BMO Harris Bank N.A. v. Hundal

Filing 18

FINDINGS and RECOMMENDATIONS recommending that 12 Plaintiff's Motion for Default Judgment be GRANTED re 1 Complaint signed by Magistrate Judge Barbara A. McAuliffe on 9/6/2018. Referred to Judge Drozd. Objections to F&R due within fourteen (14) days. (Jessen, A)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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BMO HARRIS BANK N.A., a national
banking association,

Case No. 1:17-cv-01363-DAD-BAM
FINDINGS AND RECOMMENDATIONS
REGARDING PLAINTIFF’S MOTION FOR
DEFAULT JUDGMENT

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Plaintiff,
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v.

(Doc. No. 12)

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HARVEER HUNDAL, an individual resident
and citizen of California,

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Defendant.

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On February 14, 2018, Plaintiff BMO Harris Bank N.A. (“Plaintiff”) filed a motion for

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19 default judgment against Defendant Harveer Hundal (“Defendant”). Doc. No. 12. No opposition
20 was filed, even though the motion was served on the Defendants at the addresses where the
21 Defendants were served. (See Doc. No. 15.)
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The motion was referred to this Court pursuant to 28 U.S.C. § 636(b)(1)(B) and Local

23 Rule 302. The Court deemed the matter suitable for decision without oral argument pursuant to
24 Local Rule 230(g), and vacated the hearing scheduled for March 16, 2018.
Having considered the moving papers and the Court’s file, the Court RECOMMENDS

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26 that Plaintiff’s motion for default judgment be GRANTED. 1
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1.

The Court has not been notified that any party has filed bankruptcy. No notice of filing of bankruptcy has
been filed with this Court. See Local Rule 159 (“If the filing party has not filed the required Notice and

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1 I.

BACKGROUND2

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A. Loan 7776475001

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On August 15, 2013, Defendant executed and entered into a Loan and Security Agreement

4 (the “7776475001 Agreement”) in favor of GE Capital Corporation (“GECC”), pursuant to which
5 GECC agreed to finance Defendant’s purchase of certain vehicle equipment and Defendant
6 agreed to pay GECC $150,927.48. Doc. 1, Ex. A. Under the 7776475001 Agreement, Defendant
7 granted GECC a security interest in collateral described as: a 2014 Vanguard Refrigerated Van,
8 VIN#

LJRR53261E6003594

and

a

2014

Vanguard

Refrigerated

Van,

VIN#

9 LJRR5326XE6003593 (collectively the “7776475001 Collateral”). 11. GECC perfected its
10 security interest in the 7776475001 Collateral by filing its liens against the titles of the
11 7776475001 Collateral with the California Department of Revenue. Doc. 1-2, Ex. B.
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GECC advanced funds for the acquisition of the 7776475001 Collateral.

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Effective December 1, 2015, GECC transferred and assigned to Plaintiff all of its rights,

14 titles, and interests in and to the 7776475001 account with Defendant, including without
15 limitation, the 7776475001 Agreement and GECC’s security interest in the 7776475001
16 Collateral. Doc. 1-2, Ex. C.
On March 24, 2017, Plaintiff and Defendant entered into Modification Agreement which

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18 is incorporated into the original 7776475001 Agreement. Doc. 1-2, Ex. D.
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B. Loan 7960883001

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On June 9, 2015, Defendant executed and entered into a Loan and Security Agreement

21 (the “7960883001 Agreement”) in favor of GECC, pursuant to which GECC agreed to finance
22 Defendant’s purchase of certain vehicle equipment and Defendant agreed to pay GECC
23 $88,881.00. Doc. 1, Ex. E.

Under the 7960883001 Agreement, Defendant granted GECC a

24 security interest in collateral described as: 2016 Great Dane Refrigerated Trailer, VIN#
25 1GRAA0628GB707135 (the “7960883001 Collateral”). GECC perfected its security interest in
26 the 7960883001 Collateral by filing its liens against the title of the 7960883001 Collateral with
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another party learns of the bankruptcy filing, that party must file the Notice within seven (7) days of
learning of the bankruptcy filing.”)
Background facts are derived from the allegations in the complaint filed on October 11, 2017. Doc. 1.

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1 the California Department of Revenue. Doc. 1-2, Ex. F
2

GECC advanced funds for the acquisition of the 7960883001 Collateral.

