BMO Bank N.A. v. Kular Transportation Inc

[9] UNITED STATES DISTRICT COURT [10] EASTERN DISTRICT OF CALIFORNIA [11] 12 BMO BANK N.A., Case No. 1:24-cv-01568-JLT-SAB 13 Plaintiff, FINDINGS AND RECOMMENDATIONS RECOMMENDING GRANTING 14 v. PLAINTIFF’S MOTION FOR DEFAULT JUDGMENT WITH REDUCTION IN 15 KULAR TRANSPORTATION INC., et al., ATTORNEY’S FEES 16 Defendants. ORDER REQUIRING SERVICE ON DEFENDANT WITHIN THREE DAYS [17] (ECF No. 11) [18] OBJECTIONS DUE WITHIN FOURTEEN 19 DAYS 20 Pending before the Court is Plaintiff BMO Bank N.A.’s (“Plaintiff”) motion for default 21 judgment. Plaintiff seeks default judgment against Defendants Kular Transportation Inc. and 22 Lakhwinder Singh (collectively, “Defendants”) relating to Defendants’ defaults on contracts 23 involving vehicles. No opposition to the motion was filed. On May 28, 2025, the Court held a 24 hearing on the motion. Ken Ichi Ito, Esq., appeared on behalf of Plaintiff, and no appearance was 25 made on behalf of Defendants. Having considered the moving papers, the declarations and 26 exhibits attached thereto, Defendants’ nonappearance at the hearing, as well as the Court’s file, the 27 Court issues the following findings and recommendations recommending granting Plaintiff’s 28 motion for default judgment, subject to a reduction in the requested attorneys’ fees. 1 I. 2 BACKGROUND1 3 A. The Loan Agreements 4 1. Agreement 62001 – January 17, 2022 5 On January 17, 2022, Plaintiff and Defendant Kular Transportation Inc. (“Kular”) entered 6 into a loan and security agreement with contract number ending 62001 (“Agreement 62001”), 7 pursuant to which Plaintiff agreed to finance Kular’s purchase of certain vehicles for use in 8 Kular’s transportation business (“62011 Vehicles”). (ECF No. 1, Ex. 1.) Defendant Kular agreed 9 to pay Plaintiff $236,205.00, including interest pursuant to the terms and conditions in Agreement 10 62001. (Id.) 11 2. Agreement 83001 – September 7, 2022 12 On September 7, 2022, Plaintiff and Defendant Kular entered into a loan and security 13 agreement with contract number ending 83001 (“Agreement 83001”), pursuant to which Plaintiff 14 agreed to finance Kular’s purchase of certain vehicles for use in Kular’s transportation business 15 (“83001 Vehicles”). (Id. at Ex. 2.) Defendant Kular agreed to pay Plaintiff $245,665.20, 16 including interest pursuant to the terms and conditions in Agreement 83001. (Id.) 17 3. Agreement 03001 – December 28, 2022 18 On December 28, 2022, Plaintiff and Defendant Kular entered into a loan and security 19 agreement with contract number ending 03001 (“Agreement 03001”), pursuant to which Plaintiff 20 agreed to finance Kular’s purchase of certain vehicles for use in Kular’s transportation business 21 (“03001 Vehicles”). (Id. at Ex. 3.) Defendant Kular agreed to pay Plaintiff $276,446.88, 22 including interest pursuant to the terms and conditions in Agreement 03001. (Id.) 23 B. The Guaranties 24 In connection with Agreements 62001, 83001, and 03001, Defendant Singh (“Singh”) 25 executed continuing guaranties, respectively, on January 17, 2022, September 7, 2022, and 26 December 28, 2022. (Id. at Ex. 4.) By signing the continuing guaranties, Defendant Singh [27] 1 Background facts are derived from the allegations in the Complaint as well as the exhibits annexed therein. (ECF 28 No. 1.) 1 guaranteed the full and timely performance of all of Defendant Kular’s present and future 2 liabilities to Plaintiff. (Id.) 3 C. The Security Interest 4 In consideration for entering into the above-described agreements, Defendant Kular 5 granted Plaintiff a first-priority security interest in the respective vehicles. The vehicles consist of 6 the following: 7 62001 Vehicles 8 1. 2019 Vanguard Refrigerated Vans, with 2018 Thermo King, Model S-600; VIN: 9 527SR5327KL018773; Serial No. 6001278835; and 10 2. 2019 Vanguard Refrigerated Vans, with 2018 Thermo King, Model S-600; VIN: 11 527SR532XKL013578; Serial No. 6001275006 12 83001 Vehicle 13 1. 2023 Freightliner, Model PT126SLPG; VIN: 3AKJHHDR3PSUJ4190 14 03001 Vehicles 15 1. 2023 Utility Refrigerated Vans, with 2022 Thermo King, Model S-600; VIN: 16 3UTVS2531P8885007; Serial No. 6001380867; and 17 2. 2023 Utility Refrigerated Vans, with 2022 Thermo King, Model S-600; VIN: 18 3UTVS253398885008; Serial No. 6001380868 19 Plaintiff perfected its security interest in the vehicles by recording its liens on the 20 certificate of title for each vehicle. (ECF No. 1, Ex. 5.) 