McKesson Medical-Surgical Incorporated v. Custom Glass and Synthetic Design LLC ( 2021 )

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 10 McKesson Medical-Surgical Inc., No. CV-21-01471-PHX-DGC 11 Plaintiff, ORDER AND DEFAULT JUDGMENT 12 v. 13 Custom Glass and Synthetic Design, LLC, 14 Defendant. 15 16 Plaintiff McKesson Medical-Surgical sued Defendant Custom Glass and Synthetic 17 Design to recover a sum of money owed to Plaintiff for goods sold to Defendant. Doc. 1. 18 Pursuant to Federal Rule of Civil Procedure 55(b)(2), Plaintiff has filed a motion for default 19 judgment against Defendant. Doc. 11. For reasons stated below, default judgment is 20 appropriate and will be entered in the amount of $355,628.46. 21 I. Background. 22 Plaintiff alleges that, between November 2020 and January 2021, Defendant 23 purchased pharmaceutical products from Plaintiff pursuant to a credit application and a 24 series of invoice agreements. Doc. 1 ¶¶ 8-9; see id. at 8-67 (application and invoices). 25 Plaintiff further alleges that Defendant has failed to make the invoice payments when due 26 and therefore is in breach of the parties’ agreements. Id. ¶ 10. Plaintiff seeks damages in 27 the amount of $355,628.46 – the total due for all unpaid invoices. Id.; see id. at 71-72 28 (final account statement). Plaintiff seeks to recover the $355,628.46 based on the following 1 claims: (1) breach of contract, (2) goods sold and delivered, (3) reasonable value, (4) 2 money due, and (5) account stated. Id. ¶¶ 8-25. 3 Defendant was served with the summons and complaint on August 31, 2021 4 (Doc. 7), but has not appeared in this action. Pursuant to Rule 55(a), the Clerk entered 5 Defendant’s default on October 5. Doc. 10. Plaintiff filed its motion for default judgment 6 on November 11. Doc. 11. Defendant has filed no response and the time for doing so has 7 expired. See Fed. R. Civ. P. 6; LRCiv 7.2(c). 8 II. Default Judgment. 9 After the clerk enters default, the district court may enter a default judgment 10 pursuant to Rule 55(b)(2). See Brooke v. Sai Ashish Inc., No. 1:21C-cv-00967-AWI-SAB, 11 2021 WL 4804220, at *5 (E.D. Cal. Oct. 14, 2021) (explaining that default judgment “is 12 a two-step process: an entry of default judgment must be preceded by an entry of default”). 13 The court’s “decision whether to enter a default judgment is a discretionary one.” Aldabe 14 v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). Although the court it is not required to 15 make detailed findings of fact, see Fair Housing of Marin v. Combs, 285 F.3d 899, 906 16 (9th Cir. 2002), it should consider the following factors: (1) possible prejudice to the 17 plaintiff, (2) the merits of the claims, (3) the sufficiency of the complaint, (4) the amount 18 of money at stake, (5) potential factual disputes, (6) whether default is due to excusable 19 neglect, and (7) the policy favoring decisions on the merits, see Eitel v. McCool, 782 F.2d 20 1470, 1471-72 (9th Cir. 1986). As the party seeking default judgment, Plaintiff “bears the 21 burden of demonstrating to the Court that the complaint is sufficient on its face and that 22 the Eitel factors weigh in favor of granting default judgment.” Ronald Norris v. Shenzhen 23 IVPS Tech. Co., No. CV-20-01212-PHX-DWL, 2021 WL 4844116, at *2 (D. Ariz. Oct. 18, 24 2021). 25 A. Prejudice to Plaintiff. 