Sunteck Transport Company, LLC v. TCSL, Inc. ( 2021 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 SUNTECK TRANSPORTATION No. 2:19-cv-02364-TLN-JDP 12 COMPANY, LLC, FINDINGS AND RECOMMENDATIONS 13 Plaintiff, THAT PLAINTIFF’S RENEWED MOTION FOR DEFAULT JUDGMENT BE GRANTED 14 v. ECF No. 14 15 TCSL, INC., OBJECTIONS DUE WITHIN 14 DAYS 16 Defendant. 17 18 19 Plaintiff Sunteck Transportation Company, LLC, brings this action under the Carmack 20 Amendment to the Interstate Commerce Act, 49 U.S.C. § 14706, which governs the liability of 21 freight carriers. ECF No. 1 at 2. Plaintiff claims that it entered into an agreement with defendant 22 TCSL, Inc. on November 8, 2016, under which defendant agreed to perform transportation 23 services for Sunteck. ECF No. 1 at 3. On or about July 6, 2018, pursuant to the agreement, 24 TCSL picked up four shipments of fresh lamb in Dominguez Hills, California, for delivery to 25 consignees in Illinois, Ohio, and Indiana. Id. TCSL was required, per the agreement, to keep the 26 cargo at 30 degrees Fahrenheit during transport. Id. The shipments were ultimately rejected by 27 their respective consignees because each shipping container exceeded 30 degrees Fahrenheit. Id. 28 1 On February 10, 2020, Sunteck requested an entry of default, ECF No. 5, and the clerk 2 entered default the following day, ECF No. 6. On June 9, 2020, plaintiff filed its first motion for 3 default judgment, ECF No. 7, which was denied on July 13, 2020, due to plaintiff’s failure to 4 adequately serve defendant, ECF No. 8. After plaintiff perfected service, see ECF No. 9, the 5 clerk, upon motion from plaintiff, see ECF No. 11, again entered default. Plaintiff filed the 6 instant renewed motion for default judgment on November 6, 2020 in the amount of $51,120.01 7 ($25,397 in direct damages, $3,169.15 in prejudgment interest, $21,772.50 in attorneys’ fees, and 8 $781.36 in costs). ECF No. 14. TCSL has not responded to the complaint or otherwise appeared 9 to defend this action. This court held a hearing on December 17, 2020, but only plaintiff’s 10 counsel appeared. Because defendant was properly served, and because relevant discretionary 11 factors favor default judgment, I recommend that plaintiff’s motion be granted for the full 12 amount—$51,120.01. 13 DISCUSSION 14 Pursuant to Federal Rule of Civil Procedure 55(a), default may be entered against a party 15 against whom a judgment for affirmative relief is sought if that party fails to defend against the 16 action. See Fed. R. Civ. P. 55(a). Federal Rule of Civil Procedure 55(b)(2) allows a court to 17 enter judgment against a party that has defaulted. See Fed. R. Civ. P. 55(b)(2). However, “[a] 18 defendant’s default does not automatically entitle the plaintiff to a court-ordered judgment.” 19 PepsiCo, Inc. v. Cal Sec. Cans, 238 F. Supp. 2d 1172, 1174 (C.D. Cal. 2002) (citing Draper v. 20 Coombs, 792 F.2d 915, 924-25 (9th Cir. 1986)). The decision to enter judgment against a 21 defaulting party is “discretionary,” Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir.1980), and the 22 court considers several factors before granting default judgment. 23 When a plaintiff moves for default judgment, plaintiff first must show adequate service. 24 See United States v. 4268 Los Angeles Ave. Simi Valley California 93063, 672 F. App’x 770 (9th 25 Cir. 2017) (“A default judgment must be set aside if the court lacked jurisdiction over the 26 defendants due to insufficient service of process.”). If service of process is deemed sufficient 27 under Federal Rule of Civil Procedure 4, the court then considers a number of factors in assessing 28 the appropriateness of default judgment, including: (1) possible prejudice to the plaintiff; (2) the 1 merits of plaintiff’s claim; (3) the sufficiency of the complaint; (4) the sum of money at stake; 2 (5) the possibility of a factual dispute; (6) whether the default was potentially due to excusable 3 neglect; and (7) the general policy that cases be decided on the merits. See Eitel v. McCool, 782 4 F.2d 1470, 1471-72 (9th Cir. 1986). 