Select Portfolio Servicing, Inc. v. Allstate Ins. Co. ( 2021 )

1 2 3 4 5 6 7 8 IN THE UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 PILOT CATASTROPHE SERVICES, INC. No. 2:20-CV-1083-TLN-DMC 12 Cross-Claimant, 13 v. FINDINGS AND RECOMMENDATIONS 14 VICTORIA MANUEL also known as VICTORIA GENE MANUEL, 15 Cross-Defendant. 16 17 Plaintiff, proceeding with retained counsel, brings this civil action. Before the Court 18 is Cross-claimant Pilot Catastrophe Services, Inc.’s motion for entry of default judgment. ECF No. 19 27. The motion involves two parties who were initially defendants in this action: (1) Pilot 20 Catastrophe Services, Inc. (Pilot), and (2) Victoria Manuel. Pilot crossclaimed against Manuel for 21 damages related to a home insurance policy belonging to Manuel’s father, Peter Schmitt. A fire 22 destroyed Schmitt’s home. Pilot directed an insurance payout in Manuel’s name, but she never paid 23 off a mortgage on the property that had been subject to the fire loss. The insurer, Allstate, ultimately 24 paid off the mortgage and sought reimbursement from Pilot. When Pilot sought recovery via a cross 25 complaint against Manuel, Cross-Defendant Manuel failed to ever respond to that crossclaim. Pilot 26 now seeks entry of default judgment of $112,806, the amount it paid to Allstate. After consideration 27 of Pilot’s claimed damages and submitted evidence, as well as the factors governing motions for 28 default judgment, the undersigned United States Magistrate Judge recommends granting Pilot’s 1 motion. The undersigned recommends granting default judgment for $110,943.57. 2 I. BACKGROUND 3 A. Factual History: 4 Peter Schmitt died in November 2017. Id. at 4. At the time of his death, Schmitt 5 owned a home in Paradise, California. Id. His daughter, Victoria Manuel, inherited the property 6 subject to a mortgage serviced by Select Portfolio Services (SPS). Id. at 3–4. The deed of trust 7 securing the mortgage required maintenance of an insurance policy covering the property against 8 fire and other loss. ECF No. 1 at 3. The deed also required naming the lender as a loss payee up to 9 the amount of any outstanding loan balance. Id. Allstate insured the property under a homeowner’s 10 policy (Policy). ECF No. 27 at 4. 11 The Camp Fire destroyed Schmitt’s home one year after his death, in November 12 2018. Id. Manuel reported the loss to Allstate. Id. at 4. Allstate referred the loss investigation to 13 Pilot, which adjusts catastrophic losses on Allstate’s behalf. Id. Pilot investigated the loss. Id. Based 14 on Pilot’s investigation, Allstate issued settlement checks payable to Schmitt and SPS in the amount 15 of $249,892.92 for damage to the property’s structures and landscaping. Id. 16 Around January 2019, because Manuel had inherited Schmitt’s property, she 17 demanded that Allstate reissue checks in her name alone. Id. Allstate reissued checks in Manuel’s 18 name. Id. The payment then totaled $414,245.92 for damages to the property’s landscaping and 19 structures, including payment for damages to personal property. Id. Manuel cashed the checks in 20 February 2019. Id. Pilot asserts that Allstate informed Manuel that her right to the insurance payout 21 was contingent upon compliance with the Policy. Id. Importantly, Pilot claims responsibility for 22 causing Allstate to issue the checks in Manuel’s name alone—that is, without naming SPS. Id. at 23 5; ECF No. 32, Bell Decl., ¶ 4. 24 In April 2019, after Manuel cashed the settlement checks, SPS requested copies of 25 the checks from Allstate. ECF No. 27 at 4. Allstate complied and sent copies. Id. SPS then requested 26 that Allstate reissue checks—for the structure and landscaping damages—to SPS as a co-payee to 27 cover the outstanding mortgage. See id. Allstate attempted to have Manuel pay off her mortgage 28 obligations. Id. Manuel consistently dissembled and evaded payment for over a year. Id. She falsely 1 told Pilot that she was trying to satisfy or had satisfied the remaining obligation. Id. at 4–5. 