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Covenant Care California, LLC v. Shirk

United States District Court, D. Nevada

June 21, 2018

Covenant Care California, LLC d/b/a Silver Ridge Healthcare Center, Plaintiff
v.
Chester Marshall Shirk, Defendant

          ORDER GRANTING MOTION FOR DEFAULT JUDGMENT [ECF NO. 14]

          UNITE STATES DISTRICT JUDGE JENNIFER A. DORSEY

         Plaintiff Silver Ridge Healthcare Center contracted with defendant Chester Marshall Shirk to admit him to its facility as a resident.[1] Shirk agreed to pay Silver Ridge for his tenancy and understood that payments would be due upon discharge.[2] Shirk has an overdue balance of $101, 153.53, and Silver Ridge sues to collect that amount.[3] Shirk has failed to appear in these proceedings since Silver Ridge filed its complaint over a year ago on April 5, 2017.[4] Silver Ridge now moves for default judgment.[5] I find that Silver Ridge has met its burden to show that default judgment is warranted, and I grant its motion.

         Background

         When Shirk discharged from Silver Ridge on November 22, 2016, he owed $101, 153.53 for services rendered during his 223-night stay at the facility.[6] Silver Ridge sent Shirk a notice of past-due balance a month later[7] and warned him that he could be subject to a collection action if payment was not received before the end of December.[8] Shirk ignored the notice, so Silver Ridge sent a similar one on January 12, 2017.[9] Shirk ignored that, too, so Silver Ridge filed this lawsuit and served Shirk with process in April 2017.[10] Shirk's habit of avoiding Silver Ridge persists, and the Clerk entered default against him on October 27, 2017.[11]

         Discussion

         A. Default-judgment standard

         Federal Rule of Civil Procedure 55(b)(2) permits a plaintiff to obtain a default judgment after the clerk enters default based on a defendant's failure to defend. After default, the complaint's factual allegations are taken as true, except those relating to damages.[12]“[N]ecessary facts not contained in the pleadings, and claims [that] are legally insufficient, are not established by default.”[13] The court has the power to require a plaintiff to provide additional proof of facts or damages to ensure that the requested relief is appropriate.[14] A default judgment must not differ in kind from, or exceed in amount, what is demanded in the pleadings.[15] Whether to grant a motion for default judgment lies within the trial court's discretion, [16] which is guided by the seven factors outlined by the Ninth Circuit in Eitel v. McCool:

(1) the possibility of prejudice to the plaintiff; (2) the merits of the plaintiff's substantive claim; (3) 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.[17]

         B. Evaluating the Eitel factors

         1. Possibility of prejudice to Silver Ridge

         The first Eitel factor weighs in favor of default judgment because Silver Ridge would otherwise likely be without other recourse or recovery. Shirk's failure to appear or respond prejudices Silver Ridge's ability to pursue its claim on the merits.

         2. Substantive merits and sufficiency of Silver Ridge's claims

         The second and third Eitel factors require Silver Ridge to demonstrate that it has stated a claim on which it may recover.[18] Silver Ridge's complaint contains claims for breach of contract, breach of the implied covenant of good faith and fair dealing, and unjust enrichment. Because Silver Ridge satisfies all elements for its breach-of-contract claim, it can recover its full damages from that claim, so I need not address the merits of its bad-faith and unjust-enrichment claims.

         The elements of a breach-of-contract claim in Nevada are: (1) the existence of a valid contract; (2) a breach by the defendant; and (3) damages as a result of the breach.[19] Silver Ridge has alleged and shown that Shirk had a valid agreement for its residency at their facility, [20] that Shirk breached that agreement by failing to pay Silver Ridge for services provided during his tenancy as he promised in the agreement, and that Shirk has an overdue balance of $101, 153.53. Silver Ridge supports these allegations with an account-write-off request, [21] an accounts-receivable spreadsheet, [22] the collections-activities log, [23] Shirk's transaction history, [24] two signed affidavits, [25] and the past-due-balance notices. Shirk's absence has made it impossible for him to refute this evidence, so I find that Silver Ridge has established a meritorious breach-of-contract claim. The second and third Eitel factors therefore weigh in favor of default judgment.

         3. Sum of money at stake in the action

         The sum-of-money factor requires me to consider “the amount of money at stake in relation to the seriousness of [Shirk's] conduct.”[26] “If the sum of money at stake is completely disproportionate or inappropriate, default judgment is disfavored.”[27] Silver Ridge is asking for judgment in the amount of $101, 153.53 for Shirk's overdue account. This amount represents the actual cost of services that Shirk contracted to pay for, but didn't. I find that this factor weighs in favor of default judgment.

         4. Possibility of a dispute ...


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