Prime 3 Group, LLC v. SolFocus, Inc.

Filing 14

ORDER DENYING MOTION FOR DEFAULT JUDGMENT 8 WITHOUT PREJUDICE; GRANTING LEAVE TO FILE AMENDED COMPLAINT; VACATING APRIL 25, 2013 HEARING. Signed by Judge Maria-Elena James on 4/10/2013. (mejlc2, COURT STAFF) (Filed on 4/10/2013)

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UNITED STATES DISTRICT COURT

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Northern District of California

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PRIME 3 GROUP, LLC,

No. C 13-0264 MEJ

Plaintiff,

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ORDER DENYING PLAINTIFF’S
MOTION FOR DEFAULT
JUDGMENT
[Dkt. No. 8]

v.
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SOLFOCUS, INC.,
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Defendant.
_____________________________________/

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For the Northern District of California

UNITED STATES DISTRICT COURT

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I. INTRODUCTION
Pending before the Court is Plaintiff Prime 3 Group, LLC’s Motion for Default Judgment,

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filed on March 18, 2013. Dkt. No. 8. After careful consideration of Plaintiff’s Motion and relevant

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authority, the Court hereby DENIES default judgment against Defendant Solfocus, Inc. without

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prejudice and GRANTS Plaintiff leave to file an amended complaint.

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II. BACKGROUND

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The instant lawsuit follows a previous action between the parties, Prime3Group, LLC v.

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SolfFocus, Inc., Case No. C 11-03072 EMC. Compl. ¶ 3, Dkt. No. 1. In that matter, the parties

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entered into a Settlement Agreement on October 7, 2011, pursuant to which Defendant agreed to

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make six equal settlement payments of $25,000 on six dates in 2011, 2012, and 2013. Id.

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In its Complaint, Plaintiff alleges that Defendant made the first three payments, but failed to

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make the fourth and fifth payments on September 15, 2012 and December 15, 2012, respectively.

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Id. ¶¶ 8-9. Plaintiff further alleges that “based on [Defendant’s] aforementioned breaches of the

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Agreement, [Plaintiff] is informed and believes and thereon alleges that [Defendant] similarly will

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not make its sixth payment of $25,000, which is due on March 15, 2013.” Id. ¶ 10. Based on these

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allegations, Plaintiff asserts a claim for breach of contract and seeks $75,000 in contract damages

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(representing payments four, five, and six), prejudgment interest on the missed payments, and

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attorney fees. Id. at 3.

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After Defendant failed to timely answer, Plaintiff moved for entry of default on February 28,

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2013 (Dkt. No. 5), which the Clerk of Court entered on March 6, 2013 (Dkt. No. 7). Plaintiff

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thereafter filed the instant Motion seeking default judgment against Defendant.

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In its Motion, Plaintiff explains that since the filing of the Complaint, Defendant has made

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the fourth and fifth settlement payments, but has now missed the sixth settlement payment due on

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March 15, 2013. Mot. at 2. Thus, Plaintiff now seeks entry of default judgment on its breach of

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contract claim and an award of $37,453.01, constituting $25,000 for the missed sixth payment,

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$1,457 in prejudgment interest, and $10,996.01 in attorneys fees and costs. See Dkt. Nos. 8, 12.

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III. LEGAL STANDARD
Federal Rule of Civil Procedure 55(b)(2) permits a court, following a default by a defendant,

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For the Northern District of California

UNITED STATES DISTRICT COURT

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to enter a final default judgment in a case. Fed. R. Civ. P. 55(b)(2). The court has discretion in

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determining whether to grant or deny a motion for entry of default judgment. Draper v. Coombes,

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792 F.2d 915, 924 (9th Cir. 1986); see also Kingvision Pay-Per-View, Ltd. v. Rivers, 2000 WL

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356378, *1 (N.D. Cal. Mar. 28, 2000). “Generally, upon an entry of default, the factual allegations

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of the plaintiff’s complaint will be taken as true.” Rivers, 2000 WL 356378, at *1. “For a default

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judgment, well-pleaded factual allegations are sufficient to establish a defendant’s liability.

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However, the allegations of the complaint regarding the amount of damages suffered are not

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controlling.” Kingvision Pay-Per-View, Ltd. v. Backman, et. al., 102 F. Supp. 2d 1196, 1197 (N.D.

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Cal. 2000) (citing Dundee Cement Co. v. Howard Pipe & Concrete Products, 722 F.2d 1319, 1323-

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1324 (7th Cir.1983)); Geddes v. United Fin. Group, 559 F.2d 557, 560 (9th Cir. 1977)).

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In deciding whether to grant a motion for default judgment, the Court examines: (1) the

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possibility of prejudice to the plaintiff; (2) the merits of plaintiff’s substantive claim; (3) the sum of

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money at stake in the action; (4) the possibility of a dispute concerning material facts; (5) whether

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the default was due to excusable neglect; and (6) the strong policy underlying the Federal Rules of

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Civil Procedure favoring decisions on the merits. Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir.

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1986).

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Finally, where a default judgment is granted, the scope of relief is limited by Federal Rules

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of Civil Procedure 54(c) and 55(d). “A judgment by default shall not be different in kind from or

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exceed in amount that prayed for in the demand for judgment” in the complaint. Fed. R. Civ. P.

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54(c), 55(d).

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IV. DISCUSSION

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Reviewing Plaintiff’s Motion and relief requested, the Court notes that the facts have

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changed significantly since Plaintiff filed this lawsuit. Particularly, Defendant has paid $50,000 to

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satisfy the fourth and fifth settlement installment payments, but has now missed the sixth installment

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payment. The damages Plaintiff seeks are now predominately based on the missed sixth payment,

As a result of these factual developments, the Complaint no longer matches the grounds on which

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For the Northern District of California

which was only alleged as an anticipated or prospective breach in the Complaint. See Compl. ¶ 10.

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UNITED STATES DISTRICT COURT

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Plaintiff seeks entry of default judgment. Accordingly, the Court DENIES Plaintiff’s Motion for

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Default Judgment without prejudice. The Court further GRANTS Plaintiff leave to file an amended

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complaint setting forth the current facts supporting its breach of contract claim and the damages

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sought. Plaintiff’s amended complaint shall be due by April 25, 2013.

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V. CONCLUSION
For the reasons set forth above, the Court DENIES Plaintiff’s Motion for Default Judgment

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(Dkt. No. 8) WITHOUT PREJUDICE and GRANTS Plaintiff leave to file an amended complaint.

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Further, the Court VACATES the hearing set for April 25, 2013.

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IT IS SO ORDERED.

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Dated: April 10, 2013.

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_______________________________
Maria-Elena James
US Magistrate Judge

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