The opinion of the court was delivered by: David O. Carter United States District Judge
ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS' MOTION FOR DEFAULT JUDGMENT
Before the Court is a Motion for Default Judgment filed by Plaintiff, the Federal Deposit Insurance Corporation, in the above-captioned case ("Motion for Default Judgment") (Docket 61). After considering the moving papers*fn1 and oral argument, the Court GRANTS in part and DENIES in part the Motion for Default Judgment.
The Federal Deposit Insurance Corporation ("Plaintiff"), as Receiver for Downey Savings & Loan ("Downey"), seeks default judgment on its claim for breach of contract against Defendants Quest Financial Services, Incorporated ("Quest"); Jesse Dichoso ("Dichoso"); and Omar Anabo ("Anabo").*fn2 Dichoso and Anabo are alleged to have functioned as the alter egos of Defendant Quest, on the grounds that Dichoso and Anabo constituted Quest's sole shareholders and improperly commingled their own funds with those of Quest. Plaintiff further requests default judgment on claims of professional negligence against Quest, Dichose and Anabo and on claims of negligent misrepresentation and fraud against Quest, Dichoso, Anabo, Capital Access, LLC ("Capital Access") and Zalathiel Aguia ("Aguia").
Plaintiff's claims arise from a series of alleged events relating to six separate loans executed by Downey: the Anway loan, the Maharaj loan, the Serrano loan, the Torres loan, the Sutor loan, and the Valle loan. Plaintiff makes three allegations for each of the six loans. First, Plaintiffs claim that borrowers intentionally misrepresented various information in their loan applications. Specifically, Plaintiff contends that all borrowers overstated their income and that certain borrowers misstated employment information and understated debts. Second, Plaintiff alleges that Quest failed to properly perform a reasonable investigation into the accuracy of the loan applications upon which Plaintiff relied in approving the loans, which was a breach of its Brokerage Agreement and its duties of professional care. Third, Plaintiff alleges that borrowers were in fact straw borrowers paid in exchange for the use of their credit information, and that the real borrower in most if not all of the loans was Quest acting through its affiliate Capital Access.
Federal Rule of Civil Procedure 55 provides that the Court may, in its discretion, order default judgment following the entry of default by the Clerk. Fed. R. Civ. P. 55(b). "The general rule of law is that upon default, the factual allegations of the complaint, except those relating to the amount of damages, will be taken as true." Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977) (per curiam). However, "necessary facts not contained in the pleading, 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). Where the pleadings are insufficient, the Court may require the moving party to produce evidence in support of the motion for default judgment. See TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987).
Ultimately, "[t]he district court's decision whether to enter a default judgment is a discretionary one." Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). Factors that may be considered by the Court in exercising its discretion to enter default judgment include:
(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 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).
A. Procedural Requirements
The Court begins by determining whether Plaintiff has complied with the applicable procedural requirements. The Court finds that Plaintiffs have fulfilled their obligations under Fed. R. Civ. P. 55(a) and Local Rules 55-1 and 55-2 with respect to the entry of default judgment. Specifically, Plaintiffs have identified the Defendants against whom the default is sought and have established that the clerk of the court entered a default against them (Dockets 30, 46, 60). Plaintiffs have attested that none of the Defendants are infants or incompetent persons and that no Defendants are in active military service.Decl. of J. Wilcox (Dockets 29, 33, 59). Finally, Plaintiffs have provided proof that Defendants were served with the Notice of Motion for Default Judgment. Having determined Plaintiff's procedural compliance, the Court turns to the substance of Plaintiff's Motion.
B. The Propriety of Default Judgment
In deciding whether to exercise their discretion to impose judgment by default, courts look to ...