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Puapong v. Wellcare Disability, LLC

United States District Court, D. Hawaii

January 14, 2019



          Richard L. Puglisi, United States Magistrate Judge

         Before the Court is Plaintiff's Motion for Default Judgment on Proof as to Wellcare Disability, LLC (“Motion”). ECF No. 25. On December 4, 2018, the Court directed supplemental briefing, which was filed on December 18, 2018. ECF Nos. 27, 28.

         The Court found this matter 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. 26. After carefully reviewing the pleadings and relevant legal authority, the Court FINDS and RECOMMENDS that the district court GRANT IN PART AND DENY IN PART Plaintiff's Motion.


         Plaintiff Praphan Puapong, M.D. filed this action on December 29, 2017, to recover unpaid wages for medical services that he rendered on behalf of Defendant Wellcare Disability, LLC (“Defendant Wellcare”) and Defendant Veterans Evaluation Services. See ECF No. 1. Plaintiff alleges that he entered into a written contract with Defendants to provide medical services in April 2015 (the “Contract”). Id. ¶ 10. The Contract was effective on April 13, 2015, and expired on April 30, 2017. Id. After the Contract expired on April 30, 2017, Defendants continued to provide Plaintiff with patient schedules and referred patients to Plaintiff. Id. ¶ 13. Beginning in June 2017, the paychecks Plaintiff received from Defendant Wellcare as payment for his services were returned due to insufficient funds. Id. ¶ 14. Plaintiff contacted Bruce Cheek, President of Defendant Wellcare, regarding the paycheck he received in June that was returned due to insufficient funds and his continued employment with Defendant Wellcare. Id. ¶ 15. Mr. Cheek informed Plaintiff that he would issue another check to him and that Plaintiff should continue providing patient services for Defendants. Id. ¶ 16. On September 12, 2017, Mr. Cheek advised Plaintiff in writing (the “Termination Letter”) that his employment agreement had been terminated because Defendant Wellcare could no longer afford to stay in business and that every effort would be made to pay his accrued fees from unpaid receivables. Id. ¶ 17. After Plaintiff received the Termination Letter, he contacted Defendants regarding his unpaid fees but received no response. Id. ¶¶ 18, 19. In his Complaint, Plaintiff asserts claims for breach of contract, quantum meruit, and fraud. Id. ¶¶ 20-38.

         Plaintiff filed a notice of dismissal as to Defendant Veterans Evaluations Services on March 21, 2018. ECF No. 11. Plaintiff filed a Waiver of Service signed by Mr. Cheek on March 16, 2018. ECF No. 16. On April 9, 2018, a “Response to Complaint for Damages” was filed by Mr. Cheek “representing Wellcare Disability, LLC as its former owner.” ECF No. 17. In that Response, Mr. Cheek states that Defendant Wellcare was licensed in Kentucky and was dissolved in September 2017. Id. Further, Mr. Cheek states that Plaintiff “is owed $17, 615.00 by Wellcare Disability, LLC for clinic services ending in August 2017.” Id.

         The Court issued an Order to Show Cause on June 5, 2018. ECF No. 20. The Order to Show Cause explained that Defendant Wellcare cannot represent itself in this proceeding, nor can its owners, managers, members, or employees file papers in this case on its behalf unless they are licensed attorneys. Id. at 2. Further, the Court stated that Defendant Wellcare must retain counsel if it wishes to defend against this action. Id. The Court ordered Defendant Wellcare to show cause, if any, why default should not be entered against it for its failure to defend this action and be represented by counsel. Id. Defendant Wellcare did not appear at the show cause hearing or otherwise respond to the Court's Order to Show Cause. See ECF No. 22. Accordingly, the Court directed the Clerk's Office to enter default against Defendant Wellcare and directed Plaintiff's counsel to file the appropriate motion for default judgment. ECF No. 23. Default was entered against Defendant Wellcare on July 17, 2018. ECF No. 23.

         In the present Motion, Plaintiff asks the Court to enter default judgment against Defendant Wellcare on all claims and to award damages “between $75, 000 and $100, 000.” See ECF No. 28-1 at 8-9.


