-CMK (TEMP) Lehman Brothers Holdings, Inc. v. Shasta Financial Services, Inc., No. 2:2010cv03083 - Document 18 (E.D. Cal. 2011)

Court Description: FINDINGS and RECOMMENDATIONS signed by Magistrate Judge Craig M. Kellison on 4/29/11 RECOMMENDING that pltf's motion for default judgment against dft 16 be granted; and judgment be entered against dft in the amount of $1,993.605.03 with post-judgment interest to accrue pursuant to 28:1961. REFERRED to Judge John A. Mendez. Parties may file objections within 14 days.(Carlos, K) Modified on 5/2/2011 (Carlos, K).
Download PDF
-CMK (TEMP) Lehman Brothers Holdings, Inc. v. Shasta Financial Services, Inc. Doc. 18 1 2 3 4 5 6 7 8 IN THE UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 LEHMANL BROTHERS HOLDINGS, INC., 11 Plaintiff, 12 No. CIV S-10-3083 JAM CMK (TEMP) v. 13 SHASTA FINANCIAL SERVICES, INC. 14 Defendant. / 15 Plaintiff’s motion for default judgment was submitted on the papers. The court’s 16 docket reflects that defendant has not filed any opposition to plaintiff’s motion for entry of 17 default judgment despite being served with the motion and supporting exhibits. For the reasons 18 set forth below, the undersigned recommends that plaintiff’s motion be granted and that default 19 judgment be entered against defendant. 20 BACKGROUND 21 In the complaint filed November 16, 2010, plaintiff alleges mortgage loans were 22 purchased by Lehman Brothers Bank, FSB (“LBB”) from defendant pursuant to a series of 23 written contracts and that the rights of LBB were subsequently assigned to plaintiff. Plaintiff 24 further alleges that with respect to certain of the mortgages, defendant breached provisions of the 25 ///// 26 1 Dockets.Justia.com 1 contracts that required it to repurchase those mortgage loans for which the borrower failed to 2 make payments on the mortgage. 3 The record reflects that defendant was properly served with process on December 4 5, 2010 and default was entered on January 13, 2011. (Doc. Nos. 9, 13.) On March 18, 2011, 5 plaintiff filed a motion for default judgment. (Doc. No. 16.) 6 LEGAL STANDARDS 7 Federal Rule of Civil Procedure 55(b)(2) governs applications to the court for 8 entry of default judgment. Upon entry of default, the complaint’s factual allegations regarding 9 liability are taken as true, while allegations regarding the amount of damages must be proven. 10 Dundee Cement Co. v. Howard Pipe & Concrete Prods., 722 F.2d 1319, 1323 (7th Cir. 1983) 11 (citing Pope v. United States, 323 U.S. 1 (1944); Geddes v. United Fin. Group, 559 F.2d 557 (9th 12 Cir. 1977)); see also DirectTV v. Huynh, 503 F.3d 847, 851 (9th Cir. 2007); TeleVideo Sys., Inc. 13 v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987). 14 Where damages are liquidated, i.e., capable of ascertainment from definite figures 15 contained in documentary evidence or in detailed affidavits, judgment by default may be entered 16 without a damages hearing. Dundee, 722 F.2d at 1323. Unliquidated and punitive damages, 17 however, require “proving up” at an evidentiary hearing or through other means. Dundee, 722 18 F.2d at 1323-24; see also James v. Frame, 6 F.3d 307, 310-11 (5th Cir. 1993). 19 Granting or denying default judgment is within the court’s sound discretion. 20 Draper v. Coombs, 792 F.2d 915, 924-25 (9th Cir. 1986); Aldabe v. Aldabe, 616 F.2d. 1089, 21 1092 (9th Cir. 1980). The court is free to consider a variety of factors in exercising its discretion. 22 Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). Among the factors that may be 23 considered by the court are 24 25 26 (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 2 1 2 Federal Rules of Civil Procedure favoring decisions on the merits. Eitel, 782 F.2d at 1471-72 (citing 6 Moore’s Federal Practice ¶ 55-05[2], at 55-24 to 55-26). 3 4 ANALYSIS I. Whether Default Judgment Should Be Entered 5 The factual allegations of plaintiff’s complaint, taken as true pursuant to the entry 6 of default against defendant, and the affidavits submitted in support of the motion for summary 7 judgment establish that plaintiff is entitled to the relief requested. The repurchase price of each 8 loan has been appropriately calculated according to the formula set forth in the Seller’s Guide 9 that governs the parties’ respective rights and responsibilities. Baker Decl., Exh. A-G. From the 10 business records submitted by plaintiff, damages in a sum certain are calculable according to a 11 set formula and the amount of damages is $1,993,605.63. 12 After weighing the Eitel factors, the undersigned finds that the material 13 allegations of the complaint support plaintiff’s claims. Plaintiff will be prejudiced if default 14 judgment is denied because plaintiff has no other recourse for recovery of the damages suffered 15 due to the defendants’ failure to repurchase the subject loans. 16 In light of the entry of default against the defendant, there is no apparent 17 possibility of a dispute concerning the material facts underlying the action. Nor is there any 18 indication that the defendant’s default resulted from excusable neglect, as defendant has been 19 properly notified of the pendency of the lawsuit and was served with a copy of the pending 20 motion. 21 Although public policy generally favors the resolution of a case on its merits, the 22 defendant’s failure to make a proper appearance and defend against plaintiff’s claims has made a 23 decision on the merits impossible in this case. Because most of the Eitel factors weigh in 24 plaintiff’s favor, the undersigned, while recognizing the public policy favoring decisions on the 25 merits, will recommend that default judgment be entered against the defaulted defendant. 26 ///// 3 1 II. Terms of Judgment to Be Entered 2 After determining that entry of default judgment is warranted, the court must next 3 determine the terms of the judgment. Upon consideration of all of plaintiff’s briefing, the 4 undersigned will recommend that damages be awarded in the amount requested. By its motion 5 for default judgment, plaintiff seeks a judgment in the amount of $1,993,605.63 with post- 6 judgment interest to accrue pursuant to 28 U.S.C. § 1961. The declaration of John Baker and 7 exhibits attached thereto support the entry of judgment in the amount requested. 8 CONCLUSION 9 For the reasons set forth above, IT IS RECOMMENDED that: 10 11 1. Plaintiff’s motion for default judgment (Doc. No. 16) against defendant be granted; 12 13 2. Judgment be entered against defendant in the amount of $1,993,605.63 with post-judgment interest to accrue pursuant to 28 U.S.C. § 1961. 14 These findings and recommendations will be submitted to the United States 15 District Judge assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(1). Within 16 fourteen days after these findings and recommendations are filed, any party may file written 17 objections with the court. A document containing objections should be titled “Objections to 18 Magistrate Judge’s Findings and Recommendations.” The parties are advised that failure to 19 file objections within the specified time may, under certain circumstances, waive the right to 20 appeal the District Court’s order. See Martinez v. Ylst, 951 F.2d 1153 (9th Cir. 1991). 21 22 DATED: April 29, 2011 ______________________________________ CRAIG M. KELLISON UNITED STATES MAGISTRATE JUDGE 23 24 25 JMM lehman-shasta.def.cmk 26 4