Garvin et al v. Ramirez et al

Filing 354

ORDER GRANTING PROSPERO TORRALBA'S APPLICATION FOR DEFAULT JUDGMENT 311 , and JUDGMENT in favor of Prospero Torralba against Golden Hills Associates, Inc. Signed by Magistrate Judge Howard R. Lloyd on 11/16/11. (hrllc1, COURT STAFF) (Filed on 11/16/2011)

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** E-filed November 16, 2011 **

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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For the Northern District of California

NOT FOR CITATION

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United States District Court

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SAN JOSE DIVISION

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MARIA A. GARVIN; ET AL,
Plaintiffs,

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v.
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LINDA TRAN, an individual; ABSOLUTE
INVESTMENT GROUP, a California
corporatiob dba PALACIO MORTGAGE;
ET AL.,

No. C07-01571 HRL
ORDER GRANTING PLAINTIFF
PROSPERO TORRALBA’S
APPLICATION FOR DEFAULT
JUDGMENT AND JUDGMENT
[Re: Docket No. 311]

Defendants.
____________________________________/

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In this predatory home loan action, numerous plaintiffs have alleged fraud, breach of
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fiduciary duty, negligence, conspiracy to defraud, and violations of Cal. Bus. & Prof. Code § 17200
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et seq against a variety of defendants involved in home sales and loans. See generally, Docket No.
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50 (“Second Amended Complaint” or “SAC”). Defendant Norma Valdovinos, through her
company, Golden Hills Associates dba Century 21 Golden Hills, acted as plaintiffs’ real estate

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agent, and then directed plaintiffs to Linda Tran, a mortgage broker, for their loan applications. Id.
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¶¶ 2-3. Plaintiffs allege that defendants preyed upon them through predatory and abusive lending
practices, which included making misrepresentations about essential terms of loans, using bait-and-

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switch tactics and duress, charging unreasonable and unearned fees, falsifying information on loan
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applications, failing to translate important loan documents from English to Spanish, and including
unexpected terms allowing for balloon payments, prepayment penalties, and negative amortization.

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Id.

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Defendant Golden Hills Associates dba Century 21 Golden Hills (“Golden Hills”) was

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served with the original Complaint and summons on April 11, 2007, but filed no answer. Docket

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No. 8. Golden Hills filed an Answer to the First Amended Complaint (“FAC”) on August 3, 2007.

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Docket No. 35. Golden Hills also filed an Answer to the SAC on December 17, 2007. Docket No.

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74. Plaintiffs then propounded written discovery requests on Golden Hills, to which Golden Hills

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failed to respond. Plaintiffs filed a Motion to Compel Responses to Interrogatories they had served

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on Golden Hills. Docket No. 186. The court granted the Motion to Compel, and then granted

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plaintiffs’ subsequent Motion for Sanctions and struck Golden Hills’s Answer when it failed to

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respond. Docket Nos. 193, 203, 218. Plaintiffs then requested the Clerk of Court to enter default

For the Northern District of California

United States District Court

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against Golden Hills, which the Clerk did enter on May 10, 2011. Docket No. 275. Plaintiff

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Prospero Torralba then filed the instant Application for an Order Entering Default Judgment against

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Golden Hills. Docket No. 311. Golden Hills has not filed an opposition or otherwise appeared since

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filing its Answer to the SAC.

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Based on the moving papers and arguments presented by plaintiff at hearing on October 25,

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2011, the Court GRANTS plaintiff Prospero Torralba’s motion for entry of default judgment against

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Golden Hills.

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LEGAL STANDARD

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After entry of default by the Clerk, courts are authorized to grant default judgment in their

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discretion. See FED. R. CIV. P. 55; Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). A court

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may consider the following factors in deciding whether to enter default judgment: (1) the possibility

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

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the complaint; (4) the sum of money at stake in the action; (5) the possibility of a dispute concerning

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material facts; (6) whether the default was due to excusable neglect; and (7) the strong policy

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underlying the Federal Rules of Civil Procedure favoring decisions on the merits. Eitel v. McCool,

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782 F.2d 1470, 1471-72 (9th Cir. 1986). In considering these factors, all factual allegations in the

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plaintiff’s complaint are taken as true, except those relating to damages. TeleVideo Sys., Inc. v.

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Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987). When the damages claimed are not readily

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ascertainable from the pleadings and the record, the court may conduct a hearing to conduct an

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accounting, determine the amount of damages, establish the truth of any allegation by evidence, or

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investigate any other matter. FED. R. CIV. P. 55(b)(2).

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DISCUSSION

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A. Entry of Default Judgment

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All of the Eitel factors favor entry of default judgment. Plaintiffs’ claims have merit and are

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sufficiently pled. Once the Clerk of Court enters default, all well-pleaded allegations regarding

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liability are taken as true except as to the amount of damages. Fair Hous. of Marin v. Combs,

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285 F.3d 899, 906 (9th Cir. 2002); Geddes v. United Fin. Group, 559 F.2d 557, 560 (9th Cir. 1977).

