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Board of Trustees of Southern California Local 831 Employer Health Fund v. Show Ready, LLC

United States District Court, C.D. California

July 10, 2017

BOARD OF TRUSTEES OF THE SOUTHERN CALIFORNIA LOCAL 831 EMPLOYER HEALTH FUND; BOARD OF TRUSTEES OF THE EMPLOYER PENSION FUND; and BOARD OF TRUSTEES OF THE EMPLOYER TRAINING AND RE-TRAINING FUND, Plaintiffs,
v.
SHOW READY, LLC; DOUGLAS MURPHY, an individual; and DOES 1-10, inclusive, Defendants.

          ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS' MOTION FOR DEFAULT JUDGMENT [24]

          OTIS D. WRIGHT, II UNITED STATES DISTRICT JUDGE

         I. INTRODUCTION

         Plaintiffs Board of Trustees of the Southern California Local 831 Employer Health Fund, the Board of Trustees of the Employer Pension Fund, and the Board of Trustees of the Employer Training and the Re-Training Fund (collectively the “Trust Funds”), brought suit against Defendants Show Ready, LLC (“Show Ready”) and Douglas Murphy (“Murphy”), the President of Show Ready, LLC, for delinquent contributions required by the collecting bargaining agreements (“CBAs”) entered into between Show Ready and the Tradeshow and Sign Crafts Union Local Union 831 (“Local 831”). The Trust Funds filed this suit against Defendants on November 18, 2016. Neither Defendant responded to the Complaint. On February 7, 2017, the Clerk entered a default against both Defendants. The Trust Funds now move for entry of a default judgment against both Defendants. For the reasons discussed below, the Court GRANTS the Motion as to Show Ready but DENIES the Motion as to Murphy. (ECF No. 24.)[1]

         II. FACTUAL BACKGROUND

         Show Ready and Local 831 entered into CBAs covering the periods of September 1, 2002, to August 31, 2005; September 1, 2005, to August 31, 2008; September 1, 2008, to August 31, 2011; September 1, 2011, to August 31, 2014; and September 1, 2014, to August 31, 2017. (Compl. ¶ 9, ECF No. 1.) Under the CBAs, Show Ready was required to send monthly reports and to pay employee benefit plan contributions to the Trust Funds. (Id. ¶ 10.)

         On December 1, 2011, the Trust Funds' auditing firm, Alsweet Associates, audited Show Ready's records from August 1, 2008, to August 31, 2011. (Compl. ¶ 13.) The audit revealed that Show Ready underpaid health and welfare contributions in the amount of $13, 108.95 for that period. (Id.; see also Armstrong Decl. ¶ 5, ECF No. 28.) On July 25, 2013, Alsweet Associates performed a second audit of Show Ready's records for the period of August 1, 2011, to June 28, 2013, which indicated that Show Ready underpaid additional health and welfare contributions in the amount of $20, 340.71. (Compl. ¶ 14; see also Armstrong Decl. ¶ 6.) In March 2015, Alsweet Associates sent two letters to Show Ready, which indicated the amount the company owed to the Trust Funds for each audited period. In the letters, Alsweet Associates requested that Show Ready mail the overdue payments to the Trust Fund or, in the alternative, notify the firm of any disagreements with the audit results within ten days from the date of the letters. (Armstrong Decl. ¶¶ 2, 7, Ex. B, ECF Nos. 25, 28.) Defendants, however, refused to pay the above amounts. (Compl. ¶ 16.) Show Ready has not been audited for the months after June 2013, but the Trust Funds contend that Show Ready has also underpaid contributions for the period of June 2013 to October 2015. (Compl. ¶ 15; see also Moreno Decl. ¶ 8, ECF No. 27.)

         On November 18, 2016, the Trust Funds filed a complaint against both Defendants requesting payment of the underpaid contributions, interest, liquidated damages, audit expenses, and reasonable attorneys' fees and costs. (ECF No. 1.) The Trust Funds served the Complaint on Show Ready on January 11, 2017, and on Murphy on November 28, 2016. (ECF Nos. 9, 10.) Neither Defendant filed a timely response to the Complaint. Fed.R.Civ.P. 12(a)(1)(A)(i). On February 6, 2017, the Trust Funds requested that the Clerk enters a default against both Defendants. (ECF No. 16.) The Clerk entered a default on February 7, 2017. (ECF No. 17.) On February 16, 2017, the Trust Funds filed this instant Motion for Default Judgment with the Court. (ECF No. 24).

         III. LEGAL STANDARD

         Federal Rule of Civil Procedure 55(b) authorizes a district court to grant a default judgment after the Clerk enters a default under Rule 55(a). Fed.R.Civ.P. 55(b). 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 and 55-2. Fed.R.Civ.P. 54(c), 55; C.D. Cal. L.R. 55-1, 55-2. Local Rule 55-1 requires that the movant submit a declaration establishing (a) when and against which party default was entered; (b) identification of the pleading to which default was entered; (c) whether the defaulting party is a minor, incompetent person, or active service member; and (d) that the Servicemembers Civil Relief Act, 50 U.S.C. § 3931, does not apply; and that (e) the defaulting party was properly served with notice, if required under Rule 55(b)(2). C.D. Cal. L.R. 55-1. Finally, if the plaintiff seeks unliquidated damages, Local Rule 55-2 requires the plaintiff to give notice to the defaulting party of the amount sought. C.D. Cal. L.R. 55-2; Unliquidated Damages, Black's Law Dictionary (10th ed. 2014) (defining “unliquidated damages” as “[d]amages that cannot be determined by a fixed formula”).

         If these procedural requirements are satisfied, a district court has discretion to enter default judgment. Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). In exercising its discretion, a court must consider several factors, including: (1) the possibility of prejudice to a plaintiff; (2) the merits of plaintiff's substantive claims; (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). Upon entry of default, the defendant's liability generally is conclusively established, and the well-pleaded factual allegations in the complaint are accepted as true. Televideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-19 (9th Cir. 1987) (per curiam) (citing Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977)).

         IV. DISCUSSION

         A. Procedural Requirements

         The Court finds that the Trust Funds have complied with the relevant procedural requirements for the entry of a default judgment as to Show Ready but not as to Murphy. Counsel submits a declaration attesting that: (a) the Clerk entered a default against both Defendants on February 7, 2017;(b) the default was entered on the original Complaint filed by the Trust Funds on November 18, 2016; (c) Show Ready is not an infant or competent person; (d) Show Ready is not covered under the Servicemembers Civil Relief Act; and (e) the Trust Funds served both Defendants with notice of this Motion. (Ancheta Decl. ¶¶ 2-4, ECF No. 26.) The declaration fails to address Local Rule 55-1(c) and (d) with respect to Murphy. Thus, while the Trust Funds have complied with the procedural requirements for entry of default as to Show Ready, it has not done so as to Murphy. This alone warrants denial of the Motion as to Murphy.

         B. Eitel Factors

         The Court finds that the Eitel factors weigh in favor of entering a default judgment. The Court will discuss each factor in turn.

         1. Plaintiffs Would ...


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