Corrales-Gonzalez v. Speed Auto Wholesalers LLC

1 WO — 2 — — 3 — — 4 — — 5 — 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA — 8 — Carmen Corrales-Gonzalez, ) No. CV-20-02023-PHX-SPL ) — 9 — ) 10 Plaintiff, ) ORDER vs. ) ) — 11 — ) Speed Auto Wholesalers LLC, et al., ) — 12 — ) 13 Defendants. ) ) 14 ) 15 Before the Court is Plaintiff Carmen Corrales-Gonzalez’s (“Plaintiff”) Motion for 16 Default Judgment (Doc. 83) in which Plaintiff moves for this Court to enter default 17 judgment against Defendant Raul Quintero and in favor of Plaintiff for a total amount of 18 $75,578.03—which includes statutory damages of $71,889.00, attorneys’ fees of 19 $3,467.50, and court costs of $221.53. (Doc. 83 at 1). No response to the Motion has been 20 filed. Having reviewed Plaintiff’s Motion, the exhibits attached thereto, and the record in 21 this matter, the Court will grant the Motion. 22 I. BACKGROUND 23 At issue in this case is a 2014 Jeep Grand Cherokee SRT-8 (the “Jeep”) which was 24 originally put into service on or about January 12, 2014. (Doc. 1 at 3). On May 11, 2018, 25 the Jeep was purchased by Defendant Quintero. (Id. at 4). At that time, the Jeep had 26 approximately 100,000 miles on it. (Id.). Plaintiff alleges that Defendant Quintero rolled 27 back or otherwise altered the odometer reading to approximately 40,000 miles. (Id.). On 28 June 2, 2018, Defendant Quintero sold the Jeep to Defendant Maira Perez. (Id. at 4–5). On 1 November 24, 2018, Defendant Perez sold the Jeep to Defendant DP Corporation (“Lifted 2 Trucks”). (Id. at 5). On November 27, 2018, Defendant Lifted Trucks sold the Jeep to 3 Defendant Speed Auto Wholesalers LLC (“Speed Auto”), certifying on the back of the title 4 that the Jeep had an odometer reading of 59,867. (Id.). Finally, on December 22, 2018, 5 Plaintiff purchased the Jeep from Defendant Speed Auto. (Id. at 6). Plaintiff alleges that 6 Defendant Speed Auto represented to Plaintiff that the Jeep had 59,867 actual miles on it. 7 (Id. at 1). Approximately a year and a half later, when Plaintiff attempted to trade in the 8 Jeep for another vehicle at a dealership in Gilbert, Arizona, Plaintiff learned that the Jeep’s 9 odometer reading was not accurate, and that it had been rolled back or otherwise altered to 10 reflect at least 60,000 fewer miles than it had actually traveled. (Id. at 1, 8). Specifically, 11 the dealership acquired a CarFax vehicle history report indicating that the Jeep’s odometer 12 was altered sometime after January 27, 2018 and before Defendant Speed Auto acquired 13 the Jeep on November 27, 2018. (Id. at 8). 14 Plaintiff alleges that Defendants knew or should have known about the mileage 15 discrepancy, that he would not have purchased the Jeep had he known the true status of the 16 odometer and its mileage, and that he suffered actual damages as a result of Defendants’ 17 actions, including the loss of value in the vehicle. (Id. at 10). On October 21, 2020, Plaintiff 18 filed a Complaint in this Court, alleging three counts: (i) violation of the federal Odometer 19 Act against all Defendants (Count I); (ii) violation of the Arizona Consumer Fraud Act 20 against Defendant Speed Auto (Count II); and (iii) breach of express warranty against 21 Defendant Speed Auto (Count III). (Id. at 10–13). On January 13, 2021, Defendant Perez 22 was dismissed. (Doc. 16). On June 6, 2022, this Court dismissed Counts II and III. (Doc. 23 69). Thus, the only remaining Defendants are Speed Auto, Lifted Trucks, and Quintero, 24 and the only remaining claim is Plaintiff’s Odometer Act claim. 25 On January 11, 2021, the Clerk entered default against Defendant Quintero after he 26 failed to appear in this matter. (Doc. 15). On June 28, 2022, Plaintiff filed the present 27 Motion for Default Judgment as to Defendant Quintero. (Doc. 83). Defendant Quintero has 28 still not appeared in this matter. 1 II. DISCUSSION 2 A. Subject Matter Jurisdiction, Personal Jurisdiction, and Service of Process 3 When default judgment is sought against a non-appearing party, a court has “an 4 affirmative duty to look into its jurisdiction over both the subject matter and the parties.” 