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Best Western International Inc. v. N3A Manufacturing Inc.

United States District Court, D. Arizona

March 23, 2018

Best Western International, Inc., Plaintiff,
v.
N3A Manufacturing, Inc., Defendant.

          ORDER

          HONORABLE STEVEN P. LOGAN UNITED STATES DISTRICT JUDGE

         On September 20, 2016, Best Western International, Inc. d/b/a Best Western Hotels & Resorts filed a first amended complaint against N3A Manufacturing, Inc. d/b/a Hotelure, Inc. for breach of contract, breach of the covenant of good faith and fair dealing, and unjust enrichment, claiming that N3A failed to comply with the terms of the parties' February 1, 2014 Endorsed Supplier Direct Order Agreement. (Doc. 27.) On September 30, 2016, N3A filed an answer (Doc. 30) which subsequently was stricken pursuant to Rule 37(b) of the Federal Rules of Civil Procedure. (Docs. 48, 52.) On August 14, 2017, the Clerk of Court entered default. (Doc. 53.)

         On August 18, 2017, counsel for N3A filed a motion to withdraw, which was denied. (Docs. 60, 63-65.) Shortly thereafter, Best Western moved for default judgment pursuant to Rule 55(b) of the Federal Rules of Civil Procedure. (Doc. 61.) In response, on September 20, 2017, N3A submitted a letter through non-counsel, asking for extension of time. (Doc. 66.) For the reasons that follow, the request for an extension will be denied and default judgment will be granted.

         I. Motion for Extension of Time

         N3A requests an extension of time to respond to Best Western's motion because counsel has “relieved himself of the responsibilities of representing” N3A, and requests additional time to find replacement counsel. (Doc. 66.) As an initial matter, N3A's motion is improper because current counsel has not in fact been withdrawn from this case, and “[a] corporation may appear in federal courts only through licensed counsel.” Rowland v. Cal. Men's Colony, Unit II Men's Advisory Council, 506 U.S. 194, 201-202 (1993). See also D-Beam Ltd. Partnership v. Roller Derby Skates, Inc., 366 F.3d 972, 973-74 (9th Cir. 2004) (“It is a longstanding rule that [c]orporations and other unincorporated associations must appear in court through an attorney.” (internal quotation omitted)).

         Nevertheless, the Court finds that N3A has failed show that its failure to timely respond to the motion for default judgment, or otherwise take appropriate action is due to excusable neglect. See Fed. R. Civ. P. 6(b)(1)(B); Ahanchian v. Xenon Pictures, Inc., 624 F.3d 1253, 1261 (9th Cir. 2010) (setting out factors for evaluating excusable neglect); Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P'ship, 507 U.S. 380, 395 (1993); Briones v. Riviera Hotel & Casino, 116 F.3d 379, 381 (9th Cir.1997); Bateman v. U.S. Postal Serv., 231 F.3d 1220 (9th Cir. 2000); Pincay v. Andrews, 389 F.3d 853 (9th Cir. 2004). To date, current counsel has taken no action, and no notice of appearance by new counsel has been filed. N3A has had ample opportunity to obtain alternative representation and move to set aside the default or otherwise defend against default judgment. Further, Best Western would be prejudiced by any further extension given the time that the case has been pending and the likelihood that extending the timeline would only serve to delay and add further expense before resolving this action. The Court has no reason to believe that alternative counsel would bring about a different result and set this action on course to be adjudicated on its merits. In light of the undue delay in filing the motion, the reason for the delay, and the resulting prejudice, the Court concludes that the untimely request for an extension will be denied.

         II. Motion for Entry of Default Judgment

         Once a party's default has been entered, the district court has discretion to grant default judgment. See Fed. R. Civ. P. 55(b)(2); Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). Factors the court may consider include (1) the possibility of prejudice to the plaintiff, (2) the merits of the claim, (3) the sufficiency of the complaint, (4) the amount of money at stake, (5) the possibility of a dispute concerning material facts, (6) whether default was due to excusable neglect, and (7) the policy favoring a decision on the merits. See Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). In applying the Eitel factors, “the factual allegations of the complaint, except those relating to the amount of damages, will be taken as true.” Geddes v. United Fin. Group, 559 F.2d 557, 560 (9th Cir. 1977).

         A. Possible Prejudice to Plaintiff

         The first Eitel factor weighs in favor of granting Best Western's motion. N3A has repeatedly failed to timely defend this action. If the motion for default judgment is not granted, Best Western will likely be without other recourse for recovery.

         B. Merits of Plaintiff's Claims and the Sufficiency of the Complaint

         The second and third Eitel factors favor a default judgment where the complaint sufficiently states a claim for relief. See Danning v. Lavine, 572 F.2d 1386, 1388-89 (9th Cir. 1978). As outlined in Best Western's Motion (Doc. 61), the Complaint (Doc. 1) shows that it has stated valid causes of action against N3A.

         C. Amount of Money at Stake

         Under the fourth Eitel factor, the Court considers the amount of money at stake in relation to the seriousness of the N3A's conduct. The Court concludes that the nature ...


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