2 Manuel never paid. Id. SPS consequently initiated this action against Allstate and 3 Manuel on May 29, 2020. Id. at 5. SPS sought the amount due on the mortgage. Id.; ECF No. 1 at 4 24. SPS alleged that, as of May 2020, Manuel owed a balance of $104,303.59. ECF No. 1 at 24. 5 Allstate settled with SPS for the balance of $104,303.59, plus a portion of SPS’s costs and fees. 6 ECF Nos. 27 at 5; 27-1, Bell Decl., ¶ 7. SPS ultimately dismissed its claims against Allstate. ECF 7 No. 27 at 5. Allstate crossclaimed against Manuel for conversion, negligent misrepresentation, 8 unjust enrichment, breach of contract, money-had-an-received, implied contractual 9 indemnification, and involuntary trust, in the light of her cashing of the checks and failure to pay 10 off her mortgage. Id. Allstate sought recovery of the money that it paid to SPS. See ECF No. 9 at 11 9–10, 13–14. 12 Because Pilot triggered Allstate’s issuance of checks to Manuel without naming 13 SPS, Pilot funded the settlement between Allstate and SPS.1 ECF No. 27 at 5; 32, Bell Decl., ¶ 4, 14 8–9. Pilot specifically reimbursed Allstate for its payment of the $104,303.59 mortgage balance, 15 plus a portion of SPS’s costs and fee, in exchange for assignment of Allstate’s rights against 16 Manuel. ECF No. 27 at 5; 32, Bell Decl., ¶ 8–9. Because Pilot funded the settlement, the District 17 Court ultimately substituted Pilot in Allstate’s place as the real party in interest. ECF Nos. 20, 21. 18 Pilot now moves for default judgment in the amount of $112,806. ECF Nos. 27 at 3, 11. 19 B. Procedural History: 20 Manuel has not filed any response during this action. SPS, as noted, filed this action 21 on May 2020. ECF No. 1. Summons was issued against Manuel and returned executed. ECF No. 22 8. Manuel was served via substituted service on June 4, 2020. Id. at 1. The process server served a 23 co-occupant at Manuel’s home (and via mail). Id. at 1, 3.). Manuel never filed a response. Nor did 24 Manuel respond to Allstate’s crossclaim, which it served on Manuel by mail. ECF No. 9 at 15. 25 / / / 26 1 As noted, Allstate reissued checks in Manuel’s name alone. It is not immediately clear from either Allstate’s 27 crossclaim or Pilot’s motion for default judgment how Pilot was involved in the reissuance process, but Pilot contends that it caused Allstate to issue checks without naming SPS. Ostensibly, Allstate reissued checks based on both Manuel’s 28 direction and some information provided by Pilot. See ECF Nos. 9 at 8; 27 at 4–5; 32, Bell Decl., ¶ 4. 1 When Manuel let the complaint go unanswered, SPS requested entry of default on 2 August 7, 2020. ECF No. 10. The clerk entered default on August 10, 2020. ECF No. 11. After SPS 3 and Allstate settled around September 2020, Allstate also requested entry of default against Manuel. 4 ECF No. 14. Allstate requested entry of default on its crossclaim against Manuel. Id. The clerk 5 entered default against Manuel on the crossclaim on September 23, 2020. ECF No. 15. The same 6 day, Allstate filed a Certificate of Service indicating that a copy of the clerk’s entry of default was 7 mailed to Manuel. ECF No. 16. Once SPS settled with Allstate and Pilot, Manuel was also served 8 with a copy of the stipulation of SPS’s dismissal as to its claims against her. ECF Nos. 17 at 3. 9 Allstate’s crossclaim remained pending. Id.; ECF No. 8. 10 The case then remained pending for a few months without any action. The District 11 Judge, in April 2021, ordered Allstate to file a status update. ECF No. 19. Pilot filed its motion for 12 substitution the next day. ECF No. 20. The District Judge granted that motion on April 5, 2021. 13 ECF No. 21. SPS, Allstate and Pilot then filed a new stipulation, agreeing that SPS would dismiss 14 its claims against Manuel, and that Pilot’s crossclaim now remained pending. ECF Nos. 23–24. 15 Pilot moved for default judgment on May 13, 2021. ECF No. 27. That motion is now before this 16 Court. 