United States District Court, C.D. California
Present: The Honorable CHRISTINA A. SNYDER, J.
CIVIL MINUTES - GENERAL
(IN CHAMBERS) - PLAINTIFF'S MOTION FOR DEFAULT JUDGMENT
AGAINST DEFENDANTS HUNG ERN TOH, BARR CONSULTING AND
HOLDINGS, INC., AND BARR HOLDINGS, LLC. (Dkt. 83, filed May
INTRODUCTION AND BACKGROUND
case concerns an allegedly fraudulent scheme orchestrated by
Hung Ern Toh (“Toh”), wherein Toh convinced
Chinese nationals to invest substantial sums of money in his
entities, Barr Consulting and Holdings, Inc. and Barr
Holdings, LLC (the “Barr entities”), by promising
them that these investments would allow them to obtain
permanent resident status in the United States. Dkt. 15 at
¶ 1. Toh then allegedly misappropriated these funds for
his own use. Id. This scheme has resulted in the
filing of several related cases in this Court.
Fan Yang (“Yang”), a citizen of the People's
Republic of China, entered into a series of contracts with
Toh for immigration services. Dkt. 83-1, Declaration of Fan
Yang (“Yang Decl.”) ¶ 3. Under the
agreements, Toh promised Yang that by investing $250, 000
with the Barr entities, Yang would qualify for an L-1 visa
for travel to and from the United States and would eventually
be able to obtain permanent residence status in the United
States. Id. ¶ 4. Toh also assured Yang that the
$250, 000 investment would be held in an escrow account held
by Beverly Hills Escrow (“BHE”) until his
immigration status was resolved. Id. ¶ 6. Based
on these representations, Yang deposited $250, 000 into
BHE's escrow account. Id. ¶ 3.
BHE distributed Yang's $250, 000 to Toh and the Barr
entities without Yang's authorization. Id.
¶ 10. On or about September 2016, Yang contacted BHE to
inquire about the status of the $250, 000 and received
materially different escrow instructions from BHE than the
ones he had signed. Id. ¶ 12. Yang made several
attempts to contact Toh, but Toh thereafter engaged in delay
tactics and refused to return Yang's $250, 000
investment. Id. ¶ 13.
August 18, 2017, Yang brought this action against defendants
BHE, Toh, and the Barr entities. Dkt. 1. Yang subsequently
filed an amended complaint on October 18, 2017. Dkt. 15
(“FAC”). The gravamen of the complaint is that
defendants misled Yang into believing that, by making an
investment of $250, 000 with defendant Toh and his Barr
entities, Yang would qualify for an L-1 Visa, and would
eventually be able to obtain permanent residence status in
the United States. FAC ¶ 1. Yang alleges claims against
Toh and the Barr entities for: (1) fraud; (2) conversion; (3)
rescission and restitution due to fraud; and (4) violation of
the California Business & Professions Code § 17200
et seq. (“UCL”). Yang alleges claims
against BHE for (1) aiding and abetting; and (2) breach of
for Toh and the Barr entities have since withdrawn from
representation. Dkts. 47, 53. Toh's counsel withdrew on
August 28, 2018, dkt. 47, and the Court allowed the Barr
entities' counsel to withdraw on September 25, 2018, dkt.
53. The Barr entities were ordered to obtain new counsel
within thirty days of the date of that order. Id. On
November 7, 2018, the Court ordered the Barr entities to show
cause in writing no later than December 7, 2018 as to why
their answers should not be stricken and default be entered
against them for failure to retain new counsel. Dkt. 56. The
Court held a status conference on November 26, 2018, which
Toh failed to attend. Dkt. 57. Yang's counsel also
notified the Court that they had been unable to contact Toh.
Id. The Court ordered Toh to show cause in writing
no later than December 14, 2018, as to why his answer should
not be stricken for failure to appear at the Court-ordered
telephone hearing. Id. Toh and the Barr entities
never responded to the Court's orders. On February 6,
2019, Yang filed an ex parte application to strike
Toh and the Barr entities' answers to the complaint. Dkt.
60. The Court granted this request on February 7, 2019 and
ordered the default of Toh and the Barr entities. Dkt. 61.
Pursuant to the Court's order, the Clerk entered default
against Toh and the Barr entities on February 7, 2019. Dkt.
62. On May 14, 2019, Yang filed the instant motion for
default judgment against Toh and the Barr entities on his
claims for fraud, rescission and restitution due to fraud,
conversion, and violation of the UCL. Dkt. 83
(“Mot.”). Yang also filed supporting declarations
and exhibits. Yang served the motion for default
judgment on Toh and the Barr entities and filed proof of
service on May 14, 2019. Dkt. 83-6. Yang's motion is
Court held a hearing on June 17, 2019. Having carefully
considered Yang's motion and supporting exhibits, the
Court finds and concludes as follows.
to Federal Rule of Civil Procedure 55, 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.
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 Beverly Reid
O'Connell & Judge Karen L. Stevenson, California
Practice Guide: Federal Civil Procedure Before Trial ¶
6:11 (The Rutter Group 2017) (citing Pena v. Seguros La
Comercial, S.A., 770 F.2d 811, 814 (9th Cir. 1985)).
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.
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); see also
Elektra, 226 F.R.D. at 392.