Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_16-cv-07053/USCOURTS-cand-3_16-cv-07053-3/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1346 Breach of Contract

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SENAH, INC.,

Plaintiff,

v.

AVIC FORSTAR S&T CO., LTD.,

Defendant.

Case No. 16-cv-07053-NC 

REQUEST FOR 

REASSIGNMENT; REPORT AND 

RECOMMENDATION TO GRANT 

IN PART AND DENY IN PART 

PLAINTIFF’S MOTION FOR 

DEFAULT JUDGMENT

Re: Dkt. No. 47

The Clerk of Court entered default against defendant AVIC after it failed to appear 

in this case. Dkt. No. 46. Plaintiff Senah moves for default judgment against AVIC for 

unpaid sales commissions, interest, and fees in the amount of $180,104,603.66. Dkt. No. 

47. The Court recommends that the motion for default judgment be granted, but finds that 

the damages requested are too speculative and unsupported except for the attorney’s fees 

and litigation costs. Therefore, the Court recommends that judgment be entered in favor of 

Senah and against AVIC in the amount of $35,995.00.

I. Background

Plaintiff Senah filed this breach of contract suit against defendant AVIC on 

December 9, 2016. Dkt. No. 1. Senah seeks damages for this breach for the years 2015 

onward, having previously been awarded damages in default judgment in another case for 

breach of the same contract for years 2008–2014. See Case No. 13-cv-04254-BLF. 

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Senah alleges that it entered a contract with AVIC in March 1999 where Senah was 

hired as an independent wholesale sales representative to sell AVIC’s products in defined 

territories for defined compensation. Dkt. No. 1 at ¶ 7. Senah alleges that the parties 

entered a renegotiated contract in August 2004 setting Senah’s commission rate at 20% for 

worldwide sales. Id. at ¶ 8. 

After orders to show cause for failure to serve the complaint, the Court granted 

Senah’s request to enter default on February 4, 2019, finding attempts at that service had 

been sufficient under Article 15 of the Hague Convention. Dkt. Nos. 22, 34, 45. The clerk 

entered default and Senah filed a motion for default judgment. Dkt. Nos. 46, 47. The 

Court ordered Senah to serve the motion for default upon the defendant. Dkt. No. 51. The 

Court then held a hearing on the motion for default judgment and, there, asked Senah to 

file a supplemental brief on specific questions. Dkt. No. 54. The Court was not satisfied 

with Senah’s supplemental filing and found that the brief was not consistent with its order, 

so requested another supplemental brief with further detail. Dkt. Nos. 57, 59. Senah filed 

another supplement. Dkt. No. 60. The Court considers Senah’s complaint, original motion 

for default judgment, the hearing on the motion, and two supplemental briefs in deciding 

this Order.

II. Legal Standard

Default may be entered against a party who fails to plead or otherwise defend an 

action and against whom a judgment for affirmative relief is sought. Fed. R. Civ. P. 55(a). 

After entry of default, the Court has discretion to grant default judgment on the merits of 

the case. Fed. R. Civ. P. 55(b); Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). In 

deciding whether to grant default judgment, the Court considers the following factors: 

(1) the merits of the plaintiff’s substantive claim; (2) the sufficiency of the 

complaint; (3) the sum of money at stake in the action; (4) the possibility of 

prejudice to the plaintiff; (5) the possibility of a dispute concerning material facts; 

(6) whether the default was due to excusable neglect; and (7) the strong policy 

favoring decisions on the merits. 

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Eitel v. McCool, 782 F.2d 1470, 1471–72 (9th Cir. 1986). The factual allegations of the 

complaint, except those concerning damages, are deemed admitted by the non-responding 

parties. Shanghai Automation Instrument Co., Ltd. v. Kueit, 194 F. Supp. 2d 995 (N.D. 

Cal. 2001); see also Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977) (“[t]he 

general rule of law is that upon default the factual allegations of the complaint, except 

those relating to the amount of damages, will be taken as true”). 

III. Discussion

A. Factors 1 and 2: The Merits of Plaintiff’s Substantive Claim and the 

Sufficiency of the Complaint

The first two Eitel factors for the court to consider are the merits of the plaintiff’s 

substantive claim and the sufficiency of its complaint. In analyzing these factors, the court 

accepts as true all well-pleaded allegations regarding liability. See, e.g., HICA Educ. Loan 

Corp. v. Warne, Case No. 11-cv-04287-LHK, 2012 WL 1156402, at *2 (N.D. Cal. April 6, 

2012). 