17 Pilot appeared before the Court on June 15, 2021. The Court indicated that it was 18 inclined to recommend that the District Court grant entry of default judgment. See ECF No. 31 at 19 1–2. The Court observed, however, that evidence establishing Pilot’s requested damages was 20 lacking. See id. Other than the statements in the pleadings and a solitary declaration from Bell, in 21 Pilot’s cross-complaint Pilot originally did not submit any evidence documenting its damages.2 See 22 id. Consequently, the Court ordered Pilot to submit additional proof of its damages. Id. at 2. As 23 discussed below, Pilot submitted additional proof. ECF No. 32. 24 / / / 25 / / / 26 / / / 27 / / / 28 2 In Pilot’s defense, neither did Allstate or SPS submit any documentary evidence. See ECF Nos. 1, 9. 1 C. Damages: 2 Several different sums float around the parties’ submissions. The parties variously 3 mention costs and interest. But the numbers do not clearly align across the parties’ submissions. 4 While there are inferences of interest accrual and negotiation, it is not always apparent how the 5 parties arrive at one number or another. 6 Pilot caused Allstate to issue checks in Manuel’s name alone. ECF Nos. 27 at 4; 32, 7 Bell Decl., ¶ 4. Those checks totaled $414,245.92. ECF Nos. 9 at 8; 27 at 4; 32, Bell Decl., ¶ 4. 8 Copies of the checks are attached to Bell’s supplemental declaration. ECF No. 32, Bell. Decl., Ex. 9 A. The checks collectively equal $414,245.92. Id. 10 In May 2019 (around the time SPS first requested copies of the checks and tried to 11 get Manuel to pay the mortgage) an agent of SPS’ sent Allstate a statement reflecting a mortgage 12 balance of $107,337.78, subject to $16.21 per diem interest. Id., ¶ 5. A copy of that statement is 13 included with Bell’s declaration. Id., Ex. B. SPS demanded payment from Allstate on April 13, 14 2020, and that demand was forwarded to Pilot as the claims adjustor. Id. ¶ 6, Ex. C. 15 Eventually, with no payment from Manuel forthcoming, SPS sued over the balance 16 owed on the mortgage in May 2020. See ECF Nos. 1 at 2, 5, 7–8; 27 at 5. At that time, the balance 17 was apparently $104.303.59. ECF Nos. 1 at 2, 5; 27 at 5. Allstate eventually reimbursed SPS for 18 the outstanding balance plus a measure of costs and fees. ECF Nos. 27 at 5; 32, Bell Decl. at 5, ¶ 19 7. Pilot included a copy of a check with Bell’s supplemental declaration. ECF No. 32, Bell Decl., 20 EX. D. The check confirms that Allstate paid $110,943.57 to SPS on August 27, 2020. Id. 21 Notwithstanding these calculations, in their motion, Pilot seeks default judgment 22 against Manuel for $112,806. ECF No. 27 at 3, 6, 9, 11. Bell also filed a declaration in support of 23 that motion, stating that Allstate requested Pilot reimburse it for $112,806 in early 2021. ECF No. 24 27-1, Bell. Decl., ¶ 4. Of that number, $104,303.49 was the outstanding mortgage principal, 25 $3,502.41 was the accrued interest, and $5,000 was a portion of the fees SPS initially incurred in 26 suing. Id. Bell states that Pilot reimbursed Allstate for the requested $112,806. Id. ¶ 5. 27 In Bell’s declaration submitted with the supplemental evidence, however, Bell 28 asserts that Allstate demanded reimbursement of $110,943.57, not $112,806. ECF No. 32, Bell. 1 Decl., ¶ 8. Allstate made that request on September 8, 2020, not in early 2021. Id. A copy of an 2 email from Allstate to Bell confirms that Allstate requested $110,943.57 on September 8, 2020. 3 See id., Ex. E. Pilot paid the $110,943.57 to Allstate. Id., ¶ 9. A copy of a check confirms that 4 payment. Id., Ex. F. That check is dated September 14, 2020. Id. 5 Pilot does not explicitly explain the discrepancy between the $112,806 identified in 6 their motion, and the $110,943.57. It is possible that the discrepancy is due to interest. See ECF 7 Nos. 27 at 9; 27-1 at 2. It is also possible that Allstate and SPS just agreed on that calculation, as 8 suggested by a declaration from Pilot’s attorney of record, Michael Barnes. See ECF No. 32, Barnes 9 Decl., ¶ 2. 