United States District Court, D. Nevada
J. Dawson, United States District Judge
before the Court is Plaintiff's Motion for Default
Judgment Against Garnishee Defendant PreCharge USA, Inc.
(#18). Also before the Court is Plaintiff's Motion to
Satisfy Judgment and NRS § 31.330 Traversing Declaration
Regarding Garnishee PreCharge USA, Inc. (#13). Though the
time for doing so has passed, no response in opposition has
been filed to either motion.
Onyx Enterprises International Corporation
(“Onyx”) is in the business of marketing
automotive and consumer goods. Most of Onyx's sales
volume is derived from internet sales. In December 2009, Onyx
entered into a contract with Defendant Regency Global
Solutions, Inc. (“Regency”) to provide another
layer of security against credit card fraud. Regency's
services consisted of adding an additional layer of
verification of Onyx's suspect credit card orders, as
well as indemnifying Onyx from transactions that Regency had
deemed legitimate but turned out to be fraudulent. The
parties performed pursuant to their contract for six years.
However, beginning in 2015, Onyx was deluged by fraudulent
transactions that Regency had previously determined were
legitimate. By August 2016, Onyx's losses as a result of
transactions subject to Regency's indemnification reached
August 19, 2016, Onyx filed suit against Regency in the
United States District Court for the Southern District of New
York, No. 16-cv-6572-ER-KNF. Onyx caused the summons and
complaint to be served upon Regency on September 7, 2016.
After Regency failed to respond to the complaint, Onyx
obtained default judgment in the amount of $534, 000.40
(“the Judgment”), including interest. Onyx then
domesticated the Judgment in this Court on February 28, 2018
by filing a Clerk's Certification of a Judgment to be
Registered in Another District (#1).
April 23, 2018, Writ of Execution (#4) was entered by the
Clerk of the Court. The United States Marshals served
PreCharge, Onyx's alleged alter ego, with a Writ of
Garnishment in Aid of Execution (“Writ of
Garnishment”) (#10) on June 13, 2018. The Writ of
Garnishment contained garnishee interrogatories pursuant to
NRS § 31.330. The deadline for Precharge to provide its
response to the interrogatories was July 3, 2018.
See NRS § 31.260(1)(e). However, PreCharge
failed to provide its response to the U.S. Marshals Service
and/or judgment debtor Regency as required by NRS §
16, 2018, Onyx filed a Motion to Satisfy Judgment and
Traversing Declaration Regarding Garnishee PreCharge USA,
Inc. (“the Traversing Declaration”) pursuant to
NRS § 31.330. The Traversing Declaration includes
Onyx's claim that PreCharge is an alter ego of Regency.
No. responsive pleading having been filed by PreCharge, Onyx
filed an Application for Entry of Default by Clerk (#16) on
September 18, 2018. On October 2, 2018, the Clerk of the
Court entered default against PreCharge.
Legal Standard for Entry of Default Judgment
Rule of Civil Procedure 55(b)(2) permits the Court, following
a defendant's default, to enter a final judgment in a
case. There is no matter of right to the entry of a default
judgment, and its entry is entirely within this Court's
discretion. See Draper v. Coombes, 792 F.2d 915, 924
(9th Cir. 1986); Aldabe v. Aldabe, 616 F.2d 1089,
1092 (9th Cir. 1980). This Court may find entry of a default
judgment appropriate in consideration of:  the sufficiency
of the complaint and the merits of a plaintiff's
substantive claims;  the possibility of prejudice if entry
is denied;  the sum of money at stake;  the possibility
of a dispute concerning material facts;  whether default
was due to excusable neglect; and  the strong policy
favoring decisions on the merits. See Eitel v.
McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986).
Plaintiff has met all procedural requirements for entry of
default judgment, the Court must consider the Eitel
factors. The first two Eitel factors are (1) the
merits of Plaintiff's substantive claim, and (2) the
sufficiency of the complaint. See id. The Ninth
Circuit has suggested that these two factors require that a
plaintiff "state a claim on which the [plaintiff] may
recover." Danning v. Lavine, 572 F.2d 1386,
1388 (9th Cir. 1978). Plaintiff has clearly stated a claim
pursuant to NRS § 31.330; 31.260; 31.290. Plaintiff has
met the statutory requirements for registration of the
Judgment and for a finding of default against a garnishee.
See NRS § 31.290(2).
failure to enter default will prejudice Plaintiff by allowing
defendants to continually move assets to new business
entities without having to pay the Judgment. Opposing parties
had the opportunity to address disputes regarding material
facts, but chose not to appear and have made no argument that
failure to do so was a result of excusable neglect.
Therefore, the Court grants Onyx's traverse asserting
PreCharge is the alter ego of Regency and Onyx's motion
for default judgment.
IT IS HEREBY ORDERED that Plaintiff's Motion to Satisfy
Judgment and NRS § 31.330 Traversing Declaration