Senah’s first claim is for breach of contract. Dkt. No. 1 at ¶¶ 6–36. In California, a

breach of contract claim requires: (1) existence of a contract, (2) plaintiff’s performance or 

excuse for nonperformance, (3) defendant’s breach; and (4) damages to plaintiff as a result 

of the breach. CDF Firefighters v. Maldonado, 158 Cal. App. 4th 1226, 1239 (2008). 

Senah has alleged that a contract existed between the parties. Dkt. No. 1, Ex. D. Senah 

states that it performed all obligations owed to AVIC. Dkt. No. 1 at ¶ 11. It alleges that 

AVIC did not pay what it owed under the contract. Id. at ¶ 19. Finally, Senah alleges that 

it was damaged. Id. at 17–18. 

B. Factor 3: The Sum of Money at Stake in the Action

When the amount of money at stake in the action is substantial or unreasonable, 

default judgment is discouraged. BMW of North Am., LLC v. Zahra, Case No. 15-cv-2924-

CRB, 2016 WL 215983, at *4 (N.D. Cal. Jan. 19, 2016). There is a very large sum of 

money at stake in this action: Senah requests a total of $180,104,603.66. Dkt. No. 60 at 2. 

The Court’s two requests for supplemental briefing were borne out of a concern about this 

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large sum. Dkt. Nos. 54, 59. The Court has had difficulty discerning the calculations 

underlying this sum and is still not satisfied by Senah’s explanations for how the sum was 

reached. This factor weighs against the entry of default judgment.

C. Factor 4: The Possibility of Prejudice to the Plaintiff

Without entry of default, a plaintiff has no other means of recourse for a 

defendant’s breach of contract. Wilamette Green Innovation Ctr., LLC v. Quartis Capital 

Partners, Case No. 14-cv-0848-JCS, 2014 WL 5281039, at *6 (N.D. Cal. 2014). Here, 

Senah will have no other means of recourse without an entry of default judgment, and 

therefore this factor favors entry of default judgment.

D. Factor 5: The Possibility of a Dispute Concerning Material Facts

The Court next considers whether there is a possibility of dispute over any material 

fact. BMW, 2016 WL 215983 at *4. The defendant, having not appeared, has raised no 

dispute over any material fact. The Court’s concern about the sufficiency of the damages 

contentions relates to this factor. While the pleading is facially sufficient to state Senah’s 

claims, Senah has not provided coherent, reliable calculations to explain its requested 

damages. Even though AVIC has not appeared in this action, the Court is concerned that 

that material facts underlying the damages claim could be disputed. This factor weighs 

against entry of default judgment. 

E. Factor 6: Whether the Default was Due to Excusable Neglect

The Court finds that the default here is unlikely due to excusable neglect, because 

the plaintiff provided proof of its service attempts upon defendant which the Court found 

sufficient under Article 15 of the Hague Convention. Dkt. No. 45. Moreover, the 

defendant previously appeared in a similar action in this district and then “inexplicably, 

terminated its counsel and stopped defending the action.” Case No. 13-cv-4254-BLF, Dkt. 

No. 171, at 5. The Court there warned the defendant of the consequences of its failure to 

defend the action and concluded that the defendant’s default in that case was therefore not 

due to excusable neglect. Here, too, this factor weighs in favor of granting default 

judgment.

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F. Factor 7: The Strong Policy Favoring Decisions on the Merits

“[C]ases should be decided upon their merits whenever reasonably possible.” Eitel, 

782 F.2d at 1472. Nevertheless, when a defendant refuses to litigate, Federal Rule of Civil 

Procedure 55(b)(2) permits entry of default judgment. Because the defendant has not 

appeared here and has indicated unwillingness to litigate a previous similar action, this 

factor weighs in favor of default judgment. 

G. Summary

Overall, the Court finds that the Eitel factors narrowly indicate that default 

judgment is warranted. The Court therefore recommends that Senah’s motion for default 

judgment is GRANTED. 

