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Cumis Insurance Society, Inc v. Carol Ferraro

August 29, 2012

CUMIS INSURANCE SOCIETY, INC., PLAINTIFF,
v.
CAROL FERRARO, AND DOES 1 TO 10, DEFENDANTS.



The opinion of the court was delivered by: VIRGINIA A. Phillips United States District Judge

[Motion filed on August 9, 2012]

ORDER GRANTING IN PART PLAINTIFF'S MOTION FOR ENTRY OF DEFAULT JUDGMENT

On August 9, 2012, Plaintiff Cumis Insurance Society, Inc. ("Cumis") filed a Motion for Default Judgment (Doc. No. 19) against Defendant Carol Ferraro. Ferraro has not responded to the Motion or participated in the lawsuit at any point since it has been filed. The matter is appropriate for resolution without hearing pursuant to Local Rule 7-15. For the reasons set forth below, the Court GRANTS the Motion IN PART. The Court also VACATES the hearing set for September 10, 2012.

I. BACKGROUND

A. Plaintiff's Allegations

Defendant Carol Ferraro worked for Chaffey Federal Credit Union ("CFCU") for nineteen years, most recently in the position of Executive Vice President. (Declaration of Kevin Rainbolt ("Rainbolt Decl.") ¶ 10.) From June 1998 to April 2011, without CFCU's knowledge or authorization, Ferraro embezzled money from CFCU by writing checks drawn on CFCU's account payable to herself or her creditors. (Id. ¶ 11.)

Ferraro concealed her embezzlement by using her access to CFCU's accounting system to allocate balances to other accounts on significant reporting dates, and then to reverse those transactions after the reporting dates had passed. (Id. ¶ 13.) CFCU discovered Ferraro's embezzlement while conducting its annual audit in July 2011. (Id. ¶ 14.)

During the relevant time period, Plaintiff Cumis Insurance Society, Inc. ("Cumis") insured CFCU against employee dishonesty under Bond No. 500-01-08. (Id. ¶ 3.) Cumis indemnified CFCU for a total loss of $959,612.75, of which $909,612.75 represented the amount Ferraro embezzled, and $50,000 represented expenses incurred by CFCU to investigate and quantify its loss. (Id. ¶¶ 16--18.)

B. Procedural History

Cumis filed a Complaint against Ferraro on November 7, 2011, asserting claims for unjust enrichment, fraud, conversion, monies had and received, and equitable subrogation. (Compl. (Doc. No. 1).) Ferraro failed to answer or otherwise appear, and the clerk entered default against her on December 7, 2011. (Doc. No. 7.)

Cumis filed a First Amended Complaint ("FAC") on June 14, 2012, asserting the same claims but an increased amount of damages. (FAC (Doc. No. 12).) Ferraro again failed to answer or otherwise appear, and the clerk again entered default on July 19, 2012. Cumis now moves the Court for default judgment against Ferraro. (Motion (Doc. No. 19).)

II. LEGAL STANDARDS

A. Requirements of Local Rule 55-1

Local Rule 55-1 provides that an application for default judgment must be accompanied by a declaration in compliance with Federal Rule of Civil Procedure 55(b) and set forth: (1) when and against what party the default was entered; (2) the identification of the pleading to which default was entered; (3) whether the defaulting party is an infant or incompetent person, and if so, whether that person is represented by a general guardian, committee, conservator, or other representative; (4) that the Servicemembers Civil Relief Act does not apply; and (5) that notice has been served on the defaulting party if required by Federal Rule of Civil Procedure 55(b)(2).

Cumis has satisfied the requirements of Local Rule 55-1. (See Declaration of Mark J. Krone ("Krone Decl.") ¶¶ 5--8.)

B. Default Judgment

"Even if entry of default has been made by the court clerk, granting a default judgment is not automatic; rather, it is left to the sound discretion of the court." PepsiCo v. Triunfo-Mex, Inc., 189 F.R.D. 431, 432 (C.D. Cal. 1999) (citing Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980)); Laborers Health & Welfare Trust Fund for N. Cal. v. Demas Constr., Inc., No. C-96-3132 DLJ, 1997 ...


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