Opinion
22-cv-03631-TSH
12-12-2022
MDOF WELLS, LLC, Plaintiff, v. TOTAL PROPERTY SOLUTIONS, INC., et al., Defendants.
REQUEST FOR REASSIGNMENT WITH REPORT & RECOMMENDATION RE: MOTION FOR DEFAULT JUDGMENT RE: DKT. NO. 19
THOMAS S. HIXSON, United States Magistrate Judge
I. INTRODUCTION
Plaintiff MDOF Wells, LLC brings this complaint against Defendants Total Property Solutions, Inc. (“TPS”) and Hunter Robert Miley for breach of contract, breach of promissory note, breach of guaranty and declaratory relief related to obligations under a promissory note. Pending before the Court is MDOF's Motion for Default Judgment, in which it requests the Court enter default judgment in its favor and award $165,371.31 in compensatory damages. ECF No 19. Defendants have neither opposed the motion nor appeared in this case. This matter is suitable for disposition without oral argument. See Civ. L.R. 7-1(b). As not all parties have consented to magistrate judge jurisdiction pursuant to 28 U.S.C. § 636(c), the undersigned requests this case be reassigned to a district judge for disposition. After carefully reviewing the motion and controlling authorities, the undersigned RECOMMENDS the District Court GRANT the motion for the following reasons.
II. BACKGROUND
MDOF is a Texas limited liability company with its principal place of business in Austin, Texas. Compl. ¶ 1, ECF No. 1. TPS, a property management and contracting company, is a California corporation with its principal place of business located at 171 Mayhew Way, #220, Pleasant Hill, California 94523. Id. ¶ 2. Hunter Miley is a citizen of California and the President and Secretary of TPS. Id. ¶ 3.
TPS is the debtor under a promissory note in the amount of $199,828.37 and a Security Agreement dated September 10, 2018. Id. ¶ 10; see also Bacon Decl., Ex. A (Business Lending Disclosure), ECF No. 22-2; Bacon Decl., Ex. B (Business Lending Confirmation Letter), ECF Nos. 22-3. TPS's obligations under the agreement were secured by certain personal property as collateral, including all inventory, accounts, contract rights, chattel paper, general intangibles, rights to payment of every kind now, and equipment. Compl. ¶ 11; Mot., Ex A at 2-3. TPS's obligations are secured by a Commercial Guaranty dated March 6, 2017, signed by Hunter Miley. Compl. ¶ 11; Mot., Ex. C (Guaranty), ECF No. 19-5. Wells Fargo Bank, N.A. perfected its security interest in the collateral by filing a UCC Financing Statement in California on March 10, 2017. Compl. ¶ 13; Mot., Ex. D (UCC Financing Statement), ECF No. 19-6. Wells Fargo then assigned its interest in the loan to Magnify Debt Opportunity Fund, LP, as confirmed by a certain UCC Financing Statement Amendment filed on July 17, 2019. Compl. ¶ 14; Mot. Ex. E (first UCC Financing Statement Amendment), ECF No. 19-7. Subsequently, Magnify Debt Fund assigned its interest in the loan to MDOF, as confirmed by a certain UCC Financing Statement Amendment filed on August 2, 2019. Compl. ¶ 14; Mot. Ex F (second UCC Financing Statement Amendment), ECF No. 19-8.
Following MDOF's assignment, Defendants have failed to pay the amount owed under the loan documents. Compl. ¶ 15. In February 2022 MDOF notified Defendants of the default and gave them the opportunity to cure, but Defendants failed to respond. Id. ¶ 16; Mot., Ex. G (notice of default and demand for payment), ECF No. 19-9.