21 D. Default by Defendants 22 Defendants are in default under the Agreements and Guaranties for their failure to pay the 23 amounts due thereunder. (ECF No. 1, ¶ 15.) Defendant Kular failed to make payments due on 24 the Agreements commencing June 1, 2024, as to Agreement 62001 and Agreement 03001, and 25 July 7, 2024, as to Agreement 83001. (Id. at ¶ 16.) Pursuant to the Agreements, the entire 26 amounts due have been accelerated. (Id. at ¶ 17.) As of the respective dates of default, the 27 principal amount due and owing after acceleration is as follows: 28 • Agreement 62001: $124,568.77 1 • Agreement 83001: $144,606.02 2 • Agreement 03001: $177,833.75 3 (Id.) At the time of default, accrued and unpaid interest due and owing under the Agreements is 4 as follows: 5 • Agreement 62001: $0.00 6 • Agreement 83001: $2,248.72 7 • Agreement 03001: $0.00 8 (Id. at ¶ 18.) Under the Agreements, calculated from the respective dates of default to the dates of 9 acceleration, accrued and unpaid interest due and owning under the Agreements is as follows: 10 • Agreement 62001: $5,130.00 11 • Agreement 83001: $5,667.30 12 • Agreement 03001: $9,122.85 13 (Id. at ¶ 19.) 14 Defendants are obligated to pay interest on all unpaid amounts at the default interest rate 15 of 1.5% per month (18% per annum) or the maximum rate not prohibited by applicable law. (Id. 16 at ¶ 20.) The Agreements were accelerated on November 22, 2024, and the daily default rates of 17 interest accruing since then are as follows: 18 • Agreement 62001: $62.28 19 • Agreement 83001: $72.30 20 • Agreement 03001: $88.92 21 (Id.) Under the Agreements, Defendants are obligated to pay late charges and other fees. (Id. at ¶ 22 21.) As of the respective dates of default, late charges have accrued under the Agreements as 23 follows: 24 • Agreement 62001: $1,181.04 25 • Agreement 83001: $1,113.80 26 • Agreement 03001: $1,151.88 27 (Id. at ¶ 22.) 28 Under the Agreements, Defendants are obligated to pay all expenses of retaking, holding, 1 preparing for sale and selling the Vehicles. (Id. at ¶ 23.) In addition, Defendants are obligated to 2 pay the attorney’s fees and costs incurred by Plaintiff in enforcement of tis rights, including 3 expenses of filing and prosecuting a lawsuit. (Id. at ¶ 24.) 4 By letters dated December 5, 2024, Plaintiff noticed Defendants of their defaults under the 5 Agreements, as well as Plaintiff’s election to accelerate the loans evidenced by the Agreements. 6 (Id. at ¶ 25.) Additionally, Plaintiff demanded that Defendants pay the amounts due under the 7 Agreements and surrender the Vehicles. (Id.; Id. at Ex. 6.) Despite demand, Defendants failed 8 and refused to pay the amount due and owing under the Agreements and Guaranties. (Id. at ¶ 26.) 9 Under the Agreements, Plaintiff has a right to enter any premises and take possession of 10 the Vehicles. (Id. at ¶ 27.) As of the date Plaintiff filed its complaint, the collateral Vehicles 11 remained in Defendants’ possession or control. (Id. at ¶ 28.) Plaintiff has performed any and all 12 conditions and obligations required by it under the Agreements and Guaranties. 13 On December 19, 2024, Plaintiff filed this action against Defendants, asserting claims of 14 specific performance, claim and delivery, breach of contract, seeking damages and injunctive 15 relief. (ECF No.1, ¶¶ 31-63.) Defendants did not respond to the complaint. On February 27, 16 2025, Plaintiff requested an entry of default be entered against Defendants (ECF No. 8); the Clerk 17 issued an entry of default the same day (ECF No. 9.) 18 On April 9, 2025, Plaintiff filed the instant motion for default judgment against Defendants. 19 (ECF No. 11.) Defendant did not file an opposition to the motion nor otherwise appear in this 20 action. The deadline to file an opposition has expired. See L.R. 230(c). 21 In the motion, Plaintiff requests default judgment in the total amount of $501,834.37, 22 which includes a request for attorney’s fees in the amount of $3,835.00, court costs of $565.24, 23 repossession fees of $40.00. (ECF No. 11, p. 14.) Plaintiff also seeks immediate possession of the 24 following unrecovered collateral vehicle: 25 62001 Vehicle 26 2019 Vanguard Refrigerated Vans, with 2018 Thermo King, Model S-600; VIN: 27 527SR5327KL018773; Serial No. 6001278835 28 (Id. at p. 15.) Plaintiff has repossessed the other Vehicles and spent $40.00 in repossession or 1 title searches. (Id. at ¶ 17.) 2 On May 28, 2025, the Court held a hearing with the courtroom open to the public. (ECF 3 No. 17.) 4 II. 5 LEGAL STANDARD 6 Pursuant to Federal Rule of Civil Procedure (“Rule”) 55, obtaining a default judgment is a 7 two-step process. Entry of default is appropriate as to any party against whom a judgment for 8 affirmative relief is sought that has failed to plead or otherwise defend as provided by the Federal 9 Rules of Civil Procedure and where that fact is made to appear by affidavit or otherwise. Fed. R. 10 Civ. P. 55(a). After entry of default, a plaintiff can seek entry of default judgment. Fed. R. Civ. P. 11 55(b). Rule 55(b)(2) provides the framework for the Court to enter a default judgment: 12 (b) Entering a Default Judgment. 