Consumer Financial Protection Bureau v. Global Financial Support, Inc. ( 2020 )

1 2 3 4 5 6 7 8 9 10 UNITED STATES DISTRICT COURT 11 SOUTHERN DISTRICT OF CALIFORNIA 12 CONSUMER FINANCIAL Case No.: 3:15-cv-2440-GPC-WVG 13 PROTECTION BUREAU, ORDER GRANTING MOTION TO 14 Plaintiff, STRIKE ANSWER AND ENTER 15 DEFAULT. v. 16 GLOBAL FINANCIAL SUPPORT, [ECF No. 83.] 17 INC., d/b/a STUDENT FINANCIAL 18 RESOURCE CENTER, d/b/a COLLEGE FINANCIAL ADVISORY; 19 and ARMOND ARIA a/k/a ARMOND 20 AMIR ARIA, individually, and as owner and CEO of GLOBAL FINANCIAL 21 SUPPORT, INC., 22 Defendants. 23 24 On December 10, 2019, Plaintiff Consumer Financial Protection Bureau (the 25 “Bureau”) filed a motion requesting that the Court strike Defendant Global Financial 26 Support, Inc.’s (“Global”) Answer for failure to defend and then enter default against 27 Global. (ECF No. 83.) Defendant Global has not entered an opposition. Based on the applicable law, the Court the Bureau’s motion. The Court hereby 1 STRIKES Global’s Answer and ORDERS the Clerk of Court to enter default. 2 I. Background 3 On October 29, 2015, the Bureau filed a complaint alleging numerous 4 violations by Defendants Global and Armond Amir Avia, Global’s Chief Executive 5 Officer, of the Consumer Financial Protection Act of 2010 (“CFPA”), including 6 through the offering, marketing, sale, and provision of student financial aid advisory 7 services. (ECF No. 1.) 8 On April 7, 2016, Defendants filed a motion to stay proceedings while a 9 concurrent criminal suit was pending. (ECF No. 25.) On April 26, 2016, all discovery 10 was stayed. (ECF No. 30.) Through a series of subsequent orders, the Court extended 11 the stay until May 27, 2019. (See ECF Nos. 34, 42, 46, 48, 51, 53, 55, 57, 59, 61, 63, 12 65, 67, 69, 71, 73.) 13 On May 2, 2019, Defendants’ then-counsel, Mr. Russel F.A. Riviere, informed 14 Defendants that the stay would be lifted. (ECF No. 75-3, Riviere Decl., at ¶ 2.) 15 Defendants told Mr. Riviere that they would be unable to pay to retain his firm’s legal 16 services following the stay and consented to his withdrawal. (Id. at ¶¶ 3, 6.) 17 On June 3, 2019, Defendants’ counsel filed a motion to withdraw as attorney of 18 record for all defendants. (ECF No. 75.) On June 20, 2019, the Bureau filed a notice 19 of non-opposition to this motion. (ECF No. 78.) On July 12, 2019, the Court granted 20 the motion to withdraw. (ECF No. 79). The Court also ordered that Global secure 21 substitute counsel within thirty (30) days, that Global’s new counsel confer with the 22 Bureau as to a scheduling order within sixty (60) days, and that the Parties jointly file 23 a scheduling order, or file individual statements with the Parties’ positions on such an 24 order, within seventy-five (75) days. (Id. at 6.) 25 Since the Court issued its July 12, 2019, the Bureau has spoken to Defendant 26 Aria numerous times and informed him that they would move for default were Global 27 to remain unrepresented. (See ECF Nos. 81, 83.) On September 24, 2019, Magistrate 1 While Defendant Aria may properly proceed pro se, as the Court explained in its order granting the withdrawal of defense counsel, 2 corporate defendants such as Global may not appear pro se pursuant to 3 Local Rule 83.3(j). Defendant Global is warned that any continuing failure to obtain counsel may result in sanctions. 4 (ECF No. 82 at 3) (emphasis in original). Global has not obtained counsel to date. 5 II. Analysis 6 The Bureau now moves the Court to strike Global’s Answer and enter default. 