Under the terms of the note, the interest rate floor was 5% prior to default. Id. ¶ 17; Bacon Decl., Ex. B (“Interest shall accrue on the unpaid outstanding principal balance of the Credit at the greater of a floating rate equal to the Index plus 1.750% (the ‘Indexed Rate'), or the Floor Rate of 5.000%.”). After default, the unpaid balance is subject to a default rate of interest equal to the predefault rate plus 4%, meaning the default interest rate floor is currently 9%. Compl. ¶ 17; Bacon Decl., Ex. A ¶ 1.4 (“At Lender's option and without prior notice, upon or after Default, Lender may impose a default rate of interest (the ‘Default Rate') equal to the pre-default interest rate plus four percent, not to exceed the maximum lawful rate.”). Thus, as of October 25, 2022, Defendants owe $165,371.31, consisting of a $136,192.14 in unpaid principal and $24,752.92 in interest. Compl. ¶ 18; Mot. at 12.
On June 21, 2022, MDOF filed the present complaint, alleging breach of contract, breach of promissory note, breach of guaranty, conversion, and unjust enrichment. MDOF also sought a declaratory judgment against Defendants to obtain a declaration of rights and other legal relations under the loan documents. Id. ¶ 65. After Defendants failed to respond, the Clerk of Court entered their defaults on August 22. ECF No. 14.
III. LEGAL STANDARD
Federal Rule of Civil Procedure 55(b)(2) permits a court, following default by a defendant, to enter default judgment in a case. “The district court's decision whether to enter default judgment is a discretionary one.” Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980).
At the default judgment stage, the factual allegations of the complaint, except those concerning damages, “together with other competent evidence submitted” are deemed admitted by the non-responding parties. Shanghai Automation Instrument Co. v. Kuei, 194 F.Supp.2d 995, 1000 (N.D. Cal. 2001); see also Fair Hous. of Marin v. Combs, 285 F.3d 899, 906 (9th Cir. 2002). “However, a defendant is not held to admit facts that are not well-pleaded or to admit conclusions of law.” DIRECTV, Inc. v. Hoa Huynh, 503 F.3d 847, 854 (9th Cir. 2007) (citation and quotation omitted)). Therefore, “necessary facts not contained in the pleadings, and claims which are legally insufficient, are not established by default.” Cripps v. Life Ins. Co. of N. Am., 980 F.2d 1261, 1267 (9th Cir. 1992) (citing Danning v. Lavine, 572 F.2d 1386, 1388 (9th Cir. 1978)); accord DIRECTV, 503 F.3d at 854. Further, the scope of relief is limited by Federal Rule of Civil Procedure 54(c), which states that a “default judgment must not differ in kind from, or exceed in amount, what is demanded in the pleadings.”
In determining whether default judgment is appropriate, the Ninth Circuit has enumerated the following factors for courts to consider:
(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).
IV. DISCUSSION
A. Jurisdiction and Service of Process
In considering whether to enter default judgment, a district court must first determine whether it has jurisdiction over the subject matter and the parties to the case. In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999). “[T]he district court is not restricted to the face of the pleadings, but may review any evidence, such as affidavits and testimony, to resolve factual disputes concerning the existence of jurisdiction.” McCarthy v. United States, 850 F.2d 558, 560 (9th Cir. 1988) (considering subject matter jurisdiction on a 12(b)(1) motion).
1. Subject Matter Jurisdiction
Federal courts are courts of limited jurisdiction and are presumptively without jurisdiction. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). A federal court may dismiss an action on its own motion if it finds that it lacks subject matter jurisdiction. Fiedler v. Clark, 714 F.2d 77, 78-79 (9th Cir. 1983); see also Fed.R.Civ.P. 12(h)(3) (“If the court determines at any time that it lacks subject-matter jurisdiction, the court must dismiss the action.”). Here, the Court has subject matter jurisdiction over this action pursuant to 28 U.S.C. § 1332(a)(1) and (c)(1), because complete diversity exists between MDOF and Defendants, and the amount in controversy exceeds $75,000. Compl. ¶¶ 5-8.