13 (2) By the Court. In all other cases, the party must apply to the court for a default judgment. A default judgment may be entered 14 against a minor or incompetent person only if represented by a general guardian, conservator, or other like fiduciary who has 15 appeared. If the party against whom a default judgment is sought has appeared personally or by a representative, that party or its 16 representative must be served with written notice of the application at least 7 days before the hearing. The court may conduct hearings 17 or make referrals—preserving any federal statutory right to a jury trial—when, to enter or effectuate judgment, it needs to: [18] (A) conduct an accounting; [19] (B) determine the amount of damages; [20] (C) establish the truth of any allegation by evidence; or [21] (D) investigate any other matter. [22] 23 Id. 24 The decision to grant a motion for default judgment is within the discretion of the court. 25 PepsiCo, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1172, 1174 (C.D. Cal. 2002); see also TeleVideo 26 Sys., Inc. v. Heidenthal, 826 F.2d 915, 917 (9th Cir. 1987). The Ninth Circuit has set forth the 27 following seven factors (the “Eitel factors”) that the Court may consider in exercising its 28 discretion: (1) the possibility of prejudice to the plaintiff; (2) the merits of the plaintiff’s 1 substantive claim; (3) the sufficiency of the complaint; (4) the sum of money at stake in the action; 2 (5) the possibility of a dispute concerning material facts; (6) whether the default was due to 3 excusable neglect; and (7) the strong policy underlying the Federal Rules of Civil Procedure 4 favoring decisions on the merits. Eitel, 782 F.2d at 1471-72. 5 Generally, once default has been entered, “the factual allegations of the complaint, except 6 those relating to damages, will be taken as true.” Garamendi v. Henin, 683 F.3d 1069, 1080 (9th 7 Cir. 2012), quoting Geddes v. United Fin. Grp., 559 F.2d 557 , 560 (9th Cir. 1977); see also Fed. R. 8 Civ. P. 8(b)(6). The amount of damages must be proven at an evidentiary hearing or through other 9 means. Microsoft Corp. v. Nop, 549 F. Supp. 2d 1233, 1236 (E.D. Cal. 2008). Additionally, 10 “necessary facts not contained in the pleadings, and claims which are legally insufficient, are not 11 established by default.” Cripps v. Life Ins. Co. of N. Am., 980 F.2d 1261, 1267 (9th Cir. 1992) 12 (internal citation omitted), superseded by statute on other grounds, Pub. L. No. 100-702, 102 Stat. 13 4669. The relief sought must not be different in kind or exceed the amount that is demanded in the 14 pleadings. Fed. R. Civ. P. 54(c). 15 III. 16 DISCUSSION 17 A. Service of Process 18 The Court considers the adequacy of service of process before evaluating the merits of a 19 motion for default judgment. See Mason v. Genisco Tech. Corp., 960 F.2d 849, 851 (9th Cir. 20 1992). “A federal court does not have jurisdiction over a defendant unless the defendant has been 21 served properly under Fed. R. Civ. P. 4.” Direct Mail Specialists, Inc. v. Eclat Computerized 22 Techs., Inc. (Direct Mail), 840 F.2d 685, 688 (9th Cir. 1988) (citations omitted). “Rule 4 is a 23 flexible rule that should be liberally construed so long as a party receives sufficient notice of the 24 complaint.” Direct Mail, 840 F.2d at 688 , quoting United Food & Commercial Workers Union v. 25 Alpha Beta Co., 736 F.2d 1371, 1382 (9th Cir. 1984). However, “without substantial compliance 26 with Rule 4, ‘neither actual notice nor simply naming the defendant in the complaint will provide 27 personal jurisdiction.’” Id., quoting Benny v. Pipes, 799 F.2d 489, 492 (9th Cir. 1986). “[A] 28 signed return of service constitutes prima facie evidence of valid service which can be overcome 1 only by strong and convincing evidence.” SEC v. Internet Solutions for Bus., Inc., 509 F.3d 2 1161, 1163 (9th Cir. 2007). 3 Plaintiff is suing both a corporate entity and an individual in this action. The complaint 4 identifies Defendant Kular’s principal place of business as located at 3504 N. Leanna Avenue, 5 Fresno, California 93737. (ECF No. 1, ¶ 5.) Defendant Singh is the alleged owner, sole director, 6 CEO, Secretary, and CFO of Kular Transportation Inc. (Id. at ¶ 7.) The Agreements identify 7 Defendant Singh as the President of Kular Transpiration Inc. with a “Principal Residence/Chief 8 Executive Office/Place of Business” at 3504 N. Leanna Avenue, Fresno, California 93737. (Id. at 9 Exs. 1-3.) 