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Century 21 Real Estate LLC v. William Clement Co., Inc.

United States District Court, C.D. California, Southern Division

May 30, 2014

CENTURY 21 REAL ESTATE LLC, Plaintiff,
v.
WILLIAM CLEMENT COMPANY, INC. ET AL., Defendants.

ORDER GRANTING PLAINTIFF'S MOTION FOR DEFAULT JUDGMENT [17]

DAVID O. CARTER, District Judge.

Before the Court is Plaintiff Century 21 Real Estate's ("Century 21") Motion for Default Judgment against Defendant William Clement Company, Inc. ("Clement") and Clement Lombardi ("Lombardi"), (together, "Defendants") (Dkt. 17). Having considered the motion and the accompanying record, the Court GRANTS Century 21's Motion for Default Judgment.

I. Background

The Court draws the following facts from Century 21's Complaint (Dkt. 1).

William Clement, Inc. entered into a Century 21 Real Estate Franchise Agreement with Plaintiff that contained a commencement date of February 5, 1999(the "Agreement"). Compl. ¶ 7. Under the Agreement, William Clement became a franchisee of Plaintiff as a real estate brokerage business. Clement's franchise was located at 9036 Adams Avenue, Huntington Beach, California 92646. Id. ¶ 8.

The terms of the Agreement granted Clement a non-exclusive license to utilize Plaintiff's trademarks and marketing system. Id. Clement agreed in return to (1) to pay to Plaintiff six percent (6%) of all of William Clement's gross revenues under Section 8 of the Agreement ("royalty fees") and (2) to pay 2% of its gross revenues for a National Advertising Fund ("NAF") for advertising expenses under Section 9 of the Agreement, with a minimum monthly NAF fee as specified in the Agreement. Id. William Clement also agreed to permit Plaintiff to audit its books and records at any reasonable time and agreed to pay, with interest, any sums determined to be owing based on this audit. Id. Lombardi signed a Guaranty of Payment and Performance ("Guaranty"). Id. ¶ 9. Defendant Lombardi personally guaranteed the payment and performance of Clement's obligations under the Agreement. Id .; see also Ex. A at 47-48.

After entering into the Agreement and operating as a franchisee, Clement did not pay amounts owing under the Agreement, including royalty fees, and NAF fees, and failed to report on closed transactions, all of which constitute a breach of the Agreement. Id. ¶ 10. Plaintiff properly notified Defendants of these defaults in writing and provided the appropriate opportunity to cure required under the applicable Agreement. Id. Defendants did not cure these defaults. Id.

Accordingly, Plaintiff exercised its right to terminate the Agreement and terminated the Agreement effective February 2, 2010. Id. ¶ 11. The Agreement provides for the recovery of attorneys' fees and costs to any party prevailing in a legal proceeding in connection with the Agreement. Id. ¶ 12, Ex. A at 21.

II. Legal Standard

The decision to grant or deny a motion for default judgment is within the district court's discretion. Eitel v. McCool, 782 F.2d 1470, 1471 (9th Cir. 1986). After the clerk enters a default against the defendant, the factual allegations of the complaint, except those relating to damages, is taken as true. Fed.R.Civ.P. 8(b)(6); TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987) (citing Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977)). The district court considers seven factors when deciding whether to grant the motion: "(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, 782 F.2d at 1471-72.

Because the plaintiff's allegations of damages are not presumed true, a court granting a motion for default must "determine the amount and character of the relief" due. Landstar Ranger, Inc. v. Parth Enters., Inc., 725 F.Supp.2d 916, 920 (C.D. Cal. 2010) (internal quotation marks omitted).

III. Discussion

Century 21 moves for default judgment because Defendants have not answered the Complaint. For the reasons discussed ...


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