2. Personal Jurisdiction
a. Basis for Personal Jurisdiction
To enter default judgment, the Court must have a basis for the exercise of personal jurisdiction over the defendants in default. In re Tuli, 172 F.3d at 712. “Without a proper basis for [personal] jurisdiction, or in the absence of proper service of process, the district court has no power to render any judgment against the defendant's person or property unless the defendant has consented to jurisdiction or waived the lack of process.” S.E.C. v. Ross, 504 F.3d 1130, 1138 (9th Cir. 2007). Traditional bases for conferring a court with personal jurisdiction include a defendant's consent to jurisdiction, personal service of the defendant within the forum state, or a defendant's citizenship or domicile in the forum state. J. McIntyre Mach., Ltd. v. Nicastro, 564 U.S. 873, 880 (2011). Absent one of the traditional bases for jurisdiction, the Due Process Clause requires that the defendant have “certain minimum contacts with the forum ‘such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.'” Int'l Shoe Co. v. State of Wash., Office of Unemployment Comp. & Placement, 326 U.S. 310, 316 (1945) (citations and quotation marks omitted). The party seeking to invoke jurisdiction has the burden of establishing that jurisdiction is proper. Flynt Distrib. Co. v. Harvey, 734 F.2d 1389, 1392 (9th Cir. 1984). “[M]ere ‘bare bones' assertions of minimum contacts with the forum or legal conclusions unsupported by specific factual allegations will not satisfy a plaintiff's pleading burden.” Swartz v. KPMG LLP, 476 F.3d 756, 766 (9th Cir. 2007).
Here, the Court has personal jurisdiction over TPS because it is a citizen of California. TPS is a California corporation, with its principal office is located at 171 Mayhew Way #220, Pleasant Hill, California 94523. Compl. ¶ 6. The Court also has personal jurisdiction over Hunter Miley as he is an individual who is domiciled in Contra Costa County, California, with his permanent residence located at 1981 Chateau Court, Walnut Creek California 94598. Id. ¶ 7.
b. Service of Process
Personal jurisdiction also requires notice that is “reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.” Mullane v. Cent. Hanover Bank & Tr. Co., 339 U.S. 306, 314 (1950). “A federal court does not have jurisdiction over a defendant unless the defendant has been served properly under [Federal Rule of Civil Procedure 4].” Direct Mail Specialists, Inc. v. Eclat Computerized Techs., Inc., 840 F.2d 685, 688 (9th Cir. 1988).
MDOF served TPS in compliance with Rule 4(h) through personal service of a copy of the summons and complaint on July 19, 2022, at 1981 Chateau Court, Walnut Creek, CA 94598. ECF No. 11. Hunter Riley, as President of TPS, accepted service on its behalf. MDOF served Riley in compliance with Rule 4(c) through personal service of a copy of the summons and complaint on July 19, 2022. ECF No. 12.
B. Eitel Factors
Applying the seven Eitel factors, the undersigned finds default judgment is warranted in favor of Plaintiff.
1. The Possibility of Prejudice
The first factor the Court considers is the possibility of prejudice if a default judgment is not entered. Eitel, 782 F.2d at 1471-72. This factor weighs in favor of default judgment “when a defendant has failed to appear or defend against a suit, and the plaintiffs could not otherwise seek relief.” Vietnam Reform Party v. Viet Tan - Vietnam Reform Party, 416 F.Supp.3d 948, 962 (N.D. Cal. 2019) (citations omitted); IO Grp., Inc. v. Jordon, 708 F.Supp.2d 989, 997 (N.D. Cal. 2010) (prejudice exists where denying the requested default judgment would leave the plaintiff without a proper remedy). Because Defendants have not appeared in this action, MDOF would be prejudiced absent a default judgment because it would have no other recourse.
2. Substantive Claims and the Sufficiency of the Complaint
The second and third Eitel factors focus on the merits of the substantive claims and the sufficiency of the complaint. Eitel, 782 F.2d at 1471-72. “These two factors are often analyzed together and require courts to consider whether a plaintiff has ‘state[d] a claim on which [it] may recover.'” Vietnam Reform Party, 416 F.Supp.3d at 962 (quoting PepsiCo, Inc. v. Cal. Sec. Cans, 238 F.Supp.2d 1172, 1175 (C.D. Cal. 2002)). “Of all the Eitel factors, courts often consider the second and third factors to be ‘the most important.'” Id. (quoting Sanrio, Inc. v. Jay Yoon, 2012 WL 610451, at *4 (N.D. Cal. Feb. 24, 2012)).
