JPMorgan Chase Bank NA v. U.S. Metal Buildings Corporation

1 WO [7] 8 IN THE UNITED STATES DISTRICT COURT 9 FOR THE DISTRICT OF ARIZONA [10] 11 JPMorgan Chase Bank NA, No. CV-19-01432-PHX-MTL 12 Plaintiff, ORDER 13 v. 14 U.S. Metal Buildings Corporation, et al., 15 Defendants. [16] 17 Plaintiff JPMorgan Chase Bank NA moves for default judgment against Defendants 18 U.S. Metal Buildings Corp. (“U.S. Metal”) and U.S. Building Systems Corp. (“U.S. 19 Building”) pursuant to Fed. R. Civ. P. 55(b)(2). (Doc. 19.) Neither Defendant has filed a 20 response. For the reasons stated below, Plaintiff’s motion is granted. 21 I. BACKGROUND 22 This case arises out of Defendants’ alleged breach of a lease agreement (the 23 “Lease”) involving commercial real estate in Tempe, Arizona. (Doc. 1.) Plaintiff filed its 24 Complaint on March 1, 2019.1 (Id.) The Complaint states that on or about January 12, 2012, 25 BREOF BNK 2 Southwest, LLC (“BREOF”) entered into the Lease, as landlord, with U.S. 26 Building as tenant. On or about January 14, 2013, U.S. Building and U.S. Metal executed 27 1 Based on the allegations in the Complaint, the Court concludes that it has subject matter jurisdiction over this action and personal jurisdiction over Defendants. The amount in 28 controversy exceeds $75,000 and the parties are citizens of different states. 28 U.S.C. § 1332 . Defendants entered into a Lease involving property located within this District. 1 an “Assignment and Assumption of Lease and Consent to the Landlord,” which transferred 2 the tenant obligations to U.S. Metal but did not release U.S. Building from liability. (Id. ¶ 3 14–15.) The Lease was extended through July 31, 2018 (the “Amendment”). (Id. ¶ 18–19.) 4 Plaintiff states that it is the successor-in-interest to BREOF in connection with the Lease. 5 (Id. ¶ 20.) Plaintiff also states that Defendants failed to make any rent payments beginning 6 August 1, 2016. (Id. ¶ 21.) The Complaint prays for relief in the form of late rent payments, 7 reimbursement of rental incentives, liquidated damages, and attorneys’ fees and costs. (Id. 8 ¶ 24–25.) 9 Defendants failed to file an answer, a motion to dismiss, or any other response to 10 the Complaint.2 Upon application (Doc. 14), the Clerk of the Court entered default against 11 Defendants on June 19, 2019. (Doc. 15.) Plaintiff filed the pending motion on September 12 18, 2019. (Doc. 19.) Defendants have failed to respond. 13 II. DISCUSSION 14 A. Default Judgment 15 Once a default has been entered and a defendant fails to move to set aside the 16 default, the Court may enter a default judgment. Fed. R. Civ. P. 55(b)(2). Following an 17 entry of default, the Complaint’s factual allegations—other than those relating to the 18 amount of damages—are taken as true. See Fair Housing of Marin. v. Combs, 285 F.3d 19 899, 906 (9th Cir. 2002). The entry of default judgment is within the Court’s discretion. 20 Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). 21 In determining whether default judgment is appropriate, the Court considers the 22 following factors: “(1) the possibility of prejudice to the plaintiff, (2) the merits of 23 plaintiff’s substantive claim, (3) the sufficiency of the complaint, (4) the sum of money at 24 stake in the action; (5) the possibility of a dispute concerning material facts; (6) whether 25 the default was due to excusable neglect, and (7) the strong policy underlying the Federal 26 Rules of Civil Procedure favoring decisions on the merits.” Eitel v. McCool, 782 F.2d 1470 , 27 1471–72 (9th Cir. 1986). The Court will address these factors in turn. [28] 2 Defendants were served with the Complaint on May 17, 2019. (Docs. 11–12.) 1 1. Possible Prejudice to Plaintiff 2 The first Eitel factor weighs in favor of granting the motion because Plaintiff will 3 be prejudiced if default judgment is not entered. The record reflects that Plaintiff gave 4 proper notice (Docs. 2, 11, 12), but Defendants have not responded to this action. If the 5 motion is not granted, Plaintiff “will likely be without other recourse for recovery.” 