-PAL Painters Joint Committee et al v. J.L. Wallco, Inc. et al, No. 2:2010cv01385 - Document 263 (D. Nev. 2012)
Court Description: ORDER Granting 257 Plaintiffs' Motion for Default Judgment. Richard Rejan Nieto and Genuine Quality Coatings, Inc. terminated. The Clerk of the Courtshall enter default against defendants Genuine Quality Coatings, Inc and Richard Rejan Nieto. Signed by Judge James C. Mahan on 11/1/2012. (Copies have been distributed pursuant to the NEF - SLD)
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-PAL Painters Joint Committee et al v. J.L. Wallco, Inc. et al Doc. 263 1 2 3 4 UNITED STATES DISTRICT COURT 5 DISTRICT OF NEVADA 6 PAINTERS JOINT COMMITTEE, et al., 7 2:10-CV-1385 JCM (PAL) 8 Plaintiffs, 9 10 v. 11 J.L. WALLCO, INC. Dba Wallternatives, et al., 12 Defendants. 13 14 15 ORDER Presently before the court is plaintiff’s motion for default judgment against certain 16 17 defendants. (Doc. # 257). No one has filed an opposition. 18 I. Background 19 This case has dozens of defendants, a long procedural history, and a disjointed docket that 20 need not be addressed in the disposition of this motion. The court need only address a very narrow 21 set of events to resolve the motion for default judgment. 22 The attorney of record for some defendants, Genuine Quality Coatings, Inc. (“GQC Inc.”), 23 Shrader & Martinez Construction, Inc. (“SMC”), Merchants Bonding Company (“Merchants”), Great 24 American Insurance Company (“GAIC”), and Richard Rejan Nieto (Nieto Jr.”), withdrew from 25 representation because those defendants failed to pay legal costs and fees for services rendered in 26 the litigation. (Doc. # 171). In response, magistrate judge Leen ordered each of the above 27 mentioned defendants to retain new counsel by a deadline date. (Id.). 28 James C. Mahan U.S. District Judge Dockets.Justia.com 1 Merchants, SMC, and GAIC all complied with the court order and retained counsel before 2 the deadline date. (See docs. ## 177 & 179). Defendants GQC Inc. and Nieto Jr. never complied, 3 and plaintiffs filed this motion for default judgment. (Doc. # 257). The deadline to find new counsel 4 is now several months gone and the court, on its own, can discern no good cause or excusable 5 neglect for the failure to obey the order. 6 II. Legal Standard 7 “District courts have inherent power to control their dockets. In the exercise of that power 8 they may impose sanctions including, where appropriate, default or dismissal.” Thompson v. Hous. 9 Auth. of City of Los Angeles, 782 F.2d 829, 830 (9th Cir. 1986) (citing Link v. Wabash R.R. Co., 370 10 U.S. 626 (1961).1 “Dismissal, however, is so harsh a penalty it should be imposed as a sanction only 11 in extreme circumstances.” Id. (citing Henderson v. Duncan, 779 F.2d 1421, 1423 (9th Cir. 1986); 12 Raiford v. Pounds, 640 F.2d 944, 945 (9th Cir. 1981); Industrial Bldg. Materials, Inc. v. 13 Interchemical Corp., 437 F.2d 1336, 1339 (9th Cir. 1970)). The Ninth Circuit has “repeatedly 14 upheld the imposition of the sanction of dismissal for failure to comply with pretrial procedures 15 mandated by local rules and court orders.” Id. (internal citations omitted). “Courts have inherent 16 equitable powers to dismiss actions or enter default judgments for failure to prosecute, contempt of 17 court, or abusive litigation practices.” TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915 916 (9th Cir. 18 1987). 19 20 21 22 23 24 25 26 27 28 James C. Mahan U.S. District Judge 1 This court will analyze the motion for default judgment pursuant to the five factor test in Thompson as opposed to the seven factor test in Eitel v. McCool, 782 F.2d 1470 (9th Cir. 1986). Thompson, generally, controls when default or dismissal is sought because of a failure of a party to comply with a court order. The Eitel factors are appropriate when a party properly moves under Fed. R. Civ. P. 55 for a default judgment against a party who has failed to plead or otherwise defend. The relevant defendants in this motion did appear and litigate their claims for approximately a year and a half before their counsel withdrew. Further, “entry of default for failure to plead or otherwise defend is not limited to situations involving a failure to answer a complaint, but applies to any of the pleadings listed in Rule 7(a).” Allen & Wright, Federal Practice and Procedure (3d ed.) § 2682. “The words ‘otherwise defend’ refer to the interposition