United States District Court, E.D. California
FINDINGS AND RECOMMENDATIONS
ALLISON CLAIRE UNITED STATES MAGISTRATE JUDGE
matter is before the court on the motion of third party
plaintiff Envision4 Integrated Technology Inc.
(“Envision”) for the entry of a default judgment
against third party defendants Russell Jackson and Hires
Security, LLC (“Jackson”). ECF No. 29. This
matter is referred to the undersigned pursuant to Local Rule
302(c)(19). A hearing was heard on this motion on April 19,
2017. ECF No. 32. Jackson did not appear at the hearing.
Id. Envision filed supplemental briefing following
the hearing. ECF No. 33. Upon full consideration of the
record, Envision's motion for default is DENIED without
RELEVANT PROCEDURAL AND FACTUAL BACKGROUND
January 24, 2016, Migrant Clinicians Network, Inc.
(“MCN”) filed a Complaint against Rod Place and
Envision 4. ECF No. 1. On August 19, 2016,
Envision filed an Answer to the Complaint,
propounding several affirmative defenses. ECF No. 17. On the
same day, a Third Party Complaint was filed by Envision. ECF
No. 19. In the Third Party Complaint, Envision stated that in
September of 2014, it contracted with MCN to create, develop,
and program a computer database. ECF No. 19 at 3. In October
of 2014, Envision contracted with Jackson for the programming
of this database. Id. Envision alleges that Jackson
improperly communicated directly with MCN, and over a period
of six to nine months sought additional money, above the
contractual agreement, for the completion of work under the
contract. Id. at 4. On or about December 2015,
Envision alleges that Jackson sent the MCN hard drive to
Envision, but demanded an additional $5, 000 before it would
provide Envision with the password to access the drive.
Id. Because Envision does not have the password,
Envision alleges it cannot tell whether the project is
finished or still in progress. Id.
appearing pro se, filed a motion to dismiss the third party
complaint on October 25, 2016. ECF No. 23. By Minute Order,
the District Judge in this matter terminated the motion to
dismiss due to deficiency. ECF No. 24. Since then, Jackson
has not made any appearance. On December 12, 2016, Envision
filed a request for entry of default as to Jackson, which
included proof of service on Russel Jackson and Hires
Security, LLC. ECF No. 25. The clerk entered default as to
both third party defendants on December 13, 2016. ECF No. 26.
On March 2, 2017, Envision filed the pending motion for
default judgment. ECF No. 29. A hearing was held on April 18,
2017; Jackson did not attend the hearing. ECF No. 32. At the
court's request, Envision filed supplemental briefing on
May 2, 2017. ECF No. 33.
Motion for Default Judgement
within the sound discretion of the district court to grant or
deny an application for default judgment. Aldabe v.
Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). The
complaint's well-pleaded factual allegations “are
taken as admitted on a default judgment.” Benny v.
Pipes, 799 F.2d 489, 495 (9th Cir. 1986). Those
well-pleaded factual allegations must be sufficient to
establish plaintiff's entitlement to a judgment under the
applicable law. See Alan Neuman Productions, Inc. v.
Albright, 862 F.2d 1388 (9th Cir. 1988) (reversing
default judgment on Racketeer Influenced and Corrupt
Organizations Act (“RICO”) claim where “the
complaint fails properly to allege a claim for
violation” of RICO); Cripps v. Life Ins. Co. of
North America, 980 F.2d 1261, 1267 (9th Cir. 1992)
(“claims which are legally insufficient, are not
established by default”).
decision to grant or deny an application for default judgment
lies within the district court's sound discretion.
Aldabe, 616 F.2d at 1092. 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.
muti-party case, however, the considerations for entry of
default judgment are more complex. Federal Rule of Civil
Procedure 54(b) provides:
When an action presents more than one claim for
relief-whether as a claim, counterclaim, crossclaim, or
third-party claim-or when multiple parties are involved, the
court may direct entry of a final judgment as to one or more,
but fewer than all, claims or parties only if the court
expressly determines that there is no just reason for delay.
Otherwise, any order or other decision, however designated,
that adjudicates fewer than all the claims or the rights and
liabilities of fewer than all the parties does not end the
action as to any of the claims or parties and may be revised
at any time before the entry of a judgment adjudicating all
the claims and all the parties' rights and liabilities.
See Curtiss-Wright Corp. v. General Elec. Co., 446
U.S. 1, 8 (1980) (noting that the court has discretion to
enter a default judgment as to less than all defendants);
Shanghai Automation Instrument Co., Ltd. v. Kuei,
194 F.Supp.2d 995, 1010 (N.D. Cal. 2001) (“differing
judgments against defendant Tsai and the defaulting
defendants would not necessarily be illogical”).
default against fewer than all defendants might be
appropriate in some cases, the Supreme Court has warned that
“absurdity might follow” in instances where a
court “can lawfully make a final decree against one
defendant . . . while the cause was proceeding undetermined
against the others.” Frow v. De La Vega, 82
U.S. 552, 554 (1872). The Ninth Circuit has summarized the
Frow standard as follows: “[W]here a complaint
alleges that defendants are jointly liable and one of them
defaults, judgment should not be entered against the
defaulting defendant until the matter has been adjudicated
with regard to all defendants.” In re First T.D.
& Investment, 253 F.3d 520, 532 (9th Cir. 2001)
(citing Frow, 82 U.S. at 554). The Ninth Circuit has
also held “that Frow is not limited to claims
asserting joint liability, but extends to certain
circumstances in which the defendants have closely related
defenses or are otherwise similar situated.” United
Fabrics Int'l Inc. v. Life N Style Fashions, Inc.,
2015 U.S. Dist. LEXIS 158140, *3 (C.D. Cal. Nov. 23, 2015)
(citing to In re First T.D. Investment, 253 F.3d at
Envision and Jackson are similarly situated with respect to
their liability to plaintiff MCN, and judgment against
Jackson at this juncture may impact plaintiff MCN's
claims or ability to recover against Envision. MCN does not
allege Envision and Jackson are jointly and severally liable;
however, Envision raises as an affirmative defense that
“the injuries and damages, if any alleged by Plaintiff
were either in whole, negligently or otherwise, caused by
persons or entities, other than these answering Defendants,
and such fact bars any and all liability of these answering
Defendants.” ECF No. 17 at 2. Although Envision argues
in its supplemental brief that there is no just cause for
delay in entering judgment against Jackson, it does not waive
this affirmative defense, and therefore default judgment
against Jackson could conflict with MCN's ability to
fully litigate its claims against Envision. ECF No. 33.
Envision's own supplemental briefing further demonstrates
the problem with default judgment at this juncture: damages
cannot be assessed until Envision receives the password to