1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 VALLEY NATIONAL BANK, ) Case No.: 1:21-cv-1155 AWI JLT ) 12 Plaintiff, ) FINDINGS AND RECOMMENDATIONS ) GRANTING PLAINTIFF’S MOTION FOR 13 v. ) DEFAULT JUDGMENT ) 14 ROAD LINER LLC, ) (Doc. 11) ) 15 Defendant. ) ) 16 ) 17 Valley National Bank assert that Road Liner LLC breached a contract related to the financing 18 of premiums charged by an insurance company. (Doc. 1.) Because Road Liner LLC has not 19 responded to the allegations in the complaint, Plaintiff now seeks default judgment pursuant to Rule 20 55 of the Federal Rules of Civil Procedure. (Doc. 11.) 21 The Court finds the matter suitable for decision without oral argument. Therefore, the motion 22 is taken under submission pursuant to Local Rule 230(g) and General Order 618, and the hearing date 23 of November 16, 2021 is VACATED. For the following reasons, the Court recommends the motion 24 for default judgment be GRANTED. 25 I. Procedural History 26 Valley National Bank initiated this action by filing a complaint on July 31, 2021. (Doc. 1.) 27 Road Liner LLC was served with the summons and complaint on August 16, 2021. (Doc. 6.) Although 28 properly served with the summons and complaint, Road Liner failed to respond to the complaint within 1 the time prescribed by the Federal Rules of Civil Procedure. Upon the application of Plaintiff, default 2 was entered against Defendant on September 8, 2021. (Docs. 8, 9.) Valley National Bank filed the 3 motion for default judgment now pending before the Court on October 19, 2021. (Doc. 17.) Road 4 Liner has neither appeared nor opposed the motion. 5 II. Legal Standards Governing Default Judgment 6 The Federal Rules of Civil Procedure govern the entry of default and default judgment. After 7 default is entered because “a party against whom a judgment for relief is sought has failed to plead or 8 otherwise defend,” the party seeking relief may apply to the court for a default judgment. Fed. R. Civ. 9 P. 55(a)-(b). When the claims are “for a sum certain or a sum that can be made certain by 10 computation,” judgement shall be entered for that amount and costs against a defendant. Fed. R. Civ. 11 P. 55(b)(1). 12 When an amount is not for a sum certain, a plaintiff must apply to the Court for entry of default 13 judgment. Fed. R. Civ. P. 55(b)(2). Upon the entry of default, well-pleaded factual allegations 14 regarding liability are taken as true, but allegations regarding the amount of damages must be proven. 15 Pope v. United States, 323 U.S. 1, 22 (1944). In addition, “necessary facts not contained in the 16 pleadings, and claims which are legally insufficient, are not established by default.” Cripps v. Life Ins. 17 Co. of North Am., 980 F.2d 1261, 1267 (9th Cir. 1992) (citing Danning v. Lavine, 572 F.2d 1386, 1388 18 (9th Cir. 1978)). 19 Entry of default judgment is within the discretion of the Court. Aldabe v. Aldabe, 616 F.2d 20 1089, 1092 (9th Cir. 1980). The entry of default “does not automatically entitle the plaintiff to a court- 21 ordered judgment. Pepsico, Inc. v. Cal. Sec. Cans, 238 F.Supp.2d 1172, 1174 (C.D. Cal 2002), accord 22 Draper v. Coombs, 792 F.2d 915, 924-25 (9th Cir. 1986). The Ninth Circuit determined: 23 Factors which may be considered by courts in exercising discretion as to the entry of a default judgment include: (1) the possibility of prejudice to the plaintiff, (2) the 24 merits of plaintiff’s substantive claim, (3) the sufficiency of the complaint, (4) the sum of money at stake in the action, (5) the possibility of a dispute concerning 25 material facts, (6) whether the default was due to excusable neglect, and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on 26 the merits.

