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Ascentium Capital, LLC v. Aero Transport, Inc.

United States District Court, E.D. California

May 12, 2017

ASCENTIUM CAPITAL, LLC, Plaintiff,
v.
AERO TRANSPORT, INC. and RANJIT DHALIWAL, Defendant.

          FINDINGS AND RECOMMENDATIONS GRANTING PLAINTIFF'S MOTION FOR DEFAULT JUDGMENT

          BARBARA A. MCAULIFFE UNITED STATES MAGISTRATE JUDGE.

         On February 8, 2017, Plaintiff Ascentium Capital, LLC (“Plaintiff”) filed a motion for default judgment against Defendants Aero Transport, Inc. and Ranjit Dhaliwal (“Defendants”). No opposition to Plaintiff's motion was filed. The motion was referred to this Court pursuant to 28 U.S.C. § 636(b)(1)(B) and Local Rule 302. The Court deemed the matter suitable for decision without oral argument pursuant to Local Rule 230(g), and vacated the hearing scheduled for March 17, 2017. (Doc. 13). Having considered the moving papers and the Court's file, the Court RECOMMENDS that Plaintiff's motion for default judgment be GRANTED.

         I. BACKGROUND

         According to the Complaint, Plaintiff alleges that on April 23, 2015, Defendants agreed to purchase a 2016 Kenworth Model T680 vehicle together with an extended warranty (“Vehicle”). Plaintiff's Complaint at ¶ 9, Doc. 1. By executing the Finance Agreement and a Guaranty, Plaintiff loaned money to Defendants to purchase the Vehicle and Defendants agreed to repay the loan by making 60 monthly payments of $3, 056.41. See Declaration of Jerry Noon (“Noon Decl.”), Exh. 1, (Doc.11 at 9-11).

         Despite Plaintiff's performance under the contract, Defendants failed to make the payments as promised after March 2016. Noon Decl. ¶ 12. Though Plaintiff demanded repayment, Defendants have failed to comply. Id. Thus, Defendants owe Plaintiff the entire unpaid balance of $145, 015.82 plus interest and late payment charges. Id. In addition to repayment of the loans, Plaintiff seeks to recover possession of the Vehicle based upon a lien it placed on the Vehicle in connection with the Finance Agreement. Noon Decl. Ex. 1 at pg. 9-10. Despite demanding that Defendants turn over the Vehicle, they have failed to do so. Noon Decl. ¶ 20. Under the Finance Agreement, Plaintiff is entitled to liquidate the Vehicle in a commercially reasonable manner and credit the judgment with all sums received from the sale. Id.

         In order to recover the payments and possession of the Vehicle, Plaintiff filed the underlying action on October 16, 2016. (Doc. 11). On November 19, 2016, Plaintiff served a copy of the summons and complaint on Defendants by personally serving the documents on Defendant Ranjit Dhaliwal, as an individual, and as the registered agent for Defendant Aero Transport, Inc., at 4482 West Michigan Avenue, Fresno, California. (Proof of Service, Docs. 4, 5). Defendants did not respond to the complaint, and on January 7, 2017, Plaintiff filed a request for entry of default. (Doc. 6). That same day, the Clerk of the Court entered default against Defendants. (Docs. 7, 8). Plaintiff's instant motion for default judgment against Defendants followed. (Doc. 11).

         II. LEGAL STANDARD

         Pursuant to Federal Rule of Civil Procedure 55(b)(2), a plaintiff can apply to the court for a default judgment against a defendant that has failed to plead or otherwise defend against the action. Fed.R.Civ.P. 55(b)(2). “Upon default, the well-pleaded allegations of a complaint relating to liability are taken as true.” Dundee Cement Co. v. Howard Pipe & Concrete Products, Inc., 722 F.2d 1319, 1323 (7th Cir. 1983); TeleVideo Systems, Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987). Thus, “[a]t the time of entry of default, the facts alleged by the plaintiff in the complaint are deemed admitted.” 10 J. Moore, Moore's Federal Practice § 55.11 (3d ed. 2000).

         Factors which may be considered by courts in exercising discretion as to the entry of a default judgment include: (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. PepsiCo, Inc. v. Cal. Security Cans, 238 F.Supp.2d 1172, 1176 (C.D. Cal. 2002); Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986).

         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)).

         III. ANALYSIS

         Applying the factors articulated by the Ninth Circuit in Eitel, the Court finds the factors weigh in favor of granting Plaintiff's motion for default judgment.

         A. Possibility of Prejudice to Plaintiff

         The first factor considers whether the plaintiff would suffer prejudice if default judgment is not entered. See Pepsico, Inc., 238 F.Supp.2d at 1177. Generally, where default has been entered against a defendant, a plaintiff has no other means by which to recover damages. Id.; Moroccanoil, Inc. v. Allstate Beauty Prods., 847 F.Supp.2d 1197, 1200-01 (C.D. Cal. 2012). Therefore, the Court finds Plaintiff would be prejudiced if default judgment is not granted.

         B. Merits of the Plaintiff's claims and the Sufficiency of the Complaint

         The second and third Eitel factors, taken together, “require that [the] plaintiff[s] state a claim on which [they] may recover.” Pepsico, Inc., 238 F.Supp.2d at 1175. Notably a “defendant is not held to admit facts that are not well-pleaded or to admit conclusions of law.” DIRECTV, Inc. v. Huynh, 503 F.3d 847, 854 (9th Cir.2007).

         1. Breach of contract

         To demonstrate a breach of contract claim, Plaintiff must prove the existence of a contract, breach, damages, and that Plaintiff performed under the contract. Oasis West Realty, LLC v. Goldman, 51 Cal.4th 811, 821 (2011). Via the Complaint, Plaintiff has pleaded the existence of a contract with the Defendants by attaching the executed Finance Agreement and Commencement Agreement. (Doc. 1 at 9- 16). Plaintiff additionally alleges that while Plaintiff performed under the contract, Aero Transport, Inc. failed to make payments on the contract. Id. Finally, Plaintiff has alleged it suffered losses of $145, 015.82 plus interest and late charges in the amount of $1, 833.84 under the contract. Thus, Plaintiff has established the elements for breach of contract.

         2. Breac ...


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