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. 73, 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 Holdings, LLC and Barr Consulting and
Holdings, Inc. (the “Barr defendants”), by
promising them that these investments would allow them to
obtain permanent resident status in the United States. Dkt. 1
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.
Liping Zhang (“Zhang”), a citizen of the
People's Republic of China, entered into a series of
contracts with Toh for immigration services. Dkt. 73-1,
Declaration of Liping Zhang (“Zhang Decl.”)
¶¶ 1, 3. Under the agreements, Toh promised Zhang
that by investing $250, 000 with the Barr defendants, Zhang
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 Zhang that the $250, 000
investment would be held in an escrow account held by Beverly
Hills Escrow (“BHE”) until her immigration status
was resolved. Id. ¶ 5. Based on these
representations, Zhang deposited $250, 000 into BHE.
Id. ¶ 9. Shortly after Zhang made the deposit,
BHE distributed her money to the Barr defendants without her
authorization. Compl. ¶ 23; Zhang Decl. ¶ 10.
the year that followed, Zhang became concerned about
Toh's failure to update her about her immigration status.
Id. ¶ 11. Zhang contacted BHE to inquire as to
the status of her funds, and BHE provided her with escrow
instructions that are materially different than those she had
signed in August of 2015. Id. ¶ 11. Zhang
became concerned and made several attempts to contact Toh
regarding the status of her immigration application and the
$250, 000 that she had invested, but Toh did not respond to
her requests. Id. ¶ 12. On or about November
2016, Zhang engaged a lawyer to send a demand letter to Toh.
Id. ¶ 13. On December 7, 2016, Toh responded to
Zhang's attorney, claiming that Zhang's “L-1A
petition has been approved and [she had] been well informed
of [her] ¶ 1A approval and development of [her]
business.” Id. On December 19, 2016,
Zhang's attorney sent Toh another letter that included an
authorization signed by Zhang to release her information and
a request that Toh provide specific information concerning
her investment and information relating to her visa
application. Id. ¶ 14. Toh did not respond to
this letter and over the next year failed to meaningfully
respond in any way to any of Zhang's repeated attempts to
contact him. Id.
October 23, 2017, plaintiff Zhang brought this action against
Toh, the Barr defendants, and BHE. Dkt. 1
(“Compl.”). The gravamen of the complaint is that
defendants misled plaintiff into believing that by making an
investment of $250, 000 with defendant Toh and the Barr
defendants, Zhang would qualify for an L-1 Visa and would
eventually be able to obtain permanent residence status in
the United States. Compl. ¶ 1. Zhang alleges claims
against Toh and the Barr defendants 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”). Zhang
alleges claims against BHE for (1) aiding and abetting fraud;
and (2) breach of fiduciary duty.
for Toh and the Barr defendants have since withdrawn from
representation. Dkts. 39, 43. Toh's counsel withdrew on
August 28, 2018, dkt. 39, and the Court allowed the Barr
defendants' counsel to withdraw on September 25, 2018,
dkt. 43. The Barr defendants 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
defendants 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. 46. The Barr defendants never responded to the
Court's order to show cause. The Court held a status
conference on December 17, 2018, which Toh and the Barr
defendants failed to attend. Dkt. 47. Zhang's counsel
also notified the Court that they had been unable to contact
Toh. Id. The Court ordered the Barr defendants'
answers stricken and ordered Toh to show cause in writing no
later than January 7, 2019 as to why his answer should not be
stricken for failure to appear at the Court-ordered hearing.
Id. Toh never responded to the Court's order to
show cause. On February 6, 2019, Zhang filed an application
for an order striking Toh's answer and entering default
judgment against Toh and the Barr defendants. Dkt. 48. The
Court granted this application on February 7, 2019. Dkt. 49.
Pursuant to the Court's order, the Clerk entered default
against Toh and the Barr defendants on February 7, 2019. Dkt.
14, 2019, Zhang filed the instant motion for default judgment
against Toh and the Barr defendants on her claims for fraud,
conversion, rescission and restitution due to fraud, and
violation of the UCL. Dkt. 73 (“Mot.”). Zhang
also filed supporting declarations and
exhibits. Zhang served the motion for default
judgment on defendants and filed proof of service on May 14,
2019. Dkt. 73-6. Zhang's motion is unopposed.
Court held a hearing on June 17, 2019. Having carefully
considered Zhang'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 ...