10 1. Service on Defendant Kular 11 Federal Rule of Civil Procedure 4(h) governs service on a domestic corporation, 12 partnership, or other unincorporated association that is subject to suit under a common name. 13 Under 4(h), a plaintiff may serve a corporation by following state law for service of a summons 14 on an individual or by delivering a copy of the summons and complaint to an officer or agent and 15 by a mailing a copy of each to the defendant. Fed. R. Civ. P. 4(h)(1). 16 Under California law, as a substitute to personal delivery of a copy of the summons and 17 complaint, service may be made on a corporation: (1) by leaving a copy of the summons and the 18 complaint during usual office hours in the office of the corporation’s agent for service of process, 19 president, chief executive, vice president, secretary or assistant secretary, assistant treasurer, 20 controller or chief financial officer, general manager, or another head of the corporation; (2) with 21 a person “apparently in charge” of the office; and (3) “thereafter mailing a copy of the summons 22 and complaint by first-class mail, postage prepaid to the person to be served at the place where a 23 copy of the summons and complaint were left.” Cal. Code Civ. P. §§ 415.20(a), 416.10. 24 The proof of service indicates that Plaintiff served Defendant Kular with the summons and 25 complaint on its agent, Lakhwinder Singh, by leaving a copy of the summons and complaint at 26 the Kular business address, 3504 N. Leanna Avenue, Fresno, California 93737, with an 27 employee/person apparently in charge, Khushi Sheema, on January 19, 2025. (ECF No. 6) The 28 proof of service represents that the process server informed Khushi Sheema of the general nature 1 of the papers and, thereafter, mailed copies of the summons and complaint, as well as other 2 documents, to the same address, to the attention of Lakhwinder Singh. (Id.) 3 2. Service on Defendant Singh 4 Federal Rule of Civil Procedure 4(e) governs service on an individual. Under 4(e), a 5 plaintiff may serve an individual within a judicial district of the United States by: 6 (1) following state law for serving a summons in an action brought in courts of general jurisdiction in the state where the district court 7 is located or where service is made; or 8 (2) doing any of the following: 9 (A) delivering a copy of the summons and of the complaint to the individual personally; [10] (B) leaving a copy of each at the individual's dwelling or usual 11 place of abode with someone of suitable age and discretion who resides there; or [12] (C) delivering a copy of each to an agent authorized by 13 appointment or by law to receive service of process. 14 Fed. R. Civ. P. 4(e). 15 According to the proof of service on file, Defendant Singh was served by leaving a copy 16 of the summons and complaint at the Kular business address, 3504 N. Leanna Avenue, Fresno, 17 California 93737, with an employee/person apparently in charge, Khushi Sheema, on January 19, 18 2025. (ECF No. 7.) Thereafter, the summons and complaint were mailed to Defendant Singh at 19 the same address. (Id.) 20 California law permits substituted service on an individual if a copy of the summons and 21 complaint with reasonable diligence cannot be personally delivered by: 22 by leaving a copy of the summons and complaint at the person’s dwelling house, usual place of abode, usual place of business, . . . in 23 the presence of . . . a person apparently in charge of his or her office, place of business, . . . at least 18 years of age, who shall be 24 informed of the contents thereof, and by thereafter mailing a copy of the summons and of the complaint by first-class mail, postage 25 prepaid to the person to be served at the place where a copy of the summons and complaint were left. [26] Cal. Code Civ. P. § 415.20(b). [27] Here, service was attempted at Defendant Singh’s business address on three separate [28] 1 occasions before substituted service was completed on the person apparently charge, identified as 2 Singh’s spouse. (ECF No. 7, pp. 1, 3.) The summons and complaint were subsequently mailed to 3 Defendant Singh at the same address. (Id. at 5.) 4 Having considered the proofs of service, the Court finds that Defendants were adequately 5 served with the summons and complaint pursuant to Federal Rule of Civil Procedure 4. 6 B. The Eitel Factors Weigh in Favor of Default Judgment 7 The Court finds that consideration of the Eitel factors weighs in favor of granting default 8 judgment in favor of Plaintiff. 