6 PepsiCo, Inc. v. Cal. Sec. Cans., 238 F. Supp. 2d 1172, 1177 (C.D. Cal. 2002). 7 2. Merits of Plaintiff’s Claim 8 The second Eitel factor also weighs in favor of granting the motion. This factor 9 requires a plaintiff to “state a claim on which the [plaintiff] may recover.” PepsiCo, Inc., [10] 238 F. Supp. 2d at 1175 . Plaintiff has alleged that Defendants breached the underlying 11 Lease. (Doc. 1.) To prevail on a breach of contract claim under Arizona law, “a plaintiff 12 must show a contract, a breach of contract, and damages.” Best W. Int’l, Inc. v. Patel, 523 13 F. Supp. 2d 979, 988 (D. Ariz. 2007) (citing Graham v. Asbury, 112 Ariz. 184, 185 (1975)). 14 Based on the facts described above and in the Complaint, Plaintiff has pled a prima facia 15 case that Defendants breached the Lease. 16 3. Sufficiency of the Complaint 17 The third Eitel factor also favors granting the motion. Based on the Court’s analysis 18 of the merits of Plaintiff’s claim, nothing suggests that the Complaint fails to state a facially 19 plausible claim for relief. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). 20 4. Amount at Stake 21 The fourth Eitel factor, regarding the sum of money at stake, also weighs in favor 22 of granting the motion. The Court must examine “the sum of money at stake in relation to 23 the seriousness of Defendant’s conduct.” PepsiCo, Inc., 238 F. Supp. 2d at 1176–77. “If the 24 sum of money at stake is completely disproportionate or inappropriate, default judgment is 25 disfavored.” Gemmel v. Systemhouse, Inc., No. CIV 04-198-TUC-CKJ, 2008 WL 65604 , at 26 *4 (D. Ariz. Jan. 3, 2008). The motion seeks a certain amount—$89,645.90—calculated 27 from the Lease and subsequent Amendment into which Defendants entered.3 The Court does 28 3 As addressed infra, the Complaint states that “[t]he amount due to Chase pursuant to the terms of the Lease is no less than $134,685.93.” (Doc. 1 ¶ 28.) The relief requested in 1 not consider this to be a disproportionate or inappropriate sum. 2 5. Possible Dispute Concerning Material Facts 3 The fifth Eitel factor favors granting the motion because there is no dispute 4 concerning material facts. Defendants have not responded to this action in the seven 5 months that it has been pending. (Doc. 1.) As noted, upon entry of default, the factual 6 allegations of a Complaint are taken as true (except those relating to the amount of 7 damages). See Fair Housing of Marin., 285 F.3d at 906. There is therefore no dispute 8 concerning material facts at this juncture. 9 6. Whether Default Was Due to Excusable Neglect 10 The sixth Eitel factor also favors granting the motion. Defendants have had multiple 11 opportunities to respond to action over the past seven months but have failed to do so. They 12 have also offered no explanation for their failure to appear. It is therefore highly unlikely 13 that Defendants’ “failure to answer and the resulting default was a result of excusable 14 neglect.” Gemmel, 2008 WL 65604 , at *5. 15 7. Policy Underlying the Federal Rules of Civil Procedure 16 The final factor—the strong policy underlying the Federal Rules of Civil Procedure 17 favoring decisions on the merits—weighs against default judgment. “Cases should be 18 decided upon their merits whenever reasonably possible.” Eitel, 782 F.2d at 1472 . The 19 existence of Fed. R. Civ. P. 55(b), however, indicates that “this preference, standing alone, 20 is not dispositive.” PepsiCo, Inc., 238 F. Supp. 2d at 1177 (internal citation omitted). Rule 21 55 permits termination of a case before the Court hears the merits when a defendant fails 22 to defend an action. Moreover, a defendant’s failure to contest the Complaint or seek relief 23 from the Clerk’s entry of default “makes a decision on the merits impractical, if not 24 impossible.” Id. The final Eitel factor is therefore insufficient to preclude the Court from 25 entering default judgment. 