Doan v. Allstate Northbrook Indemnity Company ( 2020 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 DANIEL DOAN, Case No.: 20-cv-01060-AJB-KSC 12 Plaintiff, ORDER: 13 v. (1) DENYING WITHOUT PREJUDICE 14 ALLSTATE NORTHBROOK PLAINTIFF’S MOTION FOR INDEMNITY COMPANY, an Illinois DEFAULT JUDGMENT, (Doc. No. 11); 15 corporation, AND 16 Defendant. (2) DENYING AS MOOT 17 PLAINTIFF’S EX PARTE MOTION, 18 (Doc. No. 16). 19 20 Presently before the Court are: (1) Plaintiff Daniel Doan’s (“Plaintiff’) motion for 21 default judgment, (Doc. No. 11), and (2) Plaintiff’s ex parte motion for status hearing, 22 (Doc. No. 16). Defendant Allstate Northbrook Indemnity Company (“Allstate”) has not 23 responded nor has it otherwise appeared in this case. The Court held a hearing on Plaintiff’s 24 motion for default judgment on November 12, 2020. (Doc. No. 15.) Counsel for Plaintiff 25 appeared at the hearing. Allstate did not make an appearance. Based on the analysis set 26 forth below, the Court DENIES WITHOUT PREJUDICE Plaintiff’s motion for default 27 judgment and DENIES AS MOOT Plaintiff’s ex parte motion. 28 1 I. BACKGROUND 2 Plaintiff brings this lawsuit against Allstate for breach of the implied covenant of 3 good faith and fair dealing. (Complaint (“Compl.”), Doc. No. 1 ¶¶ 31–39.) Plaintiff alleges 4 Allstate issued an automobile insurance policy to Plaintiff, containing $100,000 in 5 Uninsured/Underinsured Motorist coverage. (Id. ¶ 3.) On December 6, 2016, in El Cajon, 6 California, Plaintiff was involved in an automobile collision. (Id. ¶ 4.) Plaintiff states he 7 was not at fault. (Id.) GEICO insured the other driver involved in the collision. (Id.) The 8 GEICO policy had liability limits of only $30,000 per person. (Id.) As a result of the 9 accident, Plaintiff sustained “serious, debilitating or permanent injuries to his neck and left 10 shoulder.” (Id. ¶ 6.) The injuries from the accident prevented Plaintiff from starting a new 11 job as a heavy equipment operator earning $3,500 a month. (Id. ¶ 7.) 12 Plaintiff settled with GEICO’s insured for GEICO’s paying policy limits of $30,000, 13 $70,000.00 less than Plaintiff’s $100,000.00 Uninsured/Underinsured Motorists bodily 14 injury coverage under the Allstate policy. (Id. ¶ 11.) Plaintiff then presented a claim to 15 Allstate for the remaining $70,000.00 in Underinsured Motorist coverage. (Id. ¶ 12.) Upon 16 receipt of the claim, Plaintiff alleges Allstate did not request a recorded statement nor ask 17 Plaintiff to submit to a medical examination by an Allstate doctor. Instead, Allstate 18 apparently told Plaintiff that Allstate uses a computer program called “Colossus” to 19 evaluate his claim. 20 On or about June 4, 2018, Allstate offered Plaintiff $20,000.00 to settle Plaintiff’s 21 claim for Underinsured Motorist coverage. (Id. ¶ 17.) On June 12, 2018, Plaintiff rejected 22 Allstate’s $20,000.00 offer and demanded arbitration. (Id. ¶ 18.) While in arbitration, on 23 August 13, 2018, Plaintiff’s attorney served a written statutory demand pursuant to 24 California Code of Civil Procedure § 998 for $70,000.00. Plaintiff claims Allstate 25 “unreasonably and in bad faith refuse[d] to pay Doan his $70,000.00 remaining 26 underinsured motorist coverage.” (Id. ¶ 25.) 27 The hearing on Plaintiff’s Underinsured motorist arbitration was set to begin April 28 18, 2019. (Id. ¶ 29.) Rather than proceeding, Allstate offered Plaintiff the policy limits of 1 $70,000.00. (Id.) However, Allstate refused to pay the costs Plaintiff incurred in arbitration 2 even though Plaintiff had served a § 998 offer. Allstate allegedly told Plaintiff that if he 3 wants his costs, he will have to recover them in an action for breach of the implied covenant 4 of good faith and fair dealing. (Id. ¶ 30.) 