Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_05-cv-04818/USCOURTS-cand-3_05-cv-04818-1/pdf.json

Parties Involved:
Steven Boyd Cameron
Defendant
Hartford Fire Insurance Company
Plaintiff

Document Text:

United States District Court

For the Northern District of California

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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

HARTFORD FIRE INSURANCE COMPANY, a

Connecticut corporation,

Plaintiff,

v.

STEVEN BOYD CAMERON and DOES 1-10,

inclusive, 

Defendants. 

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No. 05-4818 SC

ORDER GRANTING

PLAINTIFF'S MOTION

FOR ENTRY OF 

DEFAULT JUDGMENT

I. INTRODUCTION

Plaintiff Hartford Fire Insurance Company ("Hartford")

brought this action against Defendant Steven Boyd Cameron

("Cameron") et al. seeking vindication of rights acquired through

subrogation from Cameron's former employer Real Management Company

("RMC"). See Complaint. Presently before the Court is Hartford's

Motion for Entry of Default Judgment against Cameron. For the

reasons stated herein, the Motion is GRANTED.

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Case 3:05-cv-04818-SC Document 18 Filed 12/12/06 Page 1 of 7
United States District Court

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II. BACKGROUND

This action arises out of the alleged embezzlement of a

approximately $327,237.88 by Cameron from RMC, for whom Cameron

worked as a bookkeeper. See Complaint at 2. According to an

email which Hartford claims was drafted and sent by Cameron,

Cameron embezzled the funds by drafting checks payable to himself

from the RMC account. Id., Ex. A. The Complaint alleges Cameron

embezzled money for approximately three years before being

discovered by a co-worker, after which he allegedly sent the

email. Id. at 2.

On the basis of the loss incurred as a result of Cameron's

alleged embezzlement, Hartford paid RMC a total of $277,237.88 in

satisfaction of their obligation to insure RMC for employee fraud. 

Id. at 3. In exchange, "RMC has assigned all its causes of action

against Defendants, which it could have asserted for its own

benefit, to Hartford." Id. at 4. 

On November 23, 2005, Hartford filed the instant action. See

id. The Complaint alleges six causes of action against Cameron: 

1) equitable subrogation; 2) unjust enrichment; 3) fraud; 4)

conversion; 5) breach of contract; and 6) monies had and received. 

See id. On July 26, 2006, Cameron was personally served with the

Summons and Complaint. See Declaration of Mark J. Krone in

Support of Application for Default Judgment ("Krone Decl."), Ex.

G. After the requisite time limit for Cameron to file an answer

or other motion in its stead, Hartford made a motion for entry of

default, which, on August 29, 2006, was granted by the Clerk of

this Court. See Docket No. 12. On October 20, 2006, Hartford

Case 3:05-cv-04818-SC Document 18 Filed 12/12/06 Page 2 of 7
United States District Court

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filed the instant Motion for Default Judgment. See Docket No. 13.

III. LEGAL STANDARD

After entry of default, the Court may enter a default

judgment. Fed. R. Civ. P. 55. Its decision whether to do so,

while "discretionary," Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th

Cir. 1980), is guided by several factors.

As a preliminary matter, the Court must "assess the adequacy

of the service of process on the part[ies] against whom default is

requested." Board of Trustees of the N. Cal. Sheet Metal Workers

v. Peters, No. C-00-0395 VRW, 2000 U.S. Dist. LEXIS 19065, at *2

(N.D. Cal. Jan. 2, 2001). 

If the Court determines that service was adequate, it may

consider the following factors in its decision on the merits of a

motion for 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

decisions on the merits.

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

so "the factual allegations of the complaint . . . will be taken

as true." TeleVideo Systems, Inc. v. Heidenthal, 826 F.2d 915,

917 (9th Cir. 1987)(internal quotations omitted). 

Should the Court grant the Motion on the merits, however, the

same standard does not guide its determination regarding damages. 

Televideo Systems, Inc., 826 F.2d at 917. "Plaintiff[s] ha[ve]

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the burden of proving damages through testimony or written

affidavit." Board of Trustees of the Boilermaker Vacation Trust

v. Skelly, Inc., 389 F. Supp. 2d 1222, 1226 (N.D. Cal. 2005). 

 

IV. DISCUSSION

A. Service of Process

Service of process against Cameron was adequate. Federal

Rule of Civil Procedure 4(e) allows service upon an individual by

personally delivering to the individual the summons and complaint. 

Fed. R. Civ. P. 4(e)(2). Technically, Rule 4(m) requires process

to be made within 120 days after filing the complaint. See Fed.

