American River Ag., Inc. v. Global Natural, LLC et al

Filing 15

ORDER signed by Magistrate Judge Carolyn K. Delaney on 03/19/19 DENYING 14 Motion for Default Judgment without prejudice subject to renewal in a motion that addresses the appropriate legal standards. (Benson, A.)

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UNITED STATES DISTRICT COURT

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FOR THE EASTERN DISTRICT OF CALIFORNIA

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AMERICAN RIVER AG., INC.,

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No. 2:18-cv-00377-TLN-CKD

Plaintiff,
v.

ORDER

GLOBAL NATURAL, LLC, et al.,

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Defendants.

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INTRODUCTION
Presently pending before the court is plaintiff American River Ag., Inc.’s motion for

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default judgment pursuant to Federal Rule of Civil Procedure 55(b)(2). (ECF No. 14.) Plaintiff

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seeks a judgment totaling $1,462,397.47 against defendant Global Natural, LLC and

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$1,254,691.58 against defendant J. Michael Spangler. (Id. at 2.) Plaintiff previously moved for

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default judgment pursuant to Federal Rule of Civil Procedure 55(b)(1), which the court denied

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without prejudice because it could not be determined that “no doubt remains as to the amount to

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which plaintiff is entitled in relation to defendants’ default.” (ECF No. 13 at 2.) For the reasons

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discussed below, plaintiff’s current motion is again DENIED without prejudice.

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LEGAL STANDARDS

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Pursuant to Federal Rule of Civil Procedure 55, default may be entered against a party
against whom a judgment for affirmative relief is sought who fails to plead or otherwise defend
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against the action. See Fed. R. Civ. P. 55(a). However, “[a] defendant’s default does not

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automatically entitle the plaintiff to a court-ordered judgment.” PepsiCo, Inc. v. Cal. Sec. Cans,

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238 F. Supp. 2d 1172, 1174 (C.D. Cal. 2002) (citing Draper v. Coombs, 792 F.2d 915, 924-25

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(9th Cir. 1986)). Instead, the decision to grant or deny an application for default judgment lies

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within the district court’s sound discretion. Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir.

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1980). In making this determination, the court considers the following factors:

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(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.

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

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As a general rule, once default is entered, well-pleaded factual allegations in the operative

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complaint are taken as true, except for those allegations relating to damages. TeleVideo Sys., Inc.

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v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987) (per curiam) (citing Geddes v. United Fin.

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Group, 559 F.2d 557, 560 (9th Cir. 1977) (per curiam)); accord Fair Housing of Marin v. Combs,

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285 F.3d 899, 906 (9th Cir. 2002). In addition, although well-pleaded allegations in the

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complaint are admitted by a defendant’s failure to respond, “necessary facts not contained in the

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pleadings, and claims which are legally insufficient, are not established by default.” Cripps v.

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Life Ins. Co. of N. Am., 980 F.2d 1261, 1267 (9th Cir. 1992) (citing Danning v. Lavine, 572 F.2d

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1386, 1388 (9th Cir. 1978)); accord DIRECTV, Inc. v. Hoa Huynh, 503 F.3d 847, 854 (9th Cir.

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2007) (“[A] defendant is not held to admit facts that are not well-pleaded or to admit conclusions

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of law”); Abney v. Alameida, 334 F. Supp. 2d 1221, 1235 (S.D. Cal. 2004) (“[A] default

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judgment may not be entered on a legally insufficient claim”). A party’s default does not

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establish the amount of damages. Geddes, 559 F.2d at 560.

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DISCUSSION

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Plaintiff’s current motion for default judgment consists of two pages and is based upon the

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same documents upon which plaintiff’s previous motion relied—“the Declaration of Craig

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Walker . . . and the Declaration of Attorney Bradley A. Silva.” (ECF No. 14 at 2; see ECF Nos.
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9, 10.) Glaringly, this motion includes no legal analysis regarding why default judgment is

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appropriate in this matter, let alone a consideration of the Eitel factors. Moreover, even assuming

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that plaintiff has met the Eitel factors here, the motion does not adequately justify the terms of the

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judgment that plaintiff seeks.
When denying plaintiff’s first motion for default judgment, the court clearly advised

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plaintiff that “for a determination regarding default judgment in this matter, plaintiff needs to

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bring a motion pursuant to Federal Rule of Civil Procedure 55(b)(2) in accordance with the local

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rules of court.” (ECF No. 13 at 2.) In response, plaintiff submitted a two-page motion devoid of

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legal argument that merely invokes Rule 55(b)(2) rather than 55(b)(1) and is otherwise identical

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to its previous inadequate motion. With such a paucity of argument and justification, plaintiff

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seeks a combined judgment of nearly three million dollars against defendants. Plaintiff has once

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again failed to demonstrate the appropriateness of entering default judgment on the terms it seeks.

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CONCLUSION

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Accordingly, IT IS HEREBY ORDERED that:

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1. Plaintiff’s motion for default judgment (ECF No. 14) is DENIED without prejudice

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subject to renewal in a motion that addresses the appropriate legal standards.
Dated: March 19, 2019

_____________________________________
CAROLYN K. DELANEY
UNITED STATES MAGISTRATE JUDGE

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