9 1. Possibility of Prejudice to Plaintiff 10 The first factor considered is whether Plaintiff would suffer prejudice if default judgment is 11 not entered. See PepsiCo, Inc., 238 F. Supp. 2d at 1177 . Generally, where default has been 12 entered against a defendant, a plaintiff has no other means by which to recover against that 13 defendant. Id.; Moroccanoil, Inc. v. Allstate Beauty Prods., 847 F. Supp. 2d 1197, 1200-01 (C.D. 14 Cal. 2012 ). Plaintiff contends that denying judgment would prejudice Plaintiff because Defendants 15 “refused to participate in the action and has made default judgment the sole avenue of relief 16 available to Plaintiff.” (ECF No. 11, p. 12.) The Court agrees that Plaintiff would be prejudiced if 17 default judgment were not granted. Default has been entered against Defendants and Plaintiff has 18 no other means to recover against them. This factor weighs in favor of default judgment. 19 2. Merits of Plaintiff’s Claims and Sufficiency of Complaint 20 The second and third Eitel factors, taken together, “require that a plaintiff state a claim on 21 which the [plaintiff] may recover.” PepsiCo, Inc., 238 F. Supp. 2d at 1175 (citations and internal 22 quotations omitted). Notably, a “defendant is not held to admit facts that are not well-pleaded or to 23 admit conclusions of law.” DIRECTV, Inc. v. Hoa Huynh, 503 F.3d 847, 854 (9th Cir. 2007). 24 Plaintiff’s complaint alleges a breach of contract. 25 The loan agreements at issue provide that they will be subject to the laws of the State of 26 Illinois. (Doc. 1, Ex. 1 ¶ 7.6; Ex. 2 ¶ 7.6; Ex. 3 ¶ 7.6.) In determining the enforceability of a 27 choice-of-law provision in a diversity action, such as this one, a federal court applies the choice of 28 law rules of the forum state, in this case California. Hatfield v. Halifax PLC, 564 F.3d 1177 , 1182 1 (9th Cir. 2009). In California, “a freely and voluntarily agreed-upon choice of law provision in a 2 contract is enforceable ‘if the chosen state has a substantial relationship to the parties or the 3 transaction or any other reasonable basis exists for the parties’ choice of law.’” 1–800–Got Junk? 4 LLC v. Super. Ct., 189 Cal. App. 4th 500, 513-14 (2010), quoting Trust One Mortg. Corp. v. 5 Invest Am. Mortg. Corp., 134 Cal. App. 4th 1302, 1308 (2005) (emphasis in original). There is a 6 strong policy in favor of enforcing choice of law provisions. Id. at 513. 7 Plaintiff does not address the choice-of-law provisions. Instead, Plaintiff identifies only 8 California’s substantive law. (See ECF No. 10, p. 12.) However, because the elements of breach 9 of contract in Illinois and California are identical, the Court need not determine which 10 jurisdiction’s law applies. First Am. Com. Bancorp, Inc. v. Vantari Genetics, LLC, No. 2:19-cv11 04483-VAP-FFM, 2020 WL 5027990 , at *3 n.1 (C.D. Cal. Mar. 12, 2020), citing Gallagher Corp. 12 v. Russ, 309 Ill. App. 3d 192, 199 (1999). In California, “[t]o be entitled to damages for breach of 13 contract, a plaintiff must plead and prove (1) a contract, (2) plaintiff’s performance or excuse for 14 nonperformance, (3) defendant’s breach, and (4) damage to plaintiff.” First Am. Com. Bancorp, [15] 2020 WL 5027990 , at *3, quoting Walsh v. W. Valley Mission Cmty. Coll. Dist., 66 Cal. App. 4th 16 1532, 1545 (1998). Under Illinois law, “[t]o succeed on a claim for breach of contract, a plaintiff 17 must plead and prove: (1) the existence of a contract, (2) the performance of its conditions by the 18 plaintiff, (3) a breach by the defendant, and (4) damages as a result of the breach.” Law Offices of 19 Colleen M. McLaughlin v. First Star Fin. Corp., 357 Ill. Dec. 570, 583 , 963 N.E.2d 968, 981 (Ill. 20 Ct. App. 2011). 21 Here, Plaintiff alleges that Defendant Kular entered into the identified Agreements, has 22 failed to perform under the Agreements by failing to make payments when those payments become 23 due, and Plaintiff is entitled to contractual money damages under the Agreements. (ECF No. 1, 24 ¶¶ 55-58.) Plaintiff also alleges that Defendant Singh entered into the identified Guaranties, has 25 failed to perform under the Guaranties by failing to make payments when those payments became 26 due, and Plaintiff is entitled to recover contractual money damages. (Id. at ¶¶ 60-62.) 27 The Court finds that Plaintiff’s complaint sufficiently states a claim for breach of the 28 Agreements and Guaranties, which weighs in favor of default judgment. 1 3. The Sum of Money at Stake in the Action 2 Under the fourth factor cited in Eitel, “the court must consider the amount of money at 3 stake in relation to the seriousness of Defendant’s conduct.” PepsiCo, Inc., 238 F. Supp. 2d at 4 1176. Here, Plaintiff seeks judgment in the amount of $447,008.54, which includes attorneys’ fees 5 in the amount of $3,835.00, and court costs in the amount of $565.24, and a repossession fee of 6 $40.00. (ECF No. 11, p. 14.) The Court finds the amount at stake is not large, and it is 7 proportional to the harm caused by Defendants’ failure to repay the loan amounts. This factor 8 therefore does not weigh against entry of default judgment. 