27 Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). As a general rule, the issuance of default 28 judgment is disfavored. Id. at 1472. 1 III. Factual Allegations and Evidence 2 The Court accepts the factual assertions as true, because default has been entered. See Pope, 3 323 U.S. at 22. In addition, the Court may consider the “Commercial Insurance Premium Finance 4 Agreement and Disclosure Statement” with Road Liner LLC executed on April 28, 2020, which was 5 attached the Complaint.1 (Doc. 1 at 9-10.) 6 Valley National Bank reports that it “is a national banking association,” and “does business 7 through a division known as Agile Premium Finance.” (Doc. 1 at 1, ¶ 1.) The Bank reports its Agile 8 Premium Finance division “is active in the commercial insurance premium finance industry.” (Id. at 9 3, ¶ 7.) “In that capacity, Valley makes loans to commercial enterprises for the purpose of financing 10 commercial insurance premiums.” (Id.) 11 Road Liner LLC “operates a business that provides trucking services.” (Doc. 1 at 1, ¶ 2.) It 12 “engaged the services of an insurance broker … to assist … in identifying and obtaining commercial 13 insurance.” (Id. at 2, ¶ 8.) “Defendant decided to finance the payment of the premiums instead of 14 using its own money to pay the premiums charged by the insurance company issuing the policies.” 15 (Id. at 3, ¶ 12.) Accordingly, Defendant contacted Valley National Bank “to obtain financing to pay 16 for the premiums on the policies that Defendant had selected.” (Id., ¶ 13.) 17 On April 28, 2020, Plaintiff and “Defendant signed a Commercial Insurance Premium Finance 18 Agreement and Disclosure Statement (the ‘PFA’).” (Id. at 3, ¶ 15; see also id. at 9-10.) “Following 19 the signing of the PFA, Plaintiff provided the funds so that Defendant could purchase the commercial 20 insurance policies identified in the PFA.” (Id., ¶ 16.) In return for the funds, “Defendant agreed to 21 make monthly installment payments to Plaintiff to pay the debt it owed Plaintiff,” in the amount of 22 $12,553.88 per month, with payments beginning April 30, 2020, and due on the 30th of each month 23 thereafter. (Id. at ¶ 17; see also id. at 9.) The total for the premiums to be funded was $145,896.00, 24

25 1 “[D]ocuments attached to the complaint and incorporated by reference are treated as part of the complaint, not extrinsic evidence.” Summit Media LLC v. City of Los Angeles, 530 F. Supp. 2d 1084, 1096 (C.D. Cal. 2008). Documents 26 are incorporated into the complaint by reference “in situations where the complaint necessarily relies upon a document or the contents of the document are alleged in a complaint, the document’s authenticity is not in question and there are no 27 disputed issues as to the document’s relevance.” Coto Settlement v. Eisenberg, 593 F.3d 1031, 1038 (9th Cir. 2010); see also United States v. Corinthian Colleges, 655 F.3d 984, 999 (9th Cir. 2011). Because the Complaint relies upon information in 28 the agreement—and there is no dispute regarding the authenticity or relevance of either document—the Court finds the 1 and Defendant made a down payment of $36,197.00. (Id. at 9.) Thus, the principal amount financed 2 for Defendant was $109,197.00. (Id. at 9.) 3 Plaintiff reports it “performed all conditions, covenants, and promises on its part to be 4 performed under the PFA.” (Doc. 1 at 3, ¶ 16.) For two months, “Defendant made monthly payments 5 to Plaintiff consistent with the terms under the PFA.” (Id., ¶ 18.) However, Defendant “stopped 6 making payments under the PFA,” at which time it owed Plaintiff the principal amount of $84,089.24. 7 (Id. at 3-5, ¶¶ 19, 24, 35.) According to Plaintiff, “Defendant stopped making payments to Plaintiff 8 because the insurance company selected by Defendant ceased operating and could no longer provide 9 insurance coverage, resulting in the cancellation of the policies.” (Id., ¶ 19.) Plaintiff reports this 10 resulted in a default “no later than June 30, 2020” under the PFA, which indicates: 11 Default occurs when: [i] Insured does not pay an installment when it is due [ii] insured is in default with any other agreement with Agile Premium Finance [iii] Insured fails to 12 comply with any of the terms of the Agreement; [iv] insured files for or is involved in any bankruptcy proceeding [v] any of the financed policies are cancelled [vi] Insurance 13 companies have filed for bankruptcy or are otherwise insolvent.

