United States District Court, D. Nevada
ORDER DENYING WITHOUT PREJUDICE PLAINTIFF'S AMENDED MOTION FOR ENTRY OF DEFAULT JUDGMENT [DOC. 19]
JENNIFER A. DORSEY, District Judge.
This breach-of-contract action stems from pro se plaintiff Vito Antonio Laera's allegedly longstanding business relationship with Cai Jun Fang, who performed business services for Laera in China. Laera moves for a default judgment against Fang on all claims. Doc. 19. Although Laera satisfies the majority of the Eitel factors, his damages request is founded on speculation. I thus deny his motion without prejudice to Laera's filing of another motion with greater proof of damages.
Laera alleges that between 2002 and 2014 Fang was tasked with performing China-based business services including "sourcing, managerial services, office manager, translator and general business." Doc. 1 at 2. In the course of his employment, Fang hired staff members and Laera rented office space and an apartment "that was required to house employees while conducting business in the area." Id. at 2-3. On April 7, 2014, Laera discovered that Fang may have been engaged in wrongdoing, investigated the allegations with vendors, manufacturers, and employees, " and concluded that Fang had "added an average of 8% to the cost of the goods and or services." Id. at 3. Since Laera imported approximately $30 million in goods during Fang's employment, Laera estimates the damage from Fang's activities to be $2.4 million. See id. Additionally, Fang "overpaid himself $400 per month salary and shorted another employee his rightful salary, " overpayments that, according to Laera, totaled $30, 400. Id. at 3, 7. Laera asserts claims for (1) civil conspiracy, (2) conversion, (3) fraud, (4) misrepresentation, (5) unfair trade practices, (6) unfair competition, (7) interference with contractual relations, (8) interference with prospective advantage, (9) injurious falsehood, and (10) breach of fiduciary trust. Id. at 4-7. He requests, inter alia, damages of $2.4 million for the product "mark ups" and $30, 400 for salary overpayments, as well as "permanent injunctive relief against all the violations and wrong doings alleged." Id. at 7.
Laera sued Fang on May 1, 2014, and properly served Fang on that date. Docs. 1, 2, 4. Fang failed to timely respond and, on May 28, 2014, Laera moved for, and received, a clerk's entry of default. Docs. 7, 8. Laera then filed a motion for default judgment under Federal Rule of Civil Procedure 55, which I denied without prejudice because Laera failed to demonstrate that the factors that the Ninth Circuit articulated in Eitel v. McCool merit a default judgment. Doc. 17. Laera filed a new motion that addresses the Eitel factors, but his damages argument remains wanting.
Federal Rule of Civil Procedure 55 provides a mechanism for obtaining a default judgment against a party who has failed to plead or otherwise respond to claims brought against it. After clerk's entry of default, the movant must request a default judgment from the court under Rule 55(b)(2). A district court has discretion to enter a judgment by default, which typically turns on the consideration of the seven Eitel factors: (1) potential prejudice to the plaintiff; (2) the merits of the plaintiff's substantive claim; (3) the sufficiency of the complaint; (4) the amount of money at stake in the action; (5) the potential disputes as to material facts; (6) whether the default was due to excusable neglect; and (7) the strong federal policy favoring adjudications on the merits.
A. Possibility of Prejudice, Substantive Merits, and Sufficiency of the Complaint
The first, second, and third Eitel factors all weigh in favor of a default judgment. Laera may suffer prejudice if a default judgment is not entered, as Fang has failed to respond to the complaint. As to the second and third factors, Laera's claims are both sufficient and have merit. The allegations in Laera's complaint, except for the damages allegations, were all deemed admitted by virtue of the clerk's entry of a default.
As I note below, I conclude that Laera has not proven his damages and thus I will not analyze each of Laera's ten claims here, nor what portion of Laera's damages, if any, is attributable to any particular claim. However, I note that Laera appears to at least adequately alleges a claim for conversion in some amount. "Conversion is a distinct act of dominion wrongfully exerted over personal property in denial of, or inconsistent with, title or rights therein or in derogation, exclusion or defiance of such rights." "[C]onversion is an act of general intent, [and] which does not require wrongful intent and is not excused by care, good faith, or lack of knowledge." Laera alleges that he employed Fang to perform several business-related tasks in China, and paid him a salary of $1, 200 per month to do so. Doc. 1 at 2. Then, "[o]n or about April 7, 2014, Laera discovered that Fang was possibly engaging in wrong doings, " and ultimately discovered that Fang "overpaid himself $400 per month salary" and shortchanged another employee, resulting in $30, 400 in salary overpayments. Id. at 3, 7. At an April 30, 2014, trade show in Las Vegas, Nevada, "Laera demanded his property be returned and [Fang] refused to do so." Id. Fang then refused to return those monies. Id. Leara has adequately pled this cause of action and the second and third Eitel factors weigh in favor of granting a default judgment on Laera's conversion claim.
B. Sum of Money at Stake
The fourth Eitel factor considers the amount of money at stake and the seriousness of the defendant's conduct, which involves an assessment of whether the recovery sought is proportional to the harm the defendant's conduct has caused. The amount of money at stake in connection with Fang's salary overpayments alone-$30, 400-is plainly significant. However, it is not clear that the harm Fang's nonpayment has caused is proportional to the recovery sought. Although Fang's dates of employment and the amount of money he added to his salary are known, it is yet unknown how long Fang "shortchanged" his fellow employee. Moreover, Laera provides no details regarding how he arrived at the $2.4 million figure from the $30 million in inventory he received, or that Fang was responsible for the entirety of these losses. Thus, this factor weighs against entry of a default judgment.
C. Possible Dispute as to Material Facts
The fifth Eitel factor considers any potential disputes about material facts. Here, a number of material facts have already been deemed admitted as a matter of law by virtue of Fang's default. "An allegation-other than one relating to the amount of damages-is admitted if a responsive pleading is required and the allegation is not denied." Fang has filed no responsive pleading nor denied Laera's allegations. Thus, I may accept as true those portions of Laera's complaint that do not pertain to monetary liability. The damages that Laera requests, however, cannot be taken into consideration as a matter of law. And while I have already pointed out several possible ambiguities regarding Fang's liability for Laera's ...