United States District Court, N.D. California
ORDER GRANTING APPLICATION FOR DEFAULT
WILLIAM ALSUP UNITED STATES DISTRICT JUDGE
action for breach of fiduciary duty and conversion, plaintiff
moves for default judgment against defendants of
approximately $148, 284.55, plus $700 in costs. Default
judgment is Granted.
exchange for commissions, plaintiff StarNet Insurance Company
engaged defendant Jordan Harrison Insurance Brokers, Inc., to
solicit customers, bind insurance policies for StarNet's
insurance products, charge and collect premiums due under
insurance policies, and account for and hold such premiums in
trust prior to remitting the premium payments to StarNet.
Defendant Jeffrey Dickow is Harrison Insurance's
received $148, 284.55 in premiums that it held in trust for
StarNet. StarNet attempted to collect these premiums from
defendants prior to litigation. Dickow acknowledged the
requests but failed to remit the premiums.
filed this action in December 2016 alleging breach of
fiduciary duty against both defendants under Sections 1733
and 1734 of the California Insurance Code, breach of
fiduciary duty against only Harrison Insurance pursuant to
its engagement with StarNet, and conversion against both
served Dickow individually and on behalf of Harrison
Insurance on December 29 (Dkt. No. 13, 14). When defendants
failed to answer, the Clerk entered default on January 26,
2017. StarNet sought default judgment on March 2, 2017.
Defendants did not appear at the case management conference
in this action on March 16, 2017. StarNet gave defendants
informal notice of the default judgment following the case
management conference (Dkt. No. 24 at 6 n.1), and again, on
April 24, preceding the April 27 default judgment hearing
(Dkt. No. 29-1 at 2). Defendants have yet to appear. This
order now Grants default judgment against
55(b)(2) permits a district court, at its discretion, to
enter default judgment against a defendant. Aldabe v.
Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). When
exercising its discretion to award default judgment, a
district court may consider several factors including, (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 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).
denial of default would prejudice StarNet in that it would be
left without relief despite defendants' inaction.
Moreover, defendants would be allowed to benefit from their
disregard of the fiduciary duty they owe to StarNet.
second and third factors evaluated are the
merits of StarNet's substantive claims and the
sufficiency of its complaint. StarNet's breach of
fiduciary duty claim has merit and is sufficiently pled in
StarNet's complaint. The elements to establish a breach
of fiduciary duty are (1) the existence of a fiduciary
relationship; (2) a breach of the duty owed; and (3) damages
proximately caused by the breach. Slovensky v.
Friedman, 142 Cal.App.4th 1518, 1534 (2006). All funds
received by an insurance agent or broker as premiums are
received and held by him in a fiduciary capacity to both the
insured and the insurer. Cal. Ins. Code §§ 1733,
1734; Walter J. Warren Insurance Agency v. Surpur Timber
Co., 250 Cal.App. 2d 99, 104-05 (1967). Section 1734
requires the holder of fiduciary funds to “[r]emit
premiums, less commissions, and return premiums received or
held by him to the insurer or the person entitled
complaint pled facts that defendants were fiduciaries to
StarNet by virtue of their agent and broker relationship with
StarNet (Compl. ¶¶ 14-24). StarNet pled facts that
defendants breached the fiduciary obligations they owed
StarNet (Compl. ¶¶ 25-34), and it provided
declarations appending invoices, emails, and other business
records evidencing the failure to pay and that StarNet was
damaged by defendants' breach (Dkt. Nos. 21-6, 25-1).
also alleges a claim for relief for conversion. “A
[claim for relief] for conversion requires allegations of
plaintiff's ownership or right to possession of property;
defendant's wrongful act toward or disposition of the
property, interfering with plaintiff's possession; and
damage to plaintiff. Money cannot be the subject of a [claim
for relief] for conversion unless there is a specific,
identifiable sum involved, such as where an agent accepts a
sum of money to be paid to another and fails ...