14 (Id. at 3, ¶¶ 21, 24; id at 10, PFA ¶ 8.) Thus, Plaintiff concludes “Defendant is in default for at least 15 two reasons: (i) the monthly installments due under the PFA have not been paid and (ii) the financed 16 policies have been cancelled.” (Id. at 4, ¶ 22.) 17 Pursuant to the PFA, interest began to accrue from the policy effective date and would 18 “continue to accrue until the Loan is paid in full.” (Doc. 1 at 10, PFA ¶ 10.) The parties also agreed 19 “Agile Premium Finance may charge interest on the outstanding principa[l] balance at the maximum 20 rate permitted by the from the date of the default until the balance is paid in full.” (Id.) Further, the 21 PFA indicates that “Defendant must pay the “collection costs and expenses” incurred by Plaintiff as a 22 result of or in connection with enforcing its rights under the PFA, with such expenses including 23 attorney fees.” (Id. at 4, ¶ 26; see also id. at 10, PFA ¶ 8.) 24 Plaintiff reports that “[a]s of May 31, 2021, Defendant owed Plaintiff the principal amount of 25 $84,089.24 and the total amount of $89,611.50 based on the annual percentage rate of 8.25% set forth 26 in the PFA.” (Doc. 1 at 5, ¶ 35.) Plaintiff “made a demand on Defendant for payment, but payment 27 has not been made.” (Id., ¶ 25.) Thus, Plaintiff seeks “default judgment against Road Liner for 28 damages in the amount of $90,013.50, which includes the outstanding balance that Road Liner owes 1 pursuant to the PFA ($89,611.50) and Valley’s filing cost of $402.00.” (Doc. 11 at 2, ¶ 5.) 2 IV. Discussion and Analysis 3 Applying the factors articulated by the Ninth Circuit in Eitel, the Court finds the factors weigh 4 in favor of granting the motion for default judgment. 5 A. Prejudice to Plaintiff 6 The first factor considers whether a plaintiff would suffer prejudice if default judgment is not 7 entered, and potential prejudice to the plaintiff weighs in favor of granting a default judgment. See 8 Pepsico, Inc., 238 F. Supp. 2d at 1177. Generally, where default has been entered against a defendant, 9 a plaintiff has no other means by which to recover damages. Id.; see also Microsoft Corp. v. Nop, 549 10 F. Supp.2d 1233, 1236-37 (E.D. Cal. 2008) (“Plaintiff will be prejudiced if default judgment is denied 11 because plaintiff will be without other recourse for recovery”). Because Plaintiff has no other means 12 to recover damages from Road Liner, the Court finds Plaintiff would be prejudiced if default judgment 13 is not granted, and this factor weighs in favor of the entry of default judgment. 14 B. Merits of Plaintiff’s claims and the sufficiency of the complaint 15 Given the kinship of these factors, the Court considers the merits of Plaintiff’s claims and the 16 sufficiency of the complaint together. See Yelp Inc. v. Catron, 70 F. Supp. 3d 1082, 1098 (N.D. Cal. 17 2014) (“For ease of analysis, the merits of Plaintiffs substantive claims and sufficiency of the complaint 18 are considered together”); see also Premier Pool Mgmt. Corp. v. Lusk, 2012 WL 15932060, at *5 (E.D. 19 Cal. May 4, 2012). The Ninth Circuit has suggested that, when combined, the factors require a plaintiff 20 to “state a claim on which the plaintiff may recover.” Pepsico, Inc., 238 F. Supp. 2d at 1175. 