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Effective October 1, 2015, GECC transferred and assigned to Transportation Truck and

4 Trailer Solutions, LLC (“TTTS”) all of its rights, titles, and interests in the 7960883001 account
5 with Defendant, including without limitation, the 7960883001 Agreement and GECC’s security
6 interest in the 7960883001 Collateral. Doc. 1-2, Ex. G. Effective December 1, 2015, TTTS
7 transferred and assigned to Plaintiff all of its rights, titles, and interests in the 7960883001 account
8 with Defendant, including without limitation, the 7960883001 Agreement and TTTS’ security
9 interest in the 7960883001 Collateral. Doc. 1-2, Ex. H.
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On March 24, 2017, Plaintiff and Defendant entered into a Modification Agreement which

11 is incorporated into the original 7960883001 Agreement. Doc. 1-2, Ex. I.
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C. Loan 7962916001

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On June 25, 2015, Defendant executed and entered into a Loan and Security Agreement

14 (the “7962916001 Agreement”) in favor of GE Capital Commercial, Inc. (“GE Capital”), pursuant
15 to which GE Capital agreed to finance Defendant’s purchase of certain vehicle equipment and
16 Defendant agreed to pay GECC $90,853.20. Doc. 1-2, Ex. J. Under this agreement, Defendant
17 granted GE Capital a security interest in certain collateral to be acquired by Defendant,
18 specifically described as: a 2016 Vanguard Refrigerated Trailer, VIN# 527SR5324GL006295
19 (the “7962916001 Collateral”). GE Capital perfected its security interest in the 7962916001
20 Collateral by filing its liens against the title of the 7962916001 Collateral with the California
21 Department of Revenue. Doc. 1-2, Ex. K.
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GE Capital advanced funds for the acquisition of the 7962916001 Collateral.

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Effective October 1, 2015, GE Capital transferred and assigned to Plaintiff all of its rights,

24 titles, and interests in and to the 7962916001 account with Defendant, including without
25 limitation, the 7962916001Agreement and GE Capital’s security interest in the 7962916001
26 Collateral. Doc. 1-2, Ex. L.
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On or about March 24, 2017, Plaintiff and Defendant entered into a Modification

28 Agreement which is specifically incorporated into the original 7962916001 Agreement. Doc. 1-

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1 2, Ex. M.
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D. Loan 7974966001

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On October 26, 2015, Defendant executed and entered into a Loan and Security

4 Agreement (the “7974966001 Agreement”) in favor of TTTS, pursuant to which TTTS agreed to
5 finance Defendant’s purchase of certain vehicle equipment and Defendant agreed to pay TTTS
6 $94,177.38. Doc. 1-2, Ex. N. Under the 7974966001 Agreement, Defendant granted TTTS a
7 security interest in certain collateral to be acquired by Defendant, specifically described as: a 2016
8 Great Dane Refrigerated Trailer, VIN# 1GRAA0621GW700990 (the “7974966001 Collateral”).
9 TTTS perfected its security interest in the 7974966001 Collateral by filing its liens against the
10 title of the 7974966001 Collateral with the California Department of Revenue. Doc. 1-2, Ex. O.
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TTTS advanced funds for the acquisition of the 7974966001Collateral.

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Effective December 1, 2015, TTTS transferred and assigned to Plaintiff all of its rights,

13 titles, and interests in and to the 7974966001 account with Defendant, including without
14 limitation, the 7974966001 Agreement and TTTS’s security interest in the 7974966001
15 Collateral. Doc. 1-2, Ex. H.
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On March 24, 2017, Plaintiff and Defendant entered into a Modification Agreement which

17 is specifically incorporated into the original 7974966001 Agreement. Doc. 1-2, Ex. P.
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E. Loan 7957930002

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On May 7, 2015, Defendant executed and entered into a Loan and Security Agreement

20 (the “7957930002 Agreement”) in favor of GECC, pursuant to which GECC agreed to finance
21 Defendant’s purchase of certain vehicle equipment and Defendant agreed to pay GECC
22 $173,411.40. Doc. 1-2, Ex. Q. Under the 7957930002 Agreement, Defendant granted GECC a
23 security interest in certain collateral to be acquired by Defendant, specifically described as: a 2016
24 Volvo Tractor, VIN# 4V4NC9EH7GN949952 (the “7957930002 Collateral”). GECC perfected
25 its security interest in the 7957930002 Collateral by filing its liens against the title of the
26 7957930002 Collateral with the California Department of Revenue. Doc. 1-2, Ex. R.
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GECC advanced funds for the acquisition of the 7957930002 Collateral.