5 While default judgments are ordinarily disfavored, id. at 1472 (citing Pena v. Seguros La 6 Comercial, S.A., 770 F.2d 811, 814 (9th Cir. 1985)), when courts apply the discretionary standard 7 provided in Eitel, “default judgments are more often granted than denied.” Phillip Morris USA, 8 Inc. v. Castworld Products, Inc., 219 F.R.D. 494, 498 (C.D. Cal. 2003). Once the clerk enters 9 default, “the factual allegations of the complaint, except those relating to the amount of damages, 10 will be taken as true.” Geddes v. United Fin. Group, 559 F.2d 557, 560 (9th Cir. 1977). 11 Here, plaintiff served Peter Svit, TCLS’s authorized agent in the state of California, at the 12 address reflected in the California Secretary of State’s records,1 thereby perfecting service on 13 defendant. See Fed. R. Civ. P. 4(h)(1)(A) (allowing a plaintiff to serve a corporate defendant “in 14 the manner prescribed by Rule 4(e)(1) for serving an individual”); Fed. R. Civ. P. 4(e)(1) 15 (permitting service in accordance with state law); Cal. Civ. Proc. Code § 415.10 (deeming service 16 complete upon the personal delivery of a copy of the summons and of the complaint). The clerk 17 of court properly entered a default on August 17, 2020. See ECF No. 12. 18 Next, I consider the Eitel factors, listed above, which, considered together, favor granting 19 default judgment in this case. Generally, beyond being granted default judgment, a plaintiff has 20 no means of recovery against a defaulting defendant and would be prejudiced if it were not 21 entered. See Moroccanoil, Inc. v. Allstate Beauty Prods., 847 F. Supp. 2d 1197, 1200-01 (C.D. 22 Cal. 2012). 23 Plaintiff’s complaint states a claim that—accepting the allegations therein as true— 24 appears meritorious. The claim is as follows: pursuant to an agreement between the parties, 25 “TCSL picked up four shipments of fresh lamb on or about July 6, 2018 in Dominguez Hills, 26 27 1 This court takes judicial notice of defendant’s entity profile from the California Secretary of State’s website. On the profile, Mr. Svit’s address is listed as 71 Seraspi Court, Sacramento, 28 CA—this is the address at which Mr. Svit was served by plaintiff. See ECF No. 9. 1 California” for delivery to consignees in Illinois, Ohio, and Indiana. ECF No. 1 at 3. TCSL was 2 required to transport these perishable goods while maintaining them “at a constant temperature of 3 30 degrees Fahrenheit.” Id. Despite being dispatched to defendant’s custody in good condition, 4 “[e]ach shipment was rejected by consignees because the temperature in each of the shipping 5 containers exceeded 30 degrees Fahrenheit.” Id. at 3-4. As a result, plaintiff’s customer 6 “suffered a loss of $25,397.22 due to the spoliation” as well as litigation expenses due to 7 defendant’s breach and accrued interest. Id. at 4-5. Plaintiff alleges that the agreement renders 8 defendant liable to plaintiff for the full value of the spoiled goods. Id. at 6. 9 The facts of this case are relatively straightforward, and plaintiff has provided the court 10 with well-pleaded allegations supporting its claims. Here, the court may assume the truth of well- 11 pleaded facts in the complaint, Cripps v. Life Ins. Co. of N. Am., 980 F.2d 1261, 1267 (9th Cir. 12 1992), excluding damages allegations, following the clerk’s entry of default; the possibility of a 13 factual dispute is low. See Elektra Entm’t Group Inc. v. Crawford, 226 F.R.D. 388, 393 (C.D. 14 Cal. 2005) (“Because all allegations in a well-pleaded complaint are taken as true after the court 15 clerk enters default judgment, there is no likelihood that any genuine issue of material fact 16 exists.”). 