Munson v. 1979 26 Cal Sailboat ( 2022 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 JASON MUNSON, No. 2:21-cv-0418-KJM-CKD 12 Plaintiff, FINDINGS AND RECOMMENDATIONS 13 v. (ECF No. 23) 14 1979 26 CAL SAILBOAT, 15 Defendant. 16 17 On March 9, 2021, plaintiff Jason Munson (“limitation plaintiff”) filed a complaint under 18 the Limitation of Liability Act, 46 U.S.C. Section 30501 et seq., claiming the right to exoneration 19 from liability, or limitation thereof, for all claims arising out of a water vessel crash that occurred 20 on or about September 8, 2020. (ECF. No. 1.) Plaintiff’s motion for default judgment against “all 21 claimants who have not filed and served a claim” is before the court. (ECF No. 23.) For the 22 reasons set forth below, the undersigned recommends the court grant the motion for default 23 judgment. 24 I. BACKGROUND 25 At approximately 2:00 p.m. on September 8, 2020, the 1979 26’ Cal Sailboat bearing Hull 26 Identification Number CABAO138M781 (“the Vessel”) came loose from its moorings at Camp 27 Richardson Marina on Lake Tahoe and is believed to have collided with at least two other vessels 28 also loose from their moorings, resulting in damages to the vessels. (ECF No. 1 at ¶ 8.) All three 1 vessels were found beached shortly after the windstorm. (Id.) No persons were on board and no 2 injuries were reported. (Id. at ¶¶ 11, 12.) 3 One of the vessels damaged as a result of the incident was a 1998 24’ Chris-Craft (“Cris- 4 Craft”) owned by Seth Nickles. (ECF No. 1 at ¶ 9.) Mr. Nickles, the owner of the Chris-Craft, 5 filed a claim against limitation plaintiff and/or the Vessel for damages, losses or injuries. (Id. at ¶ 6 16.) The third vessel is believed to have transported it to an unidentified location for repairs, and 7 its year, make, model, and owner are unknown. (Id. at ¶ 10.) 8 On March 9, 2021, limitation plaintiff filed this action under the Limitation of Liability 9 Act, 46 U.S.C. § 30511, and simultaneously requested an order directing the issuance of a 10 monition and restraining all suits. (ECF. Nos. 1, 4.) 11 On April 23, 2021, the district judge assigned to this case found plaintiff had complied 12 with Supplemental Admiralty and Maritime Claims Rule F. (ECF No. 6.) The court restrained 13 other suits, ordered notice of this action to be published in the Tahoe Daily Tribune, and 14 admonished any claimants to answer and file their claims within 30 days. (ECF Nos. 8, 9.) 15 Notice of this suit was published in the Tahoe Daily Tribune across four consecutive 16 Mondays in May. (ECF No. 12.) No answers, claims, or third-party complaints have been filed. 17 Plaintiff in limitation requested entry of default against all non-appearing claimants. (ECF 18 No. 19.) Pursuant to plaintiff’s request, on November 3, 2021, the Clerk of Court entered a 19 default as to all non-appearing claimants who had not filed and served their claims or answers in 20 this lawsuit before the court-ordered deadline of June 27, 2021. (ECF No. 20.) On December 7, 21 2021, limitation plaintiff filed the instant motion for default judgment. (ECF No. 23.) 22 II. LEGAL STANDARDS 23 The Supplemental Rules for Admiralty or Maritime Claims (“FRCP Supp. Rules”) govern 24 the procedures in an action to exonerate or limit liability from claims arising out of maritime 25 accidents. FRCP Supp. Rule A(1)(iv). “The Federal Rules of Civil Procedure also apply… except 26 to the extent they are inconsistent with [the] Supplemental Rules.” FRCP Supp. Rule A(2). 27 Because there is no Supplemental Rule on point for default judgment, this motion is governed by 28 Federal Rule of Civil Procedure, Rule 55. 1 Pursuant to Federal Rule of Civil Procedure 55, default may be entered against a party 2 against whom a judgment for affirmative relief is sought if that party fails to plead or otherwise 3 defend against the action. See Fed. R. Civ. P. 55(a). The decision to grant or deny an application 4 for default judgment lies within the sound discretion of the district court. Aldabe v. Aldabe, 616 5 F.2d 1089, 1092 (9th Cir. 1980). 6 Once default is entered, well-pleaded factual allegations in the operative complaint are 7 generally taken as true except for the allegations relating to damages. TeleVideo Sys., Inc. v. 8 Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987) (per curiam) (citing Geddes v. United Fin. 9 Group, 559 F.2d 557, 560 (9th Cir. 1977) (per curiam)); accord Fair Housing of Marin v. Combs, 10 285 F.3d 899, 906 (9th Cir. 2002). “[N]ecessary facts not contained in the pleadings, and claims 11 which are legally insufficient, are not established by default.” Cripps v. Life Ins. Co. of N. Am., 12 980 F.2d 1261, 1267 (9th Cir. 1992). Where the pleadings are insufficient, the court may require 13 the moving party to produce evidence in support of the emotion for default judgment. See 14 TeleVideo Sys., Inc., 826 F.2d at 917-18. 