Evergreen Marine Corp. Taiwan Ltd. et al v. Thuan Loi Shipping

Filing 17

ORDER GRANTING PLAINTIFFS MOTION FOR DEFAULT JUDGMENT 14 by Judge Otis D. Wright, II: Evergreen is granted demurrage and other charges in the amount of $146,579.67 and attorneys fees and costs in the amount of $7,047.19. A separate judgment will issue.The Court further ORDERS the parties TO SHOW CAUSE, in writing, by October 2, 2015, why the third and fourth claims should not be dismissed without prejudice. (lc). Modified on 9/18/2015 (lc).

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United States District Court
Central District of California

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(TAIWAN) LTD.; EVERGREEN
MARINE (UK) LIMITED; and

ORDER GRANTING PLAINTIFFS’

EVERGREEN MARINE (SINGAPORE)

MOTION FOR DEFAULT

PTE. LTD.; a/k/a EVERGREEN LINE,

JUDGMENT [14]

Plaintiffs,

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v.

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THUAN LOI SHIPPING,
Defendants.

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I.

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INTRODUCTION

Plaintiffs Evergreen Marine Corp. (Taiwan) Ltd., Evergreen Marine (UK)

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Case No. 2:15-cv-04963-ODW(FFM)

EVERGREEN MARINE CORP.

Limited, and Evergreen Marine (Singapore) Pte. Ltd. (collectively “Evergreen”)
brought suit against Defendant Thuan Loi Shipping (“Thuan”) seeking Declaratory
Relief for agreed upon freight charges and cargo carried by Evergreen from Los
Angeles, California to Ho Chi Minh City, Vietnam. For the reasons discussed below,
the Court GRANTS Evergreen’s Motion for Default Judgment (ECF No. 14.) and
enters a declaratory judgment set forth below.1
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After carefully considering the papers filed in support of the Motion, the Court deems the matter
appropriate for decision without oral argument. Fed. R. Civ. P. 78; L.R. 7-15.

II.

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FACTUAL BACKGROUND

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In May and June 2013, Thuan, as the shipper, booked four containers of cargo

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for shipment with Evergreen for carriage from Los Angeles, California to Ho Chi

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Minh City, Vietnam. (ECF No. 14, Attach. 5 Decl. of Yohana Tsai [“Tsai Decl.”],

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¶ 8.) In accordance with the booking requested by Thuan, Evergreen designated

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Thuan as the shipper of the cargo. (Id.) Evergreen provided four of its containers to

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Thuan so that Thuan could load the cargo into the containers for carriage. Evergreen

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then received the four containers from Thuan in Los Angeles, already sealed and

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loaded with cargo, and carried the containers on ocean-going vessels to Ho Chi Minh

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City, Vietnam pursuant to the terms and conditions of certain bills of lading issued by

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Evergreen to Thuan, and in consideration of freight and other charges. (Id.)

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The bills of lading issued by Evergreen for the aforesaid shipments (the “Bills

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of Lading”) set forth the terms of carriage. (Tsai Decl., Ex. B.) Thuan was the

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designated shipper on the face of the Bills of Lading. (clause 1(9).)

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Thuan agreed in the Bills of Lading to be responsible for the payment of the

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freight and other charges including demurrage relating to the ocean carriage and/or

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storage, handling and transportation of the cargo.2 (Id. ¶ 13.) Thuan also agreed to be

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responsible for charges arising from the failure to accept delivery, including, without

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limitation, demurrage. (Id.) Thuan has refused to accept delivery and Evergreen’s

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containers and the cargo have been detained by Customs officials in Vietnam. (Id.)

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As a result of the failure of Thuan to accept delivery and/or the failure to

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arrange for the clearance and acceptance of delivery of the cargo by others, Evergreen

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has incurred damages, liabilities, charges, expenses, fees and costs, including without

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The term “demurrage” means damages owed by a charterer to a ship owner for the charterer’s
failure to load or unload cargo within the time specified in the charter party. It also means the
charge due for the late return of ocean containers after free time has expired. Mediterranean
Shipping Co. (USA) v. Rose, 2008 WL 4694758, at *3 (S.D.N.Y. Oct. 3, 2008). Under wellestablished principles of admiralty law, demurrage is “extended freight.” Ocean Transp. Line, Inc.
v. Am. Philippine Fiber Indus., Inc., 743 F.2d 85, 92 (2d. Cir. 1984) (citations omitted); Gulf Puerto
Rico Lines, Inc. V. Associated Food Co., Inc., 366 F.Supp. 631, 635 (D.P.R. 1973).

