Opinion
For World Health Industries, Inc, Plaintiff: Jeffrey C Bogert, Sizemore Law Firm PLC, El Segundo, CA; Jeffrey C Bogert, Sizemore Law Firm PLC, El Segundo, CA.
Proceedings: [IN CHAMBERS] ORDER RE PLAINTIFF'S MOTION FOR DEFAULT JUDGMENT [30]
DOLLY M. GEE, UNITED STATES DISTRICT JUDGE.
On January 21, 2015, Plaintiff World Health Industries, Inc. (" World Health") filed the operative First Amended Complaint (" FAC") alleging a cause of action for breach of contract against Defendant James Lacey. [Doc. # 15.]
The complaint seeks actual damages in the amount of $356,021.84; prejudgment and postjudgment interest at the maximum amount allowed by law beginning April 9, 2014 until paid; and reasonable attorneys' fees and costs. (Id. at 5.)
On March 12, 2015, World Health executed proof of service upon Lacey. [Doc. # 21.] On June 5, 2015, the Clerk of the Court entered Lacey's default. [Doc. # 28.]
On July 6, 2015, World Health filed a motion for default judgment against Lacey. [Doc. # 30.] The Court held a hearing on the motion on August 7, 2015. Lacey did not oppose the motion or appear for the hearing.
I .
The Court accepts as true the factual allegations of the FAC, except those relating to the amount of damages, solely for the purpose of deciding the motion for default judgment. See Garamendi v. Henin, 683 F.3d 1069, 1076 (9th Cir. 2012).
Lacey solicited World Health, a compounding pharmacy, to invest in his company, Crunchies Food Company, LLC. World Health lent Lacy $300,000 through a promissory note executed December 17, 2013 and containing a maturity date of April 9, 2014. The promissory note includes a 12% interest rate per annum, which was due along with the principal amount on the maturity date.
Lacey executed a promissory note dated December 17, 2013, pursuant to which World Health loaned to Lacey's company, Crunchies Food Company, LLC, the sum of $300,000.00 at 12% interest per annum. (FAC ¶ 7, Exh. 1 (" Note").) On January 10, 2014, World Health caused $300,000.00 to be wired to Lacey's company. (FAC ¶ 8.) Lacey provided a personal guarantee of repayment of the promissory note. (Id. ¶ 9.)
On April 9, 2014, the note became due and payable. (Id. ¶ 10.) Lacey has failed to make any payments, to the detriment of World Health. (Id. ¶ 12.)
II .
DISCUSSION
By its motion for default judgment, World Health seeks damages for a breach of contract committed by Lacey. Federal Rule of Civil Procedure 55(b)(2) provides that a court may enter default judgment and, if necessary to effectuate judgment, conduct an accounting, determine the amount of damages, establish the truth of any allegation by evidence, or investigate any other matter. Default judgments are usually disfavored. Eitel v. McCool, 782 F.2d 1470, 1472 (9th Cir. 1986). In Eitel, the Ninth Circuit set forth a number of factors that courts may consider when evaluating a default judgment application: (1) the possibility of prejudice to the plaintiff; (2) the merits of the 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. Id. at 1472-73 (citing 6 Moore's Federal Practice ¶ 55-05[2]).
World Health has complied with the procedural requirements for default judgment. See Fed.R.Civ.P. 55(b)(2); C.D. Cal. L.R. 55-1. Upon review of the complaint, the motion, and the evidence submitted in support of the Motion, the Court concludes that the Eitel factors weigh in favor of entering default judgment against Lacey. Failure to enter a default judgment will prejudice World Health by denying it the right to judicial resolution of its claim against Lacey without any other recourse for recovery. See, e.g., Elektra Entm't Grp., Inc. v. Crawford, 226 F.R.D. 388, 392 (C.D. Cal. 2005). World Health has also established the merits of its substantive claim and the sufficiency of its complaint.
With respect to the merits of its substantive claim and the sufficiency of its pleading, World Health has alleged sufficient facts to support its breach of contract claim. Under California law, a claim for breach of contract includes four elements: (1) that a contract exists between the parties, (2) that the plaintiff performed his contractual duties or was excused from nonperformance, (3) that the defendant breached those contractual duties, and (4) that plaintiff's damages were a result of the breach. Boland, Inc. v. Rolf C. Hagen (USA) Corp., 685 F.Supp.2d 1094, 1101 (E.D. Cal. 2010) (citing Reichert v. General Ins. Co., 68 Cal.2d 822, 830, 69 Cal.Rptr. 321, 442 P.2d 377 (1968)). Here, the Note establishes that a contract existed between the parties that required World Health to lend $300,000 to Lacey and Lacey to repay the amount of the note plus 12% interest per annum by April 9, 2014. World Health performed its contractual duty on January 10, 2014 when it wired $300,000 to Lacey. Lacey breached his contractual duty to repay the amount plus interest by April 9, 2014. World Health's damages are a result of Lacey's breach.
World Health seeks $356,021.84 in damages caused by Lacey's breach of contract; prejudgment and postjudgment interest at the maximum amount allowed by law beginning April 9, 2014 until paid; and reasonable attorneys' fees and costs. Such damage amount is not unreasonable in relation to Lacey's conduct. World Health has served the summons and complaint on Lacey and he has failed to appear in this action. There is no evidence of excusable neglect in the record. While cases should be decided on the merits whenever possible, Eitel, 782 F.2d at 1472, Lacey's failure to defend against this action has made a decision on the merits impractical if not impossible. See Elektra Entm't Grp., 226 F.R.D. at 393.
III .
APPROPRIATE RELIEF
To recover damages after securing a default judgment, a plaintiff must prove the relief he seeks, including amount of damages, through testimony or written affidavit. Bd. of Trs. of the Boilermaker Vacation Trust v. Skelly, Inc., 389 F.Supp.2d 1222, 1226 (N.D. Cal. 2005); see also PepsiCo, Inc. v. California Security Cans, 238 F.Supp.2d 1172, 1175 (C.D. Cal. 2002) (citing TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987)). In addition, the Court must weigh the amount of money at stake against the seriousness of Defendant's conduct. Philip Morris USA, Inc. v. Castworld Prods., Inc., 219 F.R.D. 494, 500 (C.D. Cal. 2003); PepsiCo, 238 F.Supp.2d at 1176.
Here, World Health requests $356,021.84 in damages, representing the amount of the loan and the accumulated interest as of the date of the filing of the FAC. The Court finds this to be a reasonable request and grants damages in the amount of $356,021.84 accordingly.
World Health also seeks $10,720.00 in attorneys' fees. Local Rule 55-3 permits the recovery of attorneys' fees in the amount of $5,600.00 for default judgments over $100,000, plus 2% of the amount of the judgment in excess of the $100,000.00 threshold. Thus, the Court finds this amount to be reasonable and grants $10,720.00 in attorneys' fees.
IV .
CONCLUSION
Based on the foregoing, Plaintiff's motion for default judgment is GRANTED. A judgment shall issue awarding damages to Plaintiff in the sum of $356,021.84 and attorneys' fees in the sum of $10,720.00.
IT IS SO ORDERED.
JUDGMENT
This Court having granted the motion by Plaintiff World Health Industries, Inc. for default judgment by order dated August 7, 2015, IT IS HEREBY ORDERED, ADJUDGED AND DECREED that judgment is entered in favor of Plaintiff World Health Industries, Inc. and against Defendant James Lacey in the following amounts: $356,021.84 in damages and $10,720 in attorney's fees.