17 Upon review of the record, the court finds that the default was not the result of excusable 18 neglect. See PepsiCo, Inc., 238 F. Supp. 2d at 1177. Plaintiff personally served defendant’s 19 authorized agent on July 15, 2020. ECF No. 9. And the order of entry of default entered by the 20 Secretary reflects that defendant was served with process but failed to respond appropriately. 21 These circumstances support the conclusion that defendant has chosen not to defend itself in this 22 action, and that default did not result from excusable neglect. 23 Eitel does make clear that “[c]ases should be decided upon their merits whenever 24 reasonably possible.” 782 F.2d at 1472. But, standing alone, this preference for resolution on the 25 merits should not bar default judgment when a defendant has failed to appear and defend itself. 26 See PepsiCo, Inc., 238 F. Supp. 2d 1177. With no appearance from the defendant despite ample 27 opportunity to do so, a decision on the merits is unworkable. The Eitel factors thus weigh in 28 1 favor of a default judgment against the defendant. 2 As for damages, the Carmack Amendment establishes that the carrier “providing 3 transportation or service” is “liable to the person entitled to recover under the receipt or bill of 4 lading.” 49 U.S.C. § 14706(a)(1); see also Pac. Indem. Co. v. Atlas Van Lines, Inc., 642 F.3d 5 702, 710 (9th Cir. 2011) (“The Carmack Amendment imposes strict liability upon receiving 6 carriers and delivering carriers.”). As sufficiently stated in the complaint, defendant is liable for 7 the direct loss of $25,397.22 resulting from defendant’s breach in negligently transporting the 8 goods in question. See ECF No. 1 at 5. Plaintiff also seeks to recover pre-judgment interest in 9 the amount of $3,169.15 following its series of computations using the Florida interest rate of 10 5.37%.2 See ECF No. 14-1 at 9. 11 The parties also agreed in their contract that, should a dispute arise, the prevailing party is 12 entitled to recover costs, expenses, and reasonable attorneys’ fees. ECF No. 14-3 at 6-7. Plaintiff 13 requests attorneys’ fees in the amount of $21,772.50 and costs in the amount of $781.36. See 14 ECF No. 14-1 at 10. Plaintiff filed with its motion affidavits in support of these figures showing 15 expenses incurred throughout this case and attesting to the nature and amount of work performed 16 by plaintiff’s counsel. See ECF Nos. 14-11; 14-12. (Plaintiff does not, however, seek any fees or 17 costs associated with its failed first attempt at requesting this court to grant plaintiff default 18 judgment.) 19 The total amount requested in judgment—$51,120.01—appears reasonably to reflect the 20 sum of damages, interest, costs, and attorney’s fees. See ECF No. 14. 21 22 23 24 25 2 The court takes judicial notice of Florida’s Department of Financial Services, Division 26 of Accounting and Auditing webpage 27 (https://www.myfloridacfo.com/division/aa/localgovernments/current.htm), which provides the state’s judgment interest rates. According to this webpage, the interest rate was 5.37% at the time 28 plaintiff filed the present motion for default judgment. 1 FINDINGS AND RECOMMENDATIONS 2 I recommend that plaintiff's motion for a default judgment be granted in the amount of 3 | $51,120.01, that judgment be entered against defendant, and that the clerk be directed to close this 4 | case. 5 These recommendations are submitted to the U.S. district judge presiding over the case 6 | under 28 U.S.C. § 636(b)(1)(B) and Local Rule 304. Within 14 days of the service of the 7 | findings and recommendations, the parties may file written objections to the findings and 8 || recommendations with the court and serve a copy on all parties. That document must be 9 | captioned “Objections to Magistrate Judge’s Findings and Recommendations.” The presiding 10 | district judge will then review the findings and recommendations under 28 U.S.C. § 636(b)(1)(C). 11 IT IS SO ORDERED. 13 ( 1 Ow — Dated: _ June 8, 2021 14 JEREMY D. PETERSON 15 UNITED STATES MAGISTRATE JUDGE 16 17 18 19 20 21 22 23 24 25 26 27 28