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Effective October 1, 2015, GECC transferred and assigned to TTTS all of its rights, titles,

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1 and interests in and to the 7957930002 account with Defendant, including without limitation, the
2 7957930002 Agreement and GECC’s security interest in the 7957930002 Collateral. Doc. 1-2,
3 Ex. G.
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Effective December 1, 2015, TTTS transferred and assigned to Plaintiff all of its rights,

5 titles, and interests in and to the 7957930002 account with Defendant, including without
6 limitation, the 7957930002 Agreement and TTTS’ security interest in the 7957930002 Collateral.
7 Doc. 1-2, Ex. H.
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On March 24, 2017, Plaintiff and Defendant entered into a Modification Agreement which

9 is specifically incorporated into the original 7957930002 Agreement. Doc. 1-2, Ex. S.
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F. Loan 7960883003

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On July 10, 2015, Defendant executed and entered into a Loan and Security Agreement

12 (the “7960883003 Agreement”) in favor of GECC, pursuant to which GECC agreed to finance
13 Defendant’s purchase of certain vehicle equipment and Defendant agreed to pay GECC
14 $174,622.20. Doc. 1-2, Ex. T. Under the 7960883003 Agreement, Defendant granted GECC a
15 security interest in certain collateral to be acquired by Defendant, specifically described as: a 2016
16 Volvo Tractor, VIN# 4V4NC9EH7GN947585 (the “7960883003 Collateral”). GECC perfected
17 its security interest in the 7960883003 Collateral by filing its liens against the title of the
18 7960883003 Collateral with the California Department of Revenue. Doc. 1-2, Ex. U.
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GECC advanced funds for the acquisition of the 7960883003 Collateral.

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Effective October 1, 2015, GECC transferred and assigned to TTTS all of its rights, titles,

21 and interests in and to the 7960883003 account with Defendant, including without limitation, the
22 7960883003Agreement and GECC’s security interest in the 7960883003 Collateral. Doc. 1-2,
23 Ex. G.
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Effective December 1, 2015, TTTS transferred and assigned to Plaintiff all of its rights,

25 titles, and interests in and to the 7960883003 account with Defendant, including without
26 limitation, the 7960883003 Agreement and TTTS’ security interest in the 7960883003 Collateral.
27 Doc. 1-2, Ex. H.
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On March 24, 2017, Plaintiff and Defendant entered into a Modification Agreement which

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1 is specifically incorporated into the original 7960883003 Agreement. Doc. 1-2, Ex. V.
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G. Loan 7974610001

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On or about July 10, 2015, Defendant executed and entered into a Loan and Security

4 Agreement (the “7974610001 Agreement”) in favor of TTTS, pursuant to which TTTS agreed to
5 finance Defendant’s purchase of certain vehicle equipment and Defendant agreed to pay TTTS
6 $346,179.00. Doc. 1-2, Ex. W. Under the 7974610001 Agreement, Defendant granted TTTS a
7 security interest in certain collateral to be acquired by Defendant, specifically described as: 2016
8 Volvo

Tractor,

VIN#

4V4NC9EH7GN961020

and

2016

Volvo

Tractor,

VIN#

9 4V4NC9EH8GN961026 (collectively the “7960883003 Collateral”). TTTS perfected its security
10 interest in the 7974610001 Collateral by filing its liens against the title of the 7974610001
11 Collateral with the California Department of Revenue. Doc. 1-2, Ex. X.
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TTTS advanced funds for the acquisition of the 7974610001 Collateral.

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Effective December 1, 2015, TTTS transferred and assigned to Plaintiff all of its rights,

14 titles, and interests in and to the 7960883003 account with Defendant, including without
15 limitation, the 7960883003 Agreement and TTTS’ security interest in the 7960883003 Collateral.
16 Doc. 1-2, Ex. H.
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On or about March 24, 2017, Plaintiff and Defendant entered into a Modification

18 Agreement which is specifically incorporated into the original 7960883003 Agreement. Doc. 119 2, Ex. Y.
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Defendant is in default under the above-reference Loan and Security Agreements

21 (hereinafter “Agreements”) for his failure to pay the amounts due thereunder. Doc. 1, Compl. at
22 ¶¶ 55-56. Pursuant to the Agreements, the entire amounts due have been accelerated. As of the
23 respective dates of default, the principal amount due and owing after acceleration totals not less
24 than $684,250.14. Compl. at ¶ 58. Under the Agreements, Defendant is obligated to pay interest
25 on all unpaid amounts at the default interest rate of eighteen percent (18%) per annum or the
26 maximum rate not prohibited by applicable law. Id. at ¶ 59. Calculated from the respective dates
27 of default to August 28, 2017, the amount of accrued and unpaid interest due and owing under
28 the

