Valjalo v. Taylor ( 2024 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 ----oo0oo---- 11 12 CODY VALJALO, an individual; and No. 2:23-cv-02390 WBS AC DYLON VALJALO, an individual, 13 Plaintiffs, 14 ORDER v. 15 AUSTIN TAYLOR, an individual; 16 and CLU LLC, a Florida limited liability company, 17 Defendants. 18 19 20 ----oo0oo---- 21 The matter was referred to the undersigned pursuant to 22 Local Rule 302(c)(19). 23 On June 17, 2024, the Magistrate Judge filed revised 24 findings and recommendations herein which were served on 25 plaintiffs and which contained notice to plaintiffs that any 26 objections to the findings and recommendations were to be filed 27 within twenty-one days. (Docket No. 20.) Plaintiffs have filed 28 objections to the findings and recommendations. (Docket No. 21.) 1 The court has reviewed the file and finds the findings 2 and recommendations to be supported by the record and by the 3 Magistrate Judge’s analysis. The court OVERRULES plaintiffs’ 4 objection to the Magistrate Judge’s recommendation that the court 5 decline to award punitive damages. 6 In their objections (Docket No. 21), plaintiffs argue 7 that they would not be made whole with the recommended award of 8 compensatory damages because it does not account for the present 9 value of the cryptocurrency they paid to defendants and does not 10 account for the attorney’s fees they have expended in this case. 11 However, plaintiffs do not object to the Magistrate Judge’s 12 calculation of compensatory damages (see Docket No. 21 at 6), and 13 the court sees no error in this calculation. Plaintiffs also did 14 not move for attorney’s fees and provide no authority showing 15 that they are entitled to attorney’s fees in this case. 16 Plaintiffs also have a mistaken impression of the 17 circumstances under which punitive damages are available under 18 California law. It is the purpose of compensatory damages, not 19 punitive damages, to make plaintiffs whole for their losses. 20 California Civil Code § 3281 provides that compensatory damages 21 are recoverable for “[e]very person who suffers detriment from 22 the unlawful act or omission of another.” In contrast, punitive 23 damages are awarded “in addition to the actual damages, . . . for 24 the sake of example and by way of punishing the defendant.” Cal 25 Civ. Code § 3294(a). Thus, plaintiffs’ claim that the 26 recommended compensatory damages award would not fully compensate 27 them for their losses has no bearing on whether punitive damages 28 are appropriate. 1 The court also agrees with the Magistrate Judge’s 2 analysis with respect to her determination that punitive damages 3 should not be awarded here. As noted by the Magistrate Judge, 4 “punitive damages are never awarded as a matter of right, are 5 disfavored by the law, and should be granted with the greatest of 6 caution and only in the clearest of cases.” (Docket No. 20 at 14 7 (quoting Directi Internet Sols. Pvt. Ltd. v. Dhillon, No. 2:12– 8 cv–1045 WBS DAD, 2013 WL 460319, at *6, n.7 (E.D. Cal. Feb. 5, 9 2013) (citing Henderson v. Sec. Pac. Nat’l Bank, 72 Cal. App. 3d 10 764, 771 (1st Dist. 1977))).) Because there is no evidence of 11 defendant’s financial condition1 and it does not appear that 12 punitive damages are necessary to deter defendants from engaging 13 in similar conduct in the future, plaintiffs have not shown by 14 clear and convincing evidence that an award of punitive damages 15 is appropriate. See, e.g., Prof’l Seminar Consultants, Inc. v. 16 Sino Am. Tech. Exch. Council, Inc., 727 F.2d 1470, 1473 (9th Cir. 17 1984). 18 1 Plaintiffs contend that they need not provide 19 evidence of defendants’ financial situation, citing cases excusing the failure to provide such evidence based on the 20 principle that plaintiffs should not be disadvantaged on the account of lack of proof where defendants did not respond to 21 discovery requests. (Docket No. 21 at 9-10 (citing Mike Davidov 22 Co. v. Issod, 78 Cal. App. 4th 597, 608 (2d Dist. 2000); Garcia v. Myllyla, 40 Cal. App. 5th 990, 995 (2d Dist. 2019); Morgan v. 23 Davidson, 29 Cal. App. 5th 540, 551 (4th Dist. 2018)).) However, those cases all appear to involve trials or evidentiary hearings 24 where defendants participated but had refused to respond to discovery requests regarding their financial condition and/or 25 refused to produce such evidence. Plaintiffs cite no case where a court has awarded punitive damages against a party in default 26 who has not appeared in the case, and even if there were such 27 precedent, this court would not be inclined to award punitive damages in this case without some evidence as to defendant’s 28 financial condition. ee EI IIE IE IRI OE ISIE IOI EE OS III 1 Accordingly, IT IS HEREBY ORDERED that: 2 1. The revised findings and recommendations filed June 3 17, 2024 (Docket No. 20), are adopted in full; 4 2. Plaintiffs’ objections are overruled; and 5 3. Plaintiffs’ motion for default judgment (Docket No. 6 15) is GRANTED. Plaintiffs are awarded $450,242.91 ($403,897 in 7 contract damages plus $46,527.00 in royalties); and 8 4, This case is CLOSED. 9 Dated: September 16, 2024 he bloom HK (hi. 10 WILLIAMB.SHUBB-tsS~S 11 UNITED STATES DISTRICT JUDGE 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28