Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_07-cv-01795/USCOURTS-cand-3_07-cv-01795-2/pdf.json

Nature of Suit Code: 120
Nature of Suit: Marine Contract Actions
Cause of Action: 28:1333 Admiralty

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SCHENKER, INC,

Plaintiff,

 v.

PREDATOR MOGULWEAR INC.,

Defendant.

 / 

AND RELATED COUNTERCLAIM

 

No. C 07-01795 WHA

ORDER GRANTING

PLAINTIFF’S MOTION FOR

DEFAULT JUDGMENT AND

MOTION TO DISMISS

DEFENDANT’S

COUNTERCLAIM WITH

PREJUDICE

INTRODUCTION

In this action for breach of contract, plaintiff moves for default judgment against

defendant and dismissal of defendant’s counterclaim with prejudice. For the reasons stated

below, plaintiff’s motion for default judgment is GRANTED and plaintiff’s motion for dismissal

of defendant’s counterclaim with prejudice is GRANTED. The Clerk SHALL ENTER DEFAULT. 

STATEMENT

Plaintiff Schenker, Inc., does business as a consignee, exporter, and merchant of cargo

(Compl. ¶¶ 3–4). Defendant Predator Mogulwear, Inc., a producer of outdoor clothing, used

Schenker to move, insure, and store cargo (id. at ¶ 5). Schenker advanced money to United

States Customs and other entities on Predator’s behalf (ibid.). Plaintiff alleges that defendant

never repaid the advances. 

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United States District Court

For the Northern District of California

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This action was filed on March 29, 2007. On or about May 8, Harold P. Goldberg, an

attorney from the Harris Beach firm, contacted Bingham McCutchen LLP in East Palo Alto

regarding this action (Lazerson Decl. ¶ 2). Predator’s then-chief executive officer, Lee

“Skeeter” Crossley, retained the Bingham firm to defend Predator in this action (ibid.). 

Bingham appeared in the action by filing an answer and counterclaim on June 21 (id. at ¶ 3). It

also appeared at the initial case management conference on July 5 (ibid.).

Predator notified Bingham that Skeeter Crossley had been terminated (id. at ¶ 4). At

that time, Bingham offered to withdraw, but Predator’s counsel in Nevada, G. Barton Mowry of

the law firm of Maupin, Cox & LeGoy, informed them that they should continue representing

Predator in the matter (ibid.). Predator failed, however, to pay any of the fees owed to Bingham

for their representation in this action (id. at ¶ 5). Predator also did not respond to any emails or

phone calls from Bingham or their requests to arrange for substitute attorneys (id. at ¶ 6). 

Accordingly, an order dated October 17, permitted Bingham to withdraw as defendant’s

counsel and warned Predator, through the best modes of notice possible and known to defense

counsel, that if it failed to appear with new counsel at a further case management conference on

November 1, the Court would hear a motion for default judgment and dismiss its counterclaim

with prejudice, since a corporation can only appear via counsel (Docket No. 30). Defendant has

failed to retain new counsel and did not make any appearance at the case management

conference on November 1. Plaintiff then filed a motion for default judgment and a motion for

dismissal of defendant’s counterclaim with prejudice. Defendant has filed no brief in

opposition to plaintiff’s motion and did not appear at the hearing, even via a non-attorney. 

Given defendant’s obstinate refusal to defend itself in this action, there is no alternative but to

enter a default judgment.

ANALYSIS

“A corporation, unincorporated association, partnership or other such entity may appear

only through a member of the bar of this Court.” Civil L.R. 3-9. Predator was warned on

multiple occasions that it needed to retain counsel if it wished to continue to appear in front of

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this Court. Its refusal to obtain counsel constitutes a failure to appear in this action, including a

failure to file an answer to plaintiff’s complaint.

1. DEFAULT JUDGMENT. 

Under FRCP 55(b)(2), a plaintiff can apply to the district court for a default judgment

against a defendant that has failed to otherwise plead or defend against the action. Default

judgments are generally disfavored as “cases should be decided upon their merits whenever

reasonably possible.” In the Ninth Circuit, a district court must consider the following factors

when deciding whether or not to use its discretion in granting a motion for default judgment: (i)

the possibility of prejudice to the plaintiff; (ii) the merits of plaintiff’s substantive claims; (iii)

the sufficiency of the complaint; (iv) the sum of money at stake in the action; (v) the possibility

of a dispute concerning material facts; (vi) whether the default was due to excusable neglect;

and (vii) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions

on the merits. Eitel v. McCool, 782 F.2d 1470, 1471–1472 (9th Cir. 1986) (citation omitted). 