5 In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999) (“To avoid entering a default judgment that 6 can later be successfully attacked as void, a court should determine whether it has the 7 power, i.e., the jurisdiction, to enter judgment in the first place.”). A court has a similar 8 duty with respect to service of process. See Fishman v. AIG Ins. Co., No. CV 07-05899 PHX-RCB, 2007 WL 4248867 , at *3 (D. Ariz. Nov. 30, 2007) (“Because defendant has 10 not been properly served, the court lacks jurisdiction to consider plaintiff’s motions for 11 default judgment.”). These considerations are “critical because ‘[w]ithout a proper basis 12 for jurisdiction, or in the absence of proper service of process, the district court has no 13 power to render any judgment against the defendant’s person or property unless the 14 defendant has consented to jurisdiction or waived the lack of process.’” Id. (citing S.E.C. 15 v. Ross, 504 F.3d 1130 , 1138–39 (9th Cir. 2007)). 16 First, as to subject-matter jurisdiction, the Court may exercise subject-matter 17 jurisdiction because Plaintiff has stated a claim under the federal Odometer Act, 49 U.S.C. 18 § 32701, et seq., which confers jurisdictional powers upon district courts in the United 19 States in conjunction with 28 U.S.C. § 1331 . See 49 U.S.C. § 32710 (b) (“A person may 20 bring a civil action to enforce a claim under this section in an appropriate United States 21 district court.”). Next, as to personal jurisdiction, the Court has personal jurisdiction over 22 Defendant Quintero because he is a citizen of Arizona and because he was properly served. 23 See Pennoyer v. Neff, 95 U.S. 714 (1877) (noting that “every State possesses exclusive 24 jurisdiction and sovereignty over persons and property within its territory.”); Benny v. 25 Pipes, 799 F.2d 489, 492 (9th Cir. 1986) (noting that a federal court lacks personal 26 jurisdiction over defendant unless defendant properly served). According to the Complaint, 27 Defendant Quintero is an individual residing in Phoenix, Arizona. (Doc. 1 at 3). Defendant 28 Quintero was served at his Phoenix residence when the summons and complaint were 1 served on his grandmother, who also resided at the same residence, by a licensed process 2 server on October 23, 2020. (Doc. 9 at 1). The Court finds that service in this case was 3 proper under the relevant federal rule, which authorizes service of an individual by delivery 4 of the summons and complaint to the individual’s residence and by leaving said documents 5 with someone of suitable age and discretion who resides there. See Fed. R. Civ. P. 4(e). 6 With preliminary considerations of jurisdiction and service of process out of the way, the 7 Court turns to whether default judgment is appropriate. 8 B. Default Judgment Analysis: Eitel Factors 9 “A defendant’s default does not automatically entitle a plaintiff to a default 10 judgment.” Hartford Life & Accident Ins. Co. v. Gomez, No. CV-13-01144-PHX-BSB, — 11 — 2013 WL 5327558 , at *2 (D. Ariz. Sept. 24, 2013). Instead, once a default has been entered, 12 the district court has discretion to grant a default judgment. See Fed. R. Civ. P. 55(b)(2); 13 Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). Factors the Court may consider 14 include: (1) the possibility of prejudice to the plaintiff; (2) the merits of the claim; (3) the 15 sufficiency of the complaint; (4) the amount of money at stake; (5) the possibility of a 16 dispute concerning material facts; (6) whether default was due to excusable neglect; and 17 (7) the policy favoring a decision on the merits (collectively, the “Eitel factors”). See Eitel 18 v. McCool, 782 F.2d 1470 , 1471–72 (9th Cir. 1986). In applying the Eitel factors, “the 19 factual allegations of the complaint, except those relating to the amount of damages, will 20 be taken as true.” Geddes v. United Fin. Grp., 559 F.2d 557 , 560 (9th Cir. 1977). 21 i) The First, Fifth, Sixth, and Seventh Eitel Factors 22 “In cases like this one, in which [Defendant has] not participated in the litigation at 23 all, the first, fifth, sixth, and seventh factors are easily addressed.” Zekelman Indus. Inc. v. 24 Marker, No. CV-19-02109-PHX-DWL, 2020 WL 1495210 , at *3 (D. Ariz. Mar. 27, 2020). 25 The first factor—the possibility of prejudice to the plaintiff—weighs in favor of granting 26 default judgment. Defendant Quintero has failed to appear in this action, despite being 27 served on October 23, 2020. (Doc. 9). If Plaintiff’s Motion is denied, then Plaintiff will 28 likely be without other recourse for recovery. Zekelman, 2020 WL 1495210 , at *3 (citing 1 PepsiCo, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1172, 1177 (C.D. Cal. 2002)). 