10 Some constituent numbers are subsumed in the chain of payments. Emails between 11 SPS and Pilot (on behalf of Allstate) from around July 22 to July 31, 2020, suggest that Allstate 12 and SPS did agree to a compromise of $5,000 in attorney’s fees. See id. ¶ 2, Ex. G. SPS demanded 13 a principal payoff of $105,185.94, with a compromise daily interest of $15 beginning around July 14 14, 2021. Id. The final interest calculation is open-ended. Id. SPS did initially calculate a payoff at 15 $112,806. Id. Yet, the requested base principal of $105,185.94, plus $15 interest per day between 16 July 14, 2020 and the payoff date of August 27, 2020, does not equal the end payment reflected by 17 Allstate’s $110,943.57 check to SPS. See id. Pilot’s evidence does not clearly identify the dates 18 and calculations involved in reaching the final payout. 19 Whatever the calculation amongst SPS, Allstate, and Pilot actually was, on the proof 20 before the Court, Allstate paid SPS $110,943.57. Pilot reimbursed Allstate for the same. 21 II. STANDARD OF REVIEW 22 Federal Rule of Civil Procedure 55 mandates that “[w]hen a party against whom a 23 judgment for affirmative relief is sought has failed to plead or otherwise defend, and that failure is 24 shown by affidavit or otherwise, the clerk must enter the party’s default.” Fed. R. Civ. P. 55(a). A 25 plaintiff may apply to the clerk for entry of default judgment when the plaintiff’s claim is for a sum 26 certain or a sum that can be made certain through computation. Fed. R. Civ. P. 55(b)(1). In all other 27 cases, the moving party must apply the Court for default judgment. Fed. R. P. 55(b)(2). The Court 28 may conduct hearings when, in order to effectuate judgment, it is necessary to undertake an 1 accounting, determine the amount of damages, establish the truth of a party’s allegations by 2 evidence, or investigate any other issue. Fed. R. Civ. P. 55(b)(2)(A)–(D). 3 Entry of default judgment is within the discretion of the Court. E.g., Eitel v. McCool, 4 782 F.2d 1470, 1471–72 (9th Cir 1986); Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980); 5 see Dreith v. Nu Image, Inc., 648 F.3d 779, 786 (9th Cir. 2011). Upon default, the factual 6 allegations in the complaint are taken as true, except those related to the amount of damages. Cripps 7 v. Life Ins. Co. of N. Am., 980 F.2d 1261, 1267 (9th Cir. 1992); Geddes v. United Fin. Grp., 559 8 F.2d 557, 560 (9th Cir. 1977). Allegations of damages must be proven. E.g., Geddes, 559 F.2d at 9 560; See Nat’l Union Fire Ins. Co. of Pittsburgh v. Lutge, Case No.: 1:20-cv-01809 DAD JLT, 10 2021 WL 2109789, at *3 (E.D. Cal. May 25, 2021). When determining liability, a defendant’s 11 default may function as an admission of the plaintiff’s well-pleaded allegations of fact. See Panning 12 v. Lavine, 572 F.2d 1386 (9th Cir. 1978). However, the Court has the responsibility of determining 13 whether the facts alleged in the complaint state a claim that can support the judgment. See Danning 14 v. Lavine, 572 F.2d 1386, 1388 (9th Cir. 1978). The District Court does not abuse its discretion in 15 denying default judgment if a moving party’s substantive claims lack merit. See Aldabe, 616 F.2d 16 at 1092–93. 17 As stated, the Court does not presume that any factual allegations relating to the 18 amount of damages are true. See Geddes, 559 F.2d at 560. The Court must ensure that the damages 19 awarded are reasonable and demonstrated by the evidence. See id.; see also Wafer v. Suesberry, 20 No. 1:07–cv–00865–AWI–BAM PC, 2014 WL 1330556, at *3 (E.D. Cal. Apr. 1, 2014). In 21 discharging its responsibilities, the Court may conduct such hearings and make such orders as it 22 deems necessary. See Fed. R. Civ. P. 55(b)(2). In assessing damages, the Court must review the 23 facts of record, requesting more information if necessary, to establish the amount to which the 24 plaintiff is lawfully entitled. See, e.g., Pope v. United States, 323 U.S. 1, 12 (1944). 