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Amur Equipment Finance, Inc. v. CHD Transport, Inc.

United States District Court, E.D. California

November 14, 2017

AMUR EQUIPMENT FINANCE, INC. f/k/a AXIS CAPITAL, INC., Plaintiff,
v.
CHD TRANSPORT INC. d/b/a SINGH TRANSPORTATION and BALVINDER SINGH, Defendants.

          FINDINGS AND RECOMMENDATIONS THAT THE COURT DENY PLAINTIFF'S WRIT OF POSSESSION AS MOOT AND GRANT IN PART AND DENY IN PART PLAINTIFF'S RENEWED MOTION FOR DEFAULT JUDGMENT OBJECTION PERIOD: 21 DAYS (DOC. 22)

          SHEILA K. OBERTO UNITED STATES MAGISTRATE JUDGE

         Before the Court are Plaintiff AMUR Equipment Finance, Inc. f/k/a Axis Capital, Inc.'s Plaintiff's Application for Writ of Possession (Doc. 4) and Plaintiff's Renewed Motion for Default Judgment (Doc. 22). For the reasons provided herein, the undersigned recommends that the presiding district court judge DENY Plaintiff's Application for Writ of Possession as MOOT, and GRANT IN PART and DENY IN PART Plaintiff's Renewed Motion for Default Judgment.

         I. BACKGROUND

         Plaintiff alleges Defendant CHD Transport Inc. d/b/a Singh Transportation (“CHD”) and Defendant Balvinder Singh (“Singh”) (collectively “Defendants”) breached certain equipment finance agreements and related personal guaranties. Plaintiff “is a Nebraska corporation with its principal place of business located . . . [in] Nebraska.” (Doc. 1 (“Compl.”) ¶ 1.) CHD “is, upon information and belief, a California corporation with its principal place of business in Fresno, California.” (Id. ¶ 2.) Singh is “upon information and belief, a California resident residing . . . [in] Fresno, California.” (Id. ¶ 3.)

         A. Background Facts and the Parties' Agreements

         1.The 930282 Finance Agreement and Guaranty

         On August 24, 2015, Plaintiff and CHD entered into an “Equipment Finance Agreement, ” referred to as “Agreement No. 930282” (the “930282 Finance Agreement”), pursuant to which (a) Plaintiff lent funds to CHD, and CHD agreed to repay such lent funds, in accordance with the terms of the 930282 Finance Agreement, and (b) CHD granted Plaintiff a first priority security interest in the equipment purchased with the funds Plaintiff lent pursuant to the 930282 Finance Agreement (collectively, the “930282 Financed Equipment”). (Compl. ¶ 6, Ex. A.) Pursuant to the terms of the 930282 Finance Agreement, CHD is required to make monthly payments to Plaintiff for forty-nine (49) months as follows: (a) one payment in the amount of $7, 399.70 for the first month; and (b) payments in the amount of $1, 712.52 per month for forty-eight (48) months. (Id. ¶ 7, Ex. A.) “In order to induce [Plaintiff] to enter into the 930282 Finance Agreement, ” Singh executed and delivered to Plaintiff a written personal guaranty (the “930282 Singh Guaranty”) agreeing to “unconditionally guarantee . . . the payment and performance . . . of all of the obligations” owed to Plaintiff by CHD under the 930282 Finance Agreement. (Id. ¶ 10, Ex. A.) Plaintiff “accepted the 930282 Singh Guaranty, relied upon the same and, in consideration for the 930282 Singh Guaranty, entered into the 930282 Finance Agreement with CHD.” (Id. ¶ 11.)

         CHD “defaulted in its obligations under the 930282 Finance Agreement by . . . failing to pay the amounts due and owing thereunder when those amounts became due.” (Id. ¶ 12.) As a result of CHD's defaults, and in accordance with the 930282 Finance Agreement, Plaintiff “exercised its right to accelerate and declare immediately due and payable all amounts due under the 930282 Finance Agreement.” (Id. ¶ 13. See also Id. Ex. A.) Plaintiff “demanded that CHD pay all amounts due to [Plaintiff] under the 930282 Finance Agreement, ” yet, despite Plaintiff's “repeated demands, ” CHD has failed to pay the amounts demanded by Plaintiff and due under the 930282 Finance Agreement. (Id. ¶¶ 14-15.) CHD has “further failed to turn over the 930282 Financed Equipment” to Plaintiff. (Id. ¶ 15.) Under the 930282 Finance Agreement, CHD is obligated to pay attorney's fees and costs incurred by Plaintiff in enforcing the 930282 Finance Agreement. (Id. ¶ 17. See also Id. Ex. A.)

