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Bekins v. Zheleznyak

United States District Court, C.D. California

March 5, 2018

TIM BEKINS, ET AL.
v.
DMITRY ZHELEZNYAK, ET AL.

          Attorneys Present for Plaintiffs: Tim Bekins, Pro Se.

          Tami Donald, Pro Se.

          Present: The Honorable CHRISTINA A. SNYDER.

          CIVIL MINUTES - GENERALO' JS-6

         PROCEEDINGS: PLAINTIFFS' MOTION FOR DEFAULT JUDGMENT AGAINST DMITRY ZHELEZNYAK AND AKVINTA USA, INC. (DKT. 133, FILED JANUARY 30, 2018)

         I. INTRODUCTION & BACKGROUND

         On June 12, 2015, plaintiffs Tim Bekins (“Bekins”), Tami Donald (“Donald”) and Reba Barber-Money (“Barber”), proceeding pro se, initiated this action against defendants Dmitry Zheleznyak (“Zheleznyak”), Jeff Becker (“Becker”), Kristina Bucic (“Bucic”), and Pavel Ryabov (“Ryabov”). Dkt. 1. In brief, plaintiffs allege that they were California-based sales representatives of Akvinta USA, Inc. (“Akvinta”), a vodka distributor, but were not paid their salaries or reimbursed for their expenses between November 2013 and May 2015. Plaintiffs also allege that Zheleznyak and Becker are the alter egos of Akvinta.

         On October 9, 2015, plaintiffs filed a First Amended Complaint (“FAC”) dismissing Ryabov as a defendant. Dkt. 11. On November 2, 2015, the remaining defendants moved to dismiss on several grounds, including that the FAC failed to name a necessary party, Akvinta. Dkt. 15. On January 11, 2016 the Court granted the motion but allowed plaintiffs leave to amend. Dkt. 29. On January 14, 2016 plaintiffs filed the operative Second Amended Complaint (“SAC”) against Zheleznyak, Becker, and Akvinta. Dkt. 31. The SAC asserts claims for (1) breach of contract; (2) fraud; (3) deceit; (4) misrepresentation; (5) negligent misrepresentation; (6) breach of the implied covenant of good faith and fair dealing; (7) money had and received; (8) violation of California's Unfair Competition Law, Cal. Bus. & Prof. Code §§ 17200, et seq.; and (9) violation of the federal Fair Labor Standards Act (“FLSA”). Id.

         On February 1, 2016, defendants filed a motion to dismiss plaintiffs' claims and to strike the SAC's alter ego allegations pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Dkt. 34. On March 21, 2016, the Court granted the motion in part and denied it in part. Dkt. 44. Relevant here, the Court denied defendants' motion to strike the alter ego allegations, finding that plaintiffs sufficiently alleged facts demonstrating (1) a unity of interest between Zheleznyak, Becker and Akvinta; (2) that piercing the corporate veil is necessary to avoid an inequitable result. Id. at 5-8. In addition, the Court denied defendants' motion to dismiss the breach of contract claim, finding that plaintiffs sufficiently pleaded they had an oral agreement with Akvinta to serve as sales representatives in California. Id. at 8-9. Finally, the Court denied the motion to dismiss plaintiffs' fraud-based claims, finding that the SAC alleged sufficient facts to satisfy Rule 9(b)'s heightened pleading standing. Id. at 15. On May 4, 2016, Becker filed an amended answer and asserted cross-claims against Zheleznyak and Akvinta. Dkt. 56.

         On September 27, 2017, counsel for Zheleznyak and Akvinta filed a motion requesting to withdraw from the representation. Dkt. 107. On October 5, 2017, the Court granted the motion and ordered Akvinta to retain new counsel. Dkt. 109. On December 11, 2017, the Court held a status conference but no appearance was made by Zheleznyak or Akvinta nor on their behalf. The Court ordered Zheleznyak to show cause why his answer should not be stricken and default be entered against him for not appearing at a court-ordered hearing. The Court also ordered Akvinta to show cause why its answer and counterclaim should not be stricken and default be entered against it for not retaining new counsel nor having counsel appear the hearing. Dkt. 123. Zheleznyak and Akvinta failed to respond to the Court's order to show cause.

         On January 16, 2018, the Court struck Zheleznyak's answer and Akvinta's answer and counterclaim, entered default against both defendants pursuant to Rule 55(a) of the Federal Rules of Civil Procedure, and directed plaintiffs to file an application for entry of default judgment against Zheleznyak and Akvinta. Dkt. 129. On January 22, 2018, the Court held a pretrial conference at which counsel for plaintiffs and Becker informed the Court that they had reached a settlement. Dkt. 132. On January 30, 2018, plaintiffs Bekins and Donald filed the instant motion requesting the entry of default judgment against Zheleznyak and Akvinta. Dkt. 133 (“Mot.”). Having carefully considered plaintiffs' motion and supporting declarations, the Court finds and concludes as follows.

         III. LEGAL STANDARD

         Pursuant to Rule 55 of the Federal Rules of Civil Procedure, when a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, and the plaintiff does not seek a sum certain, the plaintiff must apply to the court for a default judgment. Fed.R.Civ.P. 55. As a general rule, cases should be decided on the merits as opposed to by default, and, therefore, “any doubts as to the propriety of a default are usually resolved against the party seeking a default judgment.” Judge William W. Schwarzer et al., California Practice Guide: Federal Civil Procedure Before Trial ¶ 6:11 (The Rutter Group 2015) (citing Pena v. Seguros La Comercial, S.A., 770 F.2d 811, 814 (9th Cir. 1985)).

         The Ninth Circuit has directed that courts consider the following factors in deciding whether to enter default judgment: (1) the possibility of prejudice to plaintiff, (2) the merits of plaintiff's substantive claims, (3) the sufficiency of the complaint, (4) the sum of money at stake in the action, (5) the possibility of a dispute concerning the material facts, (6) whether defendant's default was the product of excusable neglect, and (7) the strong policy favoring decisions on the merits. See Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). Granting or denying a motion for default judgment is a matter within the court's discretion. Elektra Entm't Grp. Inc. v. Crawford, 226 F.R.D. 388, 392 (C.D. Cal. 2005).

         III. ...


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