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1 Agreements is an amount not less than $29,391.67. Id. at ¶ 60. Under the Agreements, Defendant
2 is obligated to pay late charges and other fees due under the Agreements. Id. at ¶ 61. As of the
3 respective dates of default, late charges in the amount of $3,953.83 have accrued, which amount
4 remains due and owing. Id. at ¶ 62. Calculated as of August 28, 2017, the amount due and owing
5 under the Agreements, not including attorneys’ fees and expenses or costs of collection, is an
6 amount not less than $684,250.14. Id. at ¶ 64.
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By a letter dated September 5, 2017, Plaintiff notified Defendant of his respective defaults

8 under the Agreements and the consequential acceleration of the loans as authorized by the
9 Agreements. In addition, Plaintiff demanded that Defendant pay the amounts due under the
10 respective Agreements. Id. at ¶ 65; Doc. 1-2, Ex. Z. Despite demand, Defendant has failed and
11 refused to pay the amounts due and owing under the respective Agreements. Compl. at ¶ 66.
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As of September 16, 2017, the following collateral vehicles remains in Defendant’s

13 possession or control:
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2014 Vanguard Refrigerated Van Trailer
2014 Vanguard Refrigerated Van Trailer
2016 Great Dane Refrigerated Van Trailer
2016 Vanguard Refrigerated Van Trailer
2016 Great Dane Refrigerated Van Trailer
2016 Volvo VNL Series Tractor
2016 Volvo VNL Series Tractor
2016 Volvo VNL Series Tractor
2016 Volvo VNL Series Tractor

19 Id. at ¶ 69.
20

Plaintiff filed this lawsuit on October 11, 2017, asserting causes of action for injunctive

21 relief, specific performance, claim and delivery, along with breach of contract against Defendant.
22 Plaintiff served Defendant by substituted service at his dwelling house or usual place of abode by
23 leaving a copy of the summons and complaint with his wife, Sophia Noreen, on February 6, 2017.
24 Doc. No. 6. Defendant did not respond to the complaint, and on January 5, 2018, Plaintiff filed
25 a request for entry of default. Doc. No. 9. On the same day, the Clerk of the Court entered default
26 against Defendant. Doc. No. 10. Thereafter, on February 14, 2018, Plaintiff filed the instant
27 motion for default judgment. Doc. No. 12. Plaintiff requests default judgment in the amount of
28 $735,900.09, plus post-judgment interest less any net proceeds received from the liquidation of

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1 the collateral vehicles. Additionally, Plaintiff seeks an award of $7,000.00 in attorneys’ fees and
2 expenses incurred in enforcing the agreements and collection of the amounts owed. Plaintiff also
3 seeks immediate possession of the collateral vehicles.
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II.

LEGAL STANDARD FOR DEFAULT JUDGMENT

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Pursuant to Federal Rule of Civil Procedure 55(b)(2), a plaintiff can apply to the court for

6 a default judgment against a defendant that has failed to plead or otherwise defend against the
7 action. Fed. R. Civ. P. 55(b)(2). “Upon default, the well-pleaded allegations of a complaint
8 relating to liability are taken as true.” Dundee Cement Co. v. Howard Pipe & Concrete Prods.,
9 Inc., 722 F.2d 1319, 1323 (7th Cir. 1983); TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 91710 18 (9th Cir. 1987).
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Factors which may be considered by courts in exercising discretion as to the entry of a

12 default judgment include: (1) the possibility of prejudice to the plaintiff; (2) the merits of
13 plaintiff’s substantive claim; (3) the sufficiency of the complaint; (4) the sum of money at stake
14 in the action; (5) the possibility of a dispute concerning material facts; (6) whether the default
15 was due to excusable neglect; and (7) the strong policy underlying the Federal Rules of Civil
16 Procedure favoring decisions on the merits. Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir.
17 1986); PepsiCo, Inc. v. Cal. Sec. Cans, 238 F.Supp.2d 1172, 1174 (C.D. Cal. 2002)
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III.
A.

DISCUSSION
Service of Process

Plaintiff is suing an individual in this action, Defendant Harveer Hundal. Federal Rule of

21 Civil Procedure 4 sets forth the requirements for serving an individual within a judicial district of
22 the United States. Pursuant to Rule 4(e)(2), an individual may be served by delivering a copy of
23 the summons and of the complaint to the individual personally or by leaving a copy of each at the
24 individual’s dwelling or usual place of abode with someone of suitable age and discretion who
25 resides there. Fed. R. Civ. P. 4(e)(2)(A), (B). According to the proof of service on file, Defendant
26 was served by leaving a copy of the summons and complaint at his dwelling or usual place of
27 abode with his wife. Doc. No. 6. The Court finds that Defendant was properly served with the
28 summons and complaint.

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B.

