Opinion
CV-23-01937-PHX-ASB
03-07-2024
Cameron Arthur, Plaintiff, v. Rotor X Aircraft Manufacturing Company, Defendant.
REPORT AND RECOMMENDATION
Honorable Alison S. Bachus, United States Magistrate Judge
TO HON. STEPHEN M. MCNAMEE, SENIOR UNITED STATES DISTRICT JUDGE:
Before the Court is Plaintiff's Application for Entry of Default Judgment Against Defendant Rotor X Aircraft Manufacturing Company, filed January 29, 2024 (Doc. 13). No Response was filed. For the reasons that follow, the undersigned recommends the Application be granted.
A. Procedural History
On September 15, 2023, Plaintiff filed a Complaint (Doc. 1) against Defendant Rotor X Aircraft Manufacturing Company. Defendant was served. (See Doc. 9.) Defendant did not file an Answer, and Plaintiff applied for entry of default on November 9, 2023. (Doc. 10.) Default was entered by the Clerk of Court as to Defendant on November 14, 2023. (Doc. 11.) On January 19, 2024, the Court ordered Plaintiff to show cause within ten days as to why the matter should not be dismissed for failure to prosecute, unless an application for entry of judgment pursuant to Rule 55(b) of the Federal Rules of Civil Procedure was filed within such time. (Doc. 12.) Plaintiff filed the instant motion for default judgment on January 29, 2024; in the motion, Plaintiff requested an award of attorney's fees. (Doc. 13.) Plaintiff filed an amended declaration in support of his attorney's fees request on February 8, 2024. (Doc. 15.) The motion for default judgment and attorney's fees has not been opposed by Defendant.
ORDER
B. Legal Standard
Once default has been entered a party, the Court has discretion to enter default judgment against that party. See Fed.R.Civ.P. 55(b)(2); Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). “When entry of judgment is sought against a party who has failed to plead or otherwise defend, a district court has an affirmative duty to look into its jurisdiction over both the subject matter and the parties.” In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999).
After the Court has been satisfied that it has personal and subject matter jurisdiction, the Court must consider the factors enumerated by the Ninth Circuit in Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986) when deciding whether to grant default judgment. Those factors are: “(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.” Id. Upon default, and thus when applying the Eitel factors, “the factual allegations of the complaint, except those relating to the amount of damages, will be taken as true.” Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977). In its default judgment analysis, the Court “is not required to make detailed findings of fact.” Fair Hous. of Marin v. Combs, 285 F.3d 899, 906 (9th Cir. 2002).
C. Analysis
The Court has considered the record of these proceedings, including Plaintiff's Declarations in Support of Motion for Entry of Default Judgment (Docs. 13-1, 15). The Court finds that Plaintiff has complied with the requirements of Rule 55 of the Federal Rules of Civil Procedure. The Court therefore considers jurisdiction.
1. Jurisdiction
Subject matter jurisdiction exists in this diversity action, as the parties are citizens of different states and the amount in controversy exceeds $75,000.00. See 28 U.S.C. § 1332(a). Personal jurisdiction exists, as Defendant operates its principal place of business in this District, and the record establishes service was effectuated upon Defendant.
Because jurisdiction is proper, the Court next considers the Eitel factors.
2. Eitel factors
In deciding whether to grant default judgment, the Court must weigh “(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, 782 F.2d at 1471-72.
The Court finds the first factors weighs in Plaintiff's favor. Plaintiff has faithfully prosecuted this case since its inception. Defendant has not participated in this matter since being served. Plaintiff has no alternative means to resolve his claims in his Complaint. Thus, there is a strong possibility of prejudice to Plaintiff if default judgment is not entered.
Given the interplay of the second and third factors, the Court considers them together. See Eitel, 782 F.2d at 1472. Here, both factors weigh in favor of granting default judgment. The Court finds the Complaint contained significant detail regarding Defendants' alleged violations of state contract law. (See Doc. 1.) The allegations are taken as true, Geddes, 559 F.2d at 560, and the Court concludes Plaintiff has stated a claim upon which he may recover under Arizona state law.
