Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_19-cv-00813/USCOURTS-cand-3_19-cv-00813-1/pdf.json

Nature of Suit Code: 140
Nature of Suit: Negotiable Instruments
Cause of Action: 28:1332 Diversity-Negotiable Instrument

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

ACFC DELTA HOLDINGS, LLC,

Plaintiff,

v.

DELTA WATERWAYS LLC,

Defendant.

Case No. 19-cv-00813-WHO 

ORDER RE DEFAULT JUDGMENT

Plaintiff moves for default judgment on its claim for bad faith waste against Delta 

Waterways, LLC (“Delta”). Dkt. Nos. 21, 27. In a related case, I granted default judgment in 

plaintiff’s favor on its claim for against Coast West LLC and Cruiser Haven Inc, both of which 

served as guarantors on the original promissory note executed between Delta and plaintiff. See 

Dkt. No. 70, Case No. 18-cv-5845 (N.D. Cal.) (“ACFC I”). Delta was not a defendant in ACFC I. 

LEGAL STANDARD

Pursuant to Federal Rule of Civil Procedure 55(b)(2), a district court may enter a final 

judgment in a case following a defendant’s default. Whether to enter a judgment lies within the 

court’s discretion. Bd. of Trustees of Laborers Health & Welfare Tr. Fund for N. California v. 

Cazadores Constr., Inc., No. 17-cv-05242-WHO, 2018 WL 986020, at *2 (N.D. Cal. Feb. 20, 

2018). In order to exercise this discretion, the court must first confirm that it has subject matter 

jurisdiction over the case and personal jurisdiction over the parties, as well as ensure the adequacy 

of service on the defendant. Id. Once these elements are satisfied, the court turns to the following 

factors (the “Eitel factors”) to determine whether it should grant a default judgment:

(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 decision on the merits.

Case 3:19-cv-00813-WHO Document 29 Filed 03/16/20 Page 1 of 3
2

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

Eitel v. McCool, 782 F.2d 1470, 1471–72 (9th Cir. 1986). 

DISCUSSION

In this matter, plaintiff moves for default judgment only on its second cause of action for 

bad faith waste to real property. Neither the Amended Complaint nor the motion for default 

judgment cite a particular statute or authority for plaintiff’s claim for bad faith waste, and it is 

unclear what legal theory plaintiff makes its claim.1 Under California law, a claim for bad faith 

waste may arise in the context of California’s antideficiency statutes, which prevent a party from 

obtaining a deficiency judgment “after any foreclosure sale, private or judicial, of property 

securing a purchase money mortgage.” Cornelison v. Kornbluth, 542 P.2d 981, 990 (1975); Cal. 

Civ. Proc. Code § 580b. Courts have recognized bad faith waste as an “exception” to this bar, and 

have allowed mortgagees to recover damages on this basis. Cornelison, 542 P.2d at 991. Plaintiff 

has not asserted that California’s antideficiency legislation applies in this case.

2

 

I have already granted judgment in favor of plaintiff in a related case in the amount of the 

amount owing on the promissory note after foreclosure. While plaintiff may be entitled to 

judgment against Delta on its breach of promissory note, it has already recovered judgment and 

damages on that note against the guarantors of that note in ACFC I. Here, plaintiff requests 

damages from Delta not for breach of the promissory note but for waste to the property. Such 

damages would appear duplicative of the damages already awarded in ACFC I, because plaintiff 

received the amount due on the note after the property was sold in foreclosure for sum less than 

the amount of the loan. Indeed, plaintiff submitted a declaration of Darren Clow, which stated that 

“[a]s part of the sale . . . ACFC was forced to discount the purchase price to offset the repair 

costs.” Dkt. No. 25 at 3. Accordingly, there is no factual or legal information in the record that 

indicates why plaintiff is entitled to additional damages resulting from bad faith waste. At any 

 

1 Plaintiff has not identified any contractual provision that would provide this relief. The 

Amended Complaint states that “[t]he deed of trust required Delta to not commit waste to the 

Marina,” Dkt. No. 6 ¶ 7, but plaintiff has not identified the deed of trust in the record or what 

provision was allegedly violated.

 

2

It does not appear that the legislation would apply in this case. However, if it did, I note that 

plaintiff would not be able to recover both the remaining balance on the note (which was granted 

in Delta I) and damages from bad faith waste. 

Case 3:19-cv-00813-WHO Document 29 Filed 03/16/20 Page 2 of 3
3

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

rate, plaintiff has failed to demonstrate the substantive merits and the sufficiency of the complaint 

with respect to its bad faith waste claim. See ACFC I at 2. 

For this reason, I DENY plaintiff’s motion without prejudice. If plaintiff wishes to provide 

further information supporting its request for judgment on its “bad faith waste” claim, it must 

explain why, as a matter of law, it is entitled to such damages and why these damages would not 

be duplicative of the damages I have already awarded in ACFC I. Plaintiff shall file any renewed 

motion for default judgment by April 10, 2020. 

IT IS SO ORDERED. 

Dated: March 16, 2020 

William H. Orrick

United States District Judge

Case 3:19-cv-00813-WHO Document 29 Filed 03/16/20 Page 3 of 3