         Default judgment may be entered for the plaintiff if the defendant has defaulted by failing to appear and the plaintiff's 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).

         A. Jurisdiction

         As a preliminary matter, this Court has an affirmative obligation to determine whether or not it has subject matter jurisdiction over this action and personal jurisdiction over Defendant Wellcare. 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.”).

         1. Subject Matter Jurisdiction

         First, the Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1332. Plaintiff is a resident of Hawaii; Defendant Wellcare is a Kentucky limited liability company. ECF No. 1 ¶¶ 3, 5. Plaintiff's Complaint seeks damages that “exceed $75, 000.” Id. at 8. Accordingly, the Court has diversity jurisdiction over this matter. See 28 U.S.C. § 1332.

         2. Personal Jurisdiction

         Personal jurisdiction is proper if it is consistent with Hawaii's long-arm statute and it comports with due process. See Boschetto v. Hansing, 539 F.3d 1011, 1021-22 (9th Cir. 2008). Because Hawaii's long-arm statute, Hawaii Revised Statute § 634-35, reaches to the full extent permitted by the United States Constitution, the Court need only determine whether due process permits the exercise of personal jurisdiction. Television Events & Mktg., Inc. v. Amcon Distrib. Co., 416 F.Supp.2d 948, 958 (D. Haw. 2006) (citing Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800-01 (9th Cir. 2004)). For due process to be satisfied, a non-resident defendant must have “minimum contacts” with the forum state such that the assertion of jurisdiction “does not offend traditional notions of fair play and substantial justice.” Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1155 (9th Cir. 2006) (citing Int'l Shoe Co. v. Wash., 326 U.S. 310, 315 (1945)). The Ninth Circuit applies a three-part test to determine specific personal jurisdiction: (a) did the defendant purposefully avail itself of the privilege of conducting activities in the forum state; (b) does the claim relate to the defendant's forum related activities; and (c) is the exercise of jurisdiction reasonable. See Boschetto, 539 F.3d at 1021 (citing Schwarzenegger, 374 F.3d at 802).

         a. Purposeful Availment

         The purposeful availment requirement is satisfied if the defendant “has taken deliberate action” toward the forum state. Panavision Int'l L.P. v. Toeppen, 141 F.3d 1316, 1320 (9th Cir. 1998) (citing Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir. 1995)). This requirement ensures that a nonresident defendant will not be haled into court based upon “random, fortuitous or attenuated” contacts with the forum state. Id. (quoting Burger King Corp. V. Rudzewicz, 471 U.S. 462, 475 (1985)). A defendant need not have physical contacts with the forum, so long as its efforts are “purposefully directed” toward forum residents. Id. A defendant's efforts are “purposefully directed” if the defendant (1) committed an intentional act (2) expressly aimed at the forum state that (3) caused harm that the defendant knew was likely to be suffered in the forum state. See Bancroft & Masters, Inc. v. Augusta Nat. Inc., 223 F.3d 1082, 1087 (9th Cir. 2000) (citing Calder v. Jones, 465 U.S. 783 (1984)).

         Here, taking all allegations as true, the Court finds that Defendant Wellcare's efforts were purposefully directed toward Hawaii residents. Defendant Wellcare's agent approached Plaintiff, a resident of Hawaii, and solicited him to enter into a written contract with Defendants. ECF No. 1 ¶¶ 9-10. Further, Defendants continued to provide Plaintiff with patient schedules and referred patients to Plaintiff after his written contract expired. Id. ¶ 13. Defendant Wellcare's president also told Plaintiff that he should continue providing patient services for Defendants. Id. ¶ 16. These acts were intentional and aimed at a resident of Hawaii. These acts caused harm to Plaintiff who provided services, but did not get paid by Defendants. Given these actions, Defendant Wellcare knew that harm would have been suffered in Hawaii where Plaintiff resides. Accordingly, the Court concludes that Defendant Wellcare's contacts with Hawaii are sufficient to show purposeful availment.

         b. Claims Arise Out of Forum ...

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