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Xifin, Inc. v. Prestige Worldwide Leasing

United States District Court, S.D. California

September 17, 2019

XIFIN, INC., a California Corporation, Plaintiff,
v.
Prestige Worldwide Leasing, a Louisiana limited liability company Defendants.

          ORDER

          Hon. William Q. Hayes, United States District Court

         The matters before the Court are the Motion for Default Judgment (ECF No. 11) filed by Plaintiff XIFIN, Inc. (Xifin) against Defendant Prestige Worldwide Leasing, a Louisiana limited liability company (Prestige), and the Motion to File Documents Under Seal filed by Plaintiff Xifin (ECF No. 9).

         Background

         Plaintiff is a healthcare information technology company that provides its clients with cloud-based billing services. (ECF No. 1 at 3). Defendant is a healthcare diagnosis service provider organized under the laws of the State of Louisiana with its principal place of business in Louisiana. (ECF No. 1 at 2–3).

         On June 23, 2014, Plaintiff entered into a written Systems and Services Agreement (Contract). (ECF No. 1 at 3). Pursuant to the Contract, Plaintiff implemented a revenue performance management system for Defendant and provided Defendant with access to Defendant’s System Environment. (ECF No. 1 at 4). Beginning in May 2016, Defendant became delinquent in paying service fees due under the Contract. (Tammy Lawrence Decl., ECF No. 11-3 ¶ 10). On June 1, 2016, Plaintiff informed Defendant’s Chief Information Officer (CIO) of the past due amounts. Id. ¶ 11. After June 1, 2016, Plaintiff informed Defendant’s CIO and Chief Executive Officer (CEO) on several occasions regarding its delinquent account by email and teleconference. Id. ¶ 12. Prestige did not dispute the amount of service fees owed. Id. ¶ 13. From November 1, 2014 through September 30, 2017, Plaintiff continued to provide Defendant with services and access, despite Defendant’s failure to pay amounts owed and accruing. Id. ¶ 14. On June 26, 2017, Plaintiff provided notice of non-renewal of the Contract. Id. ¶ 15. Until September 30, 2017, Plaintiff continued to provide Defendant with services and continued to submit claims to third-party payors on Defendant’s behalf, despite Defendant’s failure to pay amounts owed and accruing. Id. ¶ 16. On September 30, 2017, the Contract expired. Id.

         On December 11, 2018, Plaintiff initiated this action by filing a Complaint against Defendant for breach of contract. (ECF No. 1). On January 7, 2019, Plaintiff filed a Proof of Service, showing that it properly served Defendant a copy of the Complaint. (ECF No. 4). When Defendant failed to respond to the Complaint, Plaintiff filed a Request for an Entry of Default. (ECF No. 5). On January 24, 2019, Plaintiff filed a Certificate of Service, showing that it properly served Defendant an Application for Entry of Default by Clerk of the Court. (ECF No. 6). On January 25, 2019, the Clerk of the Court granted Plaintiff’s Request. (ECF No. 7). On July 16, 2019, Plaintiff filed a Motion for Default Judgment and against Defendant and a Motion to File Documents Under Seal. (ECF No. 11).

         Discussion

         A. Default Judgment

         Federal Rule of Civil Procedure 55 provides that “[w]hen a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend ... the clerk must enter the party’s default.” Fed.R.Civ.P. 55(a). After default is properly entered, a party seeking relief other than for a sum certain must apply to the Court for a default judgment. Fed.R.Civ.P. 55(b). “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) (quotation omitted). Courts consider the following factors when determining whether a default judgment should be granted:

(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.

Eitel v. McCool, 782 F.2d 1470, 1471–72 (9th Cir. 1986).

         1. Possibility of Prejudice to Plaintiff

         Plaintiff claims Defendant used Plaintiff’s services yet failed to pay amounts due under the Contract. Because a denial of default judgment would leave Plaintiff without recourse for recovery, the Court finds the first Eitel factor favors granting default judgment.

         2. Merits of Plaintiff's Claim & Sufficiency ...


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