9 4. The Possibility of a Dispute Concerning Material Facts 10 The facts of this case are straightforward, and Plaintiff has provided the Court with well11 pled allegations and a declaration with exhibits in support. Here, the Court may assume the truth 12 of well-pled facts in the complaint following the Clerk’s entry of default and, thus, there is no 13 likelihood that any genuine issue of material fact exists. Defendants’ failure to file an answer in 14 this case or a response to the instant motion further supports the conclusion that the possibility of a 15 dispute as to material facts is minimal. See, e.g., Elektra Entm’t Grp. Inc. v. Crawford, 226 F.R.D. 16 388, 393 (C.D. Cal. 2005) (“Because all allegations in a well-pleaded complaint are taken as true 17 after the court clerk enters default judgment, there is no likelihood that any genuine issue of 18 material fact exists.”). This factor therefore weighs in favor of default judgment. 19 5. Whether the Default Was Due to Excusable Neglect 20 The sixth Eitel factor considers the possibility that Defendant’s default resulted from 21 excusable neglect. PepsiCo, Inc., 238 F. Supp. 2d at 1177 . Courts have found that where 22 defendants were “properly served with the complaint, the notice of entry of default, as well as the 23 paper in support of the [default judgment] motion,” there is no evidence of excusable neglect. 24 Shanghai Automation Instrument Co. v. Kuei, 194 F. Supp. 2d 995, 1005 (N.D. Cal. 2001). Upon 25 review of the record, the Court finds that the default was not the result of excusable neglect. See 26 PepsiCo, Inc., 238 F. Supp. 2d at 1177 . Plaintiff adequately served Defendants with the summons 27 and complaint. (ECF Nos. 6, 7.) Moreover, Plaintiff served Defendants with a copy of the request 28 for entry of default, the motion for default judgment, along with the accompanying declarations of 1 Whitney Oliver and Ken I. Ito. (ECF Nos. 11, 12, 13.) Despite ample notice of this lawsuit and 2 Plaintiff’s intention to seek a default judgment, Defendants have not appeared to date. Thus, the 3 record suggests that they have chosen not to defend this action, and not that the default resulted 4 from any excusable neglect. Accordingly, this factor weighs in favor of the entry of a default 5 judgment. 6 6. The Strong Presumption Favoring Decisions on the Merits 7 “Cases should be decided upon their merits whenever reasonably possible.” Eitel, 782 8 F.2d at 1472. However, district courts have concluded with regularity that this policy, standing 9 alone, is not dispositive, especially where a defendant fails to appear or defend itself in an action. 10 PepsiCo, Inc., 238 F. Supp. 2d at 1177 ; see also Craigslist, Inc. v. Naturemarket, Inc., 694 F. Supp. 11 2d 1039, 1061 (N.D. Cal. Mar. 5, 2010). Although the Court is cognizant of the policy favoring 12 decisions on the merits, that policy is unavailable here because Defendants have not responded. 13 Accordingly, the Court finds that this factor does not weigh against entry of default judgment. 14 Accordingly, upon consideration of the Eitel factors, the Court concludes that Plaintiff is 15 entitled to default judgment against Defendants. 16 C. Requested Relief 17 1. Damages 18 The loan agreements at issue all provide that in the event of default by the debtor or 19 guarantor, all indebtedness becomes immediately due and payable, Plaintiff is entitled to take 20 possession of and dispose of the equipment and to have the debtor pay all interest and expenses 21 incurred—including reasonable attorney’s fees. (ECF No. 1, Ex. 1 ¶¶ 5.1-5.3; Ex. 2 ¶¶ 5.1-5.3; 22 Ex. 3 ¶¶ 5.1-5.3.) As of the respective dates of default on the various agreements, Plaintiff 23 declares that the principal amounts due and owing total $447,008.54 ($124,568.77 + $144,606.02 24 + $177,833.75). (ECF No. 12, Declaration of Whitney Oliver (“Oliver Decl.”), ¶ 20.) At the time 25 of default, accrued and unpaid interest due and owing under the agreements totaled $2,248.72 26 ($0.00 + $2,248.72 + $0.00). (Id. at ¶ 21.) Calculated from the respective dates of default to the 27 dates of acceleration, the amount of accrued and unpaid interest due and owing under the 28 Agreements is no less than $19,920.15 ($5,130.00 + $5,667.30 + $9,122.85). (Id. at ¶ 22.) Under 1 the Agreements, upon acceleration, Defendants are obligated to pay interest on all unpaid amounts 2 at the default interest rate of 1.5% per month (18% per annum) or the maximum rate not prohibited 3 by applicable law. (Id. at ¶ 23.) The Agreements were accelerated on November 22, 2024, 4 meaning the daily rates of interest accruing since the dates of acceleration are as follows: 5 Agreement 62001: $62.28; Agreement 83001: $72.30; Agreement 03001: $88.92. (Id.) As of the 6 respective dates of default, the amount of late charges have accrued to no less than $3,446.72 7 ($1,181.04 + $1,113.80 + $1,151.88). (Id. at ¶ 25.) Through acceleration, Plaintiff has incurred 8 $40.00 in repossession expenses or title searches. (Id. at ¶ 26.) 