7 (ECF No. 8.) Entering default is a two-step process. First, “[w]hen a party against 8 whom a judgment for affirmative relief is sought has failed to plead or otherwise 9 defend . . . the clerk must enter the party’s default.” Fed. R. Civ. P. 55(a). Second, 10 after default is properly entered, a party seeking relief other than a sum certain must 11 apply to the Court for a default judgment. Fed. R. Civ. P. 55(b). 12 Thus, to accomplish the first step here, the Bureau requests that the Court first 13 strike Global’s Answer. An answer may be stricken if defendants fail to defend 14 themselves. See Microsoft Corp. v. Marturano, No. 06-CV-1747-OWW, 2009 WL 15 1530040, at *2, 6 (E.D. Cal. May 27, 2009) (striking answer against defendant who 16 persistently failed to participate in the action); Galtieri-Carlson v. Victoria M. Morton 17 Enters., 08-CV-1777-FCD, 2010 WL 3386473, at *3 (E.D. Cal. 2010). Likewise, 18 when a corporation fails to retain counsel to represent it in an action, its answer may 19 also be stricken. Employee Painters’ Trust v. Ethan Enters., Inc., 480 F.3d 993 (9th 20 Cir. 2007). Various courts have applied these rules to strike the answers of corporate 21 defendants who have failed to defend themselves, direct entry of default, and permit 22 the plaintiff to move for default judgment. See, e.g., Osgood v. Main Streat Mktg., 23 LLC, No. 16-CV-2415-GPC, 2017 WL 3194460, at *2 (S.D. Cal. July 27, 2017) 24 (citing Employee Painters’ Trust v. Ethan Enters., Inc., 480 F.3d 993 (9th Cir. 2007)); 25 Microsoft Corp. v. Marturano, No. 06-CV-1747, 2009 WL 1530040, at *2, 6 (E.D. 26 Cal. May 27, 2009); see also Rojas v. Hawgs Seafood Bar, Inc., No. C-08-03819-JF, 27 2009 WL 1255538, at *1 (N.D. Cal. May 5, 2009) (“When a corporation fails to retain 1 || counsel to represent it in an action, its answer may be stricken and a default judgment 9 || entered against it.”); Oracle America, Inc. v. Serv. Key, LLC, No. C-12-790-SBA, 3 | 2013 WL 1195620, at *2-3 (N.D. Cal. Mar. 22, 2013) (ordering that if substitute 4 || counsel is not found, the court will strike answer and direct entry of default, and then 5 || plaintiff may file a motion for default judgment). 6 Here, Defendant Global has failed to retain counsel as directed by the Court. 7 || Global has had ample time to do so as the applicable period for securing counsel per g || the Court’s July 12, 2019 Order expired on or around August 12, 2019. CECF No. 79.) 9 || Furthermore, both the Bureau and the Magistrate Judge have warned Defendants that 10 || a failure to obtain counsel may result in default. (ECF Nos. 81, 82, 83.) Global has 11 || continuously failed to defend this action and it does not appear that the corporation 12 || will be doing so at this time. 13 Consequently, because Defendant Global has failed to obtain counsel and 14 || defend itself in this action, the Court grants the Bureau’s motion. 15 || I. Conclusion 16 For the foregoing reasons, the Court GRANTS the Bureau’s motion. (ECF No. 17 || 83.) The Court thus ORDERS and DIRECTS the following: 18 1. That Defendant Global Financial Support, Inc’s Answer, (ECF Nos. 6, 9), be 19 stricken from the record; 20 2. That the Clerk of Court enter default against Global; and 21 3. That the hearing set for February 7, 2020 be vacated. 22 IT IS SO ORDERED. 23 Dated: January 30, 2020 2 24 Hon. athe Coke 25 United States District Judge 26 27 28