Felldin v. Grant & Weber, Inc.

          FINDINGS AND RECOMMENDATIONS

          ALLISON CLAIRE UNITED STATES MAGISTRATE JUDGE

         Pursuant to Local Rule 302(c)(19), this matter came before the court on January 13, 2016, for hearing of plaintiff’s motion for default judgment. ECF No. 23. Attorney Jim Price appeared on behalf of the plaintiff. No appearance was made on behalf of the defendant. At that time oral argument was heard and the motion was taken under submission.

         Upon review of the motion and the supporting documents, and good cause appearing, THE COURT FINDS AS FOLLOWS:

         FACTUAL AND PROCEDURAL BACKGROUND

         Plaintiff’s complaint alleges as follows. Plaintiff had a debt with Sutter Delta Medical Center in the amount of $350.06. ECF No. 1 at 1.^[1] On August 20, 2014, plaintiff paid that debt in full. Id. On August 23, 2014, plaintiff sent defendant, Grant & Weber, Inc., a letter showing proof of plaintiff’s satisfaction of her debt and demanding that the defendant cease contacting plaintiff. Id. On December 1, 2014, defendant sent plaintiff a letter seeking to collect “an amount which was not authorized by the agreement creating the debt or permitted by law.” Id. at 2.

         On April 24, 2015, plaintiff commenced this action by filing a complaint and paying the required filing fee. ECF No. 1. Plaintiff’s complaint alleges claims for violation of the Rosenthal Fair Debt Collection Practices Act, (“RFDCPA”), California Civil Code §§ 1788, et seq., the Fair Debt Collection Practices Act, (“FDCPA”), 15 U.S.C. § 1692, et seq., negligence and negligent training. Id. at 3-6. Plaintiff’s complaint seeks statutory, actual and punitive damages, as well as reasonable attorney’s fees and costs. Id. at 6.

         The summons and complaint were served on the defendant by personal service on May 12, 2015. ECF No. 5; Fed.R.Civ.P. 4(e)(2); Pacific Atlantic Trading Co. v. M/V Main Express, 758 F.2d 1325, 1331 (9th Cir. 1985) (default judgment void without personal jurisdiction). On July 20, 2015, plaintiff filed a notice of settlement. ECF No. 6. However, on September 14, 2015, plaintiff filed a request for entry of default^[2], (ECF No. 8), and the clerk entered default against defendant on September 15, 2015. ECF No. 10.

         Plaintiff filed a motion for default judgment on October 28, 2015, but incorrectly noticed the motion for hearing before the assigned District Judge. ECF No. 13. On November 16, 2015, plaintiff filed the pending motion for default judgment, and noticed the matter for hearing before the undersigned.^[3] ECF No. 17. Plaintiff’s request for entry of default and the instant motion for default judgment and supporting papers were served by mail on the defendant. ECF Nos. 8-2 & 20. Plaintiff seeks an entry of default judgment on plaintiff’s claims that the defendant violated the FDCPA and the RFDCPA and seeks $2, 000 in statutory damages in addition to reasonable attorney’s fees and costs. ECF No. 17 at 9.

         LEGAL STANDARD

         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)); see Fed.R.Civ.P. 55(b) (governing the entry of default judgments). 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 may consider 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 policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits.

Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). Default judgments are ordinarily disfavored. Id. at 1472.

         As a general rule, once default is entered, well-pleaded factual allegations in the operative complaint are taken as true, except for those allegations relating to damages. TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987) (per curiam) (citing Geddes v. United Fin. Group, 559 F.2d 557, 560 (9th Cir. 1977) (per curiam)); see also Fair Housing of Marin v. Combs, 285 F.3d 899, 906 (9th Cir. 2002). Although well-pleaded allegations in the complaint are admitted by a defendant’s failure to respond, “necessary facts not contained in the pleadings, and claims which are legally insufficient, are not established by default.” Cripps v. Life Ins. Co. of N. Am., 980 F.2d 1261, 1267 (9th Cir. 1992) (citing Danning v. Lavine, 572 F.2d 1386, 1388 (9th Cir. 1978)); accord DIRECTV, Inc. v. Huynh, 503 F.3d 847, 854 (9th Cir. 2007) (“[A] defendant is not held to admit facts that are not well-pleaded or to admit conclusions of law”) (citation and quotation marks omitted); Abney v. Alameida, 334 F.Supp.2d 1221, 1235 (S.D. Cal. 2004) (“[A] default judgment may not be entered on a legally insufficient claim.”). A party’s default conclusively establishes that party’s liability, although it does not establish the amount of damages. Geddes, 559 F.2d at 560; cf. Adriana Int’l Corp. v. Thoeren, 913 F.2d 1406, 1414 (9th Cir. 1990) (stating in the context of a default entered pursuant to Federal Rule of Civil Procedure 37 that the default conclusively established the liability of the defaulting party).

         DISCUSSION

         A. The Eitel Factors

         1. Factor One: Possibility of Prejudice to Plaintiff

         The first Eitel factor considers whether the plaintiff would suffer prejudice if default judgment is not entered, and such potential prejudice to the plaintiff militates in favor of granting a default judgment. See PepsiCo, Inc., 238 F.Supp.2d at 1177. Here, plaintiff would potentially face prejudice if the court did not enter a default judgment. Absent entry of a default judgment, plaintiff would be without another recourse for recovery. Accordingly, the first Eitel factor favors the entry of default judgment.

         2. Factors Two and Three: The Merits of Plaintiff’s Substantive Claims and the Sufficiency of the Complaint

         The undersigned considers the merits of plaintiff’s substantive claims and the sufficiency of the complaint together because of the relatedness of the two inquiries. The undersigned must consider whether the allegations in the complaint are sufficient to state a claim that supports the relief sought. See Danning, 572 F.2d at 1388; PepsiCo, Inc., 238 F.Supp.2d at 1175. Plaintiff seeks entry of default judgment on her ...