The Eitel Factors Weigh in Favor of Default Judgment

As discussed below, the Court finds that the Eitel factors weigh in favor of granting default

3 judgment.
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1.

Possibility of Prejudice to Plaintiff

The first factor considers whether a plaintiff would suffer prejudice if default judgment is

6 not entered. See PepsiCo, Inc., 238 F.Supp.2d at 1177. Generally, where default has been entered
7 against a defendant, a plaintiff has no other means by which to recover damages. Id.; Moroccanoil,
8 Inc. v. Allstate Beauty Prods., 847 F.Supp.2d 1197, 1200-01 (C.D. Cal. 2012). Therefore, the
9 Court finds Plaintiff would be prejudiced if default judgment is not granted, and this factor weighs
10 in favor of default judgment.
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2.

Merits of Plaintiff’s Claims and Sufficiency of the Complaint

The second and third Eitel factors, taken together, “require that [the] plaintiff[s] state a

13 claim on which [they] may recover.” PepsiCo, Inc., 238 F. Supp. 2d at 1175. Notably a “defendant
14 is not held to admit facts that are not well-pleaded or to admit conclusions of law.” DIRECTV,
15 Inc. v. Hoa Huynh, 503 F.3d 847, 854 (9th Cir. 2007). Plaintiff’s complaint alleges breach of loan
16 agreements and breach of a guarantee. However, neither Plaintiff’s application for default
17 judgment nor its complaint provide the relevant legal standard or analysis of these claims. Despite
18 this deficiency, the Court will evaluate the merits and sufficiency of the complaint.
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The loan agreements at issue provide that they will be subject to the laws of the state of

20 Texas. Doc. No. 1-2, Ex. A ¶ 7.6; Ex. E ¶ 7.6; Ex. J¶ 7.6; Ex. N ¶ 7.6, Ex. Q ¶ 7.6; Ex. T ¶ 7.6;
21 Ex. W ¶ 7.6. In determining the enforceability of a choice-of-law provision in a diversity action,
22 such as this one, a federal court applies the choice of law rules of the forum state, in this case
23 California. Hatfield v. Halifax PLC, 564 F.3d 1177, 1182 (9th Cir. 2009). In California, “a freely
24 and voluntarily agreed-upon choice of law provision in a contract is enforceable ‘if the chosen
25 state has a substantial relationship to the parties or the transaction or any other reasonable basis
26 exists for the parties' choice of law.’ ” 1–800–Got Junk? LLC v. Super. Ct., 189 Cal.App.4th 500,
27 513–14 (2010) (quoting Trust One Mortg. Corp. v. Invest Am. Mortg. Corp., 134 Cal.App.4th
28 1302, 1308 (2005) (emphasis in original). There is a strong policy in favor of enforcing choice of

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1 law provisions. 1–800–Got Junk? LLC, 189 Cal.App.4th at 513.
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Here, the parties have agreed that the laws of Texas apply to claims arising out of the loan

3 agreements. It is not necessary to decide whether California or Texas’s substantive law governs,
4 however, because the Court is aware of no relevant differences between the states’ laws governing
5 breach of contract claims. See Petro-Diamond Inc., v. SCB & Assocs., LLC, No. SACV 126 01893-CJC(ANx), 2013 WL 12138724, at *3 n. 4 (C.D. Cal. Sept. 18, 2013) (“The Court need
7 not decide whether California’s or Texas’s substantive law governs, however, because it is aware
8 of no relevant differences between the states' laws governing breach of contract and civil
9 conspiracy.”); see also Paramount Pictures Corp. v. Johnson Broad. Inc., No. CIV.A.H 04 03488,
10 2006 WL 367874, at *5 n. 6 (S.D. Tex. Feb. 15, 2006) (“The Court need not decide whether
11 California’s or Texas’s substantive law applies, however, since the law governing breach of
12 contract claims is the same for both states.”).
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In order to establish a breach of contract claim, a plaintiff must demonstrate: (1) the

14 existence of a valid contract; (2) performance or tendered performance by the plaintiff; (3) breach
15 of the contract by the defendant, and (4) resulting damages to the plaintiff. Id. at *5 (citing
16 Reichert v. Gen. Ins. Co. of Am., 68 Cal.2d 822, 69 Cal.Rptr. 321, 442 P.2d 377, 381 (Cal. 1968)
17 and Aguiar v. Segal, 167 S.W.3d 443, 450 (Tex. App. 2005)).
18

With respect to the breach of guaranty claims, under California law, the elements for a