25 Default judgments are typically disfavored. See Eitel 782 F.2d at 1472. The general 26 rule is that cases should be resolved on their merits. See, e.g., id. Nevertheless, the United States 27 Court of Appeals for the Ninth Circuit has directed that courts may consider a variety factors when 28 determining whether to enter default judgment. Id. at 1471–72. Generally, courts apply the Eitel 1 factors. See id.; Johnson v. Pizano, No. 2:17-cv-1655-TLN-DB, 2019 WL 2499188, at *2 (E.D. 2 Cal. June 17, 2019). Namely, courts will consider (1) the possibility of prejudice to plaintiff; (2) 3 the merits of plaintiff’s substantive claims; (3) the sufficiency of the complaint; (4) the sum of 4 money at issue; (5) the possibility of a dispute over material facts; (6) whether a defendant’s default 5 was due excusable neglect; and (7) the strong policy, underlying the Federal Rules of Civil 6 Procedure favoring decisions on the merits. See Eitel, 782 F.2d at 1471–72. 7 III. DISCUSSION 8 A. Pilot’s Arguments: 9 Pilot contends that it is entitled to default judgment because it satisfies the seven 10 Eitel factors. ECF No. 27 at 5–11. 11 First, Pilot argues that it will be prejudiced if the Court does not enter default 12 judgment because it effectively had to pay off Manuel’s mortgage. Id. at 6. Manuel retained the full 13 insurance payment for herself without paying off her obligations to SPS. Id. Pilot reimbursed 14 Allstate for its payment of a total of $112,806. See id. at 6. Pilot argues that, absent entry of default 15 judgment, its claims will go unsatisfied. Id. In Pilot’s view, it lacks any other avenue for recovery 16 of its losses. Id.. Pilot cites a few District Court cases indicating that plaintiffs would be prejudiced 17 without default if there is no other recourse for recovery. Id. 18 The bulk of Pilot’s argument is devoted to the second and third factors. Id. at 6–9. 19 Essentially, Pilot argues that it has stated multiple claims on which relief may be granted. See id. 20 Pilot argues that it has stated claims for conversion, negligent misrepresentation, unjust enrichment, 21 breach of contract, money-had-and-received, implied contractual indemnification, and involuntary 22 trust. Id. For example, Pilot notes that the insurance policy covering the property expressly stated 23 that covered losses will be payable to mortgagees named in the policy, to the extent of their interest 24 and in order of precedence. Id. at 8. In keeping the loss payout for herself, Pilot asserts that Manuel 25 breached the insurance policy on which Pilot is now entitled to recover. Id. 26 As another example, Pilot argues that an implied right to indemnity exists in this 27 case. Id. An implied right to indemnity exists when a party pays a debt for which another is liable, 28 and which should have been paid by the latter party. Id. Because Pilot ultimately paid a debt that 1 Manuel owed and should have paid, Manuel must indemnify Pilot. Id. 2 As to the fourth Eitel factor, Pilot asserts that the $112,806 that it seeks is directly 3 proportional to the harm it incurred. Id. at 9. It is the amount that Pilot compensated Allstate for 4 because of Manuel’s failure to pay her mortgage. See id. 5 Pilot then contends, on the fifth factor, that there is only a slim possibility of dispute 6 over material facts. Id. at 10. The clerk has already entered Manuel’s default, and the Court must 7 take Pilot’s well-pleaded factual allegations as true. Id. Pilot argues that the pleadings and Bell’s 8 declaration establish the amount of damages at issue. See id. There can be no doubt that the various 9 payments occurred. Id. Allstate paid Manuel. Id. Allstate then reimbursed SPS. Id. And Pilot 10 reimbursed Allstate in turn. Id. 11 Sixth, in Pilot’s view, Manuel’s default did not arise due to excusable neglect. Id. 12 Manuel was properly served and simply did not respond, befitting her pattern of disregarding 13 demands to pay the mortgage. Id. 14 Finally, Pilot asserts that a decision on the merits is impossible because Manuel has 15 not defended against any of the claims in this action. See id. More than ten months have passed 16 without any action on Manuel’s part. Id. 17 B. Application of the Eitel Factors: 18 Manuel, as cross-defendant, has not responded to Pilot’s crossclaim. She has 19 defaulted. The Court thus takes well-pleaded facts pled in the crossclaim as true, though not claims 20 related to damages. See, e.g., Cripps, 980 F.2d at 1267; Geddes, 559 F.2d at 560. Allegations of 21 damages must be proven. E.g., Geddes, 559 F.2d at 560; Wafer, 2014 WL 1330556, at *3. The 22 Eitel factors support entry of default. Pilot’s supplemental evidence satisfactorily establishes the 23 damages they paid to Allstate. 