DariTech, Inc. v. Te Velde
Filing
25
OPINION AND ORDER: The Court enters this Opinion and Order in favor of defendant in the amount of $396,271.47. Signed on 11/16/18 by Magistrate Judge Patricia Sullivan. (dsg)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
PENDLETON DIVISION
DARITECH, INC., a Washington
corporation,
Case No. 2:18-cv-00090-SU
Plaintiff,
OPINION AND ORDER
v.
GREG TE VELDE, an individual,
formerly doing business as Willow
Creek Dairy, and doing business as
Lost Valley Farm,
Defendant.
_________________________________________
SULLIVAN, United States Magistrate Judge:
Plaintiff DariTech, Inc., brings this action for breach of contract and related claims
against defendant Greg Te Velde, formerly doing business as Willow Creek Dairy, and doing
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business as Lost Valley Farm, to recover the unpaid balance on dairy farm equipment and
services that plaintiff provided defendant. Defendant has not appeared or otherwise taken any
action in this matter. The Court entered default on March 6, 2018. (Docket No. 9). Plaintiff
filed a Motion for Default Judgment (Docket No. 10), on which the Court, finding the Motion
deficient, ordered supplemental briefing (Docket No. 14). Plaintiff then filed an Amended
Motion for Default Judgment. (Docket No. 15). On April 30, 2018, plaintiff filed a Notice that
defendant filed for Chapter 11 bankruptcy on April 27, 2018, in the Eastern District of
California. (Docket No. 18). On August 28, 2018, the Court stayed this matter pending the
bankruptcy proceedings. (Docket No. 19). On August 31, 2018, plaintiff filed a Notice that the
Bankruptcy Court had approved relief from the automatic stay of bankruptcy. (Docket No. 20).
On November 15, 2018, plaintiff filed an Unopposed Motion for Entry of Judgment
Consistent with Stipulation between Parties and Order of Bankruptcy Court. (Docket No. 22).
Pursuant to the stipulation between the parties, the parties move for this Court to enter Judgment
in favor of plaintiff and against defendant in the amount of $396,271.47. The Court GRANTS
plaintiff’s motion.
BACKGROUND
Plaintiff is a dairy equipment company that manufactures, supplies, and installs dairy
farm equipment. Compl. ¶ 7 (Docket No. 1); Suppl. DeWaard Decl. ¶ 2 (Docket No. 16).
Defendant had been developing and improving property in Morrow County, Oregon, to operate a
dairy farm. Compl. ¶ 6; Suppl. DeWaard Decl. ¶ 3.
In March 2016, defendant ordered various pieces of dairy farming equipment from
plaintiff. Compl. ¶ 8; Suppl. DeWaard Decl. ¶ 4. Defendant agreed to pay $862,952 for the
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equipment. Id. Defendant made a 10% down payment in March 2016, with 70% of the agreed
price to be paid upon delivery, and the remaining 20% to be paid within 30 days of completion
of the order. Id. Plaintiff completed installation of the order in July 2017. Compl. ¶ 9; Suppl.
DeWaard Decl. ¶ 5. Defendant then ordered additional equipment and services, in the amount of
$342,993.16, which plaintiff delivered and provided. Compl. ¶ 10; Suppl. DeWaard Decl. ¶ 6.
Plaintiff has invoiced defendant and demanded payment for the supplied equipment,
labor, service, and parts, but defendant has failed to pay the full balance owed. Compl. ¶ 11;
Suppl. DeWaard Decl. ¶ 7. As of March 6, 2018, defendant had paid plaintiff $820,236.54,
leaving a balance owed to plaintiff of $376,146.06, including interest. Id.; see Compl., Exs. 1 &
2; Suppl. DeWaard Decl. ¶ 7, Exs. 1 & 2.
Defendant was served with the Summons and Complaint in this action by substitute
service on January 29, 2018, with follow-up mailing completed on January 30, 2018. (Docket
No. 4). Proof of service was filed February 5, 2018. Id. On February 21, 2018, defendant’s
attorney contacted plaintiff’s attorney and informed her that defendant did not dispute the
Complaint’s allegations, did not intend to contest the matter, and agreed that default judgment
was appropriate. Schleicher Decl. ¶ 4 (Docket No. 7). Defendant failed to appear, plead, or
otherwise defend this action. Id. ¶ 5.
LEGAL STANDARD
After an entry of default against an unresponsive defendant, a court may grant default
judgment in plaintiff’s favor and award damages. Fed. R. Civ. P. 55(b)(2). “The district court’s
decision whether to enter a default judgment is a discretionary one.” Aldabe v. Aldabe, 616 F.2d
1089, 1092 (9th Cir. 1980). In exercising its discretion, the court considers the following factors,
as articulated in Eitel v. McCool:
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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.
782 F.2d 1470, 1471-72 (9th Cir. 1986). Upon entry of default, the non-responding party is
deemed to have admitted the factual allegations against him, except allegations of damages. Fed.