Under the fourth factor, the Court considers the amount of money at stake in relation to the seriousness of Defendant's conduct. See PepsiCo., Inc. v. Cal. Sec. Cans, 238 F.Supp.2d 1172, 1176 (C.D. Cal. 2002). In the case at bar, Plaintiff seeks total damages in the amount of $105,800.00, which represents $92,000.00 in damages and prejudgment interest of $13,800.00 (Doc. 13.) He also seeks attorney's fees and costs. (Id.) Taking Plaintiff's allegations as true, the record before the Court indicates that Plaintiff paid Defendant for an aircraft kit pursuant to a contract between the parties. (Doc. 13-1.) Plaintiff paid the full contractual amount of $92,000.00 in January 2021, and Defendant delivered only a frame and body parts for the kit. (Id.) Those components are considered “scrap” without the complete kit. (Id.) Furthermore, under the terms of the parties' contract, “a 100% refund shall be paid to the Purchaser [Plaintiff] for any components not received with an additional 5% interest due on this remaining balance.” (Doc. 13 at 5.) The Court finds the amount of sought damages to be reasonable. This factor weighs in favor of default judgment.
The Court considers infra the sufficiency of Plaintiff's evidence regarding sought damages.
The fifth factor requires the Court to consider the possibility of dispute concerning the material facts. This factor favors default judgment, as Defendant has failed to participate in this matter since being served. Defendant has made no discernible effort to challenge Plaintiff's Complaint or engage in the discovery process.
Sixth, the Court considers whether the default was due to excusable neglect. The record is devoid of any indication that Defendant's failure to participate in this case or otherwise defend against the Complaint is the result of excusable neglect. Defendant was duly served with this lawsuit. Defendant was therefore made aware of the pendency of this matter and its attendant obligations. No evidence to indicate Defendant has excusably neglected this matter is before the Court. Thus, the factor weighs in favor of default judgment.
Finally, the Court is mindful of “the general rule that default judgments are ordinarily disfavored,” and that matters “should be decided upon their merits whenever reasonably possible.” Eitel, 782 F.2d at 1472. However, Defendant has not engaged in this lawsuit, despite being served. Defendant's conduct has rendered decision of this case on its merits impossible.
After considering and weighing the Eitel factors, the Court finds default judgment is appropriate and recommends to the District Judge that default judgment be entered.
3. Damages
When considering the amount of damages, the Court does not take the factual allegations contained in the Complaint as true. See Geddes, 559 F.2d at 560; TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917 (9th Cir.1987). Rather, Plaintiff is required to prove up the damages he sought in his Complaint. Philip Morris, U.S.A. v. Castworld Prods., Inc., 219 F.R.D. 494, 498 (C.D. Cal. 2003). Further, “a default judgment must not differ in kind from, or exceed in amount, what is demanded in” Plaintiff's Complaint. Fed.R.Civ.P. 54(c). “In determining damages, a court can rely on the declarations submitted by the plaintiff or order a full evidentiary hearing.” Philip Morris, 219 F.R.D. at 498 (citing Fed.R.Civ.P. 55(b)(2)).
The Court has carefully reviewed the Complaint (Doc. 1) and Plaintiff's Declaration (Doc. 13-1). The Complaint included a specific dollar amount of damages and therefore provided sufficient detail regarding the relief sought. Furthermore, the Complaint described relief sought under the prejudgment interest clause of the parties' contract. In his Declaration supporting the instant Motion, Plaintiff provided facts sufficient to establish the amount he paid to Defendant for goods not delivered to him was $92,000.00. The undisputed record further supports the contract's 5% prejudgment interest penalty, and it has been over three years since Defendant failed to perform on the contract. Three years of 5% interest on $92,000.00 equals $13,800.00. Based on that evidence put forth by Plaintiff, the Court concludes Plaintiff has proven $105,800.00 in total damages against Defendant. Accordingly, the Court recommends damages be awarded accordingly.
4. Attorney's Fees and Costs
In addition to damages, Plaintiff requests an award of attorney's fees and costs. It is undisputed that the parties' contract provides that the prevailing party in any dispute will be awarded its reasonable attorney's fees and costs. (See Doc. 13 at 6.) The Court concludes Plaintiff is the “prevailing party,” as Plaintiff “succeed[ed] on any significant issue in litigation which achieve[d] some of the benefit the part[y] sought in bringing suit.” Hensley v. Eckerhart, 461 U.S. 424, 433 (1983) (quoting Nadeau v. Helgemoe, 581 F.2d 275, 278-79 (1st Cir. 1978)). Thus, by operation of the parties' contract, Plaintiff is entitled to an award of his reasonable attorney's fees and costs. In addition, as to costs, Plaintiff invokes A.R.S. § 12-341, which states, “The successful party to a civil action shall recover from his adversary all costs expended or incurred therein unless otherwise provided by law.” The Court concurs with Plaintiff that an award of costs is mandatory under Arizona law, as Plaintiff is the successful party in this matter.