2 The fifth and sixth factors—the possibility of a dispute concerning material facts 3 and whether default was due to excusable neglect—also weigh in favor of granting default 4 judgment. Given the sufficiency of the Complaint (discussed below) and Defendant 5 Quintero’s default, the Court finds that no genuine dispute of material facts would preclude 6 granting the Motion. And because Defendant Quintero was properly served and has never 7 appeared in this case, the Court finds that it is unlikely that Defendant Quintero’s failure 8 to appear and the resulting default was the result of excusable neglect. See id. at *4 (“Due 9 to Defendants’ failure to participate, there is no dispute over material facts (except as to 10 damages) and no indication that default is due to excusable neglect.”). 11 The seventh factor—the policy favoring a decision on the merits—generally weighs 12 in favor of denying default judgment because “[c]ases should be decided upon their merits 13 whenever reasonably possible.” Eitel, 782 F.2d at 1472 . But the mere existence of FRCP 14 55(b) “indicates that this preference, standing alone, is not dispositive.” PepsiCo, 238 F. 15 Supp. 2d at 1177. Moreover, Defendant Quintero’s unexplained absence at this juncture of 16 the case makes a decision on the merits impossible. Thus, the Court is not precluded from 17 entering default judgment against Defendant Quintero. See Emp. Painters’ Tr. v. Ethan 18 Enters., Inc., 480 F.3d 993 , 1000–01 (9th Cir. 2007); Zekelman, 2020 WL 1495210 , at *4 19 (citation omitted) (“[T]he default mechanism is necessary to deal with wholly unresponsive 20 parties who could otherwise cause the justice system to grind to a halt. Defendants who 21 appear to be ‘blowing off’ the complaint should expect neither sympathy nor leniency from 22 the court.”). 23 ii) The Second and Third Eitel Factors 24 The second and third factors—the merits of the claims and the sufficiency of the 25 complaint—weigh in favor of granting default judgment. “These two factors are often 26 analyzed together and require courts to consider whether a plaintiff has stated a claim on 27 which it may recover.” Zekelman, 2020 WL 1495210 , at *5 (citation omitted). When the 28 complaint sufficiently states a claim for relief, these factors favor a default judgment. See 1 Danning v. Lavine, 572 F.2d 1386 , 1388–89 (9th Cir. 1978). “Of all the Eitel factors, courts 2 often consider the second and third factors to be the most important.” Zekelman, 2020 WL 3 1495210, at *5 (citation omitted). 4 Here, Plaintiff alleges that, at the time he purchased the Jeep, it was represented to 5 him that the vehicle had only 59,867 actual miles on it. (Doc. 1 at 1). However, Plaintiff 6 later discovered that the Jeep had well over 100,000 miles on it, and that its odometer had 7 been rolled back or otherwise altered. (Id. at 1–2). Plaintiff alleges that Defendant Quintero 8 rolled back the odometer during the time he possessed the Jeep in May 2018, and that 9 Defendant Quintero knew or should have known that the odometer reading on the Jeep was 10 no longer the actual mileage at the time he sold the Jeep to Defendant Perez. (Id. at 4). 11 Plaintiff alleges that Defendant Quintero rolled back or otherwise altered the odometer with 12 the intent to defraud Defendant Perez or subsequent purchasers of the Jeep, including 13 Plaintiff. (Id. at 4–5). The Court finds that, taking these and other allegations made in the 14 Complaint as true, Plaintiff has sufficiently stated a claim for relief against Defendant 15 Quintero for violation of the Odometer Act, “which prohibits a person from changing the 16 mileage on an odometer or providing a false odometer disclosure statement when 17 transferring title to a vehicle.” King v. Union Leasing Inc., No. CV-17-03281-PHX-DGC, — 18 — 2018 WL 5044660 , at *2 (D. Ariz. Oct. 17, 2018) (citing 49 U.S.C. §§ 32703 (2), 19 32705(a)(1)). Also supporting Plaintiff’s allegations are the various documents submitted 20 to the Court by Plaintiff, including the CarFax Vehicle History Report (Doc. 1-1 at 1–11) 21 and the Certificates of Title (Doc. 1-1 at 12–23). In sum, because Plaintiff has sufficiently 22 stated a claim for relief against Defendant Quintero, the second and third Eitel factors favor 23 default judgment in Plaintiff’s favor. 24 iii) The Fourth Eitel Factor 25 Under the fourth factor, this Court “must consider the amount of money at stake in 26 relation to the seriousness of Defendant’s conduct.” Philip Morris USA, Inc. v. Castworld 27 Prods., Inc., 219 F.R.D. 494, 500 (C.D. Cal. 2003). “When the money at stake in the 28 litigation is substantial or unreasonable, default judgment is discouraged.” Zekelman, 2020 1 WL 1495210 , at *4 (internal quotations omitted) (citation omitted). 