R. Civ. P. 8(b)(6); Geddes v. United Fin. Group, 559 F.2d 557, 560 (9th Cir. 1977). Thus, the
court accepts plaintiff’s pleaded facts as true, but plaintiff must prove damages. TeleVideo Sys.,
Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987).
DISCUSSION
I.
Whether to Grant Default Judgment
The Court entered default against defendant on March 6, 2018. (Docket No. 9). The
consideration of the Eitel factors regarding entry default judgment is as follows.
A.
Factor One: Possibility of Prejudice to Plaintiff
The first Eitel factor considers whether plaintiff will suffer prejudice if the court denies
default judgment. Courts have found that this factor favors default judgment where plaintiff’s
only available legal remedy is default judgment, and where, without such judgment, plaintiff
would be left without any recourse for recovery. See, e.g., Garcia v. Pacwest Contracting LLC,
No. 3:12-cv-01930-SI, 2016 WL 526236, at *3 (D. Or. Feb. 9, 2016); Joe Hand Prods. v.
Holmes, No. 2:12-cv-00535-SU, 2015 WL 5144297, at *3 (D. Or. Aug. 31, 2015).
Defendant has not appeared, pleaded, or otherwise defended this action. According to
plaintiff’s counsel, counsel for defendant stated that defendant “does not intend to contest this
matter, and agreed that default judgment was appropriate in this matter.” Schleicher Decl. ¶ 4.
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If the Court were to deny plaintiff’s Motion, plaintiff would be left without remedy or recourse
for recovery. Accordingly, the first Eitel factor supports entry of default judgment.
B.
Factors Two and Three: Merits and Sufficiency of the Complaint
Factors two and three, the merits of plaintiff’s substantive claims and the sufficiency of
the complaint, “are closely related. Both factors require that a plaintiff’s allegations state a claim
on which the plaintiff may recover.” Joe Hand, 2015 WL 5144297, at *3 (quotation omitted);
Garcia, 2016 WL 526236, at *3.
Plaintiff’s first claim for relief is breach of contract. “[A]n offer containing a promise for
a consideration to do an act which a person has a lawful right to do, made by one person to
another, followed by an unqualified and unequivocal acceptance by the person to whom it is
made of the offer as made, creates a contract . . . .” C. R. Shaw Wholesale Co. v. Hackbarth, 102
Or. 80, 94 (1921). Plaintiff sufficiently pleads contract formation, that defendant agreed to pay
for the equipment and additional service and parts, and that plaintiff performed as required under
the contract. Compl. ¶¶ 8-16. Plaintiff also sufficiently pleads breach, in that defendant has not
paid the balanced owed to plaintiff. Id. at ¶ 11.
Plaintiff’s second claim for relief is account. “A common-law cause of action on an
account requires proof that there was a sale and delivery of merchandise, that the prices were
charged in accordance with an agreement or, in absence of an agreement, were usual, customary,
and reasonable prices for merchandise, and that the account was not paid.” Nw. Country Place,
Inc. v. NCS Healthcare of Or., Inc., 201 Or. App. 448, 460 (2005) (quoting Accounts &
Accounting, 1 Am. Jur. 2d 630 § 8 (2005)). Plaintiff sufficiently pleads a claim for account: the
parties agreed to the sale and delivery of equipment and parts, at reasonable prices, and
defendant has not paid fully on the account. Compl. ¶¶ 8-11, 17-20.
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Plaintiff’s third claim for relief is account stated.
An action on an account stated is upon a new promise to pay a specific amount
and not upon the original debt or items of the account. The promise resulting from
the accounting is the gist of the cause of action. It is necessary for a plaintiff
claiming an account stated to establish an agreement to pay a particular amount of
money calculated on the basis of previous monetary transactions of the parties.
Tri-Cty. Ins., Inc. v. Marsh, 45 Or. App. 219, 223 (1980). “The thrust of this theory is that an
agreement may be inferred from the failure of a debtor to object to an accounting he receives
from a creditor.” Id. Plaintiff has sufficiently pleaded a claim for account stated: it alleges that it
sent defendant invoices of amounts owed, with a summary of invoices to and payments made by
defendant, and defendant never objected to the invoices. Compl. ¶¶ 8-11, 21-23.
Plaintiff’s fourth claim for relief is quantum meruit.
A claim for quantum meruit is a quasi-contractual claim. The elements of the
claim are a benefit conferred, awareness by the recipient that a benefit has been
received, and judicial recognition that, under the circumstances, it would be unjust
to allow retention of the benefit without requiring the recipient to pay for it.
Safeport, Inc. v. Equip. Roundup & Mfg., Inc., 184 Or. App. 690, 706 (2002) (citations omitted).
Plaintiff has sufficiently pleaded quantum meruit as an alternative theory of relief: it alleges that
it provided equipment, service, and parts to defendant, from which defendant received a benefit;
defendant failed to pay fully for those goods and services; and it would be unjust for defendant to
retain that benefit without paying for it. Compl. ¶¶ 8-11, 24-26.
