Opinion
2:22-cv-01841-HL
06-20-2023
CITY OF UMATILLA, OREGON, Plaintiff, v. JOEY CHACON, Defendants.
FINDINGS AND RECOMMENDATION
ANDREW HALLMAN UNITED STATES MAGISTRATE JUDGE
Plaintiff City of Umatilla, Oregon (“Umatilla”) brings suit against Defendant Joey Chacon (“Chacon”) for breach of contract resulting from Chacon's failure to clean up or pay for his boat sinking in the Umatilla Marina. Before this Court is Umatilla's Motion for Default Judgment based on the Court's prior entry of default. ECF 7, 8. For reasons set forth below, this Court recommends that Umatilla's Motion for Default Judgment be GRANTED. Judgement should be entered in favor of Umatilla and against Chacon in the following amounts: (1) $157,197.10 in damages on its breach of contract claim; (2) $5662.50 in attorney's fees; and (3) $171.50 in costs.
BACKGROUND
Chacon entered a Moorage/Dry Storage Lease Agreement (“Lease”) with the Umatilla to store his boat in the Umatilla Marina. Compl. ¶¶ 5-6; Ince Decl. ¶ 3. Chacon's vessel sunk in the Umatilla Marina, and he failed to remove his vessel from the water or marina. Compl. ¶¶ 8-12; Ince Decl. ¶¶ 4-9. Umatilla demanded Chacon pay for dredging his boat out of the water and contacted him multiple times to dispose of the vessel before hauling it to a proper disposal site. Compl. ¶¶ 9-12; Ince Decl. ¶¶ 4-9.
The Lease states that Chacon was responsible for cleaning up his sunken boat and that he is liable for all expenses Umatilla paid in completing this task, “including reimbursement for administrative time.” Compl. ¶ 19; Ince Decl. at Ex. 1 § C.6. The Lease also provides for attorney's fees for the prevailing party of any litigation arising out of the Lease. Compl. ¶ 20; Ince Decl. at Ex. 1 § H.2.
Umatilla spent $157,197.10 to remove the boat from the water, transport it out of the marina, and have it destroyed. Ince Decl. Umatilla also incurred $6,087.55 in attorney's fees and costs litigating this matter. Molyneux-Elliot Decl. Ex. 2.
Umatilla filed action on November 23, 2022. Compl., ECF 1. Umatilla brought one claim for breach of contract, seeking costs associated with the removal, transport, and destruction of Chacon's vessel. Compl.¶¶ 13-24. Chacon did not appear and, on January 1, 2023, this Court entered an Order of Default. ECF 7. Umatilla now seeks a Default Judgment. ECF 8.
LEGAL STANDARDS
Under Rule 55(a), the clerk of the court is required to enter an order of default if a party against whom affirmative relief is sought has failed to timely plead or otherwise defend an action. See FED. R. CIV. P. 55(a) (“When a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise, the clerk must enter the party's default.”). For the purposes of default judgment, all well-pleaded allegations in the complaint, except those relating to damages, are assumed to be true. Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977); see also TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987) (providing the general rule that “the factual allegations of the complaint, except those relating to the amount of damages, will be taken as true”).
“A default judgment must not differ in kind from, or exceed in amount, what is demanded in the pleadings.” FRCP 54(c). When the plaintiff's claim is not for a sum certain or a sum that can be made certain by computation, the court may conduct hearings to effectuate a judgment as needed to conduct an accounting, determine damages, establish the truth of any allegation by evidence, or investigate any other matter. FRCP 55(b)(2)(A-D). A sum is certain when “no doubt remains as to the amount to which a plaintiff is entitled as a result of the defendant's default.” Franchise HoldingII, LLC v. Huntington Rests. Grp., Inc., 375 F.3d 922, 929 (9th Cir. 2004).
“Rule 55 provides that ‘after the clerk's entry of default against a defendant, a court may enter default judgment against that defendant.'” Glacier Films (USA), Inc., v. Tenorio, Case No. 3:15-cv-01729-SB, 2016 WL 3766465, at *1 (D. Or. June 22, 2016) (quoting FirstBank P.R. v. Jaymo Properties, LLC, 379 Fed.Appx. 166, 170 (3d Cir. 2010)). “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 this discretion, courts in this circuit consider the factors discussed in Eitel v. McCool, 782 F.2d 1470 (9th Cir. 1986). Glacier Films, 2016 WL 3766465, at *1. The Eitel factors are (1) the possibility of prejudice to the plaintiff; (2) the merits of the plaintiff's substantive claims; (3) the sufficiency of the operative complaint; (4) the sum of money at stake in the litigation; (5) the possibility of dispute over material facts; (6) whether the default was due to excusable neglect; and (7) the strong policy favoring decisions on the merits. Eitel, 782 F.2d at 1471-72. The court's analysis begins with “the general rule that default judgments are ordinarily disfavored.” Id. at 1472 (citation omitted).