24 i. Possibility of Prejudice to Plaintiff if Relief is Denied: 25 Eitel’s first factor weighs in Pilot’s favor. Manuel has refused to appear and defend 26 against the claims asserted against her. More than a year has passed since SPS first filed this action. 27 There is no reason to believe that Manuel will suddenly appear in this case (or in a new one) in 28 order to allow Pilot to litigate its claims at trial. Absent entry of default judgment, Pilot will be 1 without other recourse for recovery, which various courts have found sufficient to establish 2 prejudice. See, e.g., Furia v. McGrew, No. 2:19-cv-942-JAM-KJN (PS), 2020 WL 3888968, at *3 3 (E.D. Cal. July 10, 2020); Aussieker v. Stoccato Props., LLC, No. 2:19-cv-0089 TLN-DB-PS, 2019 4 WL 7184554, at *2 (E.D. Cal. Dec. 26, 2019); Landstar Ranger, Inc. v. Parth Enters., Inc., 725 F. 5 Supp. 2d 916, 920 (C.D. Cal. 2010); PepsiCo, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1172, 1177 6 (C.D. Cal. 2002). 7 ii. The Merits and Sufficiency of Plaintiff’s Claims:3 8 The second and third Eitel factors test the substantive merit of Pilot’s claims and the 9 sufficiency of its pleadings. E.g., Landstar, 725 F. Supp. 2d at 920. Due to their interrelatedness, 10 the Court considers them together. See Lutge, 2021 WL 2109789, at *3; Aussieker, 2019 WL 11 7184554, at *2. The Ninth Circuit has suggested, in District Courts’ view, that the factors require 12 a plaintiff to “state a claim on which [they] may recover.” PepsiCo, Inc., 238 F. Supp. 2d at 1175; 13 see Danning, 572 F.2d at 1388; Landstar, 725 F. Supp. at 920. 14 Allstate assigned its rights against Manuel to Pilot. ECF No. 32, Bell Decl., ¶ 9. 15 Taking Pilot’s well-pleaded facts as true, Pilot stands in Allstate’s shoes.4 See Essex Ins. Co. v. 16 Five Star Dye House, Inc., 38 Cal. 4th 1252, 1263–64 (2006). As indicated, Pilot reasserts each of 17 the claims for which Allstate crossclaimed against Manuel. See ECF Nos. 9 at 10–13; 27 at 6–9. 18 Pilot has sufficiently stated a claim for equitable indemnification against Manuel. 19 Because Pilot has established liability on that claim, it is unnecessary to address the others. The 20 Court expresses no opinion on the merits of any of Pilot’s other claims. 21 Pilot asserts a claim for “implied contractual indemnification.” ECF No. 27 at 8. 22 The Court believes that Pilot means to assert a claim of equitable indemnification more generally. 23 3 District Courts, including in the Eastern District, have indicated that determination of a cognizable claim is necessary 24 to satisfy the second and third factors, and have thus undertaken analysis of a plaintiff’s claims (e.g., breach of contract). See, e.g., Lutge, 2021 WL 2109789, at *3; R & B of the Pac. v. Price, No. 2:18-cv-03257 KJM AC, 2019 WL 4877575, 25 at *3 (E.D. Cal. Oct. 3, 2019); PepsiCo, Inc., 238 F. Supp. 2d at 1175. 4 California recognizes the assignability of “things in action.” Baum v. Duckor, Spradling & Metzger, 72 Cal. App. 4th 26 54, 64–65 (Cal. Ct. App. 1999); see AMCO Ins. Co. v. All Solutions Ins. Agency, LLC, 244 Cal. App. 4th 883, 891– 92 (Cal. Ct. App. 2016). A “thing in action,” statutorily defined, “is a right to recover money or other personal property 27 by a judicial proceeding.” Cal. Civ. Code § 953; Baum, 72 Cal. App. 4th at 64. A thing in action thus refers to a cause of action. See AMCO Ins. Co., 244 Cal. App. 4th at 891. “A thing in action, arising out of the violation of a right of 28 property, or out of an obligation, may be transferred by the owner.” Cal. Civ. Code § 954. 