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The Eclipse Group Llp v. Fortune Mfg Co., Ltd.

United States District Court, S.D. California

December 8, 2014

THE ECLIPSE GROUP LLP, a California limited liability partnership, Plaintiff,
v.
FORTUNE MFG. CO., LTD., a Taiwan company, Defendant.

ORDER: (1) GRANTING DEFENDANT'S MOTION TO SET ASIDE DEFAULT JUDGMENT; (2) VACATING HEARING DATE [Dkt. No. 8.]

GONZALO P. CURIEL, District Judge.

I. INTRODUCTION

Defendant Fortunate Mfg. Co. Ltd. ("Defendant") moves the court to set aside default judgment pursuant to Federal Rules of Civil Procedure 55 and 60(b). (Dkt. No. 8.) The parties have fully briefed the motion. (Dkt. Nos. 10-11.) Pursuant to Civil Local Rule 7.1(d)(1), the Court finds the matter suitable for adjudication on the papers, without oral argument. For the following reasons, the Court GRANTS Defendant's motion to set aside default judgment.

II. BACKGROUND

On February 26, 2014, Plaintiff The Eclipse Group LLC ("Plaintiff") filed a complaint against Defendant. (Dkt. No. 1.) Plaintiff has a place of business in San Diego, California, but Defendant's principal place of business is in Taiwan. ( Id. ¶¶ 1-2.) The action arises from Defendant's alleged failure to pay Plaintiff for legal services. ( Id. ¶¶ 5-11.) Plaintiff alleges four claims: (1) breach of written agreement; (2) open book; (3) account stated; and (4) quantum meruit. ( Id. ¶¶ 12-30.)

On April 16, 2014, Plaintiff filed a proof of service of the summons and complaint, declaring that it had served Defendant by Postal Registered Mail on March 11, 2014, pursuant to Federal Rule of Civil Procedure 4(f)(2)(C)(ii). (Dkt. No. 3.)

On May 12, 2014, the Clerk entered default against Defendant, pursuant to Plaintiff's request. (Dkt. Nos. 4-5.) On June 20, 2014, the Clerk entered default judgment in the amount of $206, 065.28, pursuant to Plaintiff's request. (Dkt. Nos. 6-7.)

Four months later, on October 20, 2014, Defendant filed a motion to set aside default judgment. (Dkt. No. 8.) On November 14, 2014, Plaintiff filed a response. (Dkt. No. 10.) On November 21, 2014, Defendant filed a reply. (Dkt. No. 11.)

III. LEGAL STANDARD

"[D]efault judgments are ordinarily disfavored" and "[c]ases should be decided upon their merits whenever reasonably possible." Eitel v. McCool, 782 F.2d 1470, 1472 (9th Cir. 1986).

A district court "may set aside a default judgment under Rule 60(b)." Fed.R.Civ.P. 55(c). Federal Rule of Civil Procedure 60(b) allows a court to set aside a judgment where one or more of the following is shown: (1) mistake, inadvertence, surprise or excusable neglect; (2) newly discovered evidence which by due diligence could not have been discovered before the court's decision; (3) fraud by the adverse party; (4) the judgment is void; (5) the judgment has been satisfied; or (6) any other reason justifying relief. Fed.R.Civ.P. 60(b); Sch. Dist. 1J v. ACandS Inc., 5 F.3d 1255, 1263 (9th Cir. 1993).

Defendant primarily argues that the judgment is void due to improper service. (Dkt. No. 8-1 at 4-5.) Under Rule 60(b)(4), a default judgment may be set aside where the judgment is void. Fed.R.Civ.P. 60(b)(4). A default judgment is void where the court lacks personal jurisdiction due to insufficient service of process. S.E.C. v. Internet Solutions for Bus. Inc., 509 F.3d 1161, 1165 (9th Cir. 2007). Unlike a motion to set aside default judgment for equitable reasons, there is no discretion for a district court to exercise under Rule 60(b)(4); either a judgment is void or it is valid. Thomas P. Gonzales Corp. v. Consego Nacional de Produccion de Costa Rica, 614 F.2d 1247, 1256 (9th Cir. 1980). Therefore, a district court need not consider the merits of the defense, prejudice to the plaintiff, or culpability of the defendant under Rule 60(b)(4). Internet Solutions, 509 F.3d at 1165.

A plaintiff generally has the burden to establish personal jurisdiction. Internet Solutions, 509 F.3d at 1165. However, the Ninth Circuit has held that "a defendant moving to vacate a default judgment based on improper service of process, where the defendant had actual notice of the original proceeding but delayed in bringing the motion until after entry of default judgment, bears the burden of proving that service did not occur." Id. "Existing case law does not resolve the question of whether a defendant without actual notice also bears the burden of proving that he is entitled to relief, or whether the burden in such a case would rest with the plaintiff." Oak Point Partners, Inc. v. Lessing, No. 11-cv-3328, 2012 WL 4121109, at *3 (N.D. Cal. Sept. 18, 2012). Here, the parties appear to disagree about whether Defendant had actual notice. (Dkt. No. 8-1 at 4; Dkt. No. 10 at 4; Dkt. No. 11-1 at 3.) However, as ...


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