Bostik, Inc. v. J.E. Higgins Lumber Company et al, No. 3:2012cv04021 - Document 32 (N.D. Cal. 2013)

Court Description: ORDER denying 27 Motion for Default Judgment.Signed by by Judge Samuel Conti 1/10/2013. (sclc2, COURT STAFF) (Filed on 1/10/2013)
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1 2 3 4 5 IN THE UNITED STATES DISTRICT COURT 6 FOR THE NORTHERN DISTRICT OF CALIFORNIA 7 BOSTIK, INC., 8 Plaintiff, v. 10 For the Northern District of California United States District Court 9 11 12 J.E. HIGGINS LUMBER CO.; GOLDEN STATE FLOORING, INC.; and DOES 150, inclusive, 13 Defendants. 14 ) Case No. 12-4021 SC ) ) ORDER DENYING APPLICATION ) FOR DEFAULT JUDGMENT ) ) ) ) ) ) ) ) 15 16 17 I. INTRODUCTION Now before the court is Plaintiff Bostik, Inc.'s ("Plaintiff") 18 Application for Default Judgment against Defendant J.E. Higgins 19 Lumber Co. ("Defendant"). 20 neither appeared in this action nor opposed Plaintiff's 21 Application. 22 this matter appropriate for resolution without oral argument. 23 discussed below, Plaintiff's Application is DENIED without 24 prejudice. ECF No. 27 ("Appl."). Defendant has Pursuant to Civil Local Rule 7–1(b), the Court finds 25 26 II. 27 Plaintiff is a manufacturer and supplier of industrial 28 BACKGROUND adhesives, among other things. Defendant, a hardwood flooring As 1 company, purchased adhesive products from Plaintiff in twenty-one 2 transactions, each enshrined in the parties' purchase orders and 3 invoices (collectively, the "Agreements"). 4 7-10; ECF No. 1-2 ("Thompson Decl."). 5 by Plaintiff's Terms and Conditions of Sale ("Terms"). 6 Decl. Ex. B. 7 Agreements, but Defendant never paid. 8 therefore sued Defendant for breach of contract. ECF No. 1 ("Compl.") ¶¶ The Agreements are governed Thompson Plaintiff alleges that it performed per the Compl. ¶¶ 7-10. Plaintiff Compl. ¶¶ 11-15. Plaintiff served Defendant with the Summons and Complaint on 9 United States District Court For the Northern District of California 10 August 1, 2012. ECF No. 6-1 (Proof of Service) ("POS"). 11 never responded or appeared in this action. 12 entered default against Defendant on October 5, 2012, ECF No. 21, 13 and Plaintiff served the Clerk's notice of entry of default on 14 Defendant that same day. 15 Plaintiff served Defendant with a copy of the present Application 16 and other papers. 17 judgment for a total of $680,593.64, comprised of: (1) $590,946.27 18 in unpaid contractual fees under the Agreements; (2) $70,913.55 in 19 contractual interest, based on the Terms' requirement that 20 Defendant pay the maximum allowable interest under Wisconsin law on 21 unpaid contractual fees; and (3) $18,733.82 in attorneys' fees, 22 costs, and expenses, per the Terms' requirement that Defendant pay 23 Plaintiff's attorneys' fees and other costs if Plaintiff is forced 24 to recover unpaid fees from Defendant. 25 has not opposed Plaintiff's Application. 26 /// 27 /// 28 /// ECF No. 22. ECF No. 27-5. Defendant The Clerk of Court On October 17, 2012, Now Plaintiff seeks default 2 Appl. at 2-3. Defendant 1 III. LEGAL STANDARD Under Federal Rule of Civil Procedure 55(b)(2), a party may 2 3 apply to the Court for entry of default judgment after the Clerk of 4 Court has entered default. The Court's decision to enter default 5 judgment is discretionary. Aldabe v. Aldabe, 616 F.2d 1089, 1092 6 (9th Cir. 1980). 7 the adequacy of the service of process on the party against whom 8 default judgment is requested." 9 Metal Workers v. Peters, No. C 00-0395 VRW, 2000 U.S. Dist. LEXIS United States District Court For the Northern District of California 10 As a preliminary matter, the Court must "assess Bd. of Trs. of the N. Cal. Sheet 19065, at *2 (N.D. Cal. Jan. 2, 2001). If the Court determines that service was sufficient, its 11 12 decision to enter default judgment may be guided by the following 13 factors: (1) the possibility of prejudice to the plaintiff; (2) the 14 merits of the plaintiff's substantive claim; (3) the sufficiency of 15 the complaint; (4) the sum of money at stake in the action; (5) the 16 possibility of a dispute concerning material facts; (6) whether the 17 default was due to excusable neglect; and (7) the strong policy 18 underlying the Federal Rules of Civil Procedure favoring decisions 19 on the merits. 20 1986). 21 allegations regarding liability are taken as true, except with 22 respect to the damages requested. 23 285 F.3d 899, 906 (9th Cir. 2002). Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. When the Court assesses the Eitel factors, all well-pleaded Fair Hous. of Marin v. Combs, 24 25 IV. DISCUSSION 26 A. 27 Federal Rule of Civil Procedure 4(e) permits service by any 28 Adequacy of Service means authorized by the law of the state in which the district 3 1 court sits. See Fed. R. Civ. P. 4(e)(1). Rule 4(h)(1)(A) 2 authorizes service upon a corporation "in the manner prescribed by 3 Rule 4(e)(1) for serving an individual." 