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Here, the Clerk entered default against Golden Hills on May 10, 2011. Upon review of Plaintiffs’

For the Northern District of California

United States District Court

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SAC, the court finds that Mr. Torralba has adequately alleged each of his causes of action. Since all

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liability-related allegations are taken as true, there can be no dispute over material facts. Further,

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plaintiff would be prejudiced if default is not entered against Golden Hills. Since defendant has

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failed to participate in this action (and there is no indication that its failure to do so is due to

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excusable neglect), plaintiff’s only recourse is a default judgment. While this court prefers to decide

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matters on the merits, defendants’ refusal to participate meaningfully in this litigation renders that

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impossible. Finally, “default judgment is disfavored when a large amount of money is . . .

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unreasonable in light of defendant’s actions.” United States v. Ordonez, 2011 U.S. Dist. LEXIS

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50765, *6 (E.D. Cal. May 11, 2011) (finding that over $300,000 was appropriate for resolution by

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default judgment when plaintiff’s allegations supported the sum). Here, the sum of money

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requested, while not insignificant, is small enough to make this matter appropriate for resolution by

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default judgment.

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Therefore, the court GRANTS Prospero Torralba’s application for default judgment against
Golden Hills.

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B. Damages Requested

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Plaintiff Torralba requests that the default judgment be entered against Golden Hills for

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$29,363.00. Unlike liability-related allegations, allegations related to damages are not taken as true

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upon entry of default against a defendant. Plaintiffs must therefore “prove up” the amount of

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damages they seek. Here, plaintiff seeks damages for all of the following:

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rent for a home like his is $2,300, or $138,000 over the five years since he moved in. Since

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purchasing the home, he has made $103,580 in payments on the home. He has paid $3,900

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in homeowners insurance, which he would not have incurred but for purchasing the home;

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2. Mr. Torralba has paid $31,237 in property taxes, which he would not have incurred but for

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purchasing the home. He has paid $3,000 in water and trash since he moved in, which he

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would not have incurred but for purchasing the home. He has paid $6,720 in electricity,

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which he did not pay before he became a homeowner;

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3. He has made significant improvements and repairs to his home. He put in new flooring,

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For the Northern District of California

1. Mr. Torralba has a four-bedroom home. Mr. Torralba believes that the average monthly

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United States District Court

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new windows, and repaired the bathroom. He works in construction, and believes that the

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market rate of his work would have been $35,000;

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4. Mr. Torralba had to take out a number of personal loans to avoid foreclosure of his home.

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Specifically, Mr. Torralba took out $7,000 in credit cards cash advances. He borrowed the

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money in 2008, and he is still paying this off. He pays 27% interest on his credit card, and

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over a five year period, he will pay $5,824 in interest payments on the borrowed amount. He

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took out a personal loan from his father in the amount $10,000, of which he has paid back

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$5,000;

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5. He took out a loan from the City of San Jose Revolving Loan Fund for victims of

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predatory lending for $12,000, which is due from settlement proceeds from this case; and

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6. Golden Hills made a commission of $18,200 from the purchase transaction of his home.

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Defendant Linda Tran made $20,402 in fees for his mortgages. His loan from Pablo Curiel in

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the amount of $74,375 has recently been rescinded. The amount financed was only $62,000.

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He has settled the instant litigation with Jesus Chavez for $17,500.

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See generally, Docket No. 313 (Torralba Declaration). Including the offsets for settlements and the

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benefit of living in his home, Mr. Torralba believes that he has incurred damages in the sum of

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$29,363.00.

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The court is satisfied that plaintiff has provided sufficient evidence to prove the damages he
requests. The court awards plaintiff $29,363.00 in damages.

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CONCLUSION

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Default Judgment is hereby ENTERED in favor of Plaintiff Prospero Torralba and against

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Defendants Golden Hills Associates, Inc., dba Century 21 Golden Hills in the amount of

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$29,363.00.

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IT IS SO ORDERED.
Dated: November 16, 2011
HOWARD R. LLOYD
UNITED STATES MAGISTRATE JUDGE

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For the Northern District of California

United States District Court

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C07-01571 HRL Notice will be electronically mailed to:

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Alisha Mei Yuk Louie
Annette D. Kirkham
Cindy Hamilton
Jessica Lynn Fry

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Karen Rosenthal
Kimberly Pederson
Kyra Ann Kazantzis
Shawn Robert Parr
William Cornelius Last , Jr
William J. Goines

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Notice will be mailed to:

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Raya Ghajar
1101 Salerno Drive
Campbell, CA 95008

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For the Northern District of California

United States District Court

[e-mail]
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[e-mail]
[e-mail], [e-mail], [e-mail]

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Counsel are responsible for distributing copies of this document to co-counsel who have not
registered for e-filing under the court’s CM/ECF program.

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