DISCUSSION
A. Procedural Requirements
This Court first considers whether Defendant has complained with all necessary procedural requirements to obtain a default judgment.
As a preliminary matter, this Court is satisfied that it has personal jurisdiction over Chacon based on the facts alleged in the record. A district court “has an affirmative duty” to determine whether it has subject matter jurisdiction and personal jurisdiction over the defendant before entering a default judgment. Allstream Bus. US, LLC v. Carrier Network Sols., LLC, Case No. 3:20-cv-01970-IM, 2021 WL 3488086, at *3 (D. Or. Aug. 9, 2021); In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999). The court “may dismiss an action sua sponte” where personal jurisdiction does not exist. Id. But it must first give the plaintiff moving for a default judgment the opportunity to show facts supporting the exercise of personal jurisdiction. Id. at 712-13.
This Court has federal admiralty and maritime jurisdiction under 28 U.S.C § 1333 because the contractual violation occurred on a navigable waterway and related to maritime activities. See Jerome B. Grubart, Inc. v. Great Lakes Dredge & Dock Co., 513 U.S. 527, 532 (1995) (holding admiralty jurisdiction exists when there was a “substantial relationship” with maritime activities). Chacon is subject to personal jurisdiction in this district on account of his contractual leasing arrangement with the City of Umatilla, Oregon, and many pertinent facts giving rise to the dispute occurred in Umatilla, Oregon. See Allstream, 2021 WL 3488086, at *3 (stating contractual relationship in a state provides it with personal jurisdiction). Finally, venue is proper in this Court pursuant to 28 U.S.C. § 1391(b) because a substantial part of the events at issue giving rise to this claim occurred in this District when Chacon's boat sank in the marina.
In addition, Umatilla has satisfied the procedural requirements for entry of a default judgment under Rules 55(a), 55(b), and 54(c). This Court properly entered default against Chacon under Rule 55(a), ECF 7, and Umatilla's requested default judgment does not differ in kind or exceed the remedy pleaded in the Complaint. Compl. ¶ 23; FRCP 54(c). Chacon was personally served, ECF 4, and did not appear personally or by a representative and is not entitled to written notice of the application for default judgment. FRCP 55(b); Allstream, 2021 WL 3488086, at *4. Accordingly, all procedural requirements for a default judgment are satisfied.
B. Default Judgment Under FRCP 55.
Finding procedural compliance, this Court now turns to Plaintiff's Motion for Default Judgement, first considering whether discretion should be exercised to enter a default judgment under the Eitel factors, and then considering whether Umatilla is entitled to the damages, attorney's fees, and costs it seeks.
1. Eitel factors.
On balance, the Eitel factors weigh in favor of granting Umatilla's motion based on the breach of contract. Each factor is discussed in turn.
The first Eitel factor favors Umatilla, which will be prejudiced if default judgment is not entered, as it does not have another way to resolve its claim against Chacon. See, e.g., Craigslist,Inc. v. Naturemarket, Inc., 694 F.Supp.2d 1039, 1061 (N.D. Cal. 2010) (“[W]here a defendant's failure to appear makes a decision on the merits impracticable, if not impossible, entry of default judgment is warranted.”) (Internal quotations omitted).
The second and third Eitel factors “require that a plaintiff state a claim on which [it] may recover” and are often analyzed together. PepsiCo, Inc. v. Cal. Sec. Cans, 238 F.Supp.2d 1172, 1175 (C.D. Cal. 2002); Allstream, 2021 WL 3488086, at *5. The Court must consider whether the allegations in the complaint state a claim that supports the relief sought. Umatilla seeks default judgment against Chacon on its breach of contract claim. Umatilla must prove (1) a contract existed; (2) the relevant terms of the contract; (3) its full performance and lack of breach; and (4) Chacon's breach resulting in damages to Umatilla. See Olmstead v. ReconTrustCo., N.A., 852 F.Supp.2d 1318, 1322 (D. Or. 2012) (stating elements of breach of contract claim). Umatilla has shown these elements by providing the specific contract terms establishing Chacon's duty to prevent his vessel from sinking in the marina and the provisions stating cleanup costs would be shifted to him if his vessel did sink. These contract terms and the declarations stating that Chacon's vessel sunk and he failed to respond or pay for those costs are sufficient to demonstrate that Chacon breached his Lease with Umatilla.
