Great American Insurance Company v. Artap et al

Filing 74

ORDER RE: PLAINTIFF'S MOTION FOR DEFAULT JUDGMENT (Dkt. 68). Signed by Magistrate Judge Jacqueline Scott Corley on 12/8/2011. (ahm, COURT STAFF) (Filed on 12/8/2011)

1
2
3
4
5
6
7
8

IN THE UNITED STATES DISTRICT COURT

9

FOR THE NORTHERN DISTRICT OF CALIFORNIA

10

Northern District of California

United States District Court

11
12
13
14

GREAT AMERICAN INSURANCE
COMPANY,
Plaintiff,

15
16

Case No.: 11-cv-1842 PJH (JSC)
ORDER RE: PLAINTIFF’S MOTION
FOR DEFAULT JUDGMENT (Dkt.
No. 68)

v.

17
18
19

RODOLFO ARTAP, a.k.a. RUDY
ARTAP, et al.,
Defendants.

20
21
22
23
24
25
26
27
28

In this civil action, Plaintiff Great American Insurance Company, Inc., moves for Final
Default Judgment against Defendants Antonio Boleche, Ian Colvin, Jeremy Ferrer, Jerry
Kahue, James Salceda, Vichai Do, Luis Tobar Marquez and Emmanuel Valdez, seeking
default judgment, damages and costs. This motion was referred to the undersigned Judge for
a report and recommendation. The deadline for opposing the motion has passed, see Civ. L.R.
7-3(a), and the Defaulted Defendants have not filed an opposition nor otherwise
communicated with the Court. Having reviewed the papers submitted in support of Plaintiff’s

1

request for default judgment and the relevant legal authority, the Court hereby orders Plaintiff

2

to submit additional briefing in support of its motion for default judgment.

3

BACKGROUND

4

Plaintiff Great American Insurance Company, Inc., (“Great American”) brought this

5

Boleche, Ian Colvin, Carlos Corobado, Jeremy Ferrer, Steven Hagen, Jerry Kahue, James

8

Salceda, David Siharath, Vichai So, Luis Tobar Marquez, Emmanuel Valdez (collectively

9

“the Employee Defendants”); and Vinh Nguyen, d.b.a. Kim Tin Jewelry, and Pleasant Hill

10

Coin & Jewelry, alleging that these Defendants participated in a scheme to steal gold from

11
Northern District of California

civil action against the following Defendants: Rodolfo Artap, a.k.a. Rudy Artap, Antonio

7

United States District Court

6

Bei Sensors & Systems Company, Inc., (“Bei”), who was insured by Plaintiff Great

12

American.1 Plaintiff alleged the following violations (1) unjust enrichment, (2) fraud, (3)

13

conversion, (4) breach of contract, (5) money had and received, (6) equitable subrogation,

14

(7) equitable indemnity. (Dkt. No. 1, ¶¶ 30-63).
Eight of the Employee Defendants, Antonio Boleche, Ian Colvin, Jeremy Ferrer, Jerry

15
16

Kahue, James Salceda, Vichai So, Luis Tobar Marquez, and Emmanuel Valdez (“Defaulted

17

Defendants”), failed to file a responsive pleading or otherwise appear and the clerk entered

18

their default pursuant to Federal Rule of Civil Procedure 55(a). (Dkt. Nos. 27, 39, 45, 65).

19

Plaintiff now moves for default judgment against the Defaulted Defendants asking that they

20

be held jointly and severally liable for $7,750,000 in damages and $3,480.21 in costs based

21

on the following violations: (1) unjust enrichment, (2) fraud, (3) conversion, (4) breach of

22

contract, (5) money had and received, (6) equitable subrogation, (7) equitable indemnity, (8)

23

breach of duty of loyalty, and (9) conspiracy.

24
25
26
27
28

1

Great American actually insured Bei’s parent corporation, Schneider Electric Holdings, Inc.,
under Crime Protection Policy, No. SAA 517-77-45-03. On or about October 30, 2008, Bei
submitted a proof of loss pertaining to the gold theft to Plaintiff Great American. Plaintiff
and Bei subsequently entered into a settlement agreement whereby Plaintiff indemnified Bei
$7,750,000 for its loss and Bei assigned all of its claims, demands, causes of action and suits
related to the gold theft to Plaintiff. See BEI Sensors & Systems Company, Inc. v. Great
American Insurance Company, N.D. Cal. No. 09-5819-SBA.
2

DISCUSSION

1
2

After entry of default, a court may grant default judgment on the merits of the case.

3

See Fed. R. Civ. P. 55. The factual allegations of the complaint, except those concerning

4

damages, are deemed to have been admitted by the non-responding party. Geddes v. United

5

Financial Group, 559 F.2d 557, 560 (9th Cir. 1977). Although well-pleaded allegations in

6

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

7

contained in the pleadings, and claims which are legally insufficient, are not established by

8

default.” Cripps v. Life Ins. Co. of N. Am., 980 F.2d 1261, 1267 (9th Cir. 1992) (internal

9

citations omitted). A court should consider the following factors in determining whether to

10

Northern District of California

United States District Court

11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

enter default judgment:
(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 v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986).
Plaintiff has not addressed the Eitel factors at all in the motion for default judgment.
Plaintiff’s supplemental brief shall address the Eitel factors. See Alan Neuman Productions,
Inc., v. Albright, 862 F.2d 1388, 1392 (discussing the legal sufficiency of the allegations
contained in the complaint necessary for entry of default judgment). Plaintiff also seeks
default on two claims, conspiracy and breach of the duty of loyalty, which are not contained
in the Complaint.
Further, Plaintiff has not addressed the fact that in this multi-defendant action seeking
joint and several liability, it only seeks default judgment with respect to some of the
Defendants. In Frow v. De La Vega, 82 U.S. 552 (1872), the Supreme Court held that
“where a complaint alleges that defendants are jointly liable and one of them defaults,
judgment should not be entered against the defaulting defendant until the matter has been
adjudicated with regard to all defendants.” In re First T.D. & Inv., Inc., 253 F.3d 520, 532
(9th Cir. 2001). Courts take varying views on Frow’s injunction against entering default

3

1

judgments while claims remain pending against other defendants. See Shanghai Automation

2

Instrument Co., Ltd. v. Kuei, 194 F.Supp.2d 995, 1008 (N.D. Cal. 2001) (discussing the

3

various approaches courts have taken in these cases). Plaintiff shall address this issue and

4

explain why the Court should enter judgment at this time.

5
6

Plaintiff shall serve a copy of this Order on Defendants within three days and shall
file a proof of service with this Court.

7

Accordingly, Plaintiff shall file a supplemental brief addressing these issues by

8

January 6, 2011. The hearing on Plaintiff’s Motion for Default Judgment is reset to January

9

20, 2011 at 2:00 p.m.

10

Northern District of California

United States District Court

11

IT IS SO ORDERED.

12
13

Dated: December 8, 2011
_________________________________
JACQUELINE SCOTT CORLEY
UNITED STATES MAGISTRATE JUDGE

14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

4