengler, 822 F.3d 1085, 1099 (9th Cir. 8 2016). 9 The reasonable hourly rate is assessed by “the prevailing market rate in the relevant 10 community.” Id. To obtain an award of attorneys’ fees and costs, the prevailing party must 11 file a motion for fees and submit evidence in support of the proposed award. Machowski v. 12 333 N. Placentia Prop., LLC, 38 F.4th 837, 841 (9th Cir. 2022). In determining the 13 reasonably hourly rate, the Court is not guided by the hours charged by the prevailing 14 party’s attorney, but is rather “guided by the rate prevailing in the community for similar 15 work performed by attorneys of comparable skill, experience, and reputation.” Chalmers 16 v. City of Los Angeles, 796 F.2d 1205, 1210–11 (9th Cir. 1986), opinion amended on denial 17 of reh’g, 808 F.2d 1373 (9th Cir. 1987) (citing Blum v. Stenson, 465 U.S. 886, 896 n.11 18 (1984)). 19 The number of hours considered in the Lodestar calculus is not limited to those 20 hours expended up to a favorable judgment. Rather, “[i]n statutory fee cases, federal courts, 21 including our own, have uniformly held that time spent in establishing the entitlement to 22 and amount of the fee is compensable.” In re Nucorp Energy, Inc., 764 F.2d 655, 659–60 23 (9th Cir. 1985). This includes FLSA actions. See Gary v. Carbon Cycle Ariz. LLC, 398 F. 24 Supp. 3d 468, 479 (D. Ariz. 2019) (“Indeed, courts within the Ninth Circuit have awarded 25 attorneys’ fees to prevailing plaintiffs in FLSA actions for the costs incurred in preparing 26 their motions for attorneys’ fees.”). 27 “[I]n appropriate cases, the district court may judge the ‘presumptively reasonable’ 28 lodestar figure based upon the factors listed in Kerr v. Screen Extras Guild, Inc. . . . that 1 have not been subsumed in the lodestar calculation.” Intel Corp. v. Terabyte Int’l, Inc., 6 2 F.3d 614, 622 (9th Cir. 1993). The Kerr factors are: 3 (1) the time and labor required, (2) the novelty and difficulty of the questions 4 involved, (3) the skill requisite to perform the legal service properly, (4) the preclusion of other employment by the attorney due to acceptance of the case, 5 (5) the customary fee, (6) whether the fee is fixed or contingent, (7) time 6 limitations imposed by the client or the circumstances, (8) the amount involved and the results obtained, (9) the experience, reputation, and ability 7 of the attorneys, (10) the ‘undesirability’ of the case, (11) the nature and 8 length of the professional relationship with the client, and (12) awards in similar cases. 9 10 Kerr v. Screen Extras Guild, Inc., 526 F.2d 67, 70 (9th Cir. 1975), abrogated on other 11 grounds by City of Burlington v. Dague, 505 U.S. 557 (1992).16 12 V. Conclusion. 13 For the foregoing reasons, the Court recommends that Plaintiff’s Motion for 14 Default Judgment and Motion for Attorneys’ Fees be denied without prejudice. While the 15 Court finds that Plaintiff’s Complaint insufficiently pleads claims sounding in fraud, this 16 is not the end of this matter. Instead, because the defects contained within Plaintiff’s 17 Complaint may be remedy upon amendment, the Court recommends that Plaintiff be 18 granted 30 days to file an amended complaint. Permitting leave to amend in this situation 19 appears apt in light of our sister courts’ decisions. See Chilko v. Lorren, No. 1:07CV1316 20 OWW GSA, 2008 WL 3154734, at *5–6 (E.D. Cal. Aug. 3, 2008) (denying motion for 21 default judgment while permitting leave to amend); see also 5960 Bonsall, LLC v. Lanix 22 Expl. Inc., No. CV 15-03628-MMM (PJWx), 2015 WL 12696201, at *10 (C.D. Cal. Oct. 23 15, 2015) (denying motion for default judgment while permitting plaintiff to file a motion 24 for leave to amend). Plaintiff is warned that the Court will neither read in facts omitted 25 from an amended complaint nor bowdlerize claims or content that should not be contained 26 therein. 27 As a final matter, the Court suggests that Plaintiff ponder whether—in its amended
28 16 Local Rule 54.2(c) adds an additional factor to the list, namely, “Any other matters deemed appropriate under the circumstances.” LRCiv. 54.2(c)(3)(M). 1 complaint or otherwise—Defendant Jane Doe Moore is factually and legally a proper 2 defendant in this action. First, the Court notes that in Plaintiff’s notice of execution of 3 service upon Defendant Jane Doe Moore, Plaintiff’s process server, in all caps, notes that 4 “DEFENDANT[, presumably Jane Doe Moore,] IS NOT MARRIED.” (Doc. 10.) 5 Consequently, it is unclear whether there is community property in this matter. If not, it is 6 unnecessary to name Defendant Jane Doe Moore as a defendant because there is no 7 community property at stake. 