Under the fourth Eitel factor, the Court must balance the sum of money at stake in relation to the seriousness of the defaulting party's conduct. PepsiCo, 238 F.Supp.2d at 1176; see also Walter v. Statewide Concrete Barrier, Inc., No. 04-cv-02559-JSW, 2006 WL 2527776, at *4 (N.D. Cal. Aug. 30, 2016) (“If the sum of money at issue is reasonably proportionate to the harm caused by the defendant's actions, then default judgment is warranted.”). Here, someone must pay the costs of Chacon's sinking boat. Chacon was required to pay those costs under the terms of the lease, but failed to do so, and Umatilla was required to pay those costs instead. Thus, the sum of money at issue is directly tied to Chacon's conduct.
The fifth Eitel factor considers the possibility that material facts are disputed. PepsiCo, 238 F.Supp.2d at 1177. Umatilla has alleged facts necessary to support its claim for breach of contract, there can be no reasonable dispute as to the terms of the lease agreement, and this Court is not aware of any basis for Chacon to dispute the underlying facts pertaining to Umatilla's breach of contract claim. Because Chacon has not responded, there is no genuine dispute of material fact that precludes granting Umatilla's motion. PepsiCo, 238 F.Supp.2d at 1177.
The sixth Eitel factor is whether the default was due to excusable neglect. Eitel, 782 F.2d at 1472. Chacon was served with the Complaint, yet it failed to respond. There is no sign that Chacon's default resulted from excusable neglect. Umatilla has made numerous attempts notify Chacon of the sunken vessel and engage with him regarding this dispute. There is no evidence that his failure to engage with Umatilla or respond in this action was excusable neglect.
The seventh Eitel factor reminds the Court that judgment on the merits is preferred over judgment by default. Westchester Fire Ins. Co. v. Mendez, 585 F.3d 1183, 1189 (9th Cir. 2009). Courts recognize, however, that “this preference, standing alone, is not dispositive.” PepsiCo, 238 F.Supp.2d at 1177. Despite this, when a party completely fails to respond, a decision on the merits is impracticable, and default judgment is warranted. Craigslist, 694 F.Supp.2d at 1061. Chacon's failure to defend this action or communicate with Umatilla makes a ruling on the merits not feasible, and denying default judgment would deny Umatilla any relief. This factor is either neutral or favors default judgment.
In short, the Court finds that six of the Eitel factors support entering a default judgment on the breach of contract claim against Chacon and recommends default judgment in Umatilla's favor.
2. Damages
Turing to the remedy, Umatilla seeks $157,197.10 in damages, which is equal to the payments it made for removing, moving, and disposing of the vessel. Pl.'s Mot. 1, ECF 8.
This Court does not accept as true the complaint's allegations of damages. TeleVideo Sys., 826 F.2d at 917-18. To support its damages claim, Umatilla has provided copies of the invoices from the companies it contracted with to remove, transport, and destroy the vessel, along with a declaration of showing the administrative time Umatilla employees spent on this matter. Ince Decl. Ex. 2 at 3, ECF 10-2 ($150,272.14 invoice from TideWater to remove the vessel from the water); id. at Ex. 7 ($3,900 invoice from Humfleet Transport for transporting vessel from the marina); id. at Ex. 8 ($2,500 invoice from Dike Marine Service and Storage for destroying the vessel) id. at Ex. 9 (declarations supporting $524.96 in administrative time). On this record, Umatilla's claim is for a sum certain because “no doubt remains as to the amount to which [Umatilla] is entitled as a result of [Chacon's] default.” Franchise HoldingII, 375 F.3d at 928-29. Thus, this Court recommends $157,197.10 in damages be awarded to Umatilla on its breach of contract claim.
