Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_08-cv-01677/USCOURTS-azd-2_08-cv-01677-0/pdf.json

Nature of Suit Code: 290
Nature of Suit: Other Real Property Actions
Cause of Action: 28:1331(a) Fed. Question: Real Property

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

PHOENIX REVITALIZATION

CORPORATION, an Arizona non-profit

corporation, as agent of the Federal

Deposit Insurance Corporation, statutory

successor to the Resolution Trust

Corporation as Receiver for Sun State

Savings and Loan Association F.S.A., 

 

Plaintiff, 

vs.

MARABRISA CONDOMINIUMS,

LLC, an Arizona limited liability

company,

Defendant. 

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No. CV 08-01677-PHX-MHM

ORDER

 Plaintiff filed a Complaint against Defendant and WB AZ Equities, II LLC on

September 11, 2009. (Dkt. # 1.) Plaintiff amended its Complaint in order to terminate WB

AZ Equities, II LLC on February 2, 2009. (Dkt. # 13.) Defendant was served on July 28,

2009. (Dkt. # 21.) Defendant failed to respond and on September 4, 2009, Plaintiff filed a

motion for default judgment. (Dkt. # 23.) The Clerk entered default against Defendant

pursuant to Federal Rules of Civil Procedure 55(a) on September 9, 2009. (Dkt. # 26.)

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Case 2:08-cv-01677-MHM Document 27 Filed 11/12/09 Page 1 of 6
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I. BACKGROUND

Plaintiff Phoenix Revitalization Corporation is authorized to act as the agent of the

Federal Deposit Insurance Corporation to monitor and enforce certain Land Use Restriction

Agreements (“LURA”), which preserve affordable housing opportunities for low-income

households. (Dkt. # 13.) Certain real property (the “Property”), which includes a 12-unit

rental housing project known as Sun Valley Garden Apartments, was encumbered by a LURA

on February 18, 1993. (Dkt. # 13.) Defendant took title to the Property subject to the LURA.

(Dkt. # 13.)

The LURA requires that the owner of the Property (1) remain in compliance with the

occupancy requirements and rent limitations set forth in the LURA, (2) submit annual

certifications of compliance to Plaintiff, and (3) pay administrative fees to Plaintiff. (Dkt. #

13.) The LURA provides that, in the event of a breach, Plaintiff is entitled to: (a) specific

performance of the terms of the LURA, (b) an injunction against any violation of the LURA,

(c) the appointment of a receiver to take over and operate the Property in accordance with the

terms of the LURA, and (d) its reasonable attorneys’ fees in a judicial action in which Plaintiff

prevails. (Dkt. # 13). Finally, the LURA provides that the beneficiaries of the obligations in

the LURA cannot be adequately compensated by monetary damages in the event of a default.

(Dkt. # 13).

Plaintiff claims that Defendant has failed to: (i) remain in compliance with the

occupancy requirements and rent limitations set forth in the LURA, (ii) submit annual

certifications of compliance to Plaintiff, and (iii) pay administrative fees to Plaintiff. (Dkt.

# 13.) Plaintiff requests: (1) Defendant be required to perform all of its duties and obligations

under the LURA, (2) an injunction against further violations of the LURA, and or (3) the

appointment of a receiver to take over and operate the Property in accordance with the terms

of the LURA. Plaintiff also requests (4) accrued administrative fees due and owing, and (5)

reasonable attorneys’ fees and costs.

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Case 2:08-cv-01677-MHM Document 27 Filed 11/12/09 Page 2 of 6
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II. DISCUSSION

“Entry of default judgment is governed by FRCP 55 and is left to the trial court’s sound

discretion.” Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). After entry of default

by the Clerk of the Court pursuant to FRCP 55(a), the Court may grant default judgment

pursuant to FRCP 55(b)(2). See Eitel v. McCool, 782 F.2d 1470, 1471 (9th Cir. 1986)

(discussing the sequential two-step process under FRCP 55). A district court may consider

the following factors in exercising its discretion: 

(1) the possibility of prejudice to the plaintiff, (2) the 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 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 the merits.

Eitel, 782 F.2d at 1471-72. After default has been entered by the Clerk of the Court, the

factual allegations of the complaint are taken as true, except for those allegations relating to

damages. See TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917 (9th Cir. 1987). “A

party seeking default judgment must state a claim upon which it may recover.” See Philip

Morris USA, Inc. v. Castworld Products, Inc., 219 F.R.D. 494, 501 (C.D. Cal. 2003).

Furthermore, a plaintiff must prove all damages sought in the complaint. Philip Morris USA,

219 F.R.D. at 498; Fed. R. Civ. P. 55 (b)(2) (“In determining damages, a court can rely on the

declarations submitted by the plaintiff.”). 

