Wai Construction Group LLC v. Wave Quantum Inc

Filing 36

ORDER GRANTING 35 PLAINTIFF'S MOTION FOR DEFAULT JUDGMENT; AND DEFAULT JUDGMENT. Default Judgment entered in favor of Plaintiff. Judgment is awarded to Plaintiff against Defendants, jointly and severally, in the amount of $418,009.89, with the applicable post-judgment statutory interest rate. File is CLOSED. Signed by Judge Mary K. Dimke. (SG, Case Administrator)

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FILED IN THE
U.S. DISTRICT COURT
EASTERN DISTRICT OF WASHINGTON

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Oct 15, 2024
SEAN F. MCAVOY, CLERK

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF WASHINGTON

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WAI CONSTRUCTION GROUP, LLC.,

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Plaintiff,
vs.
WAVE QUANTUM, INC., and
HARVEY PRICKETT,

No. 4:23-CV-5091-MKD
ORDER GRANTING PLAINTIFF’S
MOTION FOR DEFAULT
JUDGMENT; AND DEFAULT
JUDGMENT
ECF No. 35

Defendants.
Before the Court is Plaintiff’s Motion for Default Judgment. ECF No. 35.

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The Court has considered the record and is fully informed. Neither Defendant has

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appeared or otherwise participated in the pending action, and neither Defendant has

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responded to the Order of Default issued by the Clerk of Court on October 3, 2024.

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ECF No. 34. For the reasons discussed below, the Court grants the Motion.
BACKGROUND

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A. Factual Background
The following facts are taken from Plaintiff’s Second Amended Complaint.
ECF No. 21.

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Plaintiff WAI Construction Group, LLC is an Ohio-based company. Id. at 1 ¶

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2. Defendant WAVE Quantum, Inc. (“WAVE”) is a Washington-based company

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with a principal place of business in Kennewick, Washington. Id. at 2 ¶ 3.

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Defendant Harvey Prickett is the president and principal of WAVE and a resident of

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Washington. Id. at 2 ¶ 4.

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Plaintiff and WAVE executed a Master Services Agreement, regarding a

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construction project in Hanford, Washington, on February 15, 2021. Id. at 4 ¶ 12;

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see ECF No. 21-1. On February 24, 2021, Plaintiff and WAVE subsequently

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executed a Statement of Work regarding the construction projection. ECF No. 21 at

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4 ¶ 13; see ECF No. 21-2. The Statement of Work was incorporated into the Master

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Services Agreement, which, collectively, Plaintiff refers to as the Contract. ECF

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No. 21 at 4 ¶ 14.

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Pursuant to the Contract, Plaintiff agreed to provide both financial assistance

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and staffing and support services for WAVE’s Hanford construction project. Id. at 5

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¶ 15; see ECF No. 21-2 at 1-2. In exchange, WAVE agreed to pay Plaintiff

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consistent with the terms outlined in the Statement of Work. ECF No. 21 at 5 ¶ 16;

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see ECF No. 21-2 at 1-2.

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Plaintiff provided WAVE with staffing and support services from

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approximately February 2021 through July 2022. ECF No. 21 at 5 ¶ 17. However,

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WAVE only partially paid Plaintiff for these services, owing $82,009.95 to date. Id.

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at 5 ¶ 18-20. Plaintiff also provided WAVE with three payments on a line of credit,

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totaling $295,000. Id. at 6 ¶ 24. Pursuant to the Contract, WAVE agreed to “repay

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the credit line allocations in full and include a 4.95% rate of interest within eleven

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(11) months of the date of execution of the [Master Services Agreement].” ECF No.

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21-2 at 2. WAVE failed to pay down the balance on its credit line, owing, as of June

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21, 2023, $328,118.89. ECF No. 21 at 6 ¶¶ 25-26. Plaintiff alleges the money it

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loaned to WAVE was “knowingly and wrongfully kept” by Mr. Prickett “for his

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own personal use.” Id. at ¶ 28. Plaintiff further alleges Defendants owe

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$412,688.98 as of August 24, 2023. Id. at ¶ 30.

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Plaintiff’s Second Amended Complaint asserts two claims for breach of
contract and one claim for unjust enrichment. Id. at 7-10.
B. Procedural History
Plaintiff filed its initial Complaint on June 22, 2023. ECF No. 1. Plaintiff

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filed an Amended Complaint on September 6, 2023. ECF No. 6. Proofs of service

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of the Amended Complaint as to both Defendants were filed on December 6, 2023.