9 Calculated as of April 8, 2025, the amount due and owing under the Agreements, not 10 including attorneys’ fees and expenses, is an amount not less than $497,434.13. (Id. at ¶ 34(d).) 11 These requested amounts are supported by declaration. (ECF No. 12.) The Agreements and 12 declaration constitute sufficient proof that Plaintiff has sustained damages for the breaches of the 13 Agreements. Plaintiff therefore seeks judgment in the amount of $497,434.13, plus postjudgment 14 interest and attorneys’ fees and costs, against Defendants. 15 2. Attorney’s Fees and Costs 16 Plaintiff seeks a total amount of $3,835.00 in attorney’s fees and $565.24 in court costs. 17 (ECF No. 13, Declaration of Ken I. Ito (“Ito Decl.”), ¶¶ 9, 10.) California and Illinois both enforce 18 contractual provisions allowing the collection of reasonable attorneys’ fees. Cal. Civ. Proc. Code 19 § 1021 (“Except as attorney’s fees are specifically provided for by statute, the measure and mode 20 of compensation of attorneys and counselors at law is left to the agreement, express or implied, of 21 the parties; but parties to actions or proceedings are entitled to their costs, as hereinafter 22 provided.”); Gil v. Mansano, 121 Cal. App. 4th 739, 742-43 (2004); Cap. One Auto Fin., Inc. v. 23 Orland Motors, Inc., No. 09-cv-4731, 2012 WL 3777025 , at *3 (N.D. Ill. Aug. 27, 2012) (“Illinois 24 recognizes the American Rule that ‘absent a statute or contractual provision, a successful litigant 25 must bear the burden of his or her own attorney’s fees.’”). Under the Agreements, Defendant 26 Kular is obligated to pay the attorney’s fees and costs incurred by Plaintiff in the enforcement of 27 its rights, including expenses of filing and prosecuting this action. (Doc. 1, Ex. 1, ¶ 5.2, Ex. 2, ¶ 28 5.2; Ex. 3, ¶5.2; see ECF No. 12, Oliver Decl., ¶ 27.) Plaintiff is therefore entitled to recovery of 1 attorneys’ fees and costs. 2 To determine a reasonable attorneys’ fee, or “lodestar,” the starting point is the number of 3 hours reasonably expended multiplied by a reasonable hourly rate. See Hensley v. Eckerhart, 461 4 U.S. 424, 433 (1983). In considering what constitutes a reasonable hourly rate, the Court looks to 5 the prevailing market rate in the relevant community. Blum v. Stenson, 465 U.S. 886, 895 (1984). 6 The “relevant community” for the purposes of the lodestar calculation is generally the forum in 7 which the district court sits. Gonzalez v. City of Maywood, 729 F.3d 1196, 1205 (9th Cir. 2013). 8 Thus, when a case is filed in the Eastern District of California, this district “is the appropriate 9 forum to establish the lodestar hourly rate . . . .” See Jadwin v. County of Kern, 767 F. Supp. 2d 10 1069, 1129 (E.D. Cal. 2011). 11 a. Reasonable Hourly Rate 12 Hourly rates for attorney’s fees awarded in the Eastern District of California range from 13 $200 to $750, with hourly rates exceeding $600 reserved for attorneys who have been practicing 14 approximately 30 years. See, e.g., BMO Bank N.A. v. Cheema, No. 1:24-cv-00634-SAB, 2024 15 WL 4357004 , at *9 (E.D. Cal. Oct. 1, 2024), F&R adopted, 2024 WL 4873520 (E.D. Cal. Nov. 22, 16 2024) (awarding hourly rate of $325 to attorney with more than 28 years litigation experience); 17 Olguin v. FCA US LLC, No. 1:21-cv-1789-JLT-CDB, 2024 WL 4012103 , at *7 (E.D. Cal. Aug. 18 30, 2024) (awarding hourly rates of $525 for attorneys practicing more than 20 years, $500 for 19 attorneys practicing between 18 and 19 years, $450 to attorney practicing for approximately 13 20 years, $400 to attorney with 7-10 years of experience, $300 to attorney practicing about 6 years, 21 $275 to attorney practicing about 4 years, and $250 for attorney practicing approximately 2 years); 22 Owen v. Hyundai Motor Am., No. 2:22-cv-00882-KJM-CKD, 2024 WL 3967691 , at *4 (E.D. Cal. 23 Aug. 28, 2024) (finding typical rate for attorneys who have been practicing for more than ten years 24 but less than fifteen years is between $350 and $375). Plaintiff’s counsel was admitted to practice 25 in California in 2011 and has more than 13 years of experience. (ECF No. 13, Ito Decl., ¶ 9.) 