26 Having reviewed Plaintiff’s motion and analyzed the factors set forth in Eitel, the 27 Court finds that factors one through six weigh in favor of granting Plaintiff’s motion. The 28 Plaintiff’s motion for default judgment (Doc. 19), however, does “not differ in kind from, or exceed in amount, what is demanded in the pleadings.” Fed. R. Civ. P. 54(c). 1 final Eitel factor is not sufficient to outweigh the first six factors. Therefore, for the reasons 2 set forth herein, the Court concludes that Plaintiff is entitled to default judgment. 3 B. Damages 4 Having found that entry of a default judgment is proper, the only remaining issue is 5 one of damages. In contrast to the other allegations in a complaint, allegations pertaining 6 to damages are not taken as true when considering a motion for default judgment. Fair 7 Housing of Marin, 285 F.3d at 906. Nonetheless, a district court has “wide latitude” in 8 determining the amount of damages to award upon default judgment. James v. Frame, 6 9 F.3d 307, 310 (9th Cir. 1993). 10 Plaintiff requests entry of judgment without a damages hearing in the amount of 11 $89,645.90, comprised of (1) $42,933.55 in past-due rent payments, (2) $4,710.25 in late 12 fees, (3) $9,000.45 in reimbursement of a rental incentive pursuant to the Lease, and (4) 13 $33,001.65 for reimbursement of a rental incentive pursuant to the First Lease Amendment. 14 (Doc. 19 at 5.) This is less than the $134,685.93 prayed for in the Complaint, which, in 15 addition to the aforementioned items, also requested interest on late fees, liquidated 16 damages on future rent and taxes, pre- and post-judgment interest, and attorneys’ fees and 17 costs. (Doc. 1 at 5.) 18 Rule 54(c) of the Federal Rules of Civil Procedure requires that a default judgment 19 “not differ in kind from, or exceed in amount, what is demanded in the pleadings.” Fed. R. 20 Civ. P. 54(c). Plaintiff’s motion for default judgment requests a subset of those damages 21 requested in the Complaint; it does not request damages “different in kind” or in excess of 22 those in the Complaint. Id. The Court concludes that Plaintiff’s Complaint provided 23 Defendants with “sufficient notice. . .of the potential award,” enabling them “to decide 24 whether to respond to the complaint in the first instance.” Fisher Printing Inc. v. CRG LTD 25 II LLC, No. CV-16-03692-PHX-DJH, 2018 WL 603299 , at *3 (D. Ariz. Jan. 22, 2018). 26 The Court may enter a default judgment without a damages hearing when, as here, 27 “the amount claimed is a liquidated sum or capable of mathematical calculation.” HTS, Inc. 28 v. Boley, 954 F. Supp. 2d 927, 947 (D. Ariz. 2013) (quoting Davis v. Fendler, 650 F.2d 1 } 1154, 1161 (th Cir. 1981)). In this case, the requested damages are a definite sum 2|| comprised of specified past-due rent payments, late fees, and rental incentives specified in || the Lease and Amendment thereto. (Doc. 19.) The requested damages are also supported by the Declaration of Michael Trainer, Plaintiff's Vice President and Lease Account 5 || Manager, and accompanying documents. (Doc. 19-1.) See Doe v. United States, No. CV- □□ 17-01991-PHX-GMS (JZB), 2018 WL 2431774 , at *8 (D. Ariz. May 30, 2018) (“In 7\| determining damages, a court can rely on declarations submitted by the plaintiff[.]”’) (citing || Philip Morris USA, Inc. v. Castworld Prods., Inc., 219 F.R.D. 494, 498 (C.D. Cal 2003)). 9 The Court finds that Plaintiff’s motion, the Declaration of Michael Trainer, and 10 || attached exhibits sufficiently establish the amount of damages suffered by Plaintiff. (Docs. 11 || 19, 19-1.) The Court will enter default judgment against Defendants, jointly and severally, 12]| in the amount of $89,645.90. 13] DI. CONCLUSION 14 Accordingly, 15 IT IS ORDERED that Plaintiff's motion for default judgment (Doc. 19) is granted. 16 IT IS FURTHER ORDERED that judgment is entered in favor of Plaintiff and 17 || against Defendants U.S. Metal Buildings Corp. and U.S. Building Systems Corp., jointly 18 || and severally, in the amount of $89,645.90. 19 IT IS FURTHER ORDERED that the Clerk of Court is directed to enter judgment in Plaintiff’s favor. 21 Dated this 16th day of October, 2019. Michael T. Liburdi 24 United States District Judge [28] -6-