21 Plaintiff’s first claim for relief in the complaint is for breach of contract. (Doc. 1 at 4-5.) A 22 claim of breach of contract arises under state law and requires a plaintiff to demonstrate: (1) the 23 existence of a contract, (2) performance or excuse for nonperformance by the plaintiff, (3) breach by 24 the defendants, and (4) resulting damages. Alcalde v. NAC Real Estate Invs. & Assignments, Inc., 316 25 Fed. App’x 661, 662 (9th Cir. 2009) (citing First Comm. Mort. Co. v. Reece, 108 Cal. Rptr. 2d 23, 33 26 (Ct. App. 2001)); see also Haberbush v. Clark Oil Trading Co., 33 Fed. App’x 896, 898 (9th Cir. 2002) 27 (identifying “agreement, consideration, performance by plaintiff, breach by defendant, and damages” as 28 elements to a breach of contract). 1 On April 28, 2020, Plaintiff and Defendant entered into an agreement for the financing of the 2 commercial insurance policies identified in the agreement, under which Defendant agreed to make 3 monthly payments to Plaintiff for the financing. (Doc. 1 at 9-10.) Thus, Plaintiff has established that 4 an agreement existed between the parties. Further, Plaintiff reports that it provided the funds and 5 “performed all conditions, covenants, and promises on its part to be performed under the PFA.” (Doc. 6 1 at 3, ¶ 16.) However, Defendant only partially performed under the agreement and stopped making 7 the required payments beginning June 30, 2020. (Id. at 3-4, ¶¶ 19, 24.) Thus, Defendant failed to 8 comply with the terms of the agreement with Plaintiff and defaulted on the terms of the PFA. (See 9 Doc. 1 at 10, PFA ¶ 18.) 10 Based upon the allegations of the Complaint and document incorporated by reference, the Court 11 finds Plaintiff established a claim for breach of contract under California law. Thus, these factors 12 support the entry of default judgment. 13 C. Sum of money at stake 14 In considering this factor, the Court “must consider the amount of money at stake in relation to 15 the seriousness of Defendant’s conduct.” Pepsico, Inc., 238 F.Supp.2d at 1176. Here, Plaintiff seeks 16 “default judgment against Road Liner for damages in the amount of $90,013.50,” which includes the 17 outstanding balance of $89,611.50 under the PFA and the filing fee in this action of $402.00. (Doc. 11 18 at 2, ¶ 5.) Thus, the amount of damages is proportional to Defendants' conduct, and this factor does not 19 weigh against default judgment. 20 D. Possibility of dispute concerning material facts 21 There is little possibility of dispute concerning material facts because (1) based on the entry of 22 default, the Court accepts factual allegations in the Complaint as true and (2) though properly served, 23 the defendant failed to appear and defend. See Pepsico, Inc., 238 F.Supp.2d at 1177; see also Elektra 24 Entm’t Group, Inc. v. Crawford, 226 F.R.D. 388, 393 (C.D. Cal. 2005) (“Because all allegations in a 25 well-pleaded complaint are taken as true after the court clerk enters default judgment, there is no 26 likelihood that any genuine issue of material fact exists”). Therefore, this factor does not weigh 27 against default judgment. 28 /// 1 E. Whether default was due to excusable neglect 2 Generally, the Court will consider whether a defendant’s actions— such as failure to file an 3 answer— is due to excusable neglect. See Eitel, 782 F.2d at 1472. Road Liner was served with the 4 summons and Complaint on August 16, 2020. (Doc. 6.) Thus, Defendant was aware of the suit, and it 5 is unlikely the failure to respond was the result of excusable neglect. Shanghai Automation Instrument 6 Co., Ltd. v. Kuei, 194 F.Supp.2d 995, 1005 (N.D. Cal. 2001) (finding no excusable neglect because the 7 defendants “were properly served with the Complaint, the notice of entry of default”). Accordingly, 8 this factor does not weigh against default judgment. 