United States District Court, S.D. California
ORDER GRANTING MOTION FOR DEFAULT JUDGMENT (ECF NO.
Janis L. Sammartino, United States District Judge.
before the Court is Plaintiff XIFIN Inc.'s Motion for
Default Judgment (“Mot., ” ECF No. 12). After
reviewing Plaintiff's briefing and supporting evidence
and weighing the relevant factors, the Court
GRANTS Plaintiff's Motion for Default
XIFIN, Inc. is a San Diego-based healthcare information
technology company that provides clients with cloud-based
billing services, which Plaintiff provides through its
proprietary Revenue Performance Management
(“RPM”) system. ECF No. 1 (“Compl.”)
at 3. The RPM system helps medical facilities
submit claims to insurance companies, government operated
programs, and individuals. Id. Defendant Diagnostic
Lab Services, LP is a laboratory that provides diagnostic
services to healthcare providers in the United States.
August 17, 2016, Plaintiff and Defendant entered into a
three-year “Systems and Services Agreement”
(“Services Agreement”). Id. Under the
Services Agreement, Plaintiff was to configure its RPM system
to agreed specifications, provide Defendant system access,
and provide ongoing support and services related to the
processing and management of Defendant's claims to third
parties. Id. at 3-4. Defendant's obligation
under the Services Agreement was to pay an implementation fee
and ongoing service fees. Id.
implemented the RPM system on or about January 1, 2017, and
Defendant began processing bills through the system.
Id. Plaintiff thereafter processed Defendant's
billings until, on August 29, 2017, Plaintiff terminated the
Services Agreement because Defendant failed to pay any of the
service fees that were due. Id. at 5.
October 17, 2017, Plaintiff filed a complaint against
Defendant for breach of contract. Mot. at 5 (citing XIFIN
v. Diagnostic Lab Serv., LP, No.
17-cv-02134-CAB-BLM (S.D. Cal. filed Oct. 17, 2017), ECF No.
1). On December 7, 2017, the Parties entered into a
settlement agreement in which the Parties agreed to mutual
releases and settlement of all claims in exchange for
Defendant paying Plaintiff $200, 000. Id. The
agreement required Defendant to pay the amount over the
course of ten equal installments of $20, 000, beginning in
December 2017 and continuing each month thereafter.
Id. Under the settlement agreement, the Parties
agreed that if Defendant “fail[ed] to timely make any
payment required under . . . this Agreement, [Plaintiff], at
its sole discretion, may re-file a breach of contract lawsuit
against [Defendant] (and/or its successors, transferees, and
assigns) for breach of the [Services Agreement].”
Id.; see also Declaration of Tammy Lawrence
(“Lawrence Decl.”), Ex. A at 3, ECF No. 12-4.
paid Plaintiff $20, 000 on December 8, 2017. Mot. at 5. On
the same day, Plaintiff filed with the court a notice of
voluntary dismissal without prejudice of all claims against
Defendant. Id. (citing XIFIN, Case No.
17-cv-02134-CAB-BLM, ECF No. 6). On January 30, 2018,
Defendant paid Plaintiff $10, 000. Id. Since then,
Plaintiff has failed to make any further payments.
Defendant failed to make timely payments, Plaintiff filed the
Complaint in the instant action on May 8, 2018. Id.
at 5-6. On June 29, 2018, Plaintiff filed an Affidavit of Due
Diligence, stating that its attempt to serve Defendant was
unsuccessful because Defendant was no longer at its place of
business and there was a sign on the door stating, “the
locks have been changed due to tenant default.” ECF No.
3. On August 8, 2018, Plaintiff served the complaint on the
State of Texas, Secretary of State. Mot. at 6. Defendant
failed to file any responsive pleading, id., and on
January 14, 2019, the Clerk entered default against
Defendant. ECF No. 10. Plaintiff filed the instant motion now
before the Court.
Rule of Civil Procedure 55 permits a court to enter default
judgment upon a party's application. Although default
judgments are ordinarily disfavored, a court may grant or
deny a motion for default judgment at its discretion. See
Alan Neuman Prods., Inc. v. Albright, 862 F.2d 1388,
1392 (9th Cir. 1988) (citing Haw. Carpenters' Tr.
Funds v. Stone, 794 F.2d 508, 511-12 (9th Cir. 1986);
Eitel v. McCool, 782 F.2d 1470, 1471 (9th Cir.
1986); Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th
Ninth Circuit has set out seven factors, known as the
Eitel factors, that a court may consider when
exercising its discretion as to whether or not to grant
(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, 782 F.2d at 1471-72.
weighing these factors, the well-pleaded factual allegations
of the complaint are taken as true, except for those
allegations relating to damages. TeleVideo Sys., Inc. v.
Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987);
see also Fed. R. Civ. P. 8(b)(6). To prove damages,
a plaintiff may submit declarations, or the Court may hold an
evidentiary hearing. See Affinity Grp., Inc. v. Balser
Wealth Mgmt., LLC, No. 05CV1555 WQH (LSP), 2007 WL
1111239, at *1 (S.D. Cal. Apr. 10, 2007); see also Taylor
Made Golf Co. v. Carsten Sports, 175 F.R.D. 658, 661
(S.D. Cal. 1997) (“In assessing damages, the court ...