Sun v. Rickenbacker Collections

Filing 70

ORDER finding as moot 61 Motion for Entry of Default; finding as moot 62 Motion for Entry of Default; denying 64 Motion for Default Judgment. Signed by Judge Edward J. Davila on January 2, 2013. (ejdlc4, COURT STAFF) (Filed on 1/2/2013)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

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ZHIXUN SAMUEL SUN,
Plaintif,

United States District Court
For the Northern District of California

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v.

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RICKENBACKER COLLECTION dba
RICKENBACKER GROUP,

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Defendant.

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Case No.: 5:10-CV-01055-EJD
ORDER DENYING PLAINTIFF’S
MOTION FOR DEFAULT
JUDGMENT

[Re: Docket No. 61, 62, 64]

Presently before the court is pro se Plaintiff Zhixun Samuel Sun’s motion for entry of

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default judgment for $27,189.54 in monetary damages and injunctive relief against Defendant

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Rickenbacker Collection. Plaintiff seeks relief for injuries arising out of Defendant’s alleged

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violation of the Fair Credit Reporting Act, 15 U.S.C. § 1681s-2. The Court took the Plaintiff’s

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motion under submission without oral argument pursuant to Civil L.R. 7-1(b). Having considered

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the moving papers, the briefs, and the evidence presented, the motion is DENIED for the reasons

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discussed below.

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I. Background
On October 20, 2009, Plaintiff filed an action in Santa Clara County Superior Court

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alleging negligence and an intentional tort on October 20, 2009 in Santa Clara County Superior

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Court. See Dkt. No. 1, Ex. A. Defendant filed an Answer to this initial complaint, and

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subsequently removed the action to this court.

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The court recites the factual background of this case from the allegations contained in
Plaintiff’s First Amended Complaint (“FAC”). Dkt. No. 23. On April 29, 2009, Plaintiff applied
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Case No.: 5:10-CV-01055-EJD
ORDER DENYING PLAINTIFF’S MOTION FOR DEFAULT JUDGMENT

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for a primary home loan at Wells Fargo Bank. FAC 2:16-17. In the process of applying for this

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loan, Plaintiff learned that his credit report indicated that he owed a debt of $8,810. Id. at 2:18-19.

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According to Plaintiff, Defendant placed this debt on Plaintiff’s credit report without verifying the

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debt, communicating with Plaintiff, or providing the address of the original creditor to Plaintiff. Id.

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at 2:20-22. Plaintiff disputed the debt, and Defendant responded with a letter purporting to verify

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the debt and suggesting Plaintiff pay the account immediately. Id. at 2:23-27. Defendant later

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increased this debt to $8,861.21, and later again to $8,992. Id. at 3:2, 3:16.

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Plaintiff hired attorney Edwin Chau to dispute the debt for him. Id. at 3:6. Mr. Chau sent a
dispute letter to Defendant regarding the debt on July 9, 2009. Id. at 3:8-10. Plaintiff paid Mr.

United States District Court
For the Northern District of California

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Chau $885.54 in fees. FAC, Ex. 5. On September 15, 2009, Plaintiff hired attorney Vivian Lu to

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represent him in a civil lawsuit against Defendant. FAC, at 3:12-14. Ms. Lu filed the lawsuit in

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Santa Clara Superior Court October 20, 2009. Plaintiff incurred $3282.00 in Ms. Lu’s attorney

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fees. FAC, Ex. 10.

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On December 3, 2009, Defendant sent Plaintiff a letter notifying him of closure of the

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collection account against him. FAC, Ex. 7. Several days letter, Defendant sent another

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notification of the account closure, stating that it had initiated a removal of the debt from Plaintiff’s

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credit reporting. FAC, Ex. 8. A month later, Plaintiff’s credit report still did not reflect the

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correction. FAC 4:1-2.

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Plaintiff continued to pursue this case after receiving these letters from Defendant. On

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November 15, 2010, Plaintiff filed her FAC, alleging violation of the federal Fair Debt Collection

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Practices Act (“FDCPA”) and violation of the Fair Credit Reporting Act (“FCRA”). Defendant

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filed a motion to dismiss the FDCPA claim, which Judge Lucy Koh granted on February 18, 2011.