         Upon CHD's default under the 930282 Finance Agreement, the 930282 Singh Guaranty “allows [Plaintiff] to proceed against Singh for the amounts due under the 930282 Finance Agreement.” (Id. ¶ 20. See also Id. Ex. A.) Plaintiff “demanded that Singh pay all amounts due to [Plaintiff] under the 930282 Finance Agreement and the 930282 Singh Guaranty, ” yet, despite Plaintiff's demands, Singh has failed to pay the amounts due and owing to Plaintiff under the 930282 Finance Agreement and the 930282 Singh Guaranty. (Id. ¶¶ 21-22.)

         2. The 931428 Finance Agreement and Guaranty

         On December 31, 2015, Plaintiff and CHD entered into another “Equipment Finance Agreement, ” referred to as “Agreement No. 931428” (the “931428 Finance Agreement”), pursuant to which (a) Plaintiff lent funds to CHD, and CHD agreed to repay such lent funds, in accordance with the terms of the 931428 Finance Agreement, and (b) CHD granted Plaintiff a first priority security interest in the equipment purchased with the funds Plaintiff lent pursuant to the 931428 Finance Agreement (collectively, the “931428 Financed Equipment”). (Id. ¶ 25, Ex. C.) Pursuant to the terms of the 931428 Finance Agreement, CHD is required to make monthly payments to Plaintiff for sixty-one (61) months as follows: (a) one payment in the amount of $7, 400.00 for the first month; and (b) payments in the amount of $1, 498.83 per month for sixty (60) months. (Id. ¶ 26, Ex. C.) “In order to induce [Plaintiff] to enter into the 931428 Finance Agreement, ” Singh executed and delivered to Plaintiff a written personal guaranty (the “931428 Singh Guaranty”) agreeing to “unconditionally guarantee . . . the payment and performance . . . of all of the obligations” owed to Plaintiff by CHD under the 931428 Finance Agreement. (Id. ¶ 29, Ex. C.) Plaintiff “accepted the 931428 Singh Guaranty, relied upon the same and, in consideration for the 931428 Singh Guaranty, entered into the 931428 Finance Agreement with CHD.” (Id. ¶ 30.)

         CHD “defaulted in its obligations under the 931428 Finance Agreement by . . . failing to pay the amounts due and owing thereunder when those amounts became due.” (Id. ¶ 31.) As a result of CHD's defaults, and in accordance with the 931428 Finance Agreement, Plaintiff “exercised its right to accelerate and declare immediately due and payable all amounts due under the 931428 Finance Agreement.” (Id. ¶ 32. See also Id. Ex. C.) Plaintiff “demanded that CHD pay all amounts due to [Plaintiff] under the 931428 Finance Agreement, ” yet, despite Plaintiff's “repeated demands, ” CHD has failed to pay the amounts demanded by Plaintiff and due under the 931428 Finance Agreement. (Id. ¶¶ 33-34.) CHD has “further failed to turn over the 931428 Financed Equipment” to Plaintiff. (Id. ¶ 34.) Under the 931428 Finance Agreement, like the 930282 Finance Agreement, CHD is obligated to pay attorney's fees and costs incurred by Plaintiff in enforcing the 931428 Finance Agreement. (Id. ¶ 36. See also Id. Ex. C.)

         Upon CHD's default under the 931428 Finance Agreement, the 931428 Singh Guaranty “allows [Plaintiff] to proceed against Singh for the amounts due under the 931428 Finance Agreement.” (Id. ¶ 39. See also Id. Ex. C.) Plaintiff “demanded that Singh pay all amounts due to [Plaintiff] under the 931428 Finance Agreement and the 931428 Singh Guaranty, ” yet, despite Plaintiff's demands, Singh has failed to pay the amounts due and owing to Plaintiff under the 931428 Finance Agreement and the 931428 Singh Guaranty. (Id. ¶¶ 40-41.)

