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Capital Partners Funding, LLC v. Bmg Logistics, Inc.

United States District Court, S.D. California

July 1, 2014

BMG LOGISTICS, INC., et al., Defendants.


THOMAS J. WHELAN, District Judge.

On March 17, 2014, Plaintiff Capital Partners Funding, LLC filed a motion for default judgment. On May 20, 2014, this Court entered an order granting the motion as to Capital's request for default judgment as to (1) BMI with respect to the causes of action for breach of the Factoring Agreement, breach of the covenant of good faith and fair dealing, intentional misrepresentation, negligent misrepresentation, accounts stated, and unfair competition; and (2) Brianna Goodwin with respect to the second cause of action for breach of the Guaranty Agreement. ( See Default Judgement Order [Doc. 10], 11:16-23.) The order denied the motion in all other respects, including the request for damages, prejudgement interest and attorneys' fees on the ground that Capital had not provided sufficient evidence establishing its damage claims. ( Id., 6:11-8:2.) However, the order granted Capital leave to file a supplemental brief in support of its claimed damages, pre-judgment interest, and attorneys' fees and costs. ( Id., 11:25-12:2.)

Capital has now filed its supplemental brief, along with additional evidence in support of its damage claims.


The following facts are taken from this Court's Default Judgment Order.

Plaintiff Capital Partners Funding, LLC ("Capital"), is a factoring provider. ( Compl. [Doc. 1] ¶ 11.) Factoring is a financial transaction whereby a business sells its accounts receivables to a third party, such as Capital, in exchange for cash. ( Id. ) The third party then collects the money owed (i.e., the account receivable) from the customer. ( Id. )

On or about November 18, 2011, Capital entered into the Factoring Master Agreement (the "Agreement") with BMG Logistics, Inc. ("BMG") ( Compl. Ex. A.) On the same day, Defendant Brianna Goodwin, BMG's president, executed a Continuing Guaranty and Security Agreement (the "Guaranty"). ( Id. ¶ 5, Ex. B.)

Under the Agreement, Capital agreed to purchase BMG's accounts receivables. ( Compl. ¶ 12.) Section 4, however, gives Capital the right to require that BMG "repurchase, by payment of the unpaid Face Amount thereof, together with any unpaid fees relating to the Purchased Account, on demand, or at the Purchaser's option, by Purchaser's charge to the Reserve Account." ( Id. ¶ 14, Ex. A at ¶ 4.1.) Additionally, section 16 further requires BMG to reimburse Capital for the actual amount of costs and expenses incurred in connection with the enforcement of the Agreement. ( Id. ¶ 16, Ex. A at ¶ 16.1.) Under the Guaranty, Defendant Brianna Goodwin personally guaranteed BMG's prompt payment of any and all indebtedness arising under the Agreement. ( Id. ¶ 19, Ex. B at ¶ 2.1.)

Shortly after entering the Agreement, Capital purchased accounts receivables from BMG. ( Compl. ¶ 12.) Several of the accounts became delinquent because they remained unpaid past the late payment date specified in the Agreement. ( Id. ¶ 13.) Capital alleges the delinquent accounts totaled $42, 080.00 (the "Repurchase Price"). ( Id. ) Additionally, as of January 9, 2013, BMG allegedly incurred service charges and fees of $58, 780.42 (the "Accrued Fees"). ( Id. ¶ 14.) Despite Capital's repeated attempts to collect from BMG the Repurchase Price and Accrued Fees, BMG failed to repurchase any delinquent accounts. ( Id. ¶ 15.)

On December 11, 2013, Capital filed this lawsuit. The Complaint asserts seven causes of action for: (1) breach of the Agreement; (2) breach of the Guaranty; (3) breach of the covenant of good faith and fair dealing; (4) intentional misrepresentation; (5) negligent misrepresentation; (6) accounts stated; and (7) Unfair Competition under California Business & Professions Code §§ 17200, et seq.

On January 7, 2014, Defendants Joe Goodwin, Brianna Goodwin and BMG were served with the Summons and Complaint. ( See Summons [Docs. 4-6].) Despite being served, Defendants did not respond to the Complaint or otherwise appear in this action. Accordingly, on February 13, 2014, Capital filed a request for default, which was entered on February 14, 2014. ( See Entry of Default [Doc. 8].)

As stated above, on May 20, 2014, this Court issued the Default Judgement Order, which granted in part and denied in part Capital's motion, and allowed Capital leave to file a supplemental brief and evidence supporting its damage claims. On June 10, 2014, Capital filed its supplemental brief and evidence.


Rule 55(b)(2) of the Federal Rules of Civil Procedure governs applications to the court for default judgment. See Fed.R.Civ.P. 55(b)(2). Default judgment is available as long as the plaintiff establishes (1) defendant has been served with the summons and complaint and default was entered for their failure to appear; (2) defendant is neither a minor nor an incompetent person; (3) defendant is not in military service or not otherwise subject to the Soldiers and Sailors Relief Act of 1940; and (4) if defendant has appeared in the action, that defendant was provided with notice of the application for default judgment ...

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