3. Attorney's Fees
Next, the Court considers Umatilla's requested attorney's fees. The contract at issue in this case permits Umatilla to recover attorney's fees and costs. Ince Decl., Ex. 1 (“In the event of litigation arising out of or related to this lease agreement, the prevailing party shall be entitled to reasonable attorney's fees, expert witness fees, costs, and disbursements incurred[.]”). Because Umatilla is the prevailing party, it is therefore entitled to recover attorney's fees.
Reasonable attorney's fees are not assumed or sum certain in default judgment cases but must be shown as usual using the lodestar method. Vogel v. Harbor Plaza Ctr., LLC, 893 F.3d 1152, 1159 (9th Cir. 2018) “([T]he court is obliged to calculate a ‘reasonable' fee in the usual manner,” i.e., the lodestar method). The lodestar method multiplies the number of hours reasonably spent on the litigation and a reasonable hourly rate. Hensley v. Eckerhart, 461 U.S. 424, 433 (1983). The party seeking an award of attorney's fees “has the burden of submitting billing records to establish that the number of hours it has requested [is] reasonable.” Gonzalez v. City of Maywood, 729 F.3d 1196, 1202 (9th Cir. 2013). Similarly, the fee applicant has the burden of proving that the requested hourly rate is reasonable. See Camacho v. Bridgeport Fin. Inc., 523 F.3d 973, 980 (9th Cir. 2008).
Umatilla seeks $5,662.50 in attorney's fees for 17.2 hours of work performed by a partner, associate, and paralegal on this matter, at rates of $275.00, $210.00 - $225.00, and $135.00 per hour, respectively. Molyneux-Elliot Decl. Ex. 2. Although Umatilla offers no evidence apart from billing statements to support the reasonableness of the hours expended or hourly rates, this Court nevertheless concludes that both were reasonable. The billing statements demonstrate that Umatilla's counsel efficiently litigated this action and successfully obtained an order of default. Moreover, the hourly rates charged by counsel are near the average rates for attorneys practicing in eastern Oregon, where this case was filed. See OREGON STATE BAR, 2017 ECONOMIC SURVEY 39 tbls. 35-37 (2017), https://www.osbar.org/ docs/resources/Econsurveys/17EconomicSurvey.pdf (last visited May 10, 2023). The paralegal rate of $135.00 was also reasonable, as they were below the median rate for a first-year paralegal. Poticny v. Movers & Packers Relocation Specialists LLC, No. 3:22-CV-01243-IM, 2022 WL 18024218, at *9 (D. Or. Dec. 30, 2022) (discussing paralegal billing rates). Thus, this Court recommends $5662.50 in attorney's be awarded to Umatilla.
4. Costs.
Finally, Umatilla seeks $425.05 in costs, which include $8.63 in postage and $416.42 in costs related to service of process on two separate occasions. Molyneux-Elliot Decl. Ex. 2. Costs associated with service of Plaintiff are clearly recoverable. 28 U.S.C. § 1920. Thus, Umatilla is entitled to recover $171.50 in costs related to its successful service of Chacon on December 16, 2023. Affidavit of Service, Ex. 4. However, Umatilla provides no explanation for the additional $244.92 in service fees, Molyneux-Elliot Decl. Ex. 2 at 13, and this Court cannot ascertain whether those were reasonably incurred. In addition, postage fees are not recoverable in this District. Puig-Perez v. Bidema, No. 3:19-CV-00197-JR, 2020 WL 2616511, at *3 (D. Or. May 22, 2020). Thus, this Court recommends that only $171.50 in costs be awarded to Umatilla.
RECOMMENDATION
This Court recommends Umatilla's Motion for Default Judgment be GRANTED. Judgement should be entered in favor of Umatilla and against Chacon in the following amounts: (1) $157,197.10 in damages on its breach of contract claim; (2) $5662.50 in attorney's fees; and (3) $171.50 in costs.
SCHEDULING ORDER
The Findings and Recommendation will be referred to a district judge. Objections, if any, are due fourteen (14) days from Service of the Findings and Recommendation. If no objections are filed, then the Findings and Recommendation will go under advisement on that date.
A party's failure to timely file objections to any of these findings will be considered a waiver of that party's right to de novo consideration of the factual issues addressed herein and will constitute a waiver of the party's right to review of the findings of fact in any order or judgment entered by a district judge. These Findings and Recommendation are not immediately appealable to the Ninth Circuit Court of Appeals. Any notice of appeal pursuant to Rule 4(a)(1) of the Federal Rules of Appellate Procedure should not be filed until entry of judgment.