9 F. Policy disfavoring default judgment 10 As noted above, default judgments are disfavored because “[c]ases should be decided on their 11 merits whenever reasonably possible.” Eitel, 782 F.2d at 1472. Here, however, the policy underlying 12 the Federal Rules of Civil Procedure favoring decisions on the merits does not weigh against default 13 judgment because Defendant’s failure to appear makes a decision on the merits impractical. 14 V. Relief Requested 15 Based upon the foregoing, the Eitel factors weigh in favor of granting default judgment, and the 16 Court turns to the relief requested by Plaintiff. If the facts necessary to determine the damages are not 17 contained in the complaint, or are legally insufficient, they will not be established by default and cannot 18 be considered a sum certain. See Cripps v. Life Ins. Co. of N. Am., 980 F.2d 1261, 1267 (9th Cir.1992). 19 Plaintiff, both now and in the Complaint, sought the unpaid principal of the amount due on the 20 PFA, in the amount of $84,092.24, plus 8.25% interest under the terms of the PFA. (Doc. 1 at 5, ¶ 35; 21 see also Doc. 11 at 2) Including interest, Plaintiff seeks a total of $89,611.50 under the PFA. (Id.) In 22 addition, Plaintiff seeks costs in the amount of $402.00 for the filing of this action. (Doc. 11 at 2; see 23 also Doc. 11-1 at 2, Eli Decl. ¶ 6.) Thus, Plaintiff requests a total of $90.013.00. (Id.) 24 As noted, the PFA indicates an annual percentage rate of 8.25%. (Doc. 1 at 9.) In addition, if 25 Road Liner defaulted on the terms of the PFA through failure to make payments, Plaintiff was entitled 26 “to collect payment of any unpaid amounts due.” (Id. at 10, PFA ¶10.) Thus, Plaintiff is entitled to 27 recover the unpaid principal amount of $84,089.24. In addition, the PFA indicates that Defendant 28 agreed “to pay… interest charges [and] collection costs and expenses incurred by Agile Premium 1 Finance as a result of or in connection with enforcing its rights under the Agreement.” (Id.) 2 Consequently, the PFA establishes Plaintiff’s right to the interest calculated and the costs related to the 3 filing of the motion. 4 For the reasons discussed above, the Court finds the entry of default judgment is appropriate 5 and Plaintiff is entitled the requested relief. 6 VI. Findings and Recommendations 7 The Eitel factors weigh in favor of granting default judgment, and the entry of default 8 judgment is within the discretion of the Court. See Aldabe, 616 F.2d at 1092. Based upon the 9 foregoing, the Court RECOMMENDS: 10 1. Plaintiff’s motion for default judgment (Doc. 11) be GRANTED. 11 2. Judgement be entered in favor of Plaintiff Valley National Bank and against Defendant 12 Road Liner LLC in the amount of $90,013.50; and 13 3. The Clerk of Court be directed to close this action. 14 These Findings and Recommendations are submitted to the United States District Judge 15 assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(1)(B) and Rule 304 of the Local 16 Rules of Practice for the United States District Court, Eastern District of California. Within fourteen 17 days of the date of service of these Findings and Recommendations, any party may file written 18 objections with the court. Such a document should be captioned “Objections to Magistrate Judge’s 19 Findings and Recommendations.” The parties are advised that failure to file objections within the 20 specified time may waive the right to appeal the District Court’s order. Martinez v. Ylst, 951 F.2d 21 1153 (9th Cir. 1991); Wilkerson v. Wheeler, 772 F.3d 834, 834 (9th Cir. 2014). 22 23 IT IS SO ORDERED.

24 Dated: November 9, 2021 _ /s/ Jennifer L. Thurston 25 CHIEF UNITED STATES MAGISTRATE JUDGE

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