United States District Court, C.D. California
ORDER GRANTING PLAINTIFF'S MOTION FOR DEFAULT
JUDGMENT [45]
OTIS
D. WRIGHT, II UNITED STATES DISTRICT JUDGE
I.
INTRODUCTION
On
March 8, 2016, Plaintiff Federal Trade Commission filed its
First Amended Complaint against Defendants Good Ebusiness,
LLC (doing business as AAP Firm, Student Loan Help Direct,
and Select Student Loan), Select Student Loan Help, LLC,
Select Document Preparation, Inc., Tobias West, and Komal
West ("Defendants"), as well as Relief Defendant
Beverly Hills Tax Group, LLC ("Relief Defendant").
Plaintiff
alleges Defendants violated the Federal Trade Commission Act
("FTC Act"), the Telemarketing and Consumer Fraud
and Abuse Prevention Act ("Telemarketing Act"), and
the 2009 Omnibus Appropriations Act ("2009 Omnibus
Act") by preying on financially struggling consumers and
promising to make their mortgage or student loan payments
substantially lower by renegotiating with their lender-but
without ever having any intention of actually doing so.
(First Am. Compl. ("FAC"), ECF No. 31.) The Clerk
of Court entered default against Defendants Good Ebusiness,
Student Loan Help Direct, Select Student Loan, Select Student
Loan Help, and Select Document Preparation ("Defaulting
Defendants") and Relief Defendant on March 29, 2016.
(ECF No. 40.) Plaintiff subsequently moved for default
judgment against Defaulting Defendants, in which Plaintiff
seeks monetary relief equal to revenues less chargebacks
between August 2013 and the end of February 2016 (totalling
$2, 329, 456), disgorgement of all funds in Beverley Hills
Tax Group's accounts, and an injunction banning
Defaulting Defendants from selling unsecured or secured debt
relief products or services, making material
misrepresentations in connection with any product or service,
or making claims in connection with any product or service
without possessing competent and reliable substantiation.
(Mot. Default J. ("Mot.") 8-13, ECF No. 45.) For
the reasons discussed below, the Court GRANTS Plaintiff's
Motion.[1]
II.
FACTUAL BACKGROUND
Plaintiff
Federal Trade Commission ("FTC") is an independent
agency of the United States Government created by 15 U.S.C.
§§ 41-58. (FAC ¶ 4.) Defendant Good Ebusiness,
LLC ("GEB") is incorporated in Nevada and has also
done business as The AAP Firm ("AAP"), Student Loan
Help Direct ("SLHD"), and Select Student Loan
("SSL"). (Id. ¶ 6.) Defendant Select
Student Loan Help, LLC ("SSLH") is incorporated in
Florida. (Id.¶ 7.) Defendant Select Document
Preparation, Inc. ("SDP") is also incorporated in
Nevada. (Id. ¶ 8.) Each corporation is
controlled by Defendants Tobias West and his wife, Komal
West. (Id. ¶¶ 9-10.) Relief Defendant
Beverly Hills Tax Group has received funds or assets that can
be traced to Defendants' fraudulent business practices as
alleged in the FAC. (Id. ¶ 11.)
From at
least January 2014 to August 2014, Defendants GEB (d/b/a AAP)
and Tobias West engaged in a course of conduct to market and
sell mortgage assistance relief services ("MARS").
(Id. ¶ 14.) These "MARS Defendants"
marketed their services primarily via unsolicited outbound
telemarketing calls, inbound telemarketing calls from
consumers responding to online advertising at their website,
and direct mail advertising. (Id. ¶ 15.) To
induce consumers, MARS Defendants promised consumers that
they would lower the consumer's monthly mortgage payment,
mortgage interest rate, or obtain loan forbearance, a loan
modification, or other loan restructuring. (Id.
¶ 16.) Furthermore, MARS Defendants purported to be a
law firm that would provide forensic loan audits and other
services to identify errors in consumers' mortgage loan
documents, ferret out predatory lending practices, gather
information to defend against foreclosure, and win
concessions from lenders. (Id. ¶ 17.) MARS
Defendants charged an initial up-front fee, ranging from $1,
000 to $5, 000, and represented that, if they were unable to
secure the promised relief, they would fully refund all fees
paid by the consumers. (Id. ¶ 18.) However, in
numerous instances, MARS Defendants failed to obtain the
promised relief for their customers and have not provided the
promised refund. (Id. ¶ 19.)