19 breach of guaranty claim generally are the same as the elements of a breach of contract claim.
20 See Alwood v. Montecalvo, No. CV 14-08139 MMM (PJWx), 2015 WL 13306204, at *6 (C.D.
21 Cal. Nov. 3, 2015). Under Texas law, to prevail on a claim for breach of a guaranty, Plaintiff
22 must establish (1) the existence and ownership of a guaranty contract; (2) the terms of the
23 underlying contract secured by the guaranty; (3) the occurrence of the conditions upon which
24 liability is based; and (4) the failure or refusal to perform the promise by the guarantor.
25 CSFB1998-C2 TX Facilities, LLC v. Rector, No. 3:14-CV-4142-M, 2016 WL 631923, at *2
26 (N.D. Tex. Feb. 16, 2016).
27

The Court finds that Plaintiff’s complaint sufficiently states claims for breach of the loan

28 agreements, which weighs in favor of default judgment.

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2

3.

The Sum of Money at Stake in the Action

Under the fourth factor cited in Eitel, “the court must consider the amount of money at

3 stake in relation to the seriousness of Defendant’s conduct.” PepsiCo, Inc., 238 F Supp.2d at
4 1176; see also Philip Morris USA, Inc. v. Castworld Prods., Inc., 219 F.R.D. 494, 500 (C.D. Cal.
5 2003). Here, Plaintiff seeks judgment in the amount of $735,900.09 against Defendant, plus post6 judgment interest which may accrue, less any net proceeds received from the liquidation of any
7 collateral vehicles, along with $7,000.00 in attorneys’ fees and costs incurred by Plaintiff in
8 prosecuting this action. Doc. 12 at 5. The Court finds that although the amount at stake is
9 significant, it is proportional to the harm caused by Defendant’s failure to repay the loan amounts
10 and, therefore, this factor does not weigh against entry of default judgment.
11
12

4.

The Possibility of a Dispute Concerning Material Facts

The facts of this case are straightforward, and Plaintiff has provided the Court with well-

13 pled allegations and a declaration with exhibits in support. Here, the Court may assume the truth
14 of well-pled facts in the complaint following the clerk’s entry of default and, thus, there is no
15 likelihood that any genuine issue of material fact exists. Defendant’s failure to file an answer in
16 this case or a response to the instant motion further supports the conclusion that the possibility of
17 a dispute as to material facts is minimal. See, e.g., Elektra Entm’t Grp. Inc. v. Crawford, 226
18 F.R.D. 388, 393 (C.D. Cal. 2005) (“Because all allegations in a well-pleaded complaint are taken
19 as true after the court clerk enters default judgment, there is no likelihood that any genuine issue
20 of material fact exists.”). This factor therefore weighs in favor of default judgment.
21
22

5.

Whether the Default Was Due to Excusable Neglect

The sixth Eitel factor considers the possibility that Defendant’s default resulted from

23 excusable neglect. PepsiCo, Inc., 238 F.Supp.2d at 1177. Courts have found that where defendants
24 were “properly served with the complaint, the notice of entry of default, as well as the paper in
25 support of the [default judgment] motion,” there is no evidence of excusable neglect. Shanghai
26 Automation Instrument Co. v. Kuei, 194 F.Supp.2d 995, 1005 (N.D. Cal. 2001). Upon review of
27 the record, the Court finds that the default was not the result of excusable neglect. See PepsiCo,
28 Inc., 238 F. Supp. 2d at 1177. According to the Court’s docket, Plaintiff properly served

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1 Defendant Harveer Hundal. Doc. No. 6. Moreover, Plaintiff served Defendant with a copy of
2 the request for entry of default and the motion for default judgment. Doc. Nos. 9 and 15. Despite
3 ample notice of this lawsuit and Plaintiff’s intention to seek a default judgment, Defendant has
4 not appeared to date. Thus, the record suggests that he has chosen not to defend this action, and
5 not that the default resulted from any excusable neglect. Accordingly, this factor weighs in favor
6 of the entry of a default judgment.
7
8

6.

The Strong Policy Favoring Decisions on the Merits

“Cases should be decided upon their merits whenever reasonably possible.” Eitel, 782

9 F.2d at 1472. However, district courts have concluded with regularity that this policy, standing
10 alone, is not dispositive, especially where a defendant fails to appear or defend itself in an action.
11 PepsiCo, Inc., 238 F.Supp.2d at 1177; see also Craigslist, Inc. v. Naturemarket, Inc., 694
12 F.Supp.2d 1039, 1061 (N.D. Cal. Mar. 5, 2010). Although the Court is cognizant of the policy
13 favoring decisions on the merits, that policy is unavailable here because Defendants has not
14 responded. Accordingly, the Court finds that this factor does not weigh against entry of default
15 judgment.
16