         3. Amounts Due and Owing

         Following Plaintiff's unanswered demands for payment from Defendants under the 930282 Finance Agreement and the 931428 Finance Agreement (collectively the “Finance Agreements”), and the 930282 Singh Guaranty and the 931428 Singh Guaranty (collectively the “Singh Guaranties”), Plaintiff retained a recovery firm to repossess the 930282 Financed Equipment and the 931428 Financed Equipment (collectively the “Financed Equipment”). (Doc. 22-1, Declaration of Stacie Van Bibber in Support of Plt.'s Renewed Mot. for Default J. (“Van Bibber Decl.”), ¶¶ 36-38.) Plaintiff sold the 930282 Financed Equipment for $4, 000.00 and the 931428 Financed Equipment for $6, 000.00, and applied the sale proceeds toward the amounts due and owing from Defendants. (Id. ¶¶ 38-39.)

         As of July 31, 2017, Plaintiff alleges it has been damaged, taking into account the net sales proceeds of the 930282 Financed Equipment, in the amount of $65, 268.93, in addition to (a) all costs and attorney's fees incurred and to be incurred by Plaintiff in connection with the enforcement of its remedies under the 930282 Finance Agreement (including all pre-judgment and post-judgment attorney's fees and costs), and (b) post-judgment interest at the applicable rate. (Id. ¶ 40.) Plaintiff alleges further that under the 931428 Finance Agreement, taking into account the net sales proceeds of the 931428 Financed Equipment, it is owed $78, 506.57 as of July 31, 2017, in addition to (a) all costs and attorney's fees incurred and to be incurred by Plaintiff in connection with the enforcement of its remedies under the 931428 Finance Agreement (including all pre-judgment and post-judgment attorney's fees and costs), and (b) post-judgment interest at the applicable rate. (Id. ¶ 41.)

         B. Procedural History

         Plaintiff filed its Complaint in this Court on March 22, 2017. (Compl.) The Complaint includes claims against CHD for breaches of the Finance Agreements, and claims against Singh for breaches of the Singh Guaranties. (See Id. ¶¶ 43-56.) The Complaint also alleges claims against CHD for “claim and delivery” of the 931428 Financed Equipment and the 930282 Financed Equipment. (See Id. ¶¶ 57-62.) The Complaint includes requests for (1) the amounts due and owing under the Finance Agreements and the Singh Guaranties; (2) pre-judgment and post-judgment attorney's fees and costs; (3) post-judgment interest at the applicable rate; (4) “all other amounts” due Plaintiff under the agreements; and (5) judgment against CHD for possession of the 931428 Financed Equipment and the 930282 Financed Equipment.

         Plaintiff effectuated service of the Complaint on Defendants on May 13, 2017. (See Docs. 8, 10.) To date, no Defendant has filed a response to the Complaint. On July 31, 2017, Plaintiff filed its original Motion for Default Judgment without having first having obtained entry of default against Defendants, which was denied without prejudice. (See Docs. 14, 16.) Plaintiff filed a Request for Entry of Default against all Defendants on August 9, 2017. (Doc. 17.) The Clerk entered default against all Defendants on August 10, 2017. (Docs. 18, 19.)

         On August 23, 2017, Plaintiff filed its Renewed Motion for Default Judgment, requesting default judgment against Defendants. (Doc. 22.) To date, no Defendant has filed a response to this motion. In an order entered on October 2, 2017, the undersigned found that Plaintiff's Renewed Motion for Default Judgment was “suitable for decision without oral argument” and vacated the hearing regarding this motion. (Doc. 29.) As such, Plaintiff's Motion for Default Judgment is fully briefed and ready for disposition.[1]

         II. APPLICATION FOR WRIT OF POSSESSION

         On March 27, 2017, Plaintiff filed an Application for Writ of Possession seeking “immediate possession” of the Financed Equipment so Plaintiff “can dispose of same” in accordance with the Finance Agreements (the “Application”). (Doc. 4.)