From at
least June 2014 to the present, Defendants GEB (d/b/a SLHD
and SSL), SSLH, SDP, Tobias West, and Komal West
("Student Debt Relief Defendants") have engaged in
a similar course of conduct to market and sell a program that
aims to renegotiate, settle, or otherwise alter the terms of
payment for a customer's student loan debt. (Id.
¶¶ 37, 40-41.) Student Debt Relief Defendants
represent that, if they are unable to secure the promised
debt relief, they will refund the fees paid by consumers
(Id. ¶ 38.) However, in numerous instances
Student Debt Relief Defendants have failed to obtain the
promised relief and have not provided the promised refund.
(Id.) Relief Defendant Beverly Hills Tax Group has
received, directly or indirectly, funds or other assets from
Defendants that are traceable to funds obtained from
Defendants' customers through these mortgage and student
loan relief practices. (Id. ¶ 84.)
On
February 16, 2016, Plaintiff filed its initial Complaint
against Defendants seeking a permanent injunction and other
equitable relief. (ECF No. 1.) Plaintiff also requested an Ex
Parte Temporary Restraining Order ("TRO") and
sought asset relief and the appointment of a receiver. (ECF
No. 3.) The Court granted the TRO. (ECF No. 12.) On February
29, 2016, the Court entered a preliminary injunction against
Defendants Tobias and Komal West, and against Defaulting
Defendants on March 1, 2016. (ECF Nos. 26-27.) On March 8,
2016, Plaintiff filed its First Amended Complaint, adding
Beverley Hills Tax Group, LLC, as a relief defendant. (ECF
No. 31.) On March 29, 2016, after Defendants failed to timely
respond to Plaintiff's FAC, the Clerk of Court entered a
default against Defaulting Defendants GEB (d/b/a AAP, SLHD,
and SSL), SSLH, and SDP, and Relief Defendant Beverley Hills
Tax Group. (ECF No. 40.) Plaintiff subsequently filed the
present Motion for Default Judgment. (ECF No. 45.)
Plaintiff's Motion is now before the Court for decision.
III.
LEGAL STANDARD
Federal
Rule of Civil Procedure 55(b) authorizes a district court to
enter a default judgment after the Clerk enters a default
under Rule 55(a). District courts have discretion over
whether to enter default judgment. Aldabe v. Aldabe,
616 F.2d 1089, 1092 (9th Cir. 1980). When a party moves for a
default judgment, the Court accepts the well-pleaded factual
allegations in the complaint as true, with the exception that
the moving party must submit evidence establishing the amount
of damages sought. Televideo Sys., Inc. v.
Heidenthal, 826 F.2d 915, 917-19 (9th Cir. 1987) (per
curiam); Fed.R.Civ.P. 54(c) ("[a] judgment by default
shall not be different in kind or exceed in amount that
prayed for in the [complaint]").
In
exercising its discretion, a court must consider several
factors (the Eitel factors), which include: (1) the
possibility of prejudice to the plaintiff; (2) the merits of
the plaintiff's substantive claim; (3) the sufficiency of
the complaint; (4) the sum of money at stake; (5) the
possibility of a dispute concerning material facts; (6)
whether the defendant's 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).
IV.
DISCUSSION
A.
Procedural Requirements
Before
a court can enter a default judgment against a defendant, the
plaintiff must satisfy the procedural requirements set forth
in Federal Rules of Civil Procedure 54(c) and 55, as well as
Local Rule 55-1. Local Rule 55-1 requires that the movant
submit a declaration establishing: (1) when and against which
party the default was entered; (2) identification of the
pleading on which the default was entered; (3) whether the
defaulting party is a minor, incompetent person, or active
service member; and (4) that the defaulting party was
properly served with notice if required. Vogel v. Rite
Aid Corp., 992 F.Supp.2d 998, 1006 (C.D. Cal. 2014).
Here,
Plaintiff has satisfied these requirements. Plaintiff's
counsel submitted a declaration stating that the Clerk
entered a default against Defendants on the First Amended
Complaint on March 29, 2016. (Durham Decl. ¶ 2, ECF No.
45-1; see also ECF No. 40.) Plaintiff's counsel
also declares that Defaulting Defendants are not infants,
incompetent, or active service members, and that they were
properly served with written notice via email on May 13,
2016. (Durham Decl. ¶¶ 4-6.) Plaintiffs have thus
complied with the procedural prerequisites for default
judgment.
B.
E ...