of various challenges to such matters as service venue, and the sufficiency of the prior pleading, any of which might prevent a default if pursued in the absence of a responsive pleading.” Id. “It must be remembered that Rule 55(a) does not represent the only source of authority in the rules for the entry of a default that may lead to judgment.” Id. -2- 1 2 However, because dismissal is such a severe remedy, its imposition is allowed only after this court weights several factors: “(1) the public’s interest in expeditious resolution of litigation; (2) the court’s need to manage its docket; (3) the risk of prejudice to the defendants; (4) the public policy favoring disposition of cases on their merits; and, (5) the availability of less drastic sanctions.” 3 4 5 Id. (citing Henderson, 779 F.2d at 1423-24). 6 Finally, pertinent to this case, “a corporation may appear in federal court only through 7 licensed counsel.” United States v. High Country Broadcasting Co., Inc., 3 F.3d 1244, 1245 (9th 8 Cir. 1993) (citing Rowland v. California Men’s Colony, 113 S.Ct. 716, 721 (1993)). “The general 9 rule of law is that upon default the factual allegations of the complaint, except those relating to the 10 amount of damages, will be taken as true.” TeleVideo, 826 F.2d at 917-18 (9th Cir. 1987) (internal 11 quotations and citations omitted). 12 III. Discussion 13 Plaintiffs seek default judgment against two parties - GQC Inc. and Nieto Jr. Plaintiffs cite 14 as the basis for default judgment GQC Inc.’s and Nieto Jr.’s failure to comply with a court order, 15 and their failure to answer or otherwise respond to the third amended complaint. However, 16 plaintiffs’ motion addresses neither the Thompson or Eitel factors. See footnote 1 supra. Further, 17 plaintiffs have not properly complied with the two-step process of seeking a default judgment under 18 Fed. R. Civ. P. 55.2 19 At this stage, the court will address the portion of plaintiffs’ motion that seeks a default 20 judgment because defendants failed to comply with a court order. Magistrate judge Leen ordered 21 defendants GQC Inc. and Nieto Jr. to retain counsel by a deadline date. Neito Jr. was also given the 22 option to appear pro se. Neither defendant has retained counsel. Magistrate judge Leen warned both 23 24 25 26 27 28 James C. Mahan U.S. District Judge 2 “Obtaining a default judgment entails two steps. First, the party seeking a default judgment must file a motion for entry of default with the clerk of a district court by demonstrating that the opposing party has failed to answer or otherwise respond to the complaint, and second, once the clerk has entered a default, the moving party may then seek entry of a default judgment against the defaulting party.” UMG Recordings, Inc. v. Steward, 461 F.Supp.2d 837, 840 (S.D. Ill. 2006) (internal citations omitted) (emphasis added); see Eitel, 782 F.2d at 1471 (noting the “two-step process required by Rule 55.”). -3- 1 GQC Inc. and Nieto Jr. that “[f]ailure to comply with this order may result in a recommendation to 2 the District Judge for sanctions, including case-dispositive sanctions.” (Doc. # 171). 3 A. The Public’s Interest in Expeditious Resolution of Litigation 4 This factor weighs heavily in favor of plaintiffs. This case is already over two years old. The 5 court most recently denied motions for summary judgments, and the parties’ most recent action was 6 the stipulation to an extension of time to file a pretrial order. The ultimate resolution of this case has 7 a long way to go yet. This case must proceed on and the failure of defendants GQC Inc. and Nieto 8 Jr. to retain counsel in flagrant violation of a court order cannot slow down the process. 9 B. The Court’s Need to Manage its Docket 10 This court’s docket, probably like the majority of district court dockets across the country, 11 is significant. The dismissal of these two defendants will aid the court in the management of both 12 its docket and this particular case. This particular case presently has, though the number is in a 13 continual state of flux, about 60 defendants. This case has been and likely will continue to account 14 for a substantial portion of this court’s docket. The dismissal, or entry of default, against two 15 defendants that refuse to comply with court orders will alleviate the court’s docket. This factor 16 weighs heavily in favor of plaintiffs’ request for default judgment. 