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Long v. Toh

United States District Court, C.D. California

June 28, 2019


          Present: The Honorable CHRISTINA A. SNYDER Judge.




         This case concerns an allegedly fraudulent scheme orchestrated by Hung Ern Toh (“Toh”), wherein Toh convinced non-English speaking residents of the People's Republic of China to invest substantial sums of money in his entities, Barr Consulting and Holdings, Inc. and Barr Holdings, LLC (the “Barr defendants” or “Barr entities”), by promising them that these investments would allow them to obtain permanent resident status in the United States. Dkt. 1 (“Compl.”) ¶ 2. Toh and his co-defendants then allegedly misappropriated these funds. Id. ¶¶ 2-4. This scheme has resulted in the filings of several related cases in this Court.

         Plaintiff Yongxin Long (“Long”), a resident of the People's Republic of China, entered into a series of contracts with Toh for immigration services. Id. ¶¶ 24-32. Under the agreements, Toh promised Long that by investing in the Barr entities, Long 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. ¶ 5. Toh also assured Long that the investment would be held in attorney John Bradford Flecke's (“Flecke”) client service account until her immigration status was resolved. Id. ¶ 7. Based on these representations, Long wired $300, 000 into Flecke's client service account and incurred $75, 977 in related fees. Id. ¶¶ 20, 27-28.

         Thereafter, Long discovered Flecke's unauthorized disbursement of her investment to the Barr defendants. Id. ¶¶ 4, 56-58. Upon learning that her L-1 visa application was denied, Long demanded that defendants return her money. However, Toh engaged in delay tactics and refused to return Long's investment. Id. ¶ 4.

         On November 30, 2017, Long brought this action against defendants Flecke, [1] Toh, and the Barr defendants. In brief, Long alleges that she and the defendants entered into a series of contracts that contained false promises intended to entice Long into investing money in Toh's businesses, the Barr entities, as part of a fraudulent immigration scheme. Id. ¶¶ 1-2. Long asserts the following causes of action: (1) fraud; (2) fraud based on conspiracy; (3) conversion; (4) rescission and restitution due to fraud; (5) breach of written contract; (6) breach of fiduciary duty; (7) violation of the California Business & Professions Code § 17200 et seq.; and (8) violation of the California Business & Professions Code § 6148.

         Counsel for Toh and the Barr defendants have since withdrawn from representation. Dkts. 68, 74. Toh's counsel withdrew on September 10, 2018, dkt. 68, and the Court allowed the Barr defendants' counsel to withdraw on October 11, 2018, dkt. 74. The Barr defendants were ordered to obtain new counsel within thirty days of their counsel's withdrawal. Id. On November 19, 2018, the Court ordered Toh and the Barr defendants to show cause in writing no later than December 20, 2018 as to why their answers should not be stricken and default be entered against them for failure to retain new counsel. Dkt. 79. The defendants failed to respond to the Court's order. On January 3, 2019, Toh and the Barr defendants failed to appear or otherwise participate in a status conference held by the Court, and the Court ordered Long's counsel to move for entry of default against the defendants. Dkt. 80. Pursuant to the Court's order, Long filed a Request for Entry of Default against Toh and the Barr defendants on January 16, 2019. Dkts. 80-81. The Clerk entered default on January 18, 2019. Dkt. 83. On March 26, 2019, Long filed the instant motion for entry of default judgment against Toh and the Barr defendants on her claims for fraud and breach of contract. Dkt. 95 (“Mot.”). Long now requests that this Court grant her motion for default judgment in the amount of $375, 977.00, plus the legal rate of interest. Id. at 18, 20. Long served the motion for default judgment on defendants and filed proof of service on March 26, 2019. Dkt. 95-3. Long's motion is unopposed.

         The Court held a hearing on April 29, 2019. Having carefully considered Long's motion and supporting documents, the Court finds and concludes as follows.


         Pursuant 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.

         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 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. 2005).

         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); see also Elektra, 226 F.R.D. at 392.

         IV. ...

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