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ECF No. 6. Plaintiff served a notice of intent to file for default on December 6,

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2023. ECF No. 6. On December 12, 2023, Plaintiff filed a motion for Entry of

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Default as to both Defendants. ECF No. 12. The Clerk entered an Order of Default

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as to both Defendants on December 18, 2023. ECF No. 13. On January 31, 2023,

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Plaintiff filed a Motion for Default Judgment. ECF No. 14. The Court denied the

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Motion for Default Judgment on July 16, 2024. ECF No. 20. Plaintiff thereafter

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filed the operative Second Amended Complaint on July 18, 2014, ECF No. 21, and

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moved for default judgment that same day, ECF No. 24. On July 19, 2024, the

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Court denied Plaintiff’s motion for default judgment as “premature.” ECF No. 25 at

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1. Plaintiff then served Defendants with the Second Amended Complaint on July

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24, 2024. ECF No. 28. On August 16, 2024, Plaintiff filed a Third Motion for

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Default Judgment. ECF No. 29. August 20, 2024, the Court denied the motion as

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“premature.” ECF No. 30 at 2. On September 30, 2024, Plaintiff moved for an

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Entry of Default. ECF No. 31. The Clerk entered an Order of Default as to both

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Defendants on October 3, 2024. ECF No. 34. Plaintiff filed the instant Motion for

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Default Judgment on October 10, 2024. ECF No. 35.

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DISCUSSION

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Plaintiff moves for default judgment on its two breach of contract claims,

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seeking $418,009.89 in damages. ECF No. 35; ECF No. 15 at 1, 5. 1

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proceedings herein, including the Memorandum previously filed by the Plaintiff and

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the exhibits attached thereto, including the Declaration of Joseph Barton, and the

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Declaration of William J. Beckley.” ECF No. 35 at 1. The Court considers these

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pleadings consistent with LCivR 10(c).

The instant Motion to Default Judgment refers to “all of the files, records, and

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A. Jurisdiction

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“When entry of judgment is sought against a party who has failed to plead or

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otherwise defend, a district court has an affirmative duty to look into its jurisdiction

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over both the subject matter and the parties” to “determine whether it has the

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power . . . to enter the judgment in the first place.” In re Tuli, 172 F.3d 707, 712

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(9th Cir. 1999) (citations omitted).

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1. Subject Matter Jurisdiction

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Subject matter jurisdiction is proper under 28 U.S.C. § 1332. Plaintiff is a

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foreign company organized under the laws of Ohio with a principal place of business

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in Ohio. ECF No. 21 at 1 ¶ 2. WAVE is a corporation organized under the laws of

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the State of Washington with a principal place of business in Kennewick,

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Washington. Id. at 2 ¶ 3. Mr. Prickett is an individual who resides in Kennewick,

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Washington. Id. at 2 ¶ 4. As such, there is complete diversity among the parties.

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See Caterpillar v. Lewis, 519 U.S. 61, 68 (1996). Plaintiff alleges damages totaling

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$754,019.30, plus continually accruing interest. ECF No. 21 at 11. From these

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facts, the amount in controversy plausibly exceeds $75,000. See Dart Cherokee

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Basin Operating Co., LLC v. Owens, 574 U.S. 81, 89 (2014) (holding that the

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amount in controversy requires “only a plausible allegation that the amount in

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controversy exceeds the jurisdictional threshold.”).

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2. Personal Jurisdiction

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The Court finds an adequate basis to exercise personal jurisdiction over

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Defendants, as both are domiciled in Washington. ECF No. 21 at 1 ¶¶ 3-4. Further,

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venue is proper under 28 U.S.C. §§ 1391(b)(1) and 1391(b)(2), as both Defendants

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reside within this district and this case concerns a contractual dispute arising from a

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construction project in Hanford, Washington, which is within this district. Id. at 4 ¶

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B. Procedural Requirements

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The process for obtaining a default judgment is set forth in Fed. R. Civ.

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P. 55(b) and LCivR 55(b). The Court is satisfied that Plaintiff has complied with

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these procedural requirements. In particular, the Court notes that Plaintiff’s counsel

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previously submitted a declaration on January 16, 2024, that complies with the

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requirements of LCivR 55(b)(1)(A)-(B). ECF No. 16.

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C. Substantive Requirements: Eitel Factors

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Upon default, the Court assumes that the well-pleaded allegations in the

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complaint are true, except those relating to the amount of damages. Geddes v.

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United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977) (citing Pope v. United States,

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323 U.S. 1, 12 (1944)). The Court considers seven factors in exercising its

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discretion to enter a default judgment: “(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

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complaint, (4) the sum of money at stake in the action[,] (5) the possibility of a

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dispute concerning material facts[,] (6) whether the default was due to excusable

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neglect, and (7) the strong policy underlying the Federal Rules of Civil Procedure

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

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Cir. 1986).

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1. Possibility of Prejudice

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Under the first Eitel factor, “prejudice exists where the plaintiff has no

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recourse for recovery other than default judgment.” Curtis v. Illumination Arts, Inc.,

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33 F. Supp. 3d 1200, 1211 (W.D. Wash. 2014) (citation and quotation marks

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omitted). Plaintiff filed its initial complaint on June 22, 2023, nearly 16 months ago.

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ECF No. 1. Defendants have had ample opportunity to respond or otherwise

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participate in the litigation. Under these circumstances, Plaintiff will be prejudiced

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if it is not permitted to proceed against Defendants by way of default judgment. The

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first Eitel factor weighs in favor of default judgment.

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2. Merit of Claims and Sufficiency of the Complaint

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The second and third factors are often weighed together, see Curtis, 33 F.