15 Default judgments are ordinarily disfavored. Eitel v. McCool, 782 F.2d 1470, 1472 (9th 16 Cir. 1986). In making the determination whether to grant a motion for default judgment, the court 17 considers the following factors: 18 (1) the possibility of prejudice to the plaintiff, (2) the merits of plaintiff’s substantive claim, (3) the sufficiency of the complaint, (4) 19 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 20 excusable neglect, and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits. 21 22 Eitel,782 F.2d at 1471-72. 23 III. DISCUSSION 24 Limitation plaintiff, the owner of the vessel, filed this action under the court’s admiralty 25 jurisdiction, seeking exoneration from liability, or limitation thereof, under 46 U.S.C. section 26 30501, et seq. “The owner of a vessel may bring a civil action in a district court of United States 27 for limitation of liability” by filing a claim no later than six months after a limitation plaintiff 28 receives a claim in writing. 46 U.S.C. § 30511. A limitation plaintiff must meet certain pleading 1 requirements and must give a deposit and security for costs and interest. FRCP Supp. Rule F(1). 2 Upon compliance with subsection (1) of Rule F, “all claims and proceedings against the owner or 3 the owner’s property with respect to the matter in question shall cease.” Id. at subsection 3. 4 A. Eitel Factors 5 1. Possibility of Prejudice to Plaintiff 6 The first factor considers whether the plaintiff would suffer prejudice if default judgment 7 is not entered. Such potential prejudice to the plaintiff militates in favor of granting a default 8 judgment. See PepsiCo, Inc., v. California Security Cans, 238 F. Supp. 2d 1172, 1177 (C.D. Cal. 9 2002). Here, the non-appearing parties failed to submit claims by the deadline, despite the 10 requisite notice being given. Without default judgment, limitation plaintiff would continue to be 11 exposed to liability and would not be afforded the protections of the Act. See, e.g., Matter of 12 Duley, No. 8:16-cv-00135-JLS-DFM, 2017 WL 8180609, at *2 (C.D. Cal. July 11, 2017) 13 (finding “no just reason for delay in entering a judgment against those who have not yet 14 submitted claims”). Thus, the possibility of prejudice to plaintiff weighs in favor of entering 15 default judgment. 16 2. Merits of the Substantive Claim and the Sufficiency of the Complaint 17 The court considers the merits of plaintiff’s substantive claim and the sufficiency of the 18 complaint together due to the relatedness of the inquiries. The court must consider whether the 19 allegations in the complaint are sufficient to state a claim on which plaintiff may recover. See 20 Danning v. Lavine, 572 F.2d 1386, 1388 (9th Cir. 1978); PepsiCo, Inc., 238 F. Supp. 2d at 1175. 21 Here, limitation plaintiff seeks a declaratory judgment exonerating plaintiff from liability 22 for the events surrounding the September 8, 2020 collision. The district judge assigned to this 23 case has determined the allegations of the complaint satisfy the special pleading requirements of 24 FRCP Supp. Rule F. (ECF No. 6 at 2-3.) Accordingly, the merits of the claim and sufficiency of 25 the complaint favor default judgment. See, e.g., Duley, 2017 WL 8180609 at *2 (noting that upon 26 a showing of compliance with the Supplemental Rules, “courts regularly grant a default judgment 27 against claimants who do not answer.”). 28 //// 1 3. The Sum of Money at Stake 2 Under the fourth factor cited in Eitel, “the court must consider the amount of money at 3 stake in relation to the seriousness of defendant’s conduct.” PepsiCo, Inc., 238 F. Supp. 2d at 4 1176-77; see also Philip Morris USA, Inc. v. Castworld Prods., Inc., 219 F.R.D. 494, 500 (C.D. 5 Cal. 2003). Here, plaintiff seeks declaratory relief against the non-appearing parties exonerating 6 plaintiff from all liability for all claims arising out of the September 8, 2020 incident. (ECF No. 7 23-3.) Plaintiff does not seek monetary relief. This factor weighs in favor of granting the default 8 judgment. 9 4. The Possibility of a Dispute Concerning Material Facts 10 Limitation plaintiff has provided the court with well-pleaded allegations supporting the 11 complaint’s assertions. The court may assume the truth of well-pleaded facts in the complaint 12 following the clerk’s entry of default. Thus, for default purposes there is no likelihood that any 13 genuine issue of material fact exists. See, e.g., Elektra Entm’t Group Inc. v. Crawford, 226 F.R.D. 14 388, 393 (C.D. Cal. 2005) (“Because all allegations in a well-pleaded complaint are taken as true 15 after the court clerk enters default judgment, there is no likelihood that any genuine issue of 16 material fact exists”); accord Philip Morris USA, Inc., 219 F.R.D. at 500; PepsiCo, Inc., 238 F. 17 Supp. 2d at 1177. 