Here, these factors favor entry of default judgement against defendant.

A. Merits and Sufficiency of the Complaint.

With respect to determining liability and entry of default judgment, the general rule is

that well-pleaded allegations in the complaint regarding liability are deemed true (except for the

amount of damages). Fair Housing of Marin v. Combs, 285 F.3d 899, 906 (9th Cir. 2002). 

Consequently, this order finds that the Eitel factors two, three, and five weigh in favor of the

entry of default judgment against Predator. 

Under California law, to prevail on a breach of contract claim, a plaintiff must show: 

(1) the existence of a contract; (2) performance by the plaintiff; (3) a breach by the defendant;

and (4) damages. See Careau & Co. v. Sec. Pac. Bus. Credit, Inc., 222 Cal. App. 3d 1371, 1399

(1990). Plaintiff’s Complaint establishes each of these elements. Schenker and Predator

entered into a contract, whereby Schenker fully performed its obligations by advancing the

necessary money on Predator’s behalf to release certain cargo from customs (Compl. ¶ 5). 

Predator breached the contract by failing to pay Schenker for the money advanced and Schenker

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was damaged as a result of the non-payment (Compl. ¶¶ 7–9). Plaintiff’s prayer for relief also

sets forth its claim for attorney’s fees, interest, and costs.

B. Remaining Factors.

This order finds that the remaining Eitel factors likewise favor entry of default

judgment. First, plaintiff would be prejudiced if default judgment was not granted. Defendant

has already engaged in a variety of delaying tactics. Defendant has disregarded the orders of

this Court by refusing to obtain any new counsel and appear in this action. The possibility of

prejudice to plaintiff is great if such conduct were permitted to continue. Second, the sum of

money at stake in this action is not substantial. Plaintiff seeks $75,883.13, which pales in

comparison to the amount mentioned in Eitel. Third, there is nothing excusable in regards to

defendant’s actions. Defendant was given multiple warnings to obtain counsel and has had

sufficient time to do so. Fourth, although federal policy favors decisions on the merits, the

circumstances surrounding this case indicate that default judgment under FRCP 55(b) is proper.

2. DISMISSAL OF COUNTERCLAIM.

Under FRCP 41(b), a district court may dismiss an action, with prejudice, based upon

the failure to prosecute, the failure to obey a court order, and the failure to comply with rules

and procedures. In the October 17 order, defendant was specifically warned that its failure to

appear would result in default judgment and dismissal of its counterclaim. Defendant’s refusal

to comply with the orders and rules of this Court warrant a dismissal of defendant’s

counterclaim with prejudice. 

3. DAMAGES.

Plaintiff requests an award in the amount of $75,883.13. Damages directly resulting

from defendant’s breach of contract comprise $48.894.97 of the total amount. The remaining

amount includes attorney’s fees, costs, and interest in the amount of $24,769.57, $402.00, and

$2,218.59, respectively. The credit contract entered into by the parties provided:

In any referral for collection or action against the Customer for monies due to

the Company, including but not limited to any action for the enforcement of any

provision of the Master Customs Power of Attorney between the Customer and

the Company, upon recovery by the Company, the Customer shall pay the

expenses of collection and/or litigation, including a reasonable attorney’s fees,

costs, and expenses (Gendron Decl. ¶¶ 9–10).

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In both prosecution of its own breach of contract claim and defense of Predator’s counterclaim,

plaintiff has asserted that it is entitled to attorney’s fees and costs. In addition, plaintiff’s

counsel has provided a declaration and other documentation supporting the requested amount of

$75,883.13. Accordingly, plaintiff is entitled to the full amount requested.

CONCLUSION

For all of the above-stated reasons, plaintiff’s motion for default judgment is GRANTED

and plaintiff’s motion to dismiss defendant’s counterclaim with prejudice is GRANTED. 

Defendant is ordered to pay $75,883.13 in damages, representing the outstanding invoice

charges under the contract, attorney’s fees and costs, and interest. 

IT IS SO ORDERED.

Dated: December 20, 2007 

WILLIAM ALSUP

UNITED STATES DISTRICT JUDGE

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