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Defendant did not address the FCRA claim, and thus that claim has survived.

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Under Fed. R. Civ. P. 12(a)(4)(A), Defendant was required to file an answer to the

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remaining FCRA claim by March 4, 2011. Defendant failed to file an answer. Instead, on March

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3, 2011, Defendant’s counsel filed a motion to withdraw as attorney, which stated that Defendant,

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which is no longer in business, could not pay its defense costs and had breached its legal services

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agreement by failing to pay the agreed-upon fees. Judge Koh granted this motion on April 8, 2011,
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Case No.: 5:10-CV-01055-EJD
ORDER DENYING PLAINTIFF’S MOTION FOR DEFAULT JUDGMENT

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and ordered Defendant to retain new counsel within 30 days or risk entry of default judgment. Dkt.

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No. 40. New counsel for Defendant has still not appeared.

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The action was reassigned to the undersigned on April 25, 2011. Dkt. No. 44. On May 24,

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2011, Plaintiff filed for entry of default and a motion for default judgment. Dkt. No. 46. The

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motions were brought under Fed. R. Civ. P. 55(a) and Fed. R. Civ. P. 55(b)(1), and were denied.

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Dkt. No. 52. On December 13, 2011, Plaintiff filed a second motion for entry of default, which

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was also denied. On February 28, 2012, Plaintiff filed a third motion for entry of default (Dkt. No.

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53), which the Court granted on July 10, 2012 (Dkt. No. 59).

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Plaintiff now brings two motions for entry of default pursuant to Federal Rule of Civil

United States District Court
For the Northern District of California

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Procedure 55(a) and one motion for entry of default judgment pursuant to Federal Rule of Civil

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Procedure 55(b)(2). Dkt. Nos. 61, 62, 64. The two motions brought pursuant to Rule 55(a) are

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duplicative of the motions already granted by this court, and thus will be DENIED as moot. The

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motion for default judgment pursuant to Rule 55(b)(2) is brought in accordance with this court’s

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July 10, 2012 order granting entry of default, and will now be considered.

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II. Legal Standard

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Pursuant to Federal Rule of Civil Procedure 55(b)(2), following an entry of default, a court

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may enter default judgment on the merits of the case against a defendant who has failed to plead or

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otherwise defend an action. “The district court's decision whether to enter a default judgment is a

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discretionary one.” Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). In exercising that

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discretion, a court should consider the following factors: “(1) the possibility of prejudice to the

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plaintiff; (2) the merits of plaintiff's substantive claim; (3) the sufficiency of the complaint; (4) the

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sum of money at stake in the action; (5) the possibility of a dispute concerning material facts; (6)

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whether the default was due to excusable neglect; and (7) the strong policy underlying the Federal

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Rules of Civil Procedure favoring decisions on the merits.” Eitel v. McCool, 782 F.2d 1470, 1471–

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72 (9th Cir. 1986). When assessing these seven “Eitel factors,” all well-pled allegations in the

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complaint regarding liability are taken as true, except as to the amount of damages, for which

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evidentiary support is required. See Fair Hous. of Marin v. Combs, 285 F.3 d 899, 906 (9th Cir.

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2002); TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917–18 (9th Cir. 1987) (per curiam).
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Case No.: 5:10-CV-01055-EJD
ORDER DENYING PLAINTIFF’S MOTION FOR DEFAULT JUDGMENT

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If the plaintiff is seeking money damages, the plaintiff must “prove-up” any such damages.

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Amini Innovation Corp. v. KTY Int'l Mktg., 768 F.Supp.2d 1049, 1053–54 (C.D. Cal. 2011). That

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is, the plaintiff must “provide evidence of its damages, and the damages sought must not be

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different in kind or amount from those set forth in the complaint.” Id. (citing Philip Morris USA,

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Inc. v. Castworld Prods., Inc., 219 F.R.D. 494, 498 (C.D.Cal. 2003)); see Schwarzer, Tashima, and

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Wagstaffe, Federal Civil Procedure Before Trial § 6:80 (2010 ed.). “In order to ‘prove up’

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damages, a plaintiff is generally required to provide admissible evidence (including witness

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testimony) supporting damage calculations.” Cannon v. City of Petaluma, No. C 11–0651, 2011

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WL 3267714, at *2 (N.D. Cal. July 29, 2011) (Hamilton, J.) (citing Schwarzer, et al., § 6:94, et

United States District Court
For the Northern District of California

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seq.)).]