4 corporation may be served by either: (1) personal delivery of a 5 copy of the summons and complaint to an officer, general manager, 6 or a person authorized by the corporation to receive service of 7 process; or (2) "leaving a copy of the summons and complaint during 8 usual office hours in his or her office . . . with the person who 9 is apparently in charge thereof" and then by mailing the papers to Under California law, a United States District Court For the Northern District of California 10 the person to be served at the office address. 11 Proc. §§ 415.20(a), 416.10(b). 12 complete on the tenth day after mailing. Cal. Code Civ. This method of service is deemed Id. On August 1, 2012, Plaintiff's process server delivered to 13 14 Defendant's offices copies of the Summons and Complaint, addressed 15 to Defendant's registered agent for service of process, and left 16 them with "Brad Ibiadt," the "Front Desk Person," who was informed 17 of the nature of the papers. 18 Plaintiff mailed copies of the service papers to Defendant's 19 registered agent in compliance with the California Code of Civil 20 Procedure section 415.20. 21 Mr. Ibiadt was not "apparently in charge" of the office. 22 accordingly finds that Plaintiff adequately served Defendant as of 23 August 12, 2012, the tenth day after Plaintiff mailed the service 24 papers to Defendant. POS at 1. Id. at 2. On August 2, 2012, There is no indication that The Court 25 B. Eitel Factors 26 Since service was proper, the Court turns to the Eitel factors 27 to determine whether default judgment is appropriate. 28 /// 4 1 2 1. Prejudice Against Plaintiff The first factor considers the possibility of prejudice 3 against the plaintiff is default judgment is not entered. 4 Court finds that, because Plaintiff may be without recourse for 5 recovery if default judgment is not entered, this factor weighs in 6 favor of default judgment. 7 Cans, 238 F. Supp. 2d 1172, 1177 (C.D. Cal. 2002). 8 9 2. The See PepsiCo, Inc. v. California Sec. Plaintiff's Allegations Must State a Claim The second and third Eitel factors require that a plaintiff's United States District Court For the Northern District of California 10 allegations state a claim upon which it can recover. 11 instant action, Plaintiff claims that Defendant breached the 12 Agreements by failing to pay after Plaintiff performed. 13 Plaintiff's allegations are sufficient to state a claim for breach 14 of contract. 15 in favor of default judgment. 16 17 3. In the Accordingly, the Court finds that these factors weigh The Amount of Money at Stake As to the fourth Eitel factor, the Court must consider "the 18 amount of money at stake in relation to the seriousness of 19 defendant's conduct." 20 Workers, No. C 00-0395 VW, 2000 U.S. Dist. LEXIS 19065, at *4-5 21 (N.D. Cal. Dec. 29, 2000). 22 declarations, calculations, and other documentation of damages in 23 determining if the amount at stake is reasonable." 24 Corp. v. Twinstar Tea Corp., No. 06–CV–03594, 2007 WL 1545173, at 25 *12 (N.D. Cal. May 29, 2007). 26 Bd. of Trs. of the N. Cal. Sheet Metal "The Court considers Plaintiff's Truong Giang In its Application, Plaintiff seeks a total of $680,593.64: 27 $590,946.27 in contractual fees, $70,913.55 in interest, and 28 $18,733.82 in attorneys' fees, costs, and expenses. 5 Appl. at 2-3. 1 While this is a significant amount, the parties are corporations in 2 a commercial transaction, and the contractual fees and interest 3 accumulated over a relatively long period of time. 4 contractual fees at issue here are based on Defendant's refusal or 5 failure to pay the amounts explicitly required of it per the 6 Agreements, and Plaintiff has a clear contractual basis for 7 requesting interest and attorneys' fees and costs. 8 Plaintiff has sources of proof for the amount it requests. 9 Also, the In other words, However, as discussed below, Plaintiff fails to "prove up" the United States District Court For the Northern District of California 10 amount of money it seeks in judgment despite its sources of proof 11 because of several significant mistakes in its Application. 12 Granting the requested amount under these circumstances would be 13 unreasonable and unfair. 4. 14 15 Likelihood of Dispute Over Material Facts With respect to the fifth Eitel factor, the material facts of 16 the instant case are not reasonably likely to be subject to 17 dispute. 18 declarations supporting its claims. 19 may assume the truth of the facts pled in the Complaint (except 20 with respect to damages) upon default, there is no likelihood that 21 any genuine issue of material fact exists here. 22 United Fin. Group, 559 F.2d 557, 560 (9th Cir. 1977). 23 failure to appear at any point in this case further supports this 24 conclusion. 25 default judgment. 26 27 28 Plaintiff has pled factual allegations and provided 5. Accordingly, since the Court See Geddes v. Defendant's Accordingly, this factor weighs in favor of entry of Excusable Neglect For the sixth Eitel factor, there is no support for finding that Defendant's default is due to excusable neglect. 