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Supp. 3d at 1211, and favor a default judgment when the “allegations in the

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complaint are sufficient to state a claim on which the [plaintiff] may recover.”

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Danning v. Lavine, 572 F.2d 1386, 1388 (9th Cir. 1978). Plaintiff has alleged

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specific and detailed facts in its Second Amended Complaint that supports the merits

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of its claims. The second and third Eitel factors weigh in favor of default judgment.

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3. The Sum of Money at Stake

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“Default judgment is disfavored if the sum of money at stake is completely

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disproportionate or inappropriate” in relation to the seriousness of a defendant’s

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conduct. Hygenix, LLC v. Xie, 2022 WL 1094181, at *3 (D. Nev. Apr. 11, 2022)

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(citation and quotation marks omitted). Plaintiff calculates the sum of damages at

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$418,009.89 (plus post-judgment interest). ECF No. 15 at 1; No 17 at 2. “While a

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large sum of money weighs in favor of a decision on the merits,” where, as here,

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“the amount directly relates to and flows from the [Defendants’] breach … with no

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contradictory evidence … the fourth [Eitel] factor weighs in favor of default

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judgment.” Red Lion Hotels Franchising, Inc. v. Dumon, 2021 WL 1269120, at *3

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(E.D. Wash. Apr. 6, 2021). The fourth Eitel factor weighs in favor of default

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judgment.

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4. Possibility of a Dispute Concerning Material Facts

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Where no dispute has been raised, the likelihood that any such dispute exists

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is remote. See Brow Room v. Med. Laser Experts, LLC, 2021 WL 5830023, at *2

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(E.D. Wash. Dec. 8, 2021). There is no information before the Court that supports

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the possibility of a dispute concerning the terms of the contract and the amount owed

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by Defendants. This factor weighs in favor of default judgment.

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5. Excusable Neglect

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“Generally, courts do not find excusable neglect when defendants were

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properly served with the complaint.” BMO Bank N.A. v. Raiden, LLC, 2023 WL

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8934854, at *2 (W.D. Wash. Dec. 27, 2023) (citation omitted). Defendants were

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served with the initial complaint on July 3, 2023, over 15 months ago. ECF No. 3.

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Defendants were served with the operative Second Amended Complaint on July 24,

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2024. ECF No. 28. Defendants have not appeared in this lawsuit, opposed the

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motion, or sought vacatur of the default. There is no indication that Defendants’

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default is due to excusable neglect. Accordingly, this factor weighs in favor of

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default judgment.

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6. Policy Consideration

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Last, the general rule is that “[c]ases should be decided upon their merits

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whenever reasonably possible.” Eitel, 782 F.2d at 1472 (citing Pena v. Seguros La

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Comercial, S.A., 770 F.2d 811, 814 (9th Cir. 1985)). While this factor inherently

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weighs against default judgment, “the mere existence of” Fed. R. Civ. P. 55(b)

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“indicates that this Eitel factor is not alone dispositive.” Curtis, 33 F. Supp. 3d at

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1213 (quoting Microsoft Corp. v. Lopez, 2009 WL 959219, at 3 (W.D. Wash. Apr. 7,

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2009)) (quotation marks and alteration omitted). “[W]here a defendant’s failure to

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appear ‘makes a decision on the merits impracticable, if not impossible,’ entry of

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default judgment is nonetheless warranted.” Elec. Frontier Found. v. Global Equity

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Mgmt. (SA) Pty Ltd., 290 F. Supp. 3d 923, 948 (N.D. Cal. 2017) (quoting Craigslist,

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

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Defendants’ failure to participate in this litigation has made a decision on the merits

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impossible. The final Eitel factor weighs in favor of default judgment.

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In sum, the Eitel factors weigh in favor of granting default judgment.
D. Damages
“It is well settled that a default judgment for money may not be entered

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without a hearing unless the amount claims is a liquidated sum or capable of

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mathematical calculation.” Davis v. Fendler, 650 F.2d 1154, 1161 (9th Cir. 1981).

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The Court finds Plaintiff has proved its damages with sufficient certainty. Plaintiff

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properly supported its evidence of damages through a declaration specifying how

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damages were computed. ECF No. 17 at 2; see NewGen, LLC v. Safe Cig, LLC, 840

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F.3d 606, 617 (9th Cir. 2016). The Court thus finds good cause to award the

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requested damages.

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Accordingly, IT IS HEREBY ORDERED:

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1.

Plaintiff’s Motion for Default Judgment, ECF No. 35, is GRANTED.

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2.

DEFAULT JUDGMENT IS HEREBY ENTERED in favor of

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Plaintiff. Judgment is awarded to Plaintiff against Defendants, jointly and severally,

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in the amount of $418,009.89, with the applicable post-judgment statutory interest

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rate. See 28 U.S.C. § 1961(a).

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IT IS SO ORDERED. The Clerk of Court is directed to file this order and
CLOSE the file.
DATED October 15, 2024.

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s/Mary K. Dimke
MARY K. DIMKE
UNITED STATES DISTRICT JUDGE

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