MDOF seeks recovery for breach of contract, breach of promissory note, breach of guaranty, and declaratory relief. Compl. ¶¶ 26, 33, 40, 65.
a. Choice of Law
As an initial matter, in determining the controlling substantive law, a federal court sitting in diversity must look to the forum state's choice of law rules. Patton v. Cox, 276 F.3d 493, 495 (9th Cir. 2002) (citing Klaxon Co. v. Stentor Electric Mfg. Co., Inc., 313 U.S. 487, 496 (1941)). Under California law, a choice of law provision will be enforced when: (1) the chosen state has a substantial relationship to the parties or their transaction, or there is any other reasonable basis for the parties' choice of law; and (2) the chosen state's law is not contrary to a fundamental policy of California. Nedlloyd Lines B.V. v. Superior Court of San Mateo, 3 Cal.4th 459, 464-66 (1992); Windsor Mills, Inc., v. Collins & Aikman Corp., 25 Cal.App.3d 987, 995-96 n. 6 (1972) (parties may expressly agree what law shall govern their contract).
Pursuant to the Business Lending Confirmation Letter, “the Agreement shall be governed by the laws of the state of California and applicable Federal Law except to the extent any related document is governed by the law of another state due to the location of the collateral.” Bacon Decl., Ex. B at 3. Applying the California law approach, the Court concludes that the state of California bears a substantial relationship to the parties' transaction because Defendants are residents of this state and enforcing the parties' choice of law provision is not contrary to any fundamental policy of the state of California. See Nedlloyd Lines B.V., 3 Cal.4th at 467 (A substantial relationship is present when “one of the parties is domiciled” in the chosen state.) Accordingly, the undersigned concludes that MDOF's contractual claims are governed by California law.
b. Breach of Contract and Breach of Promissory Note
“Because the elements of a breach of a promissory note are the same as any breach of contract, . . . and because the first and second causes of action are based on the same purported contractual obligations and breach by [Defendants], the court considers the sufficiency of the first and second claims together.” Alwood v. Montecalvo, 2015 WL 13306204, at *5 (C.D. Cal. Nov. 3, 2015) (citing Engeleiter v. Shin, 956 F.2d 274, 1992 WL 33930, *1 (9th Cir. Feb. 25, 1992) (unpub. disp.)). “[T]he elements of a cause of action for breach of contract are (1) the existence of the contract, (2) plaintiff's performance or excuse for nonperformance, (3) defendant's breach, and (4) the resulting damages to the plaintiff.” Oasis W. Realty, LLC v. Goldman, 51 Cal.4th 811, 821 (2011). MDOF alleges that the prior assignee of the contract substantially performed under the contract and promissory note by extending credit to TPS, that MDOF is the current owner, and that Defendants materially breached the contract and note. Finally, MDOF alleges it incurred damages as a result of Defendants' breach. Thus, MDOF has made sufficient factual allegations to state viable claims for breach of contract and breach of promissory note.
c. Breach of Guaranty
“A claim for breach of guaranty requires the existence of a contract, plaintiff's performance or excuse for failure to perform under the contract, defendant's breach, and resulting damage to the plaintiff.” Alwood, 2015 WL 13306204, at *6 (citing Kennedy Funding, Inc. v. Chapman, 2010 WL 4509805, at *6 (N.D. Cal. June 18, 2010)). Thus, the elements for a breach of guaranty claim are the same as the elements of a breach of contract claim. See Alwood, 2015 WL 13306204, at *6; Blue Growth Holdings Ltd. v. Mainstreet Limited Ventures, LLC, 2013 WL 4758009, at *2 (N.D. Cal. Sept. 4, 2013) (noting that by signing a guarantee, the guarantor entered into a contract with plaintiff). Accordingly, MDOF's allegations suffice to state a breach of guaranty claim against Defendants.