8 Second, were Defendants Moore and Jane Doe Moore married, the Court is 9 concerned that it is devoid of specific personal jurisdiction over Defendant Jane Doe 10 Moore. The District of Arizona’s precedent establishes that where an individual’s spouse 11 commits some tort or breaches some contract that benefits the martial community, the 12 inquiry is not whether the marital community itself has sufficient contacts with the forum; 13 Rather, “the appropriate inquiry is whether the spouse herself has contact with Arizona 14 sufficient to confer specific jurisdiction.” See Sw. Foodservice Excellence Inc. v. Strub, 15 No. CV-19-05063-PHX-SRB, 2020 WL 6323823, at *3 (D. Ariz. May 4, 2020); see also 16 Maguire v. Coltrell, No. CV-14-01255- PHX-DGC, 2015 WL 1966471, at *3–4 (D. Ariz. 17 Apr. 30, 2015) (finding that the spouse’s sharing of marital property is insufficient to confer 18 specific personal jurisdiction due, in part, to the fact that the matrimonial domicile being 19 in non-community property state). In this case, it is unclear whether the Moore Defendants’ 20 matrimonial domicile, if they were ever married, was Arizona. Specifically, the Court notes 21 that the notices of execution of service regarding both Moore Defendants state that service 22 was executed in Oklahoma, not Arizona. See (docs. 7, 10.) 23 The reason the Court focuses on the matrimonial domicile is that “the property rights 24 of a husband and wife are governed by the law of the couple’s matrimonial domicile at the 25 time of the acquisition of the property.” Sigmund v. Rea, 248 P.3d 703, 706 (Ariz. App. 26 2011) (quoting Lorenz-Auxier Fin. Grp., Inc. v. Bidewell, 772 P.2d 41, 43 (Ariz. App. 27 1989)). Now, were Oklahoma a community property state like Arizona, this matter would 28 be clear cut, because Arizona state law, “Arizona courts may exercise personal jurisdiction 1 over both [spouses] even when one lacks minimum contacts with Arizona.” Sigmund, 248 2 P.3d at 705. However, Oklahoma is neither a community property state in the traditional 3 sense nor does it allow the unilateral acts of one spouse to create a community obligation. 4 See Okla. Stat. Ann. tit. 43, § 207 (“A husband and wife may hold property as joint tenants, 5 tenants in common, or as community property.”); see also Okla. Stat. Ann. tit. 43, § 208 6 (“Neither husband nor wife, as such, is answerable for the acts of the other.”); Owens v. 7 Owens, 529 P.3d 905, 916 (Okla. 2023), as corrected (Mar. 8, 2023), as corrected (May 1, 8 2023) (noting that there is a presumption that property acquired during the marriage is 9 marital property) (emphasis added). 10 While the Court will not require briefing at this time on whether Defendant Jane 11 Doe Moore is a proper Defendant and if this Court has personal jurisdiction over her, the 12 Court suggests Plaintiff consider the following two points if it intends to file an amended 13 complaint. 14 Accordingly, 15 IT IS RECOMMENDED that Plaintiff’s Motion for Entry of Default Judgment 16 Against Defendants Lincoln J. Moore (doc. 38) be DENIED WITHOUT PREJUDICE. 17 IT IS FURTHER RECOMMENDED that Plaintiff’s Motion for Award of 18 Attorney Fees and Costs (doc. 40) be DENIED WITHOUT PREJUDICE. 19 IT IS FURTHER RECOMMENDED that, if the following recommendations are 20 adopted, Plaintiff be granted THIRTY (30) DAYS to file an amended complaint that 21 complies with Fed. R. Civ. P. 9(b). In drafting an amended complaint, Plaintiff should take 22 heed of this Court’s admonitions and suggestions. Failure to cure the deficiencies noted in 23 this Report and Recommendation may lead to Plaintiff’s case being dismissed as to the 24 Defendants then remaining. 25 This recommendation is not an order that is immediately appealable to the Ninth 26 Circuit Court of Appeals. Any notice of appeal pursuant to Rule 4(a)(1), Federal Rules of 27 Appellate Procedure, should not be filed until entry of the district court’s judgment. The 28 parties shall have 14 days from the date of service of a copy of this Report and 1 || Recommendation within which to file specific written objections with the Court. See 28 2|| U.S.C. § 636(b)(1); Fed. R. Civ. P. 6(a), 6(b) and 72. Thereafter, the parties have 14 days 3 || within which to file a response to the objections. 4 Failure to timely file objections to the Magistrate Judge’s Report and 5 || Recommendation may result in the acceptance of the Report and Recommendation by the || district court without further review. See United States v. Reyna-Tapia, 328 F.3d 1114, 7\| 1121 (9th Cir. 2003). Failure to timely file objections to any factual determinations of the 8 || Magistrate Judge will be considered a waiver of a party’s right to appellate review of the 9|| findings of fact in an order of judgment entered pursuant to the Magistrate Judge’s Report 10 |} and Recommendation. See Fed. R. Civ. P. 72. 11 Dated this 2nd day of February, 2026. \ 12 lo □ B United States Magistrate Judge 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
-25-