IV. Terms of Judgment

The Court now reviews Senah’s claims for damages. “It has been long settled in 

California that the proof must establish with reasonable certainty and probability that 

damages will result in the future to the person wronged.” Vestar Development II, LLC v. 

General Dynamics Corp., 249 F.3d 958, 961 (9th Cir. 2001). California Civil Code § 3301 

provides that damages for breach of contract claims must be certain: “no damages can be 

recovered for a breach of contract which are not clearly ascertainable in both their nature 

and origin.” California’s civil jury instruction for damages in a breach of contract case 

state that a jury “must not speculate or guess in awarding damages.” Judicial Council of 

California Civil Jury Instructions No. 350 (2010). Similarly, the Ninth Circuit’s model 

jury instruction for damages states that an award “must be based upon evidence and not 

upon speculation, guesswork or conjecture.” Manual of Model Civil Jury Instructions No.

5.1 (2017). Damages that are too speculative or remote are not compensable as a matter of 

law. Lewis Jorge Construction Management, Inc. v. Pomona Unified School Dist., 34 Cal.

4th 960, 976 (2004); see also Auerbach v. Great Western Bank, 74 Cal. App. 4th 1172, 

1191–1192 (1999) (reversing damages awarded by a jury for breach of contract because 

the award was “the result of pure speculation”). 

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Senah moves for the following damages: 

Category Amount

Commissions owed pre-termination 

(as capped by complaint)

$29,000,000

Present value of future “procuring cause” commissions 

(as capped by complaint)

$29,000,000

Commissions Sub-Total $58,000,000

Willful nonpayment under § 1738.15 Trebled commissions by 

multiplying $58,000,000 by 3

Commissions Total $174,000,000

Prejudgment Interest on capped commissions $6,068,608.66

Attorney’s Fees $32,160

Filing Fee $400

Service Fee $3,835

TOTAL $180,104,603.66

Senah provided a number of exhibits to support these claims. The Court will 

examine each of these categories in turn.

A. Commissions

Senah alleges that AVIC owed it $52.9 million in commissions pre-termination1 but 

voluntarily caps its request at $29 million. Dkt. No. 1 at 1. In support of this amount, 

Senah provides a declaration from Donald Hanes, its sole shareholder and CEO. Dkt. No. 

47, Ex. 2 (Hanes Declaration). Hanes states that he calculated this amount by multiplying 

AVIC’s sales for the years 2015–2018 according to the company’s audited financial 

statements, converting that amount to U.S. dollars, and multiplied applicable commission 

rates. Id. at ¶ 2. The Court is dubious about a few aspects of these calculations. First, the 

contract itself has some inconsistencies—for instance, Hanes declares that his 20% 

commission rate “was omitted from the contract by oversight” when the parties 

renegotiated the contract terms in August 2004. Id. at ¶ 7. Second, the Court has no 

 

1 Pre-termination refers to the years 2015–2019; a prior case awarded default judgment 

through the calendar year 2014 and Senah seeks damages in this case from 2015 through 

present. Dkt. No. 60, Ex. C.

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information to ensure that Mr. Hanes’s conversion to U.S. dollars is reliable or accurate. 

Third, the documentation presented as exhibits to Mr. Hanes’s declaration includes some 

materials not in the English language, only some of which is translated for the Court to 

examine. Mr. Hanes states that he had some documents translated first by computer 

software and then by his office manager who is a native and fluent speaker of Mandarin. 

Id. at 3. 

Senah also alleges $50,522,964.06 of “procuring cause” commissions, again 

voluntarily capped at $29 million, which account for AVIC’s future sales (from the time of 

this judgment and onward) for which Senah was the procuring cause. Dkt. No. 60, Ex. 9. 

Senah supports this amount with calculations from an “expert,” Dr. Walter Ochynski. Dkt. 

No. 48, Ex. 2. But Senah never proffers Dr. Ochynski’s training, education, or specialized 

knowledge to show that he is an expert under Federal Rule of Evidence 702. Nor does 

Senah supply a declaration from Dr. Ochynski under penalty of perjury.

The Court finds that these damage requests are too speculative and unsupported. 