Plaintiff has satisfied the procedural requirements for default judgment against

Defendant. Plaintiff submitted a declaration and application for entry of default on September

4, 2009 (Dkt. # 24), which prompted the Clerk of the Court to enter default against Defendant

on September 9, 2009 (Dkt. # 26). The application for default judgment complies with the

Federal Rules of Civil Procedure. Accordingly, the Court need only analyze the Eitel factors

to determine whether default judgment is appropriate in this case.

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The first Eitel factor weighs in favor of default judgment because Plaintiff will be

prejudiced if it is unable to enforce the LURA because of Defendant’s refusal to defend an

action. Defendant will be free to continue violating the terms of the LURA if default

judgment is not provided.

The second and third Eitel factors weigh against default judgment. While the basic

framework of Plaintiff’s claim is clear, the Complaint is factually insufficient in its

demonstration of Defendant’s failure to comply with the LURA. Plaintiff did not even

provide a copy of the LURA. Nor did Plaintiff allege Defendant’s conduct that suggests it

has violated the LURA. Plaintiff failed to provide any detail that would allow the Court to

consider the merits of Plaintiff’s substantive claim. Merely alleging that certain violations

have occurred, without providing the underlying facts or agreement necessary to substantiate

such allegations, is wholly insufficient for the Court to grant a default judgment.

Accordingly, the Court finds that the second and third factors weigh against default judgment.

The fourth Eitel factor weighs in favor of default judgment. Under this factor, the Court

considers the amount of money at stake in relation to the seriousness of Defendant’s conduct.

Eitel, 782 F.2d at 1471-72. Plaintiff seeks accrued administrative fees, and attorneys’ fees and

costs. These items are sought in accordance with the terms of the LURA. Plaintiff does not

seek any other damages. Accordingly, the Court finds that this factor weighs in favor of

granting default judgment.

The fifth Eitel factor, which requires the Court consider the possibility of dispute

concerning material facts, weighs against default judgment. On entry of default, all wellpleaded facts in the complaint are taken as true, except those relating to damages. TeleVideo

Sys., Inc., 826 F.2d at 917-18. However, Plaintiff has not pleaded all material facts because

Plaintiff has not sufficiently demonstrated Defendant’s failure to comply with the LURA.

Therefore, there is a possibility that a dispute may arise from a material fact not yet pleaded.

Accordingly, the Court finds that the fifth factor weighs against default judgment. 

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The sixth Eitel factor, which considers the possibility that default resulted from

excusable neglect, weighs in favor of default judgment. “Due process requires that all

interested parties be given notice reasonably calculated to apprise them of the pendency of the

action and be afforded opportunity to present their objections before a final judgment is

rendered.” Philip Morris USA, 219 F.R.D. at 500-01 (citing Mullane v. Central Hanover

Bank & Trust Co., 339 U.S. 306, 314 (1950)). Here, the possibility that default resulted from

excusable neglect appears remote. Defendant was served on July 28, 2009. (Dkt. # 21.)

Defendant failed to answer the Complaint and has not opposed Plaintiff’s motion for default

judgment. Accordingly, this factor weighs in favor of granting default judgment.

The seventh Eitel factor, which requires consideration of the strong policy favoring

decisions on the merits, does not preclude the Court from entering default judgment against

Defendant. Defendant’s failure to respond to this action makes a decision on the merits

impractical, if not impossible.

III. CONCLUSION

The Court finds that Plaintiff is not entitled to default judgment because the second,

third, and fifth Eitel factors weigh against default judgment. Plaintiff must provide a copy of

the LURA, and detail the specific non-complying conduct of Defendant in order for the

Complaint to be sufficient and the Court to assess the merits of Plaintiff’s substantive claim.

While denial of default judgment would be appropriate, the Court will allow Plaintiff to file

a supplemental motion within ten days to address the Eitel factors and provide a copy of the

LURA, detail the non-complying conduct of Defendant, and any other facts necessary to

satisfy the Eitel factors. If Plaintiff fails to file an amended motion within ten days, the Court

will deny Plaintiff’s Motion for Default Judgment with prejudice.

Accordingly,

IT IS HEREBY ORDERED denying Plaintiff’s Motion for Default Judgment (Dkt. #

23) without prejudice and providing Plaintiff ten calendar days from the date of this Order to

file a supplemental motion for default judgment.

Case 2:08-cv-01677-MHM Document 27 Filed 11/12/09 Page 5 of 6
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IT IS FURTHER ORDERED that if Plaintiff does not file a supplemental motion

within the allotted time-frame, the Court will direct the Clerk of the Court to enter judgment

against Plaintiff with prejudice.

 DATED this 10th day of November, 2009.

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