6 Defendant 1 was served with the Complaint and Summons in this action over five 2 months ago and has yet to enter an appearance. 3 served Defendant with their Application. 4 default cannot be attributed to excusable neglect. 5 Automation Instrument Co. v. Kuei, 194 F. Supp. 2d 995, 1005 (N.D. 6 Cal. 2001). 6. 7 8 9 Plaintiffs also In such circumstances, See Shanghai This factor supports entry of default judgment. Policy Favoring Decision on the Merits "Cases should be decided upon their merits whenever reasonably possible." Eitel, 782 F.2d at 1472. However, this United States District Court For the Northern District of California 10 policy is not dispositive, and "Defendant's failure to answer 11 Plaintiff['s] Complaint makes a decision on the merits impractical, 12 if not impossible." 13 of a case before hearing the merits is allowed when a defendant 14 fails to defend an action. 15 factor does not weigh against default judgment. 7. 16 17 PepsiCo, 238 F. Supp. 2d at 11. Id. Termination Therefore, in this case, this Summary of Eitel Factors The Eitel factors favor entry of default judgment. However, 18 as explained more fully below, the Court finds that Plaintiff's 19 failure to provide adequate proof of the amount requested outweighs 20 mechanical application of the Eitel factors in this case. 21 22 B. DAMAGES 23 In granting default judgment, a court can award only up to the 24 amount prayed for by a plaintiff in its complaint. Fed. R. Civ. 25 Pro. 54(c). 26 8(a)(3), and plaintiff must "prove up" the amount of damages, fees, 27 and costs it requests by providing admissible evidence in the form 28 of clear declarations, calculations, witness testimony, or other A demand for relief must be specific, under FRCP 7 1 documentation supporting its request. 2 & Welfare Trust Fund v. Moore Elec. Contracting, Inc., No. 11-CV- 3 00942-LHK, 2012 WL 1623236, at *2 (N.D. Cal. May 8, 2012); Truong 4 Giang, 2007 WL 1545173, at *13. 5 its damages. 6 Orange Co. Elec. Ind. Health Plaintiff has failed to prove up First, Plaintiff requests $590,946.27 in unpaid contractual 7 fees, based on the amounts provided in the Agreements. Appl. at 3. 8 However, the amounts identified in Plaintiff's supporting 9 documentation total $591,151.11, not $590,946.27. See Thompson United States District Court For the Northern District of California 10 Decl. ¶¶ 3(a)-(u); id. Ex. A. This discrepancy makes Plaintiff's 11 calculations impossible to accept, because it is not clear whether 12 Plaintiff has provided incorrect dollar amounts via the Agreements, 13 made a mistake of addition in its Application, or introduced some 14 other kind of error. 15 failure to prove up damages. Plaintiff's lack of clarity here amounts to a 16 Second, Plaintiff's incorrect calculation of unpaid fees 17 suggests that its calculation of contractual interest is also 18 wrong. 19 interest per Wisconsin Statute § 138.05, the statute that governs 20 interest Defendant owes on its unpaid fees. 21 Decl. Ex. B at #3. 22 explanation of how Plaintiff applied the Wisconsin Statute, the 23 Court cannot be sure that $70,913.55 is the proper amount of 24 interest on Defendant's unpaid fees. 25 In any event, Plaintiff did not explain how it calculated Appl. at 3; Thompson Without a correct calculation of fees or an Third, Plaintiff requests $18,733.82 in attorneys' fees and 26 costs. Appl. at 3. Plaintiff's justification for this is a bare 27 assertion that it has incurred fees of $18,115 and costs of $618.82 28 during its pursuit of its breach of contract claim. 8 Appl. at 2-3; 1 Thompson Decl. ¶ 8. However, Plaintiff does not provide any 2 explanation of these amounts, such as its counsel's hourly rates, 3 counsel's time spent working on the matter, or any other breakdown 4 of costs. 5 amount it claims.1 Plaintiff must prove to the Court that it is owed the 6 The Court therefore finds that Plaintiff has failed to prove 7 up the amount of damages it requests, despite having an otherwise 8 favorable case for default judgment. 9 precluded from filing another application for default judgment that However, Plaintiff is not United States District Court For the Northern District of California 10 provides adequate support for the relief it has requested, as 11 discussed in this Order. 12 13 VI. CONCLUSION For the reasons discussed above, the Court DENIES without 14 15 prejudice the Application for Default Judgment filed by Plaintiff 16 Bostik, Inc., against Defendant J.E. Higgins Lumber Company. 17 Plaintiff may submit a revised application for default judgment 18 addressing the issues discussed above within thirty (30) days of 19 the signature date of this Order. 20 dismissal of this action with prejudice. Failure to do so will result in 21 IT IS SO ORDERED. 22 23 Dated: January ___, 2013 24 UNITED STATES DISTRICT JUDGE 25 26 27 28 1 Plaintiff cannot, however, reassert fees for supplemental briefing on this issue. Defendant should not have to pay for Plaintiff's errors in filing a motion. 9