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Carbajal v. Diamond Resorts Hawaii Collection Development, LLC

United States District Court, D. Hawaii

February 9, 2018

MARIA CARBAJAL, Plaintiff,
v.
DIAMOND RESORTS HAWAII COLLECTION DEVELOPMENT, LLC, ET AL., Defendants.

          FINDINGS AND RECOMMENDATION TO GRANT IN PART AND DENY IN PART DEFENDANT AND COUNTER-CLAIMANT DIAMOND RESORTS HAWAII COLLECTION DEVELOPMENT, LLC'S MOTION TO ENTER DEFAULT JUDGMENT AGAINST MARIA CARBAJAL[1]

          Richard L. Puglisi United States Magistrate Judge

         Before the Court is Defendant and Counter-Claimant Diamond Resorts Hawaii Collection Development, LLC's Motion to Enter Default Judgment Against Maria Carbajal, filed on January 19, 2018 (“Motion”). ECF No. 40. Plaintiff was served with a copy of the Motion, but did not file an opposition or otherwise respond. See ECF No. 40-7. The Court found the Motion suitable for disposition without a hearing pursuant to Rule 7.2(d) of the Local Rules of Practice of the United States District Court for the District of Hawaii. ECF No. 41. After careful consideration of the Motion, the declarations, exhibits, and the record established in this action, the Court FINDS AND RECOMMENDS that the Motion be GRANTED IN PART and DENIED IN PART.

         BACKGROUND

         Plaintiff filed this action against Defendant Diamond Resorts Hawaii Collection Development, LLC (“Diamond Resorts”) in California state court on January 3, 2017. ECF No. 3-1. On February 8, 2017, Defendant removed this action to federal court in California. ECF Nos. 1, 3. Defendant then filed an motion to transfer this case to the District of Hawaii. ECF No. 11. Plaintiff filed a statement of no opposition to Defendant's motion to transfer. ECF No. 15. On June 8, 2017, the court granted Defendant's motion and transferred the case to this court. ECF No. 21.

         On June 9, 2017, the Clerk of Court issued a notice to all counsel that they must comply with the Local Rules regarding admission to this court and the submission of applications for pro hac vice admittance and the designation of local counsel. See ECF No. 24. On July 28, 2017, local counsel for Defendant filed a notice of appearance. See ECF No. 26. Defendant's mainland counsel then filed motions for pro hac vice admission, which were granted by the Court. See ECF Nos. 27-30. No local counsel filed a notice of appearance in this action on behalf of Plaintiff. Plaintiff's mainland counsel, Mitchell Reed Sussman, Esq., did not submit an application to appear pro hac vice. On September 13, 2017, Mr. Sussman informed the Court by telephone that Plaintiff would not be obtaining local counsel and had ceased communications with him. On September 15, 2017, the Court issued an Order to Show Cause directing Plaintiff to appear and show cause why this action should not be dismissed pursuant to Federal Rule of Civil Procedure 41(b) for failure to prosecute and to comply with the Local Rules. ECF No. 32. After Plaintiff failed to appear at the Show Cause hearing, the court dismissed Plaintiff's complaint and entered default against Plaintiff on Diamond Resorts' Counterclaim. ECF Nos. 36, 37. The present Motion followed.

         ANALYSIS

         Default judgment may be entered against a party from whom affirmative relief is sought and the claim is for a “sum certain or for a sum which can by computation be made certain[.]” Fed.R.Civ.P. 55(b)(1), (2). The granting or denial of a motion for default judgment is within the discretion of the court. Haw. Carpenters' Trust Funds v. Stone, 794 F.2d 508, 511-12 (9th Cir. 1986). Entry of default does not entitle the non-defaulting party to a default judgment as a matter of right. Valley Oak Credit Union v. Villegas, 132 B.R. 742, 746 (9th Cir. 1991). Default judgments are ordinarily disfavored, and cases should be decided on their merits if reasonably possible. Eitel v. McCool, 782 F.2d 1470, 1472 (9th Cir. 1986). The court should consider the following factors in deciding whether to grant a motion for default judgment:

(1) the possibility of prejudice to the moving party;
(2) the merits of the substantive claim;
(3) the 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.

Id. at 1471-72.

         On default “the factual allegations of the complaint, except those relating to the amount of damages, will be taken as true.” TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987) (quoting Geddes v. United Fin. Group, 559 F.2d 557, 560 (9th Cir. 1977)). The allegations regarding liability are deemed true, but the moving party must establish the relief to which it is entitled. Fair Hous. of Marin v. Combs, 285 F.3d 899, 906 (9th Cir. 2002). Also, “necessary facts not contained in the pleadings, and claims which are legally insufficient, are not established by default.” Cripps v. Life Ins. Co. of N. Am., 980 F.2d 1261, 1267 (9th Cir. 1992) (citing Danning v. Lavine, 572 F.2d 1386, 1388 (9th Cir. 1978)).

         A. Jurisdiction

         Before considering the merits of default judgment, the Court has an affirmative obligation to determine whether or not it has subject matter jurisdiction over this action and personal jurisdiction over Plaintiff. See In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999) (“To avoid entering a default judgment that can later be successfully attacked as void, a court should determine whether it has the power, i.e., the jurisdiction, to enter the judgment in the first place.”).

         First, the Court has diversity jurisdiction because the amount in controversy exceeds $75, 000 and there is complete diversity between Plaintiff and Defendant. See 28 U.S.C. § 1332. Plaintiff is a resident of California. ECF No. 3-1 ¶ 1. Diamond Resorts is a Delaware limited liability company with its principal place of business in Nevada, and its ...


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