United States District Court, D. Hawaii
FINDINGS AND RECOMMENDATION TO DENY WITHOUT PREJUDICE
PLAINTIFF FERRARI FINANCIAL SERVICES, INC.'S MOTION FOR
DEFAULT JUDGMENT AGAINST DEFENDANTS SEN MING LIN a.k.a. SAM
LIN AND AUTO X-CHANGE, INC. 
RICHARD L. PUGLISI, UNITED STATES MAGISTRATE JUDGE
the Court is Plaintiff Ferrari Financial Service, Inc.'s
Motion for Default Judgment Against Defendants Sen Ming Lin
a.k.a. Sam Lin and Auto X-Change, Inc., filed August 3, 2018.
ECF No. 26. Defendant Jason Yokoyama filed a Statement of No.
Position on August 8, 2018. ECF No. 28. 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. 22.
After careful consideration of the Motion and the record in
this action, the Court FINDS AND RECOMMENDS that the Motion
filed this action against Defendants alleging various causes
of action related to the purchase and financing of a 2014
Lamborghini Gallardo in 2015 by Defendant Jason Yokoyama. ECF
No. 11. In the First Amended Complaint, Plaintiff alleges
that it entered into a contract in the amount of $168, 417.78
with Defendant Yokoyama to finance the vehicle purchase (the
“Contract”). Id. ¶¶ 10, 15.
Plaintiff alleges Defendant Yokoyama granted Plaintiff a
security interest in the vehicle to secure repayment.
Id. ¶ 12. Plaintiff alleges if Defendant
Yokoyama fails to make payments under the Contract, the
Contract allows Plaintiff to take possession of and to sell
the vehicle. Id. ¶ 14. Plaintiff alleges that
Defendant Yokoyama is in default under the Contract because
he failed to make payments after January 2018. Id.
alleges that Defendant Yokoyama transferred possession of the
vehicle to Defendant Auto X-Change, Inc. and/or Defendant Sen
Ming Lin pursuant to an agreement. Id. ¶ 21.
Plaintiff alleges that Defendant Auto X-Change and/or
Defendant Lin and/or Defendant Yokoyama remain in possession
of the vehicle. Id. ¶¶ 22, 27, 38.
Plaintiff alleges that it has demanded that Defendant
Yokoyama, Defendant Auto X-Change, and Defendant Lin deliver
possession of the vehicle to Plaintiff, but Defendants have
refused. Id. 36-37, 39-40.
asserts claims for breach of contract and money lent against
only Defendant Yokoyama. Id. ¶¶ 10-19,
43-46. Plaintiff asserts claims for replevin and conversion
against all Defendants. Id. ¶¶ 20-42.
Yokoyama filed his Answer to the First Amended Complaint on
May 30, 2018. In his Answer, he denies the allegations
related to all of the claims asserted against him, including
the claims for replevin and conversion. See ECF No.
16 ¶¶ 1, 4, 6-9. Further, Defendant Yokoyama
asserts several affirmative defenses including unclean hands,
waiver, statute of limitations, estoppel, and several
contract defenses. Id. at 3-5. Pursuant to Rule
55(a) of the Federal Rules of Civil Procedure, the Clerk
entered default against Defendant Auto X-Change and Defendant
Lin on June 27, 2018, and July 13, 2018. ECF No. 19, 22.
Trial has been set in this action for August 20, 2019. ECF
present Motion, Plaintiff asks the Court to grant default
judgment against Defendant Auto X-Change and Defendant Lin
and to enter judgment pursuant to Rule 54(b) awarding
Plaintiff immediate possession of the vehicle. ECF No. 26 at
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.
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)).
Rule of Civil Procedure 54(b) specifies that “when
multiple parties are involved, the court may direct entry of
a final judgment as to one or more, but fewer than all . . .
parties only if the court expressly determines that there is
no just reason for delay.”
the Court finds that default judgment is premature and should
not be entered until Plaintiff's claims against Defendant
Yokohama have been adjudicated. See Valvanis v.
Milgroom, No. CIV.06-00144JMS-KSC, 2008 WL 2150952, at
*2 (D. Haw. May 20, 2008) (denying motion for default
judgment against one defendant as premature based on related
pending claims against the remaining defendant). As noted
above, Plaintiff seeks default judgment against Defendant
Auto X-Change and Defendant Lin on the claims for replevin
and conversion, even though its claims for breach of
contract, replevin, conversion, and money lent remain pending
against Defendant Yokoyama.
Ninth Circuit has held that “where a complaint alleges
that defendants are jointly liable and one of them defaults,
judgment should not be entered against the defaulting
defendant until the matter has been adjudicated with regard
to all defendants.” In re First T.D. & Inv.,
Inc., 253 F.3d 520, 532 (9th Cir. 2001) (citing Frow
v. De La Vega, 82 U.S. 552, 554 (1872)). Further, the
Ninth Circuit has held that this reasoning is not limited to
joint liability claims, but may extend to defendants who are
“similarly situated.” Id. Courts must
consider whether it would be “incongruous and
unfair” to allow a plaintiff to prevail against the
defaulting defendant on a legal theory that may be ultimately
rejected with regard to the answering defendant in the same
action. Id.; see also Shanghai Automation
Instrument Co. v. Kuei, 194 F.Supp.2d 995, 1008 (N.D.
Cal. 2001) (“Frow's applicability turns
not on labels such as ‘joint liability' or
‘joint and several liability,' but rather on the
key question of whether under the theory of the complaint,
liability of all the ...