United States District Court, D. Arizona
HONORABLE JENNIFER G. ZIPPS UNITED STATES DISTRICT JUDGE.
before the Court is a Motion for Default Judgment filed by
Plaintiff on October 25, 2018. (Doc. 18.) Defendant did not
file a response. Having reviewed the motion and all filings
in this matter, the Court will grant the Motion for Default
AND PROCEDURAL BACKGROUND
case arises out of a workers' compensation and
employer's liability insurance policy for two separate
periods of coverage. Plaintiff Granite State Insurance
Company issued the policy to Defendant CME Professional
Services LLC on or about August 6, 2015, to cover the period
of August 2, 2015 to August 2, 2016 (“First Policy
Period”). (Doc. 11, ¶ 16.) Per the policy's
terms, Plaintiff provided Defendant with the estimated annual
premium, including taxes and fees, of $727, 502. (Doc. 11,
Ex. A.) The policy further provided that the final
premium would be determined “after this policy ends by
using the actual, not the estimated, premium basis and the
proper classifications and rates that lawfully apply to the
business and work covered by this policy.”
(Id.) Between September 9, 2015 and May 26, 2016,
Plaintiff issued several endorsements that increased the
premium by a net $780, 565. (Doc. 11, ¶¶ 18-24.)
Plaintiff subsequently conducted two audits of
Defendant's books and records for the First Policy
Period. Based on the audits, Plaintiff calculated that the
Defendant's premium should be increased by a net $66,
014. (Id. at ¶¶ 25-28.) Ultimately,
Plaintiff determined that the Defendant owed a total premium
on the First Policy Period of $1, 574, 081. (Doc. 11, ¶
29.) Defendant has paid $1, 370, 865.74 to Plaintiff towards
the premium due for the First Policy Period. (Doc. 11, ¶
about August 4, 2016, Plaintiff renewed the Policy for the
policy period of August 2, 2016 to August 2, 2017 (“the
Second Policy Period”). The total estimated annual
premium for the Second Policy Period was $1, 700, 135.
(Id. at ¶¶ 32-33.) Between October 4, 2016
and May 24, 2017, Plaintiff issued several endorsements and
amended class codes, decreasing the premium by a net $968,
625. (Id. at 34-41.) After conducting an audit,
Plaintiff reduced the premium by $92, 843. (Id. at
¶¶ 42-43.) The Plaintiff ultimately determined that
the Defendant owed a total premium of $638, 667 for the
Second Policy Period. (Id. at ¶ 44.) Defendant
has paid $544, 921.42 to Plaintiff for the premium due for
the Second Policy Period. (Id. at ¶ 45).
billed Defendant on April 6, 2017 for the $203, 215.26 due on
the First Policy Period (Doc. 18-2) and on October 30, 2017
for the $93, 745.58 due on the Second Policy Period. (Doc.
18-3.) Plaintiff also sent Defendant demand letters
requesting payment. (Doc. 18.) Defendant has failed to provide
payment regarding either invoice. (Doc. 11, ¶¶
August 6, 2018, Plaintiff initiated this action, seeking
contractual damages in the amount of $296, 256.84, pretrial
and posttrial interest, and attorney's fees and costs.
(Doc. 1.) On August 13, 2018, Plaintiff filed an Amended
Complaint to address subject matter jurisdiction. (Docs. 9
& 11.) Defendant was served with the Amended
Complaint and Summons on September 7, 2018. (Doc. 14.)
Defendant failed to respond or answer. Thereafter, Plaintiff
requested the Clerk of the Court to enter default against
Defendant (Doc. 15), which the Clerk entered on October 2,
2018. (Doc. 16.) Plaintiff now seeks entry of default
judgment against Defendant.
entry of default, a court may grant a default judgment on the
merits of the case. See Fed. R. Civ. P. 55. The
decision to enter a default judgment is a matter left to the
sound discretion of the court. Aldabe v. Aldabe, 616
F.2d 1089, 1092 (9th Cir. 1980). In its
determination whether to enter default judgment, the court
may consider as factors:
(1) the possibility of prejudice to the plaintiff; (2) the
merits of plaintiff's 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.
Eitel v. McCool, 782 F.2d 1470, 1471-72
(9th Cir. 1986). Once default has been entered,
the court may take as true all factual allegations in
Plaintiff's Complaint, except those relating to the
amount of damages. TeleVideo Sys., Inc. v.
Heidenthal, 826 F.2d 915 (9thCir. 1987).
However, that does not relieve the plaintiff of its duty to
plead specific allegations, as “defendant is not held
to admit facts that are not well-pleaded or to admit
conclusions of law.” DirecTv, Inc. v. Hoa
Huynh, 503 F.3d 847, 855 (9th Cir. 2007).
consideration of the Eitel factors, the Court
concludes that entry of default judgment against Defendant
CME Professional Services is proper.
The possibility of prejudice to Plaintiff
will suffer prejudice if default judgment is not entered.
Eitel, 782 F.2d at 1471-72. Plaintiff provided
insurance coverage, which Defendant accepted, and for which
Defendant has failed to pay the $296, 960.84 balance owed.
Plaintiff attempted to resolve the matter without judicial
involvement by sending invoices and demand letters.
Defendant's failure to remit payment, along with its
failure to respond to or answer the Complaint makes it
unlikely Plaintiff could recover absent entry of default
judgment. The Court concludes that Plaintiff would suffer
prejudice if its motion for default judgment was denied
because it would be “without other recourse for
recovery.” PepsiCo, Inc. v. Cal. Sec. Cans,
238 F.Supp.2d 1172, 1177 (C.D. Cal. 2002). This factor
greatly weighs in favor of granting default judgment.
Merits of the Substantive Claim & Sufficiency of ...