17 C. The Risk of Prejudice to the Defendants 18 Some level of risk of prejudice to the defendants obviously exists. However, this prejudice 19 is defendants’ making. Defendants apparently refuse to litigate the claims against them or pay an 20 attorney to litigate them on their behalf. Some level of prejudice necessarily must follow. However, 21 defendants may not complain of unfair prejudice when their actions caused the prejudice in the first 22 instance. 23 The real risk of prejudice may actually lie with plaintiffs. Defendants’ refusal to comply with 24 court orders precludes plaintiffs from adjudicating their claims on the merits. Defendants cannot 25 be allowed to prevent plaintiffs from proceeding with their claims by simply not appearing and not 26 litigating. This factor is neutral. 27 ... 28 James C. Mahan U.S. District Judge -4- 1 D. The Public Policy Favoring Disposition of Cases on Their Merits 2 This factor obviously weighs in favor of defendants. There will be no disposition of the 3 claims against these defendants on the merits if these defendants never retain counsel to defend them. 4 This factor is especially troubling because these two particular defendants have survived summary 5 judgment.3 This factor favors defendants. 6 E. The Availability of Less Drastic Sanctions 7 “[T]he court’s warning to a party that its failure to obey the court’s order will result in 8 dismissal satisfies the ‘consideration of alternatives requirement.” Hingano v. Channing & Assocs., 9 LLC, No. F09-1881, 2010 WL 55891, at *2 (E.D. Cal. Jan. 4, 2010); see Cooper v. Marylind 10 Foundation, 25 Fed. Appx. 596, 597 (9th Cir. 2001) (upholding the district court’s dismissal under 11 the Thompson factors after “the district court expressly and unambiguously warned Cooper of 12 imminent dismissal if, thereafter, he failed to comply with any court orders.”). 13 GQC, Inc. and Nieto Jr. have been so warned, and no alternatives exist other than default. 14 Under these facts, the court can do no more than order GQC Inc. and Nieto Jr. to retain counsel. 15 They are in violation of a court order that: (1) GQC Inc. retain counsel because a corporation must 16 have counsel; and, (2) Neito Jr. either retain counsel or make a pro se appearance. Neither has 17 complied and they have therefore defaulted. 18 19 20 21 22 23 24 25 26 27 28 James C. Mahan U.S. District Judge 3 The court recognizes that the counsel that filed the response to plaintiffs’ motion for summary judgment argued on behalf of GQC Inc. and Nieto Jr. (See doc. # 247). This summary judgment response occurred after magistrate judge Leen’s order. (Compare doc. # 247 with doc. # 171). The heading of the summary judgment response states that counsel is attorneys for both GQC Inc. and Nieto Jr., in addition to numerous other defendants. (Id.). The various alter ego claims plaintiffs allege against GQC Inc. and Nieto Jr. intertwine and are related to the alter ego claims plaintiffs alleged against the numerous other defendants actually represented by the counsel that filed the response to the summary judgment motion. This counsel is from the same firm that previously withdrew from representation of GQC Inc. and Nieto Jr. because they would not pay their legal fees (doc. # 162), which resulted in magistrate judge Leen’s order (doc. # 171). Finally, after magistrate judge Leen’s order, this same firm filed a notice of appearance for Merchants and SMC, but not GQC Inc. or Nieto Jr. No counsel has filed a response to this motion for default judgment on behalf of GQC Inc. and Nieto Jr. Based on the facts the court finds: (1) that no attorney has made an appearance on behalf of GQC Inc. or Nieto Jr., thereby complying with magistrate judge Leen’s order; and, (2) no attorney has opposed plaintiffs’ motions for default judgment against GQC Inc and Nieto Jr. -5- 1 Accordingly, 2 IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that plaintiffs’ motion for 3 4 5 6 default judgment (doc. # 257) be, the same hereby is GRANTED consistent with the foregoing. IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that the clerk of the court shall enter default against defendants Genuine Quality Coatings, Inc and Richard Rejan Nieto. DATED November 1, 2012. 7 8 UNITED STATES DISTRICT JUDGE 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 James C. Mahan U.S. District Judge -6-
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