United States District Court, D. Arizona
DOUGLAS L. RAYES UNITED STATES DISTRICT JUDGE.
Tilted Kilt Franchise Operating, LLC moves for default
judgment against Respondents Falinason, Inc., Nirav Patel,
and Lina Patel pursuant to Federal Rule of Civil Procedure
55(b). (Docs. 14, 23.) No. response has been filed and the
time for filing one has passed. For reasons stated below,
Petitioner's motion is granted.
November 22, 2016, Petitioner filed for arbitration before
the American Arbitration Association. Respondents appeared
through counsel and participated in the arbitration. On
August 30, 2017, however, the parties entered into a
settlement agreement resolving all claims asserted in the
arbitration. As part of the settlement agreement, Respondents
agreed to pay to Petitioners: (1) a sum certain, and (2) in
the event they breached the payment terms of the settlement
agreement, liquated damages owed pursuant to the franchise
agreement. It also was agreed that the arbitration would be
held in abeyance until Respondents made all payments due
under the settlement agreement.
failed to make the required payments, breaching the
settlement agreement. As a result, Petitioner resumed the
arbitration and amended its claim to add a count for breach
of the settlement agreement. On December 19, 2017, Petitioner
filed a motion for summary judgment. On February 1, 2018, the
arbitrator held a telephonic hearing on the motion, at which
all parties appeared and participated.
February 14, 2018, the arbitrator issued an interim
arbitration award in favor of Petitioner and against
Respondents on the breach of the settlement agreement claim.
On March 22, 2018, the arbitrator issued a final award,
finding Respondents jointly and severally liable for $1, 486,
811.55 in damages and $22, 941.39 in attorneys' fees and
costs. To date, this award has not been vacated, modified, or
corrected, and the time to do so has long since expired.
25, 2018, Petitioner initiated this case to confirm the
arbitration award under the Federal Arbitration Act. (Doc.
1.) Respondents were properly served but failed to answer or
otherwise defend within the time prescribed by the Federal
Rules of Civil Procedure. Upon application by Petitioner, the
Clerk entered default against Respondents. (Docs. 11-12,
21-22.) Petitioner now seeks entry of a default judgment.
(Docs. 14, 22.)
Default Judgment Standard
default is entered by the clerk, the district court may enter
default judgment pursuant to Rule 55(b). The court's
“decision whether to enter a default judgment is a
discretionary one.” Aldabe v. Aldabe, 616 F.2d
1089, 1092 (9th Cir. 1980). Although the court should
consider and weigh relevant factors as part of the
decision-making process, it “is not required to make
detailed findings of fact.” Fair Housing of Marin
v. Combs, 285 F.3d 899, 906 (9th Cir. 2002).
following factors may be considered in deciding whether
default judgment is appropriate: (1) the possibility of
prejudice to the plaintiff, (2) the merits of the claims, (3)
the sufficiency of the complaint, (4) the amount of money at
stake, (5) the possibility of factual disputes, (6) whether
default is due to excusable neglect, and (7) the policy
favoring decisions on the merits. See Eitel v.
McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). In
considering the merits and sufficiency of the complaint, the
court accepts as true the complaint's well-pled factual
allegations, but the plaintiff must establish all damages
sought in the complaint. See Geddes v. United Fin.
Grp., 559 F.2d 557, 560 (9th Cir. 1977).
Possible Prejudice to Petitioner
first Eitel factor weighs in favor of default
judgment. Respondents failed to respond to the petition or
otherwise appear in this action despite being served with the
complaint, the application for default, and the motion for
default judgment. If default judgment is not granted,
Petitioner “will likely be without other recourse for
recovery.” PepsiCo, Inc. v. Cal. Sec. Cans,
238 F.Supp.2d 1172, 1177 (C.D. Cal. 2002). The prejudice to
Petitioner in this regard supports the entry of default
Merits of the Claims and Sufficiency ...