d. Declaratory Relief
MDOF also asks the Court to declare:
i. the Collateral includes all amounts owed to MDOF on account of the Collateral;
ii. TPS's account debtors, or other persons obligated on the Collateral, must make payment or otherwise render performance only to MDOF;
iii. MDOF may enforce the obligations of TPS's account debtors, or other persons obligated on the Collateral, and exercise TPS's rights with respect to the obligations of TPS's account debtors, or other persons obligated on the Collateral, to make payment or otherwise render performance;
iv. MDOF may enforce the obligations of TPS's account debtors, or other persons obligated on the Collateral, and exercise TPS's rights with respect to any property that secures the obligations of TPS's account debtors or other persons obligated on the Collateral; and
v. TPS is obligated to assemble the Collateral and make it available to MDOF at a place to be designated by the MDOF that is reasonably convenient to the parties.Compl. ¶ 65. Claims for declaratory relief are amendable to a motion for default judgment. PepsiCo. Inc., 238 F.Supp.2d at 1177.
The federal Declaratory Judgment Act provides that district courts “may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought.” 28 U.S.C. § 2201(a). “Declaratory relief is designed to resolve uncertainties or disputes that may result in future litigation. It operates prospectively and is not intended to redress past wrongs.” StreamCast Networks, Inc. v. IBIS LLC, 2006 WL 5720345, at *3 (C.D. Cal. May 2, 2006) (citing United States v. Washington, 759 F.2d 1353, 1356-57 (9th Cir. 1985) (“Declaratory relief should be denied when it will neither serve a useful purpose in clarifying and settling the legal relations in issue nor terminate the proceedings and afford relief from the uncertainty and controversy faced by the parties”), cert. denied, 474 U.S. 994 (1985); McGraw-Edison Co. v. Preformed Line Prod. Co., 362 F.2d 339, 342 (9th Cir. 1966) (“The two principal criteria guiding the policy in favor of rendering declaratory judgments are (1) when the judgment will serve a useful purpose in clarifying and settling the legal relations in issue, and (2) when it will terminate and afford relief from the uncertainty, insecurity, and controversy giving rise to the proceeding. It follows that when neither of these results can be accomplished, the court should decline to render the declaration prayed”) (internal quotations and citation omitted)).
Here, taking MDOF's allegations as true, the undersigned finds MDOF has stated a claim for declaratory relief by demonstrating there is an actual controversy and that the Court's judgment will serve a useful purpose in clarifying MDOF's rights as well as Defendants' obligations. As a preliminary matter, “[t]he existence of another adequate remedy does not preclude a judgment for declaratory relief in cases where it is appropriate.” Fed.R.Civ.P. 57. Thus, declaratory relief is appropriate where a breach of contract claim will not settle all of the contractual issues in which a plaintiff seeks declaratory relief. StreamCast Networks, Inc., 2006 WL 5720345, at *4 (citing Sierra Foothills Utility Dist. v. Clarendon Am. Ins. Co., 2005 WL 208932, at *6-7 (E.D. Cal. Aug. 29, 2005)). While MDOF's breach of contract claim seeks damages, its declaratory relief claim seeks a declaration that MDOF is entitled to enforce obligations with respect to any property securing Defendants' obligations. The breach of contract claim only seeks damages to redress prior wrongdoing, whereas the request for declaratory relief seeks to establish certain rights of MDOF, thereby eliminating the possibility for future ongoing disputes about its ability to recover its property. Because the two claims seek different forms of relief, MDOF's request for declaratory relief is not duplicative of its breach of contract claim. See id. at *5 (“Because the [breach of contract and declaratory relief] claims seek different forms of relief, the court denies IBIS's motion to dismiss the declaratory relief claim as redundant.”); Sierra Foothills Utility Dist., 2005 WL 208932, at *6-7.