The Court further notes that an award of attorney's fees could arguably be sought under A.R.S. § 12-341.01(A). That statute allows a court to award reasonable fees to the successful party “[i]n any contested action arising out of a contract.” However, Plaintiff does not seek fees under the statute. Without briefing and analysis of the relevant factors under Associated Indem. Corp. v. Warner, 694 P.2d 1181, 1184 (Ariz. 1985), the Court is not inclined to consider an award under this statute. See Alpha Prop. & Cas. Ins. Co. v. Freedom Movers LLC, No. CV-19-05660-PHX-DWL, 2020 WL 4346745, at *5 (D. Ariz. Jul. 29, 2020) (declining to award fees in contract default judgment action where Warner factors were unaddressed). Indeed, it need not go that far, given the parties' contract has already provided a basis for the award of attorney's fees.
The Court addresses fees and costs in turn.
a. Attorney's Fees
In the Ninth Circuit, a district court must “calculate an award of attorneys' fees by first calculating the ‘lodestar.'” Caudle v. Bristow Optical Co., Inc., 224 F.3d 1014, 1028 (9th Cir. 2000). To calculate the lodestar, the Court multiplies “the number of hours the prevailing party reasonably expended on the litigation by a reasonable hourly rate.” Morales v. City of San Rafael, 96 F.3d 359, 363 (9th Cir. 1996) (citing McGrath v. Cty. of Nev., 67 F.3d 248, 252 (9th Cir. 1995)).
Therefore, the Court first calculates the lodestar amount. “When a party seeks an award of attorneys' fees, that party bears the burden of submitting evidence of the hours worked and the rate paid. In addition, that party has the burden to prove that the rate charged is in line with the ‘prevailing market rate of the relevant community.'” Carson v. Billings Police Dep't, 470 F.3d 889, (citing Guam Soc'y of Obstetricians & Gynecologists v. Ada, 100 F.3d 691, 696 (9th Cir. 1996)); Vargas v. Howell, 949 F.3d 1188, 1194 (9th Cir. 2020) (quoting Blum v. Stenson, 465 U.S. 886, 895) (1984) (“Reasonable hourly rates ‘are to be calculated according to the prevailing market rates in the relevant community.'”). The “relevant community,” in turn, “is the forum in which the district court sits.” Camacho v. Bridgeport Fin., Inc., 523 F.3d 973, 979 (9th Cir. 2008) (citing Barjon v. Dalton, 132 F.3d 496, 500 (9th Cir. 1997)).
Here, Plaintiff's counsel seeks fees at an hourly rate of $475.00. (Doc. 13 at 7.) In support of the requested amount, counsel provides the Court with two declarations. First, counsel provides his own declaration, in which he details his years of experience, lists representative cases in this Court, and cites five recent matters in this District in which he was awarded attorney's fees at the hourly rate of $475.00. (Doc. 13-2.) Second, counsel furnishes a declaration from another Phoenix attorney who avows he is familiar with Plaintiff's counsel's work and hourly rates charged by lawyers in the District of Arizona, and who opines that $475.00 is a reasonably hourly rate for the services rendered in this case. (Doc. 15.) After considering the record before it, the Court concludes Plaintiff has met his burden, and the Court will apply a $475.00 hourly rate in its calculation.
Turning to the amount of hours expended by counsel, the Court has reviewed counsel's itemization of time spent on this case, which is found at Exhibit A to counsel's declaration. (Doc. 13-3.) The Court finds the amount of time expended by counsel (4.9 hours) to be appropriate and reasonable after considering the documentation provided. The resulting lodestar amount is therefore $2,300.00, which represents 4.9 hours at an hourly rate of $475.00.