18 5. Whether the Default Was Due to Excusable Neglect 19 The record contains no indication that defendant’s default was due to excusable neglect. 20 Due process requires that interested parties be given notice of the pendency of the action and be 21 afforded an opportunity to present their objections before a final judgment is rendered. Mullane v. 22 Central Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950). 23 There is no indication the default of the non-appearing claimants is the result of excusable 24 neglect. See PepsiCo, Inc., 238 F. Supp. 2d at 1177. The non-appearing claimants have had ample 25 notice of this lawsuit. Limitation plaintiff followed the dictates of FRCP Supp. Rule F and the 26 district court’s orders in providing notice to all possible known claimants (ECF No. 11), as well 27 as publication notice to any unknown claimants (ECF No. 12). No claimants have appeared or 28 requested additional time for any purpose. This factor favors the entry of a default judgment. 1 6. The Strong Policy Underlying the Federal Rules of Civil Procedure Favoring Decisions on the Merits 2 3 “Cases should be decided upon their merits whenever reasonably possible.” Eitel, 782 4 F.2d at 1472. But the mere existence of Rule 55(b) “indicates that this preference, standing alone, 5 is not dispositive.” PepsiCo, Inc., 238 F. Supp. 2d at 1177 (citation omitted); see also Craigslist, 6 Inc. v. Naturemarket, Inc., 694 F. Supp. 2d 1039, 1061 (N.D. Cal. 2010). Rule 55 allows a court 7 to decide a case before the merits are heard if defendant fails to appear and defend. See PepsiCo, 8 Inc., 238 F. Supp. 2d at 1177. Here, default judgment will serve the interests of justice because it 9 will “facilitate the apportionment of whatever funds are available for the [existing] claimants.” 10 Duley, 2017 WL 8180609, at *2. 11 7. Recommendation 12 Taken together, the Eitel factors support granting the request for default judgment. It is 13 therefore recommended that a default judgment be entered. 14 B. Remedies 15 A default judgment should be entered against all non-appearing claimants who did not file 16 and serve their claims or answers in this lawsuit before the court-ordered deadline of June 27, 17 2021 (“Non-Appearing Claimants”). The undersigned recommends limitation plaintiff be 18 completely exonerated from all liability for any injuries, deaths, losses, or damages that the Non- 19 Appearing Claimants may allege to have sustained or may have actually sustained arising out of, 20 resulting from, or in any manner connected with the collision(s) occurring on or about September 21 8, 2020, on the navigable waters of Lake Tahoe between the Vessel, her engines, tackle, 22 appurtenances, etc. and the other vessels. 23 IV. CONCLUSION 24 Accordingly, it is HEREBY RECOMMENDED: 25 1. Limitation plaintiff’s Motion for Default Judgment (ECF No. 23) be GRANTED. 26 2. Default judgment be ENTERED in favor of limitation plaintiff Jason Munson and 27 against all non-appearing claimants, known and unknown, who did not file and serve 28 their claims and answers on or before June 27, 2021. 1 3. Limitation plaintiff be exonerated from liability for all claims arising out of the 2 collision(s) involving the 1979 26’ Cal Sailboat bearing Hull Identification Number 3 CABAO138M781, her engines, tackle, appurtenances, etc., that occurred on or about 4 September 8, 2020. 5 These findings and recommendations are submitted to the United States District Judge 6 || assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(1). Within fourteen (14) 7 || days after being served with these findings and recommendations, any party may file written 8 | objections with the court and serve a copy on all parties. Such a document should be captioned 9 || “Objections to Magistrate Judge’s Findings and Recommendations.” Any reply to the objections 10 || shall be served on all parties and filed with the court within fourteen (14) days after service of the 11 || objections. The parties are advised that failure to file objections within the specified time may 12 || waive the right to appeal the District Court’s order. Turner v. Duncan, 158 F.3d 449, 455 (9th Cir. 13 || 1998); Martinez v. YIst, 951 F.2d 1153, 1156-57 (9th Cir. 1991). 14 | Dated: January 25, 2022 / aa / x ly a 1s CAROLYN K DELANEY 16 UNITED STATES MAGISTRATE JUDGE 17 || 8.Munson21ev418.mdj 18 19 20 21 22 23 24 25 26 27 28