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Bylin Heating Systems, Inc. v. Thermal Technologies, Inc.

United States District Court, E.D. California

July 1, 2014

BYLIN HEATING SYSTEMS, INC., et al., Plaintiffs,
v.
THERMAL TECHNOLOGIES, INC. Defendant.

ORDER AND FINDINGS AND RECOMMENDATIONS

KENDALL J. NEWMAN, Magistrate Judge.

INTRODUCTION

Presently pending before the court is plaintiffs Bylin Heating Systems, Inc. ("Bylin") and Roof Ice Melt Systems, Inc.'s (collectively, "plaintiffs") motion for entry of a default judgment against defendant Thermal Technologies, Inc. ("TTI" or "defendant"). (ECF No. 73.) The motion, which was filed on June 12, 2014, was noticed for a hearing on July 10, 2014. (Id.)

Because TTI failed to file an opposition to the motion at least fourteen (14) days prior to the hearing in accordance with Local Rule 230(c), and because the court finds that oral argument would not be of material assistance in resolving the motion, the court vacates the hearing on the motion. E.D. Cal. L.R. 230(g); see also E.D. Cal. L.R. 230(c) ("No party will be entitled to be heard in opposition to a motion at oral arguments if opposition to the motion has not been timely filed by that party.").

After carefully considering the briefing and documentation in support of plaintiffs' motion, the court's record, and the applicable law, the court recommends that plaintiffs' motion be granted, and that a default judgment be entered accordingly.

BACKGROUND

The background facts and procedural history of this case were previously extensively outlined in the court's March 1, 2013 order and findings and recommendations recommending imposition of terminating sanctions against defendant, subsequently adopted by the district judge on June 4, 2013, as well as the court's March 10, 2014 order granting in part plaintiffs' motion for monetary sanctions. (ECF Nos. 57, 59, 67.) The background facts and procedural history are not repeated here in full, but are instead incorporated by reference to those prior orders.

In short, plaintiffs, who engineer and supply commercial and residential winter freeze protection products, primarily claimed that defendant TTI breached a settlement agreement concerning a previous lawsuit for infringement of plaintiffs' patent and trademark rights by manufacturing and selling certain products in violation of the settlement agreement, failing to transfer a specified internet domain name to plaintiffs, and continuing to use that domain name to divert customers from plaintiffs. Defendant denied these allegations and asserted counterclaims for declaratory relief, rescission of the settlement agreement, trade libel, slander of title, defamation, unfair competition, and intentional interference with prospective economic advantage. (See ECF No. 57 at 2-3.)

Ultimately, on June 4, 2013, after finding that TTI failed to comply with its discovery obligations and several court orders, the court granted plaintiffs' motion for discovery sanctions in part, struck TTI's answer and counterclaims, and directed the Clerk of Court to enter TTI's default. (ECF No. 59.) The court noted that plaintiffs had also requested an award of attorneys' fees and costs as monetary sanctions. However, at that time, the court was unable to address the request, because plaintiffs had not submitted any declarations and supporting documentation regarding their fees and costs. Nevertheless, the court permitted plaintiffs "to pursue such a request either as part of any subsequent motion for default judgment or by a separate supported motion, as appropriate." (ECF No. 57 at 14.) That same day, on June 4, 2013, the Clerk of Court entered TTI's default. (ECF No. 60.)

Thereafter, on December 31, 2013, plaintiffs filed a motion for monetary sanctions pursuant to the court's inherent power in the form of an award of their attorneys' fees and costs, based on TTI's bad faith conduct in the course of the litigation. (ECF No. 64.) On March 10, 2014, after TTI twice failed to oppose the motion, the court granted plaintiffs' motion in part, awarding plaintiffs at total of $32, 851.29 in attorneys' fees and costs, imposed as monetary sanctions against TTI. (ECF No. 67.)[1]

Then, on June 12, 2014, plaintiffs filed the instant motion for entry of a default judgment. (ECF No. 73.) The motion was served on TTI by overnight mail. ( Id. at 3.) As noted above, TTI failed to oppose the motion or even seek an extension of time to do so.[2]

LEGAL STANDARDS

Pursuant to Federal Rule of Civil Procedure 55, default may be entered against a party against whom a judgment for affirmative relief is sought who fails to plead or otherwise defend against the action. See Fed.R.Civ.P. 55(a). However, "[a] defendant's default does not automatically entitle the plaintiff to a court-ordered judgment." PepsiCo, Inc. v. Cal. Sec. Cans , 238 F.Supp.2d 1172, 1174 (C.D. Cal. 2002) (citing Draper v. Coombs , 792 F.2d 915, 924-25 (9th Cir. 1986)). Instead, the decision to grant or deny an application for default judgment lies within the district court's sound discretion. 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 material facts[, ] (6) whether the default was due to excusable neglect, and (7) the strong ...

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