C.
Factor Four: Money at Stake
“The fourth Eitel factor is the sum of money at stake in the action. Under this factor, a
court considers the sum of money in relation to the seriousness of the defendant’s conduct.”
Garcia, 2016 WL 526236, at *3 (alteration and quotation omitted); Joe Hand, 2015 WL
5144297, at *7.
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Here, plaintiff has presented uncontested evidence that it is owed $376,146.06. This is a
substantial sum for defendant to have failed to pay for equipment and services received. This
factor favors entry of default judgment.
D.
Factor Five: Possibility of Dispute Concerning Material Facts
“The fifth Eitel factor is the possibility of a dispute concerning material facts. Upon
entry of default, the factual allegations of the complaint, except those relating to the amount of
damages, will be taken as true.” Garcia, 2016 WL 526236, at *4 (quotation and citation
omitted); Joe Hand, 2015 WL 5144297, at *7.
There is no dispute concerning material facts.
The Court takes all of plaintiff’s
allegations as true upon entry of default, except as to damages. Defendant has taken no action to
put any facts into dispute. Defendant apparently has conceded the truth of plaintiff’s allegations.
Thus, this factor favors entry of default judgment.
E.
Factor Six: Whether Default Is Due to Excusable Neglect
“The sixth Eitel factor inquires whether defendant’s default might have resulted from
excusable neglect.” Joe Hand, 2015 WL 5144297, at *8; Garcia, 2016 WL 526236, at *4.
The possibility of excusable neglect here is minimal. Plaintiff has presented evidence
that defendant has conceded that default is appropriate. Schleicher Decl. ¶ 4. Defendant was
served with plaintiff’s Motion for Default, Motion for Default Judgment, and Amended Motion
for Default Judgment. (Docket Nos. 8, 13, 17). This factor favors entry of default judgment.
F.
Factor Seven: Decision on the Merits
The seventh Eitel factor is the strong policy underlying the Federal Rules of Civil
Procedure favoring decisions on the merits. Eitel, 782 F.2d at 1472. Although “cases should be
decided upon their merits whenever reasonably possible,” id., “the mere existence of Fed. R. Civ.
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P. 55(b) indicates that this preference, standing alone, is not dispositive.” Garcia, 2016 WL
526236, at *4 (quotation omitted).
“[C]ourts have consistently concluded that this policy,
standing alone, is not dispositive, especially where a defendant fails to appear or defend itself in
an action. Where defendants have failed to appear or respond in a given matter, a decision on the
merits is impossible.” Joe Hand, 2015 WL 5144297, at *8 (quotation and citations omitted).
“Thus, the preference to decide cases on the merits does not preclude a court from granting
default judgment.” Garcia, 2016 WL 526236, at *4.
Given defendant’s failure to appear, plead, or defend this action, and his apparent
agreement that default is appropriate, a decision on the merits is impossible. This factor does not
preclude entry of default judgment.
*
*
*
Six of the Eitel factors favor entry of default judgment. This analysis strongly supports
entry of default judgment.
II.
Damages
Following an entry of default, the facts in the complaint are taken as true, but “neither the
default nor the allegations in the complaint can establish the amount of damages.” Lasheen v.
Embassy of the Arab Republic of Egypt, 625 F. App’x 338, 341 (9th Cir. 2015); see TeleVideo
Sys., 826 F.2d at 917-18. Thus, before the court can enter a default judgment on a sum uncertain,
the plaintiff must prove its damages. Joe Hand, 2015 WL 5144297, at *3; Rubicon Glob.
Ventures, Inc. v. Chongqing Zongshen Grp., 226 F. Supp. 3d 1141, 1148 (D. Or. 2016).
As discussed above, plaintiff has provided proof that the unpaid balance for the
equipment and services it provided defendant is $376,146.06, including interest.
Suppl.
DeWaard Decl. ¶¶ 6-7, Exs. 1 & 2. The Court requested, and plaintiff filed, supplemental
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briefing regarding damages. Plaintiff’s supplemental submission sets forth the evidence and
calculation of damages, totals of balance owed in the Amended Motion. Suppl. DeWaard Decl.
¶ 9, Ex. 1, at 1, Ex. 3, at 2. Plaintiff’s financial calculations are based on the statements of Ryan
DeWaard, plaintiff’s Vice President. The Court finds that plaintiff has succeeded in supplying
sufficient evidence under the governing standards regarding the balance it is owed. The parties
have now stipulated that the amount owed from defendant to plaintiff is $396, 271.47.
Therefore, the Court enters this Order and a Judgment in favor of defendant in the
amount of $396.271.47.
IT IS SO ORDERED.
DATED this 16th day of November, 2018.
/s/ Patricia Sullivan
PATRICIA SULLIVAN
United States Magistrate Judge
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