1 See id. The Court will give Pilot the benefit of the doubt. The facts, as alleged, support a cause of 2 action for equitable indemnification. 3 California recognizes equitable indemnity. Prince v. Pac. Gas & Elec. Co., 45 Cal. 4 4th 1151, 1157–59 (2009); C.W. Howe Partners Inc. v. Mooradian, 43 Cal. App. 5th 688, 700 (Cal 5 Ct. App. 2019). Generally speaking, indemnity references the obligation of one party to make good 6 damage that another party has incurred. Prince, 45 Cal. 4th at 1157. There are two basic types of 7 indemnity: express indemnity and equitable indemnity. Id. Express indemnity arises from explicit 8 contractual language establishing a party’s duty to indemnify another party under specified 9 circumstances. Id. at 1158. Traditional equitable indemnity, on the other hand, does not require a 10 contractual relationship. Id. Equitable indemnity “is premised on a joint legal obligation to another 11 for damages,” but it “does not invariably follow fault.” Id. (quoting W. S.S. Lines, Inc. v. San Pedro 12 Peninsula Hosp., 8 Cal. 4th 100, 114 (1994)). In other words, equitable indemnity applies in cases 13 where a party has paid a debt for which some other party is primarily liable and which “in equity 14 and good conscience” that other party should have paid. See, e.g., United Servs. Auto. Ass'n v. 15 Alaska Ins. Co., 94 Cal. App. 4th 638, 644–45 (Cal. Ct. App. 2001). The doctrine is subject to 16 principles of allocation of fault and equitable apportionment of loss. Prince, 45 Cal. 4th at 1158. 17 Implied contractual indemnity arises from a contract that does not specifically mention indemnity 18 and is viewed as a form of equitable indemnity. Id. at 1157. 19 The elements of an equitable indemnity claim are (1) a showing of fault on the 20 indemnitor’s part, and (2) “damages to the indemnitee for which the indemnitor is . . . equitably 21 responsible.” C.W. Howe Partners Inc., 43 Cal. App. 5th at 700 (quoting Bailey v. Safeway, Inc., 22 199 Cal. App. 4th 206, 217 (2011)) (internal quotation marks omitted); see Great W. Drywall, Inc. 23 v. Interstate Fire & Cas. Co., 161 Cal. App. 4th 1033, 1041 (Cal. Ct. App. 2008). In an indemnity 24 action, the factfinder must resolve whether an indemnitee was held legally responsible for damages 25 to a third party and whether the indemnitor’s conduct was a substantial factor in causing the harm. 26 Great W. Drywall, Inc., 161 Cal. App. 4th at 1041. Because indemnity is subject to comparative 27 fault analyses, a factfinder must also determine the parties’ percentages of responsibly. See id.; see 28 also Prince, 45 Cal. 4th at 1158; C.W. Howe Partners Inc., 43 Cal. App. 5th at 700. 1 Once more taking Pilot’s well-pleaded facts as true, for the purposes of a default 2 judgment analysis, Pilot makes out a plausible indemnification claim. Pilot alleges Manuel knew 3 that she had to pay a mortgage obligation and simply did not. Pilot was effectively held responsible 4 for that failure in being forced to reimburse Allstate for its payment of the debt owed to SPS. The 5 second and third factors favor Pilot. 6 iii. The Sum of Money at Stake: 7 The fourth Eitel factor directs courts to consider the amount of money at stake in 8 relation to the seriousness of a defendant’s conduct. Price, 2019 WL 4877575, at *3; PepsiCo, Inc., 9 238 F. Supp. 2d at 1176. The Court assesses whether the recovery sought is proportional to the 10 harm caused by a defendant’s actions. See Lutge, 2021 WL 2109789, at *6; Landstar, 725 F. Supp. 11 2d at 921; see also Curtis v. Illumination Arts, Inc., 33 F. Supp. 3d 1200, 1212 (W.D. Wash. 2014). 12 Pilot requests $112,806. That is a relatively substantial sum, which could weigh 13 against Pilot. See Lutge, 2021 WL 2109789, at *6. But it is evident that Pilot merely seeks what it 14 paid to Allstate. Pilot seeks only proportional recovery. The fourth factor supports Pilot as well. 15 See, e.g., Lutge, 2021 WL 2109789, at *6; Price, 2019 WL 4877575, at *3. 