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Molly Moon Films Ltd. v. ARC Entertainment, LLC

United States District Court, C.D. California

October 21, 2019

MOLLY MOON FILMS LIMITED ET AL.
v.
ARC ENTERTAINMENT, LLC ET AL.

          Present The Honorable CHRISTINA A. SNYDER

          CIVIL MINUTES - GENERAL

         Proceedings: PLAINTIFFS' MOTION FOR DEFAULT JUDGMENT AGAINST DEFENDANT ARC ENTERTAINMENT, LLC (Dkt. [ 47 ], filed September 10, 2019)

         I. INTRODUCTION AND BACKGROUND

         On December 29, 2017, plaintiffs Molly Moon Films Limited ("MMF"), Motion Investment Limited ("MIL"), and Cumulus Investors LLC ("Cumulus") filed this action against defendants ARC Entertainment, LLC ("ARC") and OA Investment Holdings, Inc. ("OA"). Dkt. 1 ("Compl."). The complaint asserts claims for: (1) breach of contract; (2) breach of the implied covenant of good faith and fair dealing; and (3) unjust enrichment. Id. OA filed its answer on October 8, 2018. Dkt. 24. Plaintiffs and OA thereafter reached a settlement and filed a joint stipulation to dismiss plaintiffs' claims against OA on September 10, 2019. Dkt. 46. The Court dismissed plaintiffs' claims against OA on September 11, 2019. Dkt. 49.

         ARC has not appeared in this action to date. On November 1, 2018, plaintiffs requested that the Clerk enter default against ARC, and the Clerk did so on November 2, 2018. Dkt. 30, 31. On September 10, 2019, plaintiffs filed the present motion for default judgment against ARC, dkt. 47-1 ("Mot."), as well as a supporting declaration, dkt. 47-2 ("Pelikan Decl.").[1]

         Plaintiffs' claims arise out of a dispute regarding the distribution rights to a motion picture entitled Molly Moon: The Incredible Hypnotist (the "Motion Picture"). Compl. ¶¶ 8-35. MMF produced the Motion Picture, while MIL and Cumulus are its primary investors. Compl. ¶ 9. In July 2015, MMF and ARC entered into a Distribution Agreement (the "Agreement"), granting ARC the rights to distribute the Motion Picture within the United States and Canada. Id. ¶ 10. The Agreement requires ARC to make advance payments totaling $80, 000 in return for the "rights to license, sub-license, distribute, advertise, promote, market, and publicize the Motion Picture for theaters, home use and digitally." Compl. ¶¶ 11, 13. The Agreement also requires ARC to pay performance bonuses to plaintiffs based on the Motion Picture's overall sales, as well as a portion of the net revenues and net receipts that ARC earned from its distribution of the Motion Picture. Id. ¶¶ 16-17. In 2015, OA acquired ARC's rights and interests in the Agreement. Id. ¶¶ 30-31.

         Plaintiffs allege that neither ARC nor OA has made the payments required under the Agreement. Id. ¶¶ 25, 29, 31. Failure to make the $80, 000 in advance payments provides a basis for terminating the Agreement. Id. ¶ 22. Accordingly, plaintiffs now seek default judgment against ARC in the amount of $80, 000.00. See Mot. at 4.

         The Court held a hearing on October 21, 2019. Having carefully considered plaintiffs' motion and supporting exhibits, the Court finds and concludes as follows.

         II. LEGAL STANDARD

         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 may apply to the court for a default judgment. Fed.R.Civ.P. 55. 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 (CD. 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 plaintiffs 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.

         "Before a court can enter a default judgment against a defendant, the plaintiff must satisfy the procedural requirements set forth in Federal Rules of Civil Procedure 54(c) and 55, as well as Local Rule 55-1 and 55-2." Harman IntT Indus., Inc. v. Pro Sound Gear, Inc., No. 2:17-cv-06650-ODW-FFM, 2018 WL 1989518, at *1 (CD. Cal. Apr. 24, 2018). Accordingly, when an applicant seeks a default judgment from the Court, the movant must submit a declaration specifying: "(a) When and against what party the default was entered; (b) The identification of the pleading to which default was entered; (c) Whether the defaulting party is an infant or incompetent person, and if so, whether that person is represented by a general guardian, committee, conservator or other representative; (d) That the Servicemembers Civil Relief Act (50 U.S.C. App. § 521) does not apply; and (e) That notice has been served on the defaulting party, if required by [Federal Rule of Civil Procedure] 55(b)(2)." See CD. Cal. L.R. 55-1.

         II. DISCUSSION

         Plaintiffs contend that "entry of default judgment as to ARC is appropriate under Rule 55(b)(2) because the Eitel factors have been satisfied."[2] Mot. at 6. In connection with their motion for default judgment, plaintiffs submit a declaration attesting that: (a) the Clerk entered default against ARC on November 2, 2018 after ARC failed to respond to plaintiffs' complaint; (b) that Arc is neither an infant nor an incompetent person; and (c) that the Servicemembers Civil Relief Act does not apply. See Pelikan Decl. ¶¶ 8-14. Accordingly, plaintiffs have satisfied the procedural requirements for default judgment.[3] See Harman, 2018 WL 1989518, at *2. The Court therefore addresses each of the Eitel factors in turn. The Court also considers the relief sought by plaintiffs.

         A. Application of ...


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