Upon consideration of the Eitel factors, the Court concludes that Plaintiff is entitled to the

17 entry of default judgment against Defendant. The Court therefore will recommend that Plaintiff’s
18 Motion for Default Judgment be granted.
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20
21

IV.
A.

Requested Relief
Damages

The loan agreements at issue all provide that in the event of default, all indebtedness

22 becomes immediately due and payable, Plaintiff is entitled to take possession of and dispose of
23 the equipment and to have the borrower pay all interest and expenses incurred, including
24 reasonable attorneys’ fees. Doc. No. 1-2, Ex. A ¶¶ 5.1-5.3; Ex. E ¶¶ 5.1-5.3; Ex. J ¶¶ 5.1-5.3; Ex.
25 N ¶¶ 5.1-5.3, Ex. Q ¶ ¶¶ 5.1-5.3; Ex. T ¶ ¶¶ 5.1-5.3; Ex. W ¶¶ 5.1-5.3. As of the respective dates
26 of default on the various agreements, Plaintiff declares that the principal amount due and owing
27 after acceleration totals $684,250.14. Doc. 12-1, Affidavit in Support of Motion for Default
28 Judgment at ¶ 50. Calculated from the respective dates of default to February 1, 2018, the amount

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1 of accrued and unpaid interest due and owing under the Agreements is an amount not less than
2 $53,899.18. Id. at ¶ 52. As of the respective dates of default, late charges in the amount of
3 $2,775.64 have accrued. Id. at ¶ 54. Calculated as of February 1, 2018, the amount due and
4 owing under the Agreements, not including attorneys’ fees and expenses or costs of collection, is
5 an amount not less than $735,900.09. Id. at ¶ 56.
6

These requested amounts are supported by an affidavit. Doc. 12-1, Ex. A. The agreements

7 and affidavit constitute sufficient proof that Plaintiff has sustained damages for the breaches of
8 the Agreements. Based on breach of the Agreements, Plaintiff seeks judgment in the amount of
9 $735,900.09, plus post-judgment interest and attorneys’ fees and costs, against Defendant
10 Harveer Hundal. Doc. 12 at ¶ 15.
11
12

B.

Attorneys’ Fees

Plaintiff seeks a total amount of $7,000.00 in attorneys’ fees and costs. Doc. 12-1, Ex. B.

13 “California and Texas both enforce contractual provisions allowing the collection of reasonable
14 attorneys’ fees. Cal. Civ. Proc. Code § 1021; Gil v. Mansano, 121 Cal.App.4th 739, 742-43
15 (2004); Tex. Civ. Prac. & Rem. Code Ann. § 38.001 (allowing prevailing party in a breach of
16 contract action to collect attorneys’ fees as a default rule); Intercontinental Grp. P'ship v. KB
17 Home Lone Star L.P., 295 S.W.3d 650, 653 (Tex. 2009) (finding that parties may specifically
18 contract for a broader or narrower attorney’s fees provision than the default rule laid out by
19 statute). The Court therefore finds that Plaintiff is entitled to reasonable attorneys’ fees.
20

To determine a reasonable attorneys’ fee, or “lodestar,” the starting point is the number of

21 hours reasonably expended multiplied by a reasonable hourly rate. See Hensley v. Eckerhart, 461
22 U.S. 424, 433 (1983). The Court, in considering what constitutes a reasonable hourly rate, looks
23 to the prevailing market rate in the relevant community. Blum v. Stenson, 465 U.S. 886, 895
24 (1984). The “relevant community” for the purposes of the lodestar calculation is generally the
25 forum in which the district court sits. Gonzalez v. City of Maywood, 729 F.3d 1196, 1205 (9th
26 Cir. 2013). The relevant community here is the Fresno Division of the Eastern District of
27 California.
28

In the Fresno Division of the Eastern District of California, attorneys with twenty or more