5 Plaintiff then filed his single claim for breach of the implied covenant of good faith 6 and fair dealing in this Court on June 10, 2020. (Compl.) On June 25, 2020, Plaintiff filed 7 a Summons Returned Executed. (Doc. No. 3.) In the proof of service, Plaintiff states 8 Enrique Mendez, a registered process server, served a Summons, Complaint, and Civil 9 Cover Sheet on Allstate Northbrook Indemnity Company via Allstate’s agent for service, 10 CT Corporation System. (Id. at 1.) Specifically, Mendez served Carlos Paz, a person 11 authorized to receive service, at 818 West 7th Street, Suite 930, Los Angeles CA, 90017 12 on June 19, 2020 at 11:40 AM. (Id.) 13 On July 23, 2020, Plaintiff requested entry of default, (Doc. No. 4), which was 14 granted by the Clerk of Court on July 24, 2020. (Doc. No. 5.) Then on September 22, 2020, 15 Plaintiff moved for default judgment. (Doc. No. 11.) Allstate did not respond to the motion 16 for default judgment, or otherwise appear in the matter. This order follows. 17 II. LEGAL STANDARD 18 Entry of default is appropriate “[w]hen a party against whom a judgment for 19 affirmative relief is sought has failed to plead or otherwise defend.” Fed. R. Civ. P. 55(a). 20 A party has no duty to defend, however, unless the plaintiff properly served the defendant 21 with the summons and complaint, or waives such service, pursuant to Federal Rule of Civil 22 Procedure 4. See Murphy Bros., Inc. v. Michetti Pipe Stringing, Inc., 526 U.S. 344, 350 23 (1999) (holding “one becomes a party officially, and is required to take action in that 24 capacity, only upon service of a summons”). 25 Before the Court decides whether to grant default judgment, Federal Rule of Civil 26 Procedure 55(b)(2) requires the Clerk’s entry of default. However, entry of a defendant’s 27 default does not automatically entitle the plaintiff to a court-ordered judgment. See Draper 28 v. Coombs, 792 F.2d 915, 924–25 (9th Cir. 1986). Indeed, a district court has discretion in 1 deciding whether to enter a default judgment. See Aldabe v. Aldabe, 616 F.2d 1089, 1092 2 (9th Cir. 1980). In exercising this discretion, the court may consider a number of factors: 3 (1) the possibility of prejudice to the plaintiff; (2) the merits of the plaintiff’s substantive 4 claim; (3) the sufficiency of the complaint; (4) the sum of money at stake in the action; (5) 5 the possibility of a dispute concerning material facts; (6) whether the default was due to 6 excusable neglect; and, (7) the strong policy underlying the Federal Rules of Civil 7 Procedure favoring decisions on the merits (collectively, the “Eitel factors”). See Eitel v. 8 McCool, 782 F.2d 1470, 1471–72 (9th Cir. 1986). 9 III. DISCUSSION 10 In assessing whether Plaintiff is entitled to default judgment, the Court must look to 11 (1) whether this Court has jurisdiction over this matter, (2) whether service was proper, 12 and (3) whether default judgment is appropriate under the Eitel factors. 13 A. Jurisdiction 14 First, when a party seeks entry of default judgment, courts have a duty to examine 15 their own jurisdiction—both subject matter and personal. See In re Tuli, 172 F.3d 707, 712 16 (9th Cir. 1999) (internal citation omitted). Here, the Court may exercise subject matter 17 jurisdiction pursuant to 28 U.S.C. § 1332 because there is complete diversity among the 18 parties, and the amount in controversy exceeds $75,000. To be sure, Plaintiff is a citizen of 19 California, and resident of El Cajon, San Diego, California. (Comp. ¶ 1.) Allstate is a 20 corporation organized under the laws of Illinois, with its principal place of business in 21 Illinois. (Id. ¶ 2.) The amount in controversy is met because Plaintiff is seeking more than 22 $75,000. Thus, because there is diversity in citizenship, and the amount in controversy is 23 met, the Court has diversity jurisdiction. Similarly, personal jurisdiction over Allstate is 24 satisfied because Plaintiff served summons on Allstate in California. See Burnham v. Sup. 25 Ct., 495 U.S. 604, 620–21 (1990). Allstate is also authorized to do business in California, 26 and this case arises out of an insurance policy issued to a California citizen. Thus, the Court 27 has personal jurisdiction. 