         In support of its Renewed Motion for Default Judgment, Plaintiff filed the declaration of Stacie Van Bibber, a Collections Analyst for Plaintiff. (Doc. 22-1.) In her declaration, Ms. Van Bibber states that Plaintiff's retained recovery firm “repossessed the Financed Equipment and sold the 930282 Financed Equipment for $4, 000.00 and the 931428 Financed Equipment for $6, 000.00.” (Van Bibber Decl. ¶ 38.) Accordingly, the undersigned recommends that the Application be DENIED as MOOT.[2]

         III. RENEWED MOTION FOR DEFAULT JUDGMENT

         The undersigned now turns to the merits of Plaintiff's Renewed Motion for Default Judgment. (Doc. 22.) For the reasons provided below, the undersigned finds that Plaintiff's request for default judgment has merit.

         A. Legal Standard

         Federal Rule of Civil Procedure 55(b) permits a court-ordered default judgment following the entry of default by the clerk of the court under Rule 55(a). See Fed. R. Civ. P. 55(b)(2). “[D]efault does not entitle the non-defaulting party to a default judgment as a matter of right . . . .” Dreith v. Nu Image, Inc., 648 F.3d 779, 785 (9th Cir. 2011). Rather, “[t]he district court's decision whether to enter a default judgment is a discretionary one.” Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980) (citations omitted).

         In Eitel v. McCool, the Ninth Circuit identified seven “[f]actors which may be considered by courts in exercising discretion as to the entry of a default judgment, ” 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 the default was due to excusable neglect, ” and (7) “the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits.” 782 F.2d 1470, 1471-72 (9th Cir. 1986). The “general rule” is “that default judgments are ordinarily disfavored.” Id. at 1472. Nonetheless, in applying the Eitel “discretionary standard, default judgments are more often granted than denied.” Philip Morris USA, Inc. v. Castworld Prods., Inc., 219 F.R.D. 494, 498 (C.D. Cal. 2003) (quoting PepsiCo v. Triunfo-Mex, Inc., 189 F.R.D. 431, 432 (C.D. Cal. 1999)).

         “The general rule of law is that upon default the factual allegations of the complaint, except those relating to the amount of damages, will be taken as true.” TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987) (quoting Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977)); see also Cripps v. Life Ins. Co. of N. Am., 980 F.2d 1261, 1267 (9th Cir. 1992) (“In reviewing a default judgment, [the] court must take the well-pleaded factual allegations of [the complaint] as true.” (citing Benny v. Pipes, 799 F.2d 489, 495 (9th Cir. 1986))). “However, a defendant is not held to admit facts that are not well-pleaded or to admit conclusions of law.” DIRECTV, Inc. v. Hoa Huynh, 503 F.3d 847, 854 (9th Cir. 2007) (citation omitted). Further, “necessary facts not contained in the pleadings, and claims which are legally insufficient, are not established by default.” Id. (citing Danning v. Lavine, 572 F.2d 1386, 1388 (9th Cir. 1978)).

         The undersigned shall address each of the Eitel factors, in turn. For the reasons that follow, the undersigned finds that these factors weigh in favor of the entry of default judgment against Defendants.

         B. The Possibility of Prejudice to Plaintiff

         “The first Eitel factor considers whether the plaintiff would suffer prejudice if default judgment is not entered, and such potential prejudice to the plaintiff militates in favor of granting a default judgment.” Joe Hand Promotions, Inc. v. Dhillon, No. 2:15-cv-1108-MCE-KJN, 2015 WL 7572076, at *2 (E.D. Cal. Nov. 25, 2015). In the present matter, Defendants failed to answer the Complaint, thereby stalling this litigation and potentially prejudicing Plaintiff by leaving it with no recourse to recover the loss Plaintiff alleges was caused by Defendants' actions. The undersigned therefore finds that the first Eitel factor weighs in favor of the entry of default judgment. See, e.g., Otter Prods. LLC v. Ace Colors Fashion, Inc., No. 2:14-cv-00141- ODW(PJWx), 2014 WL 4187947, at *3 (C.D. Cal. Aug. 21, ...


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