26 The first Eitel factor “considers whether the plaintiff will suffer prejudice if default 27 judgment is not entered.” PepsiCo, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1172, 1177 28 (C.D. Cal. 2002). This factor favors default judgment where the defendant fails to answer 1 the complaint because the plaintiff “would be denied the right to judicial resolution of the 2 claims presented, and would be without other recourse for recovery.” Marquez v. Chateau 3 Hosp., Inc., No. CV-20-0107 FMO (RAOx), 2020 WL 5118077, at *2 (C.D. Cal. June 11, 4 2020); see PepsiCo, 238 F. Supp. 2d at 1177 (same). 5 Despite being served with process, Defendant has not answered or otherwise 6 responded to the complaint. If default judgment is not entered, Plaintiff likely will be 7 without other recourse. The first Eitel factor weighs in favor of default judgment. 8 B. Merits of the Claims and Sufficiency of the Complaint. 9 These Eitel factors are often “analyzed together and require courts to consider 10 whether a plaintiff has stated a claim on which it may recover.” Best W. Int’l Inc. v. Ghotra 11 Inc., No. CV-20-01775-PHX-MTL, 2021 WL 734585, at *3 (D. Ariz. Feb. 25, 2021) 12 (citation omitted); see SCF RC Funding I, LLC v. GKRM, Inc., No. CV-21-00658-PHX- 13 DLR, 2021 WL 3290530, at *2 (D. Ariz. Aug. 2, 2021) (explaining that these Eitel factors 14 favor default judgment where “the complaint sufficiently states a plausible claim for relief 15 under the pleading standards of Rule 8”). The Court must accept the allegations of the 16 complaint as true when applying these Eitel factors. See Ghotra, 2021 WL 734585, at *2 17 (citing TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987)); Geddes 18 v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977). 19 Accepting the complaint’s allegations as true, the Court finds that Plaintiff has 20 adequately stated claims for relief. See Doc. 1 ¶¶ 8-25; see also Doc. 11 at 7-10 (setting 21 forth the elements and legal authority for each claim); Thomas v. Montelucia Villas, LLC, 22 302 P.3d 617, 621 (Ariz. 2013) (“To bring an action for the breach of the contract, the 23 plaintiff has the burden of proving the existence of the contract, its breach and the resulting 24 damages.”) (citation omitted); Broadband Dynamics, LLC v. SatCom Mktg., Inc., 418 P.3d 25 1055, 1058 (Ariz. Ct. App. 2018) (“A cause of action to recover on an open account arises 26 from ‘a contract between the parties for work done or material furnished.’ To recover on 27 an open account, the plaintiff must meet its burden to prove ‘the correctness of the account 28 and each item thereof.’”) (citations omitted); A.R.S. § 47-2305(A) (“The parties if they so 1 intend can conclude a contract for sale even though the price is not settled. In such a case 2 the price is a reasonable price at the time for delivery[.]”); Ranch House Supply Corp. v. 3 Van Slyke, 370 P.2d 661, 665 (Ariz. 1962) (“The order or request for shipment of goods to 4 the person making the request standing alone, implies a promise to pay therefor. . . . If the 5 price is not agreed upon . . . then the person ordering or requesting the shipment of goods 6 impliedly promises to pay the reasonable value of the merchandise requested and 7 shipped.”); Ruse v. Williams, 130 P. 887, 888 (Ariz. 1913) (an action of assumpsit for 8 money due “is founded upon what the law terms an implied promise on the part of the 9 defendant to pay what, in good conscience, he is bound to pay to the plaintiff”); Newbery 10 Corp. v. Fireman's Fund Ins. Co., 95 F.3d 1392, 1404 (9th Cir. 1996) (“Under Arizona 11 law, an account stated occurs when persons with an open and running business account 12 mutually agree to settle and strike a balance.”) (citing Ralston v. Morgan, 73 P.2d 94, 95 13 (Ariz. 1937)). The second and third Eitel factors favor default judgment. 14 C. Amount of Money at Stake. 