The proof of damages is unreliable. The evidence provided is unclear. Even Mr. Hanes 

acknowledges these issues. Hanes Decl. at 3. The Court cannot award the damages sought

without engaging in speculation and guesswork. Therefore, the Court recommends that the 

request for commissions damages be DENIED.

B. Trebled Damages for Willful Nonpayment 

Senah requests that its commissions damages be tripled under California Civil Code 

§ 1738.15, which states that “a manufacturer, jobber, or distributor who willfully fails to 

enter into a written contract as required by this chapter or willfully fails to pay 

commissions as provided in the written contract shall be liable to the sales representative in 

a civil action for treble the damages proved at trial.” For treble damages under § 1738.15, 

Senah must show that AVIC’s conduct was willful. See Baker v. American Horticulture 

Supply, Inc., 186 Cal. App. 4th 1059, 1072–1076 (2010). 

Senah provides no argument in its motion for why treble damages are appropriate 

here. The complaint simply states the legal conclusion that AVIC’s failure to pay 

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commissions was willful but contains no facts to support that conclusion. Dkt. No. 1 at ¶ 

18. The Court here is not convinced that there is sufficient evidence of willfulness. Id. 

Moreover, this issue is not discussed in any of the supplemental briefing that the Court 

ordered on this motion. The Court recommends that the request for treble damages under 

§ 1738.15 be DENIED.

C. Prejudgment Interest

When jurisdiction is based on diversity, California state law controls on the 

awarding of prejudgment interest. Gentek Media, Inc. v. Media Servs. Omaha, Case No. 

17-cv-7015-DSF, 2009 WL 1606157, at *2 (C.D. Cal. June 2, 2009). California law 

provides that the prejudgment interest rate where none is set by the parties’ contract should 

be 10% per year. Id. 

Senah requests $6,068,608.66 in prejudgment interest. This amount was reached by 

dividing the capped commission by the full commission, multiplied by the full interest. 

Dkt. No. 60, Ex. E. Because the Court found that the plaintiff’s proof for the commissions 

amount was insufficient, the Court cannot accurately or reliably calculate prejudgment 

interest. Without any basis by which to determine an appropriate amount of prejudgment 

interest, the Court recommends that the request for prejudgment interest be DENIED. 

D. Attorney’s Fees and Other Costs

Senah requests $32,160 in attorney’s fees for 107.2 hours worked at $300 per hour. 

Dkt. No. 60 at 2. The Court finds that upon reviewing the records and qualification of 

Senah’s attorney, Anthony Santucci, this amount is appropriate. Under the lodestar 

analysis, the Court determines that Mr. Santucci’s billing rate of $300 is more than 

reasonable in light of the rates charged by similarly situated counsel in this District. See

Blum v. Stenson, 465 U.S. 886 (1984); see also Case No. 13-cv-04254-BLF, Dkt. No. 171, 

at 8. The Court also reviews Mr. Santucci’s billing entries and finds that the total number 

of hours spent was reasonable. The Court recommends approving 102.7 hours at $300 per 

hour for a total of $32,160. 

Finally, Senah requests in costs its $400 filing fee and $3,435 in service fees for the 

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Legal Language Services’s address research, translation, and international service of 

process attempts on the defendants in China. Dkt. No. 60, Ex. 8. The Court recommends 

approving these costs.

V. Conclusion

Under 28 U.S.C. § 636, all parties must consent to the jurisdiction of a magistrate 

judge before a magistrate judge may enter judgment in a case. This includes parties who 

have not appeared. Williams v. King, 875 F.3d 500 (9th Cir. 2017). Because AVIC has 

not consented to magistrate jurisdiction, the undersigned cannot enter judgment in this 

case. Therefore, the undersigned REQUESTS that the clerk reassign this case to a district 

court judge. The undersigned RECOMMENDS the following under Federal Rule of Civil 

Procedure 72: that the motion for default judgment is GRANTED; and that the Court enter 

judgment in favor of the plaintiff and against the defendant in the amount of $35,995 for

costs and fees as detailed above. Any party may object to this report and recommendation 

within 14 days of it being served. Fed. R. Civ. P. 72(b)(2). Senah is ordered to serve this 

order on AVIC and to file proof of that service.

IT IS SO ORDERED.

Dated: July 1, 2019 _____________________________________

NATHANAEL M. COUSINS

United States Magistrate Judge

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