28 1 B. Service of Process 2 Second, the Court turns to whether service was proper. Because Allstate is a 3 corporation, service of process is governed by Federal Rule of Civil Procedure 4(h). The 4 rule provides that a corporation may be served pursuant to the law of the state where the 5 district court is located or where service is made. See Fed. R. Civ. P. 4(h)(1)(A) (referring 6 to service under Rule 4(e)(1), which provides for service pursuant to state law). In this case, 7 the state where this Court is located and where service was made is the same—i.e., 8 California. Under California law, service of process on corporations is governed by the 9 California Code of Civil Procedure. Under § 416.10 of the Code, a corporation may be 10 served by delivering a copy of the summons and complaint to, “the president, chief 11 executive officer, or other head of the corporation, a vice president, a secretary or assistant 12 secretary, a treasurer or assistant treasurer, a controller or chief financial officer, a general 13 manager, or a person authorized by the corporation to receive service of process.” Cal. 14 Code Civ. Proc. § 416.10(b). 15 Here, it appears that Plaintiff properly served Allstate by delivering a copy of the 16 Summons and Complaint to the designated agent for service of process, CT Corporation 17 Systems. The Summons Returned Executed provides that Enrique Mendez, a registered 18 process server, served a Summons, Complaint, and Civil Cover Sheet on Allstate 19 Northbrook Indemnity Company via Allstate’s agent for service, CT Corporation System. 20 (Id. at 1.) Specifically, Mendez served Carlos Paz, a person authorized to receive service 21 on Allstate’s behalf, at 818 West 7th Street, Suite 930, Los Angeles CA, 90017 on June 22 19, 2020 at 11:40 AM. (Id.) Accordingly, it appears that service of the Complaint and 23 Summons on Allstate was proper. 24 C. The Eitel Factors 25 In addition to analyzing jurisdiction and proper service, the Court considers the 26 seven-factors set out in Eitel v. McCool, 782 F.2d 1470, 1471–72 (9th Cir. 1986) when 27 evaluating whether a default judgment is proper. The papers filed by Plaintiff, however, do 28 not address these factors. Thus, the Court DENIES the motion for default judgment 1 || WITHOUT PREJUDICE and directs Plaintiff to file an amended motion for default 2 ||judgment, making the proper showing under the Eitel factors. See Hong Chang Corp. v. 3 || Dongwon Mulsan Co., No. CV 14-4632 PSG (RZX), 2016 WL 9045977, at *1 (C.D. Cal. 4 ||Mar. 2, 2016) (denying a motion for default judgment because, among other things, the 5 || plaintiff failed to discuss the Eitel factors); Hartford Life & Acc. Ins. Co. v. Gomez, No. 6 |} CV—13-01144—PHX-BSB, 2013 WL 5327558, at *2 (D. Ariz. Sept. 24, 2013) (same). 7 CONCLUSION 8 In light of the foregoing, the Court DENIES WITHOUT PREJUDICE □□□□□□□□□□□ 9 ||motion for default judgment. (Doc. No. 11.) Should Plaintiff still wish to pursue default 10 judgment, the Court DIRECTS Plaintiff to file an amended motion for default judgment 11 appropriately addressing the Fite! factors within 21 days of this order. In its discretion, the 12 || Court also directs Plaintiff to serve the Clerk of Court’s entry of default, and any amended 13 ||motion for default judgment on Allstate pursuant to Rule 4. Plaintiff must also serve a 14 || courtesy copy on counsel for Allstate in the underlying Underinsured/Uninsured arbitration 15 || proceeding. See Pension Benefit Guar. Corp. v. Beverly Hills S. Pac. Surgery Ctr., Inc., 16 || No. CV-17-3350-MWF (AJW), 2017 WL 8222633, at *2 (C.D. Cal. Aug. 28, 2017) (“As 17 ||a matter of discretion, the Court also requires a plaintiff to serve its motion for default 18 ||judgment upon a defendant.”’); Esget v. TCM Fin. Servs. LLC, No. 1:11-CV-00062-AWI, 19 ||2014 WL 258837, at *1 (E.D. Cal. Jan. 23, 2014) (“The Court further ordered Plaintiff to 20 || file and properly serve any amended motion for default judgment. .. .”). Plaintiffs ex parte 21 || motion for a status hearing is DENIED AS MOOT. (Doc. No. 16.) 22 23 IT IS SO ORDERED. 24 Dated: December 17, 2020 © 25 Hon. Anthony J. attaglia 26 United States District Judge 27 28