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limitation, demurrage, terminal handling charges, documentation fees, storage fees,

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and loss of use of the containers which remain in custody of Customs officials in

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Vietnam. (Id. ¶ 15.) As of August 11, 2015, there are demurrage, charges, expenses,

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fees and costs due and owing from Thuan to Evergreen in the amount of $146,579.67.

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These costs continue to accrue. (Id. ¶ 16.)

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By letter dated March 27, 2015, Evergreen demanded payment from Thuan.

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(Tsai Decl., Ex. C.)

To date, Thuan has failed to either accept delivery of the

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containers or arrange for their delivery from Customs officials in Vietnam, and has

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further failed to pay Evergreen the amount due. (Id. ¶ 17.)

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The Complaint was filed on July 1, 2015. (ECF. 1.) Thuan was served with the

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Summons and Complaint on July 7, 2015. (ECF No. 14, Attach. 2 Decl. of Alan

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Nakazawa [“Nakazawa Decl.”], Ex. B.)

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August 3, 2015 and served a copy of the Request for Entry of Default by mail on

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Thuan on the same date. (Id. ¶ 8.) The Clerk entered the default of Thuan on August

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3, 2015, and a copy of the Default by Clerk was served on Thuan by mail on August

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4, 2015. (Id. ¶ 9.) Thuan is neither a minor nor incompetent person and the Service

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Members Civil Relief Act does not apply. (Id. ¶ 21.) Evergreen now moves for

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default judgment on its First (Breach of Contract), Second (Money Due Under Marine

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Tariff) and Fifth (Declaratory Relief) Causes of Action. (ECF No. 14.)

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III.

Evergreen requested entry of default on

LEGAL STANDARD

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FRCP 55(b) authorizes a district court to grant default judgment after the Clerk

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enters default under Rule 55(a). Local Rule 55-1 requires that the movant submit a

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declaration establishing: (1) when and against which party default was entered; (2)

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identification of the pleading to which default was entered; (3) whether the defaulting

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party is a minor, incompetent person, or active service member; and (4) that the

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defaulting party was properly served with notice.

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A district court has discretion whether to enter default judgment. Aldabe v.

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Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). Upon default, the defendant’s liability

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generally is conclusively established, and the well-pleaded factual allegations in the

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complaint are accepted as true. Televideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917–

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19 (9th Cir. 1987) (per curiam) (citing Geddes v. United Fin. Grp., 559 F.2d 557, 560

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(9th Cir. 1977)).

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In exercising its discretion, a court must consider several factors, including: (1)

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the possibility of prejudice to plaintiff; (2) the merits of plaintiff’s substantive claim;

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(3) the sufficiency of the complaint; (4) the sum of money at stake; (5) the possibility

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of a dispute concerning material facts; (6) whether the defendant’s default was due to

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excusable neglect; and (7) the strong policy underlying the Federal Rules of Civil

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Procedure favoring decisions on the merits. Eitel v. McCool, 782 F.2d 1470, 1471–72

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(9th Cir. 1986).

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The federal Declaratory Judgment Act provides that district courts “may declare

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the rights and other legal relations of any interested party seeking such declaration

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whether or not further relief is or could be sought.” 28 U.S.C. § 2201(a). The two

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principal criteria guiding the policy in favor of rendering declaratory judgments are

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(1) when the judgment will serve a useful purpose in clarifying and settling the legal

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relations in issue, and (2) when it will terminate and afford relief from the uncertainty,

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insecurity, and controversy giving rise to the proceeding. It follows that when neither

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of these results can be accomplished, the court should decline to render the declaration

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prayed. McGraw-Edison Co. v. Preformed Line Products Co., 362 F.2d 339, 342 (9th

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Cir. 1966) (citation omitted).
IV.

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A.

DISCUSSION

Service

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The Court finds that service of the Summons and Complaint upon Thuan was

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proper, as Thuan was served both through an appointed agent and received substituted

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service through mailing to their place of business. (Nakazawa Decl., Ex. B.) All

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other requirements of Local Rule 55-1 have been met and are not in controversy.

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B.

Eitel Factors
The Court finds that the Eitel factors weigh in favor of default judgment. The

Court will discuss each factor in turn.
1. Evergreen Would Suffer Prejudice

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If default judgment is not entered against Thuan, Evergreen may be left with no

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recourse against Thuan and its efforts to collect monies owed will be severely

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prejudiced. PepsiCo, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1172, 1177 (C.D. Cal.