16 iv. Possibility of Dispute Over Material Facts: 17 The possibility of any dispute over material facts is slim. Because of the clerk’s 18 entry of default, the Court accepts Pilot’s well-pleaded allegations as true. Lutge, 2021 WL 19 2109789, at *6; Price, 2019 WL 4877575, at *3; Landstar, 725 F. Supp. 2d at 921–22; PepsiCo, 20 Inc., 238 F. Supp. 2d at 1177. Even though Manuel was properly served, she failed to appear to 21 defend this action or contest any material facts. The fifth factor supports Pilot’s position. Lutge, 22 2021 WL 2109789, at *6. 23 v. Excusable Neglect: 24 There is no evidence that Manuel’s failure to appear resulted from excusable 25 neglect. Manuel was properly served with summons and the complaint, copies of the settlement 26 stipulations, and a copy of Allstate’s (now Pilot’s) crossclaim. The record indicates that Manuel is 27 aware of the suit and chose to ignore it. The possibility of excusable neglect seems remote given 28 the length of the action and the multiple served documents. E.g., Lutge, 2021 WL 2109789, at *6; 1 Aussieker, 2019 WL 7184554, at *4; Price, 2019 WL 4877575, at *4. The sixth factor also works 2 to Pilot’s benefit. E.g., Lutge, 2021 WL 2109789, at *6; Aussieker, 2019 WL 7184554, at *4; Price, 3 2019 WL 4877575, at *4. 4 vi. Policy Favoring Decisions on the Merits: 5 The Rules of Civil Procedure unquestionably favor decisions on the merits. See 6 Eitel, 782 F.2d at 1472. When reasonably possible, cases should be decided on the merits. Id.; 7 PepsiCo, Inc., 238 F. Supp. 2d at 1177. But that partiality is not dispositive. See PepsiCo, Inc., 238 8 F. Supp. 2d at 1177; Aussieker, 2019 WL 7184554, at *4; Price, 2019 WL 4877575, at *4. 9 Manuel’s failure to answer both the complaint and the crossclaim makes a decision 10 on the merits “impractical, if not impossible.” PepsiCo, Inc., 238 F. Supp. 2d at 1177; see 11 Aussieker, 2019 WL 7184554, at *4. Entry of default judgment is warranted in such a circumstance. 12 See Aussieker, 2019 WL 7184554, at *4; Price, 2019 WL 4877575, at *4; PepsiCo, Inc., 238 F. 13 Supp. 2d at 1177; see also Landstar, 725 F. Supp. 2d at 922. The seventh factor, even if weighing 14 against Pilot, does not preclude default judgment. 15 C. Relief Requested: 16 The Court does not presume facts concerning the amount of damages are true. Pilot’s 17 submissions confirm that Allstate paid $110,943.57 to SPS in settlement of SPS’ claims. ECF No. 18 32, Bell. Decl. ¶ 7, Ex. D. Pilot reimbursed Allstate for the same amount. Id. ¶ 9, Ex. F. SPS did 19 request $112,806 in the email sent to Allstate (through Pilot). Id., Barnes Decl., Ex. G. But there is 20 no evidence that either Pilot or Allstate ever paid $112,806. Id., Bell Decl., ¶ 7, 9, Exs. D, F. 21 The Court concludes that the evidence supports $110,943.57 in damages. Because 22 Pilot has established a claim for equitable indemnification, the undersigned recommends granting 23 the motion for default judgment in the amount of $110,943.57. 24 IV. CONCLUSION 25 The Eitel factors weigh in favor of granting default judgment. Granting default 26 judgment falls within courts’ discretion. Aldabe, 616 F.2d at 1092. Based on all the foregoing, the 27 undersigned United States Magistrate Judge RECOMMENDS: 28 1. Pilot’s motion for default judgment (ECF No. 27) be GRANTED. 1 2. Pilot be awarded $110,943.57 in damages. 2 These findings and recommendations are submitted to the United States District 3 | Judge assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(1). Within 14 days after 4 | being served with these findings and recommendations, any party may file written objections with 5 || the Court. Responses to objections shall be filed within 14 days after service of objections. Failure 6 | to file objections within the specified time may waive the right to appeal. See Martinez v. □□□□□ 951 7 | F.2d 1153 (th Cir. 1991). 8 9 || Dated: September 17, 2021 Ssvcqo_ 10 DENNIS M. COTA UNITED STATES MAGISTRATE JUDGE 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 14