Further, Defendants have failed to respond and have presented no defense, meritorious or otherwise. Under these circumstances, entry of default judgment is justified without further proof of Defendants' breach. See Huddly AS v. Suzhou Washeng Tech. Co., 2022 WL 2289065, at *10 (N.D. Cal. Apr. 21, 2022), report and recommendation adopted sub nom. Huddly AS v. Suzhou Washeng Tech. Co. Ltd, 2022 WL 2288926 (N.D. Cal. May 17, 2022) (“The defendant has willfully failed to respond and has presented no defense, meritorious or otherwise. Under these circumstances, entry of default judgment is justified without further proof of defendant's infringement.”); DisputeSuite.com, LLC v. Credit Umbrella Inc., 2016 WL 6662722, at *5 (C.D. Cal. Apr. 25, 2016); Shoom, Inc. v. Elec. Imaging Sys. of Am. Inc., 2008 WL 11515251 at *6 (N.D. Cal. Apr. 8, 2008), report and recommendation adopted sub nom. Shoom, Inc. v. Elec. Imaging Sys. of Am., 2008 WL 11515252 (N.D. Cal. Apr. 25, 2008).
3. The Sum of Money at Stake in the Action
Under the fourth Eitel factor, “the Court must consider the amount of money at stake in relation to the seriousness of Defendant's conduct.” Dr. JKL Ltd., v. HPC IT Educ. Ctr., 749 F.Supp.2d 1038, 1050 (N.D. Cal. 2010) (citation and quotation marks omitted). When the amount at stake is substantial or unreasonable in light of the allegations in the complaint, default judgment is disfavored. See Eitel, 782 F.2d at 1472 (affirming the denial of default judgment where the plaintiff sought $3 million in damages and the parties disputed material facts in the pleadings). “However, when the sum of money at stake is tailored to the specific misconduct of the defendant, default judgment may be appropriate.” Yelp Inc. v. Catron, 70 F.Supp.3d 1082, 1100 (N.D. Cal. 2014). Here, MDOF seeks $165,371.31, which is proportional to the seriousness of Defendants' conduct and would compensate for their breach. Thus, the fourth Eitel factor weighs in favor of granting default judgment.
4. The Possibility of Dispute Concerning Material Facts
The fifth Eitel factor examines the likelihood of dispute between the parties regarding the material facts surrounding the case. Eitel, 782 F.2d at 1471-72. However, upon entry of default, the defendant is “deemed to have admitted all well-pleaded factual allegations” in the complaint. DirecTV, 503 F.3d at 851 (citing Fed.R.Civ.P. 55(a)). Moreover, as outlined above, MDOF has provided the Court with well-pleaded allegations supporting its claims. Accordingly, this factor weighs in favor of default judgment.
5. Whether Default was Due to Excusable Neglect
The sixth Eitel factor examines whether the defendant's failure to respond to the complaint was the result of excusable neglect. Eitel, 782 F.2d at 1471-72. Here, MDOF provided adequate notice of this action, see ECF No. 11-12, yet Defendants made no appearance and failed to respond to the present motion. See S.E.C. v. Internet Sols. for Bus. Inc., 509 F.3d 1161, 1166 (9th Cir. 2007) (“A signed return of service constitutes prima facie evidence of valid service which can be overcome only by strong and convincing evidence.”) (simplified). Further, there is nothing in the record suggesting this failure is based on excusable neglect. See Shanghai Automation, 194 F.Supp.2d at 1005 (default after proper service was not excusable neglect). Thus, this factor supports default judgment.
6. Policy Favoring Deciding a Case on its Merits
The last Eitel factor examines whether the policy of deciding a case based on the merits precludes entry of default judgment. Eitel, 782 F.2d at 1472. In Eitel, the Ninth Circuit admonished that “[c]ases should be decided on their merits whenever reasonably possible.” Id. “The existence of Federal Rule of Civil Procedure 55(b), however, shows that this policy is not dispositive.” McMillan Data Commc'ns, Inc. v. AmeriCom Automation Servs., Inc., 2015 WL 4380965, at *11 (N.D. Cal. July 16, 2015) (citing Kloepping v. Fireman's Fund, 1996 WL 75314, at *3 (N.D. Cal. Feb. 13, 1996)). Further, “deciding the case on the merits is impossible where a party refuses to participate.” Vietnam Reform Party, 416 F.Supp.3d at 970. Thus, because Defendants made no effort to respond to communication attempts by MDOF and in no way participated in the proceedings, “[t]his factor thus weighs against, but does not preclude, entry of default judgment.” Id.