15 Under the fourth Eitel factor, the Court considers the amount of money at stake in 16 relation to the seriousness of the defendant’s conduct. Defendant’s alleged failure to pay 17 Plaintiff for the goods received is a serious breach of the parties’ agreements. But the 18 amount of money at stake – more than $350,000 – is nonetheless substantial. The Court 19 concludes that this factor weighs against default judgment. See Bd. of Trustees of Sheet 20 Metal Workers Loc. 104 Health Care Plan v. Vigil, No. C 07-01508 WHA, 2007 WL 21 3239281, at *2 (N.D. Cal. Nov. 1, 2007) (noting that “default judgment is disfavored if 22 there were a large sum of money involved”); J & J Sports Prods., Inc. v. Cardoze, No. C 23 09-05683 WHA, 2010 WL 2757106, at *5 (N.D. Cal. July 9, 2010) (explaining that “a large 24 sum of money at stake,” such as the request for $114,200 in damages, “would disfavor 25 default judgment”). 26 / / / 27 / / / 28 / / / 1 D. Potential Factual Disputes. 2 “This factor turns on the degree of possibility that a dispute concerning material 3 facts exists or may later arise.” Talavera Hair Prods., Inc. v. Taizhou Yunsung Elec. 4 Appliance Co., No. 18-CV-823 JLS (JLB), 2021 WL 3493094, at *15 (S.D. Cal. Aug. 6, 5 2021) (citing Eitel, 782 F.2d at 1471-72). Where the defendant “defaults by refusing to 6 answer and defend, the allegations in the well-pleaded complaint are presumed true 7 and . . . there is no possible dispute of material facts.” D.A. v. Witt, No. 2:17-CV-0337- 8 MCE-DMC, 2021 WL 2802932, at *4 (E.D. Cal. July 2, 2021); see Talavera, 2021 WL 9 3493094, at *15 (“[A]ny purported factual dispute appears settled, as there is no indication 10 that the Defaulted Defendants will defend against the action.”). The fifth Eitel factor 11 supports default judgment. 12 E. Whether Default Was Due to Excusable Neglect. 13 Plaintiff has filed an affidavit showing proper service of process on Defendant under 14 Federal Rule of Civil Procedure 4(h). See Doc. 7. It therefore is “unlikely that 15 [Defendant’s] failure to answer and the resulting default was the result of excusable 16 neglect.” Gemmel v. Systemhouse, Inc., No. CIV 04-187-TUC-CKJ, 2008 WL 65604, at *5 17 (D. Ariz. Jan. 3, 2008). This factor weighs in favor of default judgment. 18 F. Policy Favoring Decisions on the Merits. 19 Cases “should be decided upon their merits whenever reasonably possible,” Eitel, 20 782 F.2d at 1472, but the mere existence of Rule 55(b) “indicates that this preference, 21 standing alone, is not dispositive,” PepsiCo, 238 F. Supp. at 1177. Because Defendant’s 22 failure to respond to the complaint “makes a decision on the merits impractical, if not 23 impossible,” Gemmel, 2008 WL 65604, at *5, this factor favors default judgment. 24 G. Conclusion. 25 All but one of the Eitel factors favor default judgment. Considering the factors as a 26 whole, the Court concludes that default judgment is appropriate. The Court will enter 27 default judgment against Defendant and award Plaintiff $355,628.46 in damages – the 28 1 | amount of money Defendant owes Plaintiff under their invoice agreements. See Docs. | at 2| 10-72, 11 at 12. 3 IT IS ORDERED: 4 1. Plaintiff McKesson Medical-Surgical Inc.’s motion for default judgment (Doc. 11) is granted. 6 2. Default judgment is entered in favor of Plaintiff and against Custom Glass 7 | and Synthetic Design, LLC in the amount of $355,628.46. 8 3. Plaintiff shall file its application for attorneys’ fees within 14 days of this order and judgment. 10 Dated this 23rd day of December, 2021. 11 Ly 12 2 aud ©. Cauplhtl 13 David G. Campbell 14 Senior United States District Judge 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -6-