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III. Discussion

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a. Jurisdiction

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Courts have an affirmative duty to examine their own jurisdiction—both subject matter

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jurisdiction and personal jurisdiction—when entry of judgment is sought against a party in default.

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In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999). Here, the court has subject matter jurisdiction

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pursuant to 28 U.S.C. § 1331 because Plaintiff’s complaint raises a federal question under the Fair

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Credit Reporting Act, 15 U.S.C. § 1681s-2. Personal jurisdiction arises from service upon

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Defendant in California. See Dkt. No. 1, Ex. A., Burnham v. Sup. Ct., 495 U.S. 604, 610-11

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(1990).

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b. Adequacy of Service of Process
Because Defendant has appeared in this action, Federal Rule of Civil Procedure 55(b)(2)

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requires, as a prerequisite to entry of default judgment, that Plaintiff serve Defendant or its

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representative with written notice of the application at least seven days before the hearing on the

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default judgment. See Fed. R. Civ. P. 55(b)(2). Here, Plaintiff timely served Defendant the motion

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for default judgment and all associated pleadings by United States mail to the last known addresses

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of Defendant. Proof of Service, Dkt. No. 67. Accordingly, the Court is satisfied that service of

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process was adequate under Rule 55(b)(2).

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Case No.: 5:10-CV-01055-EJD
ORDER DENYING PLAINTIFF’S MOTION FOR DEFAULT JUDGMENT

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c. Default Judgment
At the outset, the court notes that several of the Eitel factors weigh in favor of granting

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default judgment. For instance, failure to enter default judgment in favor of Plaintiff would result

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in prejudice to Plaintiff. Denying judgment against a defendant who does not participate in

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litigation deprives the plaintiff of a remedy until such time as the defendant chooses to litigate. See,

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e.g., Craigslist, Inc. v. Naturemarket, Inc., 694 F.Supp.2d 1039, 1061 (N.D.Cal. 2010).

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Additionally, the parties have not presented any issue of material fact, because the allegations in

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the complaint are taken as true. Moreover, Plaintiff has provided documentation to verify the

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factual allegations regarding the underlying dispute. Finally, there is no evidence that Defendant’s

United States District Court
For the Northern District of California

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failure to participate in the litigation is due to the excusable neglect.

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Despite these factors weighing in favor of default judgment, Plaintiff’s motion nonetheless

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must be denied because his FAC fails to state a claim. Judgment by default cannot be entered if the

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complaint fails to state a claim. See Moore v. United Kingdom, 384. F.3d 1079, 1090 (9th Cir.

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2004). As Judge Koh previously dismissed Plaintiff’s FDCPA claim, only the FCRA claim

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remains in this case.

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Plaintiff alleges that he is entitled to relief under Section 1681s-2 of the FCRA. “The

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FCRA expressly creates a private right of action for willful or negligent noncompliance with its

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requirements…However, § 1681s–2 limits this private right of action to claims arising under

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subsection (b), the duties triggered upon notice of a dispute from a CRA.” Gorman v. Wolpoff &

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Abramson, LLP, 584 F.3d 1147, 1154 (9th Cir. 2009) (citing § 1681s–2(c)). Section 1681s-2(b)

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states that, after receiving a notice of dispute from a credit reporting agency (“CRA”), the furnisher

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of information shall:

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(A) conduct an investigation with respect to the disputed information;

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(B) review all relevant information provided by the [CRA] pursuant to section 1681i(a)(2)

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...;

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(C) report the results of the investigation to the [CRA];

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(D) if the investigation finds that the information is incomplete or inaccurate, report those

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results to all other [CRAs] to which the person furnished the information ...; and
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Case No.: 5:10-CV-01055-EJD
ORDER DENYING PLAINTIFF’S MOTION FOR DEFAULT JUDGMENT