26 Attorney Ito is seeking $325.00 per hour for his work in this matter. Given this information, the 27 Court finds Attorney Ito’s hourly rate of $325.00 is reasonable. 28 / / / 1 b. Hourly Reasonably Expended 2 According to the declaration of Attorney Ito and the corresponding exhibited invoice, 3 Attorney Ito has stated that he has expended 8.80 hours of work in this matter. (See id. at ¶ 5 ; id. 4 at Ex. 10.) However, upon review of the accompanying exhibit, Attorney Ito has only supported 5 2.50 hours of attorney’s fees. (ECF No. 11, p. 7.) At the hearing, the Court inquired whether 6 Attorney Ito would like to file a supplemental declaration with supporting exhibit, but Attorney Ito 7 stated that he would waive any further attorney’s fees over 2.50 hours. Thus, upon review of the 8 declaration and exhibited invoice, the Court finds 2.50 hours to be reasonable and supported. The 9 Court will recommend a reduced attorney’s fee award of $812.50 10 In addition, Attorney Ito stated in his declaration that to “prepare this Motion for Default 11 Judgment, and assuming there is no need for an appearance for this Motion for Default Judgment, 12 it is anticipated and expected that it will take minimum of 3 hours, respectively, at a rate of 13 $325.00 for a total of $975.00.” (Id. at ¶¶ 7, 8.) However, the District Court has previously 14 rejected Attorney Ito’s “anticipated” additional hours as not supported by evidence. BMO Harris 15 Bank, N.A. v. Lala Trucking Inc., No. 1:24-cv-01114-JLT-BAM, 2025 WL 1322781 , at *2 (E.D. 16 Cal. May 7, 2025). At the hearing, Attorney Ito also stated that he would waive any opportunity to 17 support these anticipated three hours. Accordingly, “the fee award [will be] limited to the 18 established and documented time.” Id. 19 Based on the foregoing, the Court will therefore recommend awarding Plaintiff $812.50 for 20 2.50 hours of work by Attorney Ito at a rate of $325.00 per hour in attempting to collect and 21 enforce the Agreements. 22 In addition to attorneys’ fees, Plaintiff seeks the recovery of court costs in the amount of 23 $565.24, consisting of costs for the Court filing fee and service of process. (ECF No. 12, Oliver 24 Decl., ¶ 36; ECF No. 13, Ito Decl., ¶ 10.) The Court finds these costs to be reasonable. 25 / / / 26 / / / 27 / / / 28 / / / 1 V. 2 CONCLUSION AND RECOMMENDATION 3 The Eitel factors weigh in favor of granting default judgment, and the entry of default 4 judgment is within the discretion of the Court. See Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th 5 Cir. 1980). 6 Based upon the foregoing, the Court HEREBY RECOMMENDS that: 7 1. Plaintiff’s motion for default judgment (ECF No. 11) be GRANTED; 8 2. Default judgment be entered in favor of Plaintiff BMO Bank N.A. and against 9 Defendants Kular Transportation Inc. and Lakhwinder Sing in the amount of 10 $497,434.13, plus postjudgment interest; 11 3. Defendants be ordered to pay Plaintiff an amount of $1,377.74, which represents 12 the reasonable attorneys’ fees of $812.50 and costs of $565.24 incurred in 13 enforcing the Agreements and in collection of the amounts due; and 14 4. Plaintiff be awarded possession of the Vehicle listed below, and Defendants are 15 directed to specifically perform their obligations under the Loan Documents, and 16 to return and/or allow Plaintiff to take possession of the Vehicle. Upon recovery 17 and sale of the Vehicles in a commercially reasonable manner, the money 18 judgment entered herein will be credited with the net sales proceeds. 19 62001 Vehicle: 2019 Vanguard Refrigerated Vans, with 2018 Thermo King, 20 Model S-600; VIN: 527SR5327KL018773; Serial No. 6001278835 21 This findings and recommendations is submitted to the district judge assigned to this 22 action, pursuant to 28 U.S.C. § 636 (b)(1)(B) and this Court’s Local Rule 304. Within fourteen 23 (14) days of service of this recommendation, any party may file written objections to this findings 24 and recommendations with the Court and serve a copy on all parties. Such a document should be 25 captioned “Objections to Magistrate Judge’s Findings and Recommendations.” The district judge 26 will review the magistrate judge’s findings and recommendations pursuant to 28 U.S.C. § 27 636(b)(1)(C). The parties are advised that failure to file objections within the specified time may 28 result in the waiver of rights on appeal. Wilkerson v. Wheeler, 772 F.3d 834, 839 (9th Cir. 2014), 1 | citing Baxter v. Sullivan, 923 F.2d 1391, 1394 (9th Cir. 1991). 2 IT IS FURTHER ORDERED that Plaintiff shall serve a copy of this findings and 3 |recommendations on Defendants within three (3) days of entry. [4] "| ris so oRpexe. DAM Le 6 | Dated: _ May 28, 2025 STANLEY A. BOONE 7 United States Magistrate Judge [28] 1R