2 Here, Plaintiff seeks $71,889. While $71,889 is no small sum, this Court does not 3 find it to be so substantial or unreasonable as to discourage default judgment. Instead, this 4 Court finds that $71,889 is an appropriate and reasonable damages calculation. Plaintiff 5 came to this damages total by calculating the difference in value of the vehicle as 6 represented to Plaintiff at the time of his purchase, and the true value of the vehicle at that 7 time. Considering that it was represented to Plaintiff that the Jeep had only 59,867 miles 8 on it, and that it actually had well over 100,000 miles on it, the Court finds that Plaintiff’s 9 calculated difference in value of $23,963 is reasonable. Under the Odometer Act, the 10 $23,963 actual damages amount is trebled to $71,899. See 49 U.S.C. § 32710 (a) (“A person 11 that violates this chapter . . . with intent to defraud, is liable for 3 times the actual damages 12 or $10,000, whichever is greater.”). Given Plaintiff’s allegation that Defendant Quintero 13 willfully violated the Odometer Act when he sold or transferred title to the Jeep knowing 14 that it had significantly more miles on it than disclosed, the Court finds that the requested 15 amount is reasonable, and that the fourth factor weighs in favor of default judgment. 16 All told, this Court finds that the Eitel factors weigh in favor of default judgment as 17 to Plaintiff’s Odometer Act claim. The Court now turns to the relief sought by Plaintiff. 18 C. Relief Sought 19 As noted above, Plaintiff seeks $71,899 in actual damages, and an award of 20 $3,467.50 in attorneys’ fees and $221.53 in costs. As a starting point, “‘[a] judgment by 21 default shall not be different in kind from . . . that prayed for in the demand for judgment’ 22 contained in the complaint.” U.S. v. Dutson, No. 04-2585-PHX-EHC, 2006 WL 1390816 , 23 at *1 (D. Ariz. Mar. 7, 2006) (citing Fed. R. Civ. P. 54(c)). This requirement creates no 24 issue here, however, as the relief sought is consistent with the relief requested in the 25 Complaint. (See Doc. 1 at 11, 13–14). As to actual damages, this Court finds that $71,899 26 is appropriate. As noted above, any person found liable under the Odometer Act is 27 responsible for three times the actual damages or $10,000, whichever is greater. 49 U.S.C. 28 § 32710(a). Here, Plaintiff’s actual damages were $23,963 which, when trebled, equals 1 $71,899. The Court finds Plaintiff’s requested actual damages amount to be reasonable and 2 supported by the record. 3 As to an award of fees and costs, the Odometer Act also provides that the Court 4 “shall award costs and a reasonable attorney’s fee to the person when a judgment is entered 5 for that person.” Id. § 32710(b). The Court finds that Plaintiff has sufficiently documented 6 his request for attorneys’ fees and costs by attaching to his Motion an affidavit from 7 Plaintiff’s counsel, an itemized statement of time expended and expenses incurred, and an 8 invoice detailing the relevant costs. (Docs. 83-3 at 1–10 & 83-4 at 1–2). Plaintiff’s Motion 9 also explains that reasonable billing discretion was used to the extent that Plaintiff’s 10 Counsel only used the time entries pertaining to Defendant Quintero and he adjusted the 11 time when the entries pertained to multiple defendants. (Doc. 83 at 11). Having carefully 12 reviewed these supporting documents, the Court finds that the requested amounts are 13 reasonable. Plaintiff will be awarded fees and costs pursuant to the federal Odometer Act, — 14 — 49 U.S.C. § 32710 (b) and Federal Rule of Civil Procedure 54(d). 15 III. CONCLUSION 16 Having reviewed Plaintiff’s Motion and supporting documents, and having 17 considered the Eitel factors in doing so, this Court concludes that the entry of default 18 judgment is appropriate as to Plaintiff’s Odometer Act claim against Defendant Quintero. 19 Accordingly, 20 IT IS ORDERED: 21 1. That Plaintiff’s Motion for Default Judgment (Doc. 83) is granted. Default 22 judgment, pursuant to FRCP 55(b)(2), is entered in favor of Plaintiff—and 23 against Defendant Quintero—on Count One, Violation of the Odometer Act. 24 /// 25 /// 26 /// 27 /// 28 /// 1 2. That Plaintiff shall be awarded $71,899.00 in actual damages pursuant to — 2 — 49 U.S.C. § 32710 (a). 3 3. That Plaintiff shall be awarded $3,467.50 in reasonable attorneys’ fees and 4 $221.53 in costs pursuant to 49 U.S.C. § 32710 (b). 5 Dated this 7th day of September, 2022. — 6 — g United States District Jadge — 9 — — 10 — — 11 — — 12 — — 13 — — 14 — — 15 — — 16 — — 17 — — 18 — — 19 — — 20 — — 21 — — 22 — — 23 — — 24 — — 25 — — 26 — — 27 — — 28 —