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2002).
2. Evergreen Has Brought Meritorious Claims and the Complaint is

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Sufficient

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The merits of the claim and the sufficiency of the Complaint weigh in favor of

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default judgment. The Complaint sufficiently states a plausible claim for relief by

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alleging with sufficient particularity the elements for Evergreen’s claim for breach of

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the Bills of Lading and for money due under marine tariff. Further, the evidence

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submitted to the Court through the Declarations of Tsai and Nakazawa and the

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supporting exhibits establish the merit of the claims against Thuan and the amount of

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damages.

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3. The Amount at Stake Weighs in Favor of Default Judgment

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Under the fourth Eitel factor, the Court considers the amount of money at issue

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in relation to a defendant’s conduct. In the case at hand, Thuan owes Evergreen

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demurrage and other charges in the amount of $146,579.67 as of August 11, 2015.

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Evergreen performed all of its obligations under the Bills of Lading and Thuan

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benefitted from the carriage of the cargo.

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services. The Bills of Lading required Thuan to pay demurrage and other charges

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relating to the carriage. (Tsai Decl. ¶ 17.) Thuan chose to ignore the terms of the

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Bills of Lading, the tariff and Evergreen’s demands for payment. The sum of money

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is reasonably proportionate to the harm caused by the conduct of the defaulting

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defendant and is properly documented by Evergreen.

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Thuan did not pay Evergreen for its

Gen. Emp. Trust Fund v.

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Victory Bldg. Maint., Inc., 2007 U.S. Dist. LEXIS 35600 at *12 (N.D. Cal. April 11,

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2007); Cotton v. Zitterman Bosh & Assoc., 2012 WL 3289921 at *1 (D. Arizona Aug.

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13, 2012).

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Furthermore, under the terms of the Bills of Lading, Evergreen is also entitled

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to recover its attorneys’ fees and costs incurred in collecting the outstanding freight

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and other charges. Evergreen is entitled to attorneys’ fees in the amount of $6,531.59

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under Local Rule 55-3.3 Evergreen is also entitled to costs in the amount of $515.60.

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(Nakazawa Decl. ¶ 13-16.)
4. There is No Possibility of Dispute as to Material Facts

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Thuan has not filed a responsive pleading or otherwise denied the allegations of

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13 Complaint are deemed correct, except for those pertaining to damages. Further, the
14 evidence submitted by Evergreen supports its account of the events giving rise to the
15 claim. The slight possibility of a dispute of material facts favors default judgment.
16 Truong Giang Corp. v. Twinstar Tea Corp., 2007 WL 1545173, at *12 (N.D. Cal.
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5. There is Little Possibility Default was Due to Excusable Neglect

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Thuan has been properly served with the Summons and Complaint and has

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failed to answer or otherwise respond. It has also been served with the Request for

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Entry of Default and the Default by Clerk. (Nakazawa Decl. ¶ 6-9.) Thuan has had

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adequate opportunity to challenge the claims. Given the service of the Summons and

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Complaint and the notice provided to them of the entry of default, the possibility of

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excusable neglect is remote.

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When a promissory note, contract or applicable statute provides for the recovery of reasonable
attorneys’ fees, those fees shall be calculated as follows when judgment is over $100,000: $5,600
plus 2% of the amount over $100,000. L.R. 55-3.

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6. Policy for Deciding on the Merits Weighs in Favor of Granting

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Default Judgment

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In Eitel, the court maintained that “[c]ases should be decided upon their merits

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whenever reasonably possible.” Eitel, 782 F.2d at 1472. However, where, as is the

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case here, the defendant fails to answer the plaintiff’s complaint, “a decision on the

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merits [is] impractical, if not impossible.” PepsiCo, 238 F. Supp. 2d at 1177 (“Under

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Fed. R. Civ. P. 55(a), termination of a case before hearing the merits is allowed

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whenever a defendant fails to defend an action”). Furthermore, “when a defendant . . .

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[knows] that he has been sued . . . [it is] the defendant who seeks to prevent an

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adjudication on the merits.” Carol Gilbert, Inc. v. Haller, 179 Cal. App. 4th 852, 865

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(Cal. Ct. App. 2009). Accordingly, this factor does not preclude default judgment.
V.

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CONCLUSION

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For the reasons discussed above, the Court GRANTS Evergreen’s Motion for

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Default Judgment. (ECF No. 14.) Evergreen is granted demurrage and other charges

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in the amount of $146,579.67 and attorney’s fees and costs in the amount of

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$7,047.19. A separate judgment will issue.

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The Court further ORDERS the parties TO SHOW CAUSE, in writing, by

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October 2, 2015, why the third and fourth claims should not be dismissed without

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prejudice.

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IT IS SO ORDERED.

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September 18, 2015

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____________________________________
OTIS D. WRIGHT, II
UNITED STATES DISTRICT JUDGE

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