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United States of America v. Scott G. Lyon

June 7, 2011

UNITED STATES OF AMERICA, PLAINTIFF,
v.
SCOTT G. LYON, DEFENDANT.



FINDINGS AND RECOMMENDATIONS

This case was referred to the undersigned pursuant to Eastern District of California Local Rule 302(c)(19) and 28 U.S.C. § 636(b)(1) for hearing on plaintiff's motion for entry of default judgment against defendant Scott G. Lyon. Dckt. No. 12. On April 27, 2011, a hearing on the motion was held. Attorney Kurt Didier appeared at the hearing on behalf of plaintiff. No appearance was made on behalf of defendant. For the reasons that follow, and as stated on the record at the hearing, the court recommends that plaintiff's application for entry of default judgment be granted.

I. BACKGROUND

Plaintiff initiated this action on September 21, 2010, for violation of Title IV of the Higher Education Act of 1965, 20 U.S.C. §§ 1071-1087ii. Compl., Dckt. No. 1. A certificate of service, filed November 30, 2010, demonstrates that the summons and complaint were personally served on defendant at the U.S. Marshal's Office on November 23, 2010. Dckt. No.5.

On January 6, 2011, pursuant to plaintiff's request, the Clerk of Court entered defendant's default. Dckt. No. 9. On March 8, 2011, plaintiff filed a motion for default judgment, and mail served a copy of the motion on defendant. Dckt. No. 12. Plaintiff's motion seeks default judgment in favor of the United States and against defendant Lyon in the principal amount of $64,289.97 as of March 3, 2011, plus litigation costs and attorneys fees in the amount of $6,428.99, representing ten percent of the principal amount. Id. at 8. Plaintiff contends that until paid, interest on the unpaid judgment shall accrue at a rate of 4.13 percent per annum, compounded annually. Id.

II. DISCUSSION

It is within the discretion of the district court to grant or deny an application for default judgment. Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). In making this determination, the court considers the following factors:

(1) the possibility of prejudice to the plaintiff, (2) the merits of plaintiff's substantive claim, (3) the sufficiency of the complaint,

(4) the sum of money at stake in the action, (5) the possibility of a dispute concerning the material facts, (6) whether the default was due to excusable neglect, and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits.

Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). "In applying this discretionary standard, default judgments are more often granted than denied." Philip Morris USA, Inc. v. Castworld Products, Inc., 219 F.R.D. 494, 498 (C.D. Cal. 2003) (quoting PepsiCo, Inc. v. Triunfo-Mex, Inc., 189 F.R.D. 431, 432 (C.D. Cal. 1999)).

As a general rule, once default is entered, the factual allegations of the complaint are taken as true, except for those allegations relating to damages. TeleVideo Systems, Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987) (citations omitted). However, although well-pleaded allegations in the complaint are admitted by defendant's failure to respond, "necessary facts not contained in the pleadings, and claims which are legally insufficient, are not established by default." Cripps v. Life Ins. Co. of N. Am., 980 F.2d 1261, 1267 (9th Cir. 1992).

A. Entitlement to Default Judgment

The court finds that the majority of the Eitel factors weigh in favor of granting default judgment to plaintiff.

(1) Possibility of Prejudice to Plaintiff

The first Eitel factor considers whether the plaintiff would suffer prejudice if default judgment is not entered, and such potential prejudice to the plaintiff militates in favor of entering default judgment. See PepsiCo, Inc., 238 F. Supp.2d at 1177. Here, plaintiff would potentially face prejudice if the court did not enter default judgment because absent entry of default judgment, plaintiff would be without ...


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