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Swift Financial, LLC v. Alabar Construction, Inc.

United States District Court, D. Oregon, Pendleton Division

January 30, 2019

SWIFT FINANCIAL, LLC, fka Swift Financial Corporation, a Delaware limited liability company, Plaintiff,
v.
ALABAR CONSTRUCTION, INC., an Oregon corporation; and JOHN A. FENTON, an individual, Defendants.

          FINDINGS AND RECOMMENDATIONS

          PATRICIA SULLIVAN UNITED STATES MAGISTRATE JUDGE

         Plaintiff Swift Financial, LLC brings this action to confirm an arbitration award. An arbitrator for the American Arbitration Association (“AAA”) made the award August 19, 2018, in favor of plaintiff and against defendants Alabar Construction, Inc. (“Alabar”) and John A. Fenton. AAA No. 01-18-0001-6731; Laurick Nov. 20, 2018, Decl., Ex. 1 (Docket No. 2-1) (the “Arbitration Award”). Plaintiff has filed a Petition for Order to Confirm Arbitration Award. (Docket No. 1). Defendants have not appeared or otherwise taken any action in this matter. The Court entered default on January 29, 2019. (Docket No. 14). Plaintiff has moved for default judgment. (Docket No. 8).

         For the following reasons, the Court should GRANT plaintiff's Motion for Default Judgment (Docket No. 8) and GRANT plaintiff's Petition for Order to Confirm Arbitration Award (Docket No. 1).

         BACKGROUND

         The Court takes these facts from the Arbitration Award as incorporated into plaintiff's Complaint and as uncontested due to defendants' default. See Khoja v. Orexigen Therapeutics, Inc., 899 F.3d 988, 1005 (9th Cir. 2018); Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977).

         Effective August 28, 2017, plaintiff entered into a Future Receivables Sale Agreement with Alabar in which plaintiff sold to Alabar $89, 175.00 of its future receivables for the sum of $75, 000.00. Arbitration Award ¶ 1; see also Laurick Nov. 20, 2018, Decl., Ex. 2 (Docket No. 2-2) (the “Sale Agreement”). Fenton also guaranteed the obligations on the sale. Id., at 2; Arbitration Award ¶ 2. On October 24, 2017, Alabar had insufficient funds for the required remittances under the Sale Agreement and ceased making payments, in violation of the Agreement. Id. ¶¶ 4, 6. Alabar thus defaulted on the Sales Agreement, and Fenton also failed to honor his guaranty obligations. Id. ¶¶ 7-8.

         As a result, defendants owe plaintiff $77, 205.70 as an advance balance due under the Sales Agreement, plus non-sufficient funds charges of $35.00, for a total of $77, 240.70. Id. ¶ 9. The Sales Agreement also requires that defendants reimburse plaintiff for reasonable attorney's fees incurred in seeking enforcement of the Agreement, and plaintiff incurred $1, 192.00 in attorney's fees. Id. ¶ 10; see also Laurick Nov. 20, 2018, Decl., Ex. 2, at 2-3 (Docket No. 2-2). The Arbitration Award thus found that defendants Alabar and Fenton were jointly and severally liable for the amount of $77, 240.70, id. ¶ A, and for attorney's fees in the amount of $1, 192.00, id. ¶ B. The Award also awarded plaintiff AAA fees of $3, 000, plus arbitrator compensation of $1, 172.50, and so defendants were also jointly and severally liable for $4, 172.50. Id. ¶ C. In the aggregate, these total $82, 605.20. See also Laurick Jan. 11, 2019, Decl. ¶¶ 3-5 (Docket No. 9).

         LEGAL STANDARD

         After an entry of default against an unresponsive defendant, a court may grant default judgment in plaintiff's favor and award damages. Fed.R.Civ.P. 55(b)(2). “The district court's decision whether to enter a default judgment is a discretionary one.” Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). In exercising its discretion, the court considers the following factors, as articulated in Eitel v. McCool:

(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.

782 F.2d 1470, 1471-72 (9th Cir. 1986). Upon entry of default, the non-responding party is deemed to have admitted the factual allegations against him, except allegations of damages. Fed.R.Civ.P. 8(b)(6); Geddes v. United Fin. Group, 559 F.2d 557, 560 (9th Cir. 1977). Thus, the court accepts plaintiff's pleaded facts as true, but plaintiff must prove damages. TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987).

         DISCUSSION

         I. Whether to Grant Default Judgment

         The Court entered default against defendants on January 29, 2019. (Docket No. 14). Despite plaintiff's failure to discuss the Eitel factors, the Court now analyzes those ...


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