13

1 years of experience are awarded $350.00 to $400.00 per hour. See, e.g. Leprino Foods Co. v. JND
2 Thomas Co., Inc., No. 1:16-cv-01181-LJO-SAB, 2017 WL 128502, at *13 (E.D. Cal. Jan. 12,
3 2017), report and recommendation adopted in part, No. 1:16-cv-01181-LJO-SAB, 2017 WL
4 432480 (E.D. Cal. Feb. 1, 2017) (finding $400.00 per hour a reasonable hourly rate for attorney
5 with more than thirty years of experience); Sanchez v. Frito-Lay, Inc., No. 1:14-CV-00797 AWI6 MJS, 2015 WL 4662636, at *18 (E.D. Cal. Aug. 5, 2015), report and recommendation adopted,
7 No. 1:14-CV-797-AWI-MJS, 2015 WL 5138101 (E.D. Cal. Aug. 26, 2015) (finding reasonable
8 rate for attorney with twenty years of experience was $350 per hour in a wage and hour class
9 action); Willis v. City of Fresno, No. 1:09-CV-01766-BAM, 2014 WL 3563310, at *12 (E.D. Cal.
10 July 17, 2014) adhered to on reconsideration, No. 1:09-CV-01766-BAM, 2014 WL 4211087
11 (E.D. Cal. Aug. 26, 2014) (awarding attorneys with over twenty five years of experience $380.00
12 per hour). Generally, “$300 is the upper range for competent attorneys with approximately a
13 decade of experience.” Barkett v. Sentosa Props. LLC, No. 1:14–CV–01698–LJO, 2015 WL
14 5797828, at *5 (E.D. Cal. Sept. 30, 2015) (O'Neill, J.) (citing Silvester v. Harris, No. 1:11–CV–
15 2137 AWI SAB, 2014 WL 7239371, at *4 (E.D. Cal. Dec. 17 2014). For attorneys with “less
16 than ten years of experience ... the accepted range is between $175 and $300 per hour.” Silvester,
17 2014 WL 7239371 at *4 (citing Willis v. City of Fresno, 1:09-cv-01766-BAM, 2014 WL 3563310
18 (E.D. Cal. July 17, 2014); Gordillo v. Ford Motor Co., No. 1:11-cv-01786 MJS, 2014 WL
19 2801243 (E.D. Cal. June 19, 2014)). Finally, “[t]he current reasonable hourly rate for paralegal
20 work in the Fresno Division ranges from $75 to $150, depending on experience.” Silvester, 2014
21 WL 7239371, at *4 (citations omitted); cf. Franco v. Ruiz Food Prods., Inc., No. 1:10–cv–02354–
22 SKO, 2012 WL 5941801, at *20 (E.D. Cal. Nov. 27, 2012) (approving a rate of “$100 per hour”
23 for “legal assistants).
24

Here, Plaintiff provides no information regarding rates per hour or hours expended.

25 Despite the deficiency in Plaintiff’s moving papers, the Court takes judicial notice of the State
26 Bar of California website, which shows that Mr. Miles, the attorney of record in this action, was
27 admitted to practice in California in 2010, and has approximately 8 years of experience in this
28 state. He also is admitted to practice in Kansas, Missouri and Tennessee. Doc. 12-1, Ex. B at ¶

14

1 1. Given this information, the Court finds a rate of $300 per hour to be reasonable for the services
2 of Mr. Miles. With this hourly rate in mind, the amount of $7,000.00 requested by Plaintiff
3 equates with approximately 23 hours in attempting to collect and enforce the Agreements. The
4 Court finds this amount reasonable, and will recommend that attorney fees be awarded in the
5 amount of $7,000.00.
6

V.

CONCLUSION AND RECOMMENDATION

7

Based on the foregoing, IT IS HEREBY RECOMMENDED that:

8

1.

Plaintiff’s motion for default judgment (Doc. 12) be granted;

9

2.

Default judgment be entered in favor of Plaintiff and against Defendant Harveer

10 Hundal in the amount of $ $735,900.09 plus post-judgment interest, less any net proceeds
11 received from the liquidation of any collateral vehicles recovered;
12

3.

Defendant be ordered to pay Plaintiff an amount of $7,000.00, which represents the

13 reasonable attorneys’ fees, expenses and costs incurred in enforcing the Agreements and in
14 collection of the amounts due;
15

4.

Plaintiff be awarded final possession of the collateral vehicles; and

16

5.

Plaintiff be authorized to liquidate any recovered collateral in a commercially

17 reasonable manner.
18

These Findings and Recommendations will be submitted to the United States District

19 Judge assigned to the case, pursuant to the provisions of Title 28 U.S.C. § 636(b)(l). Within
20 fourteen (14) days after being served with these Findings and Recommendations, the parties may
21 file written objections with the Court. The document should be captioned “Objections to
22 Magistrate Judge’s Findings and Recommendations.” The parties are advised that failure to file
23 objections within the specified time may result in the waiver of the “right to challenge the
24 magistrate’s factual findings” on appeal. Wilkerson v. Wheeler, 772 F.3d 834, 839 (9th Cir. 2014)
25 (citing Baxter v. Sullivan, 923 F.2d 1391, 1394 (9th Cir. 1991)).
IT IS SO ORDERED.
26
27
28

Dated:

/s/ Barbara

September 6, 2018

A. McAuliffe

_

UNITED STATES MAGISTRATE JUDGE

15