7. Summary of the Eitel Factors
In sum, the majority of the Eitel factors weigh in favor of granting default judgment. Accordingly, the undersigned RECOMMENDS the District Court GRANT the motion and enter default judgment against Defendants.
C. Relief Sought
The Court next turns to the relief MDOF seeks. Once liability is established, the plaintiff must then establish that the requested relief is appropriate. Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977). A “default judgment must not differ in kind from, or exceed in amount, what is demanded in the pleadings.” Fed.R.Civ.P. 54(c).
1. Damages
The moving party has the burden to “prove up” the amount of damages. United States v. Sundberg, 2011 WL 3667458, at *6 (N.D. Cal. Aug. 22, 2011) (citation omitted). Where the amount of damages “is liquid or capable of ascertainment from definite figures contained in documentary evidence or detailed affidavits, the Court may enter default judgment without a hearing on damages.” Id. (internal quotation marks and citation omitted); see also Pope v. United States, 323 U.S. 1, 12 (1944) (“It is a familiar practice and an exercise of judicial power for a court upon default, by taking evidence when necessary or by computation from facts of record, to fix the amount which the plaintiff is entitled to recover and to give judgment accordingly.”).
MDOF seeks judgment in the amount of $165,371.31, consisting of $136,192.14 for principal and $29,179.17 for accrued interest. “For the breach of an obligation arising from contract, the measure of damages. . . is the amount which will compensate the party aggrieved for all the detriment proximately caused thereby, or which, in the ordinary course of things, would be likely to result therefrom.” Cal. Civ. Proc. Code § 3300. Damages arising from a breach of contract must be “clearly ascertainable in both their nature and origin.” Cal. Civ. Code § 3301. Here, Defendants entered into valid contracts by signing the loan documents, then breached their obligations by failing to pay the amount owed on the maturity date. As a result of Defendants' breach, MDOF has suffered damages in the amount of $136,192.14 in principal and $29,179.17 in interest. Accordingly, the undersigned recommends the Court award MDOF $165,371.31 in monetary damages.
2. Declaratory Relief
MDOF also requests a declaration of the rights of the parties under the loan documents pursuant to the Declaratory Judgment Act, 28 U.S.C. §§ 2201 and 2202. As discussed above, declaratory judgment is appropriate because MDOF has demonstrated that there is an actual controversy and that the Court's judgment will serve a useful purpose in clarifying MDOF's rights as well as Defendants' obligations. Accordingly, the undersigned recommends the Court grant MDOF's request for declaratory relief.
V. CONCLUSION
For the reasons stated above, the undersigned RECOMMENDS the District Court GRANT Plaintiff MDOF Wells, LLC's Motion for Default Judgment and enter judgment against Defendants Total Property Solutions, Inc. and Hunter Robert Miley in the amount of $165,371.31, consisting of $136,192.14 for principal and $29,179.17 for accrued interest. The undersigned further RECOMMENDS the Court declare:
i. the Collateral includes all amounts owed to MDOF on account of the Collateral;
ii. TPS's account debtors, or other persons obligated on the Collateral, must make payment or otherwise render performance only to MDOF;
iii. MDOF may enforce the obligations of TPS's account debtors, or other persons obligated on the Collateral, and exercise TPS's rights with respect to the obligations of TPS's account debtors, or other persons obligated on the Collateral, to make payment or otherwise render performance;
iv. MDOF may enforce the obligations of TPS's account debtors, or other persons obligated on the Collateral, and exercise TPS's rights with respect to any property that secures the obligations of TPS's account debtors or other persons obligated on the Collateral; and
v. TPS is obligated to assemble the Collateral and make it available to MDOF at a place to be designated by the MDOF that is reasonably convenient to the parties.
MDOF shall serve a copy of this Report and Recommendation upon Defendants and file proof of service thereafter. Pursuant to 28 U.S.C. § 636(b)(1) and Federal Rule of Civil Procedure 72(b)(2), a party may serve and file any objections within 14 days after being served. Failure to file objections within the specified time may waive the right to appeal the district court's order.
IT IS SO RECOMMENDED.