“Although in most cases, the lodestar figure is presumptively a reasonable fee award, the district court may, if circumstances warrant, adjust the lodestar to account for other factors which are not subsumed within it.” Ferland v. Conrad Credit Corp., 244 F.3d 1145, 1149 n.4 (9th Cir. 2001). That is, “in rare cases, district court may make upward or downward adjustments to the presumptively reasonable lodestar on the basis of those factors set out in Kerr v. Screen Extras Guild, Inc., 526 F.2d 67, 69-70 (9th Cir. 1975), cert. denied, 425 U.S. 951 (1976) that have not been subsumed in the lodestar calculation.” Gates v. Deukmejian, 987 F.2d 1392, 1402 (9th Cir. 1992) (internal citations omitted). The Kerr factors are:
(1) the time and labor required,
(2) the novelty and difficulty of the questions involved,
(3) the skill requisite to perform the legal service properly,
(4) the preclusion of other employment by the attorney due to acceptance of the case,
(5) the customary fee,
(6) whether the fee is fixed or contingent,
(7) time limitations imposed by the client or the circumstances,
(8) the amount involved and the results obtained,
(9) the experience, reputation, and ability of the attorneys,
(10) the “undesirability” of the case,
(11) the nature and length of the professional relationship with the client, and
(12) awards in similar cases.526 F.2d at 70; see also LRCiv 54.2(c)(3).
This matter is a straightforward contract case, wherein Defendant failed to participate in these proceedings. Plaintiff's counsel did not have to conduct discovery, and there were no complex or significantly contested issues. After considering the Kerr factors and controlling case law, the Court finds no reason to adjust the lodestar. The Court will recommend an award of $2,300.00 in attorney's fees.
b. Costs
In addition to fees, Plaintiff seeks costs. The amount sought in Plaintiff's filings is inconsistent - in his Application, Plaintiff requests costs in the amount of $490.20 ($402.00 in filing fee + $88.20 in process fees). (Doc. 13 at 7-8.) In support of the requested amount, Plaintiff cites the Court to counsel's declaration at paragraph 12. (Id. at 7.) The declaration of counsel, however, states under penalty of perjury that the filing fee was $400.00 and the process service fee was $88.20, which totals $488.20. (Doc. 13-2.) The declaration refers to Exhibit B in support, but no Exhibit B was filed.
Despite this discrepancy, the Court can resolve the issue. The Court may take judicial notice of its own docket. See Chandler v U.S., 378 F.2d 906, 909 (9th Cir. 1967) (noting it is an “established rule” that “a federal district court can take judicial notice of its own records”). Here, docket entry 1 shows that a filing fee of $402.00 was paid by Plaintiff when the Complaint was filed. (Doc. 1.) Thus, the Court assumes a scrivener's error was made by counsel in paragraph 12 of his declaration.
After considering the record, the Court finds Plaintiff's out-of-pocket costs to be reasonable and supported by the documentation. Plaintiff's costs were $402.00 in filing fees and $88.20 in service fees, for a sum of $490.20. (Docs. 1, 13.)
D. Conclusion
For the foregoing reasons, IT IS THEREFORE RECOMMENDED:
1. That Plaintiff's Application for Entry of Default Judgment Against Defendant Rotor X Aircraft Manufacturing Company, filed January 29, 2024 (Doc. 13) be granted;
2. That Plaintiff be awarded damages in the amount of $105,800.00, plus postjudgment interest; and
3. That Plaintiff be awarded attorney's fees and costs in the amount of $2,790.20 ($2,300.00 in attorney's fees + $490.20 in costs).
This recommendation is not an order that is immediately appealable to the Ninth Circuit Court of Appeals. Any notice of appeal pursuant to Rule 4(a)(1), Federal Rules of Appellate Procedure, should not be filed until entry of the district court's judgment. The parties shall have 14 days from the date of service of a copy of this recommendation within which to file specific written objections with the Court. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), 6(b) and 72. Thereafter, the parties have 14 days within which to file a response to the objections.
Failure to timely file objections to the Magistrate Judge's Report and Recommendation may result in the acceptance of the Report and Recommendation by the district court without further review. See United States v. Reyna-Tapia, 328 F.3d 1114, 1121 (9th Cir. 2003). Failure to timely file objections to any factual determinations of the Magistrate Judge will be considered a waiver of a party's right to appellate review of the findings of fact in an order of judgment entered pursuant to the Magistrate Judge's recommendation. See Fed.R.Civ.P. 72.