R. Civ. P. 4(e)(2). However, in the context of motion for default

judgment such as this, the question is not whether service of

process was made in precise compliance with the rules, but rather

whether it was adequate to give a defendant notice of the

allegations against it. Personal service, whenever completed,

adequately gives a defendant notice of the allegations against it,

since such allegations are contained in the complaint. 

B. Merits of Motion

Accepting the allegations in the Complaint as true, as it

must, the Court finds that Eitel factors weigh in favor of

entering default judgment.

1. Prejudice

While Hartford has not explicitly argued that it would be

prejudiced absent entry of default judgment, it can be assumed

that without default judgment entered against Cameron, it would be

difficult or impossible for Hartford to collect from Cameron the

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monies they claim are owed. Such a situation qualifies as

prejudice. See PepsiCo, Inc. v. California Security Cans, 238 F.

Supp. 2d 1172, 1177 (C.D. Cal. 2002).

2. Merits of Plaintiffs' Substantive Claims/Sufficiency of 

the Complaint

Hartford makes several claims against Cameron. However,

Hartford need only show that one of the causes of action which was

allegedly subrogated to it has merit and that the subrogation

claim has merit. The Court finds that Hartford's conversion claim

and its subrogation claim have merit and that both are adequately

pled in the Complaint.

Conversion is defined as "an act of wilful interference with

a chattel, done without lawful justification, by which any person

entitled thereto is deprived of use and possession.” De Vries v.

Brumback, 53 Cal.2d 643, 647 (1960) (internal quotations omitted). 

"Embezzlement requires conversion of trusted funds coupled with

the intent to defraud." In re Basinger, 45 Cal.3d 1348, 1363

(1988). 

The Complaint alleges that Cameron, while in the trusted

position of bookkeeper for RMC, took money which belonged to RMC

by drafting fraudulent checks to himself. See Complaint at 2. 

Hartford further alleges that Cameron admitted to doing so

intentionally. See id., at 3. Accepting all of these allegations

as true, the Court finds that Hartford has sufficiently stated a

claim for conversion against Cameron.

"When an insurance company pays out a claim on a first-party

insurance policy to its insured, the insurance company is

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subrogated to the rights of its insured against any tortfeasor who

is liable to the insured for the insured's damages." Progressive

West Ins. Co. v. Yolo Cnty. Superior Ct., 135 Cal.App.4th 263, 272

(Cal. App. Ct. 2005). It has already been shown that Cameron is

liable for conversion, and the Complaint alleges that Hartford

paid RMC $277,237.88 in insurance compensation for its resulting

losses. The Complaint therefore sufficiently alleges a

meritorious claim for equitable subrogation. 

3. Other Factors

None of the remaining Eitel factors dissuade the Court from

entering a default judgment against Defendants. The Court

therefore finds that entry of default judgment is warranted. 

C. Remedy

Hartford's Motion requests $327,273.88 in damages (the total

injury claimed by RMC as a result of the embezzlement) or, in the

alternative, $277,273.88 in damages (the amount which Hartford

paid RMC for its claim after the applicable deductible). See

Motion at 5. Hartford also request $412.13 in costs. See id.

Hartford has submitted in support of its request for damages a

copy of a check in the amount $277,237.88 payable to RMC from

Hartford. See Krone Decl., Ex. E. It has also submitted copies

of receipts showing costs paid for filing fees and service of

process fees which total $412.13. See id., Ex. K. 

"Subrogation places the insurer in the shoes of its insured

only to the extent of its payment." Progressive, 135 Cal.App.4th

at 272. Thus, Hartford may only claim damages in the amount of

its payment to RMC, $277,273.88, not in an amount reflecting the

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total injury to RMC. Satisfaction of any liability in excess of

the amount Hartford paid must be sought by RMC, the party-ininterest to which the claim for such an amount belongs. See Low

v. Golden Eagle Insurance Co., 101 Cal.App.4th 1354, 1364 (Cal.

App. Ct. 2002). 

The Court's decision whether to award costs to a prevailing

party is left to its discretion. See Trans Container Services

(BASEL) A.G. v. Security Forwarders, Inc.,752 F.2d 483, 488 (9th

Cir. 1985). On the basis of that authority, the Court finds that

Hartford has properly shown they should be awarded costs in the

amount of $412.13. 

V. CONCLUSION

For the aforementioned reasons, the Court GRANTS Hartford's

Motion for Default Judgment against Cameron and AWARDS Hartford

$277,273.88 in compensatory damages and $412.13 in costs, for a

total of $277,686.01. 

 

IT IS SO ORDERED.

Dated: December 12, 2006

 

UNITED STATES DISTRICT JUDGE

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