Opinion
3:22-cv-01226-YY
08-14-2023
I.Q. CREDIT UNION, Plaintiff, v. KHALEESI, Official No. 1262724, its Engines, Machinery, Appurtenances, etc., In Rem; and MARIAH LINDEN-ERICKSON, SUMER LUISE JOHNSON and UNKNOWN HEIRS and BENEFICIARIES OF BLUE LINDEN, In Personam,
FINDINGS AND RECOMMENDATIONS
YOULEE YIM YOU, UNITED STATES MAGISTRATE JUDGE
FINDINGS
Plaintiff I.Q. Credit Union has brought this foreclosure suit regarding a vessel, the Khaleesi, Official No. 1262724, formerly owned by Blue Henry Linden, who passed away on September 3, 2021. At the time of his death, Linden owed a balance on his preferred mortgage, which plaintiff seeks to collect in this action, along with late fees, interest, attorney's fees, and costs. Plaintiff also seeks a decree of foreclosure so that the vessel may be auctioned by the United States Marshal Service and proceeds distributed to plaintiff pursuant to the loan agreement.
The defendants in this case include Linden's beneficiaries. No defendants have filed an answer or otherwise appeared in this matter. On January 18, 2023, the Clerk of the Court entered default as to all defendants. Plaintiff has now filed a Motion for Default Judgment (ECF 31) and Motion for Attorney's Fees (ECF 32), which should be GRANTED.
I. Subject Matter Jurisdiction
Federal courts are courts of limited jurisdiction. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). “It is to be presumed that a cause lies outside this limited jurisdiction, . . . and the burden of establishing the contrary rests upon the party asserting jurisdiction.” Id. “If the court determines at any time that it lacks subject-matter jurisdiction, the court must dismiss the action.” FED. R. CIV. P. 12(H)(3); see also Fiedler v. Clark, 714 F.2d 77, 78-79 (9th Cir. 1983) (recognizing that the court may sua sponte dismiss an action if it finds that subject matter jurisdiction is lacking).
This court has original jurisdiction pursuant to 46 U.S.C. § 31325(b)(1) and (2), which permit a mortgagee to enforce a defaulted preferred mortgage lien in a civil action in rem and in personam in district court. See 46 U.S.C. § 31325(c) (indicating “district courts have original jurisdiction of a civil action brought under subsection (b)(1) or (2)”).
II. Personal Jurisdiction
A district court “has an affirmative duty” to determine whether it has personal jurisdiction over a defendant before entering a default judgment. In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999). “A judgment entered without personal jurisdiction over the parties is void.” Id.
“Federal courts ordinarily follow state law in determining the bounds of their jurisdiction over persons.” Picot, 780 F.3d at 1211 (quoting Daimler AG v. Bauman, 571 U.S. 117, 125 (2014)); seeFED. R. CIV. P. 4(K)(1)(A). Under Oregon's long arm statute, the court has personal jurisdiction over “a party served . . . in any action which arises out of . . . the ownership, use, or possession of . . . tangible property, assets, or things of value which were within this state at the time of such ownership, use, or possession[,] including . . . actions to recover a deficiency judgment upon any mortgage . . . or security agreement relating to such property.” The Khaleesi vessel is moored in Multnomah County, Oregon. Thus, the court has personal jurisdiction over defendants who, as the heirs and beneficiaries of the deceased owner of the vessel, have an ownership interest in the property, irrespective of whether they were domiciled or present in Oregon when served. OR. R. CIV. P. 4 F; see Moore v. Lindsey, 662 F.2d 354, 359 (5th Cir. 1981) (holding that for purposes of the Georgia long arm statute, the defendant owned property devised to her and thus the long arm service of process on the defendant in Florida conferred personal jurisdiction over her); United States v. Yennie, No. 18-CV-3268 (WMW/SER), 2019 WL 3325862, at *2 (D. Minn. Apr. 30, 2019), report and recommendation adopted, No. 18-CV-3268 (WMW/SER), 2019 WL 3325439 (D. Minn. July 24, 2019) (finding the court had personal jurisdiction over the defendant because Minnesota's long arm state enabled Minnesota to exercise personal jurisdiction over a non-resident who “owns, uses, or possesses any real or personal property situated in this state”).
III. Service of Process
Before entering a default judgment, the court must “assess the adequacy of the service of process on the party against whom default is requested.” Bank of the West v. RMA Lumber Inc., No. C 07-06469 JSW, 2008 WL 2474650, at *2 (N.D. Cal. June 17, 2008). “[I]n the absence of proper service of process, the district court has no power to render any judgment against the defendant's person or property unless the defendant has . . . waived the lack of process.” S.E.C. v. Ross, 504 F.3d 1130, 1138-39 (9th Cir. 2007).
Under Federal Rule of Civil Procedure 4(e), service on an individual within a judicial district of the United States may be accomplished by following state law or “(A) delivering a copy of the summons and of the complaint to the individual personally; (B) leaving a copy of each at the individual's dwelling or usual place of abode with someone of suitable age and discretion who resides there; or (C) delivering a copy of each to an agent authorized by appointment or by law to receive service of process.”
Here, the named defendants were personally served. See Decl. Service (Sumer Luise Johnson), ECF 15; Decl. Service (Mariah Linden-Erickson), ECF 18. Additionally, plaintiff published notice of the action in the Daily Journal of Commerce on September 21, 23, and 26, 2022. ECF 14; see OR. R. CIV. P. 7 D(1) (INDICATING A SUMMONS MAY BE SERVED IN ANY MANNER REASONABLY CALCULATED, UNDER ALL THE CIRCUMSTANCES, TO APPRISE THE DEFENDANT OF THE EXISTENCE AND PENDENCY OF THE ACTION, INCLUDING SERVICE BY PUBLICATION). PLAINTIFF HAS ESTABLISHED THAT THE SERVICE OF PROCESS IN THIS CASE IS ADEQUATE.
IV. Damages
Upon entry of default, the factual allegations in the complaint are taken as true, except for the allegations relating to damages. Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977). A plaintiff must provide proof for the damages sought. See TWC Int'l, Inc. v. Greene, 889 F.2d 1096 (9th Cir. 1989) (affirming district court's determination of damages based on written affidavit and oral testimony).
In support of the judgment that it seeks, plaintiff has offered evidence of the following amounts it is owed under the loan agreement:
Erickson Affidavit, ECF 34. Additionally, plaintiff seeks interest at 5.99% through the date the motion for default judgment was filed ($5,361.74) and until judgment is entered ($8.8119 per diem). The loan agreement allows for interest at 5.99%, as well as late charges of 5% of the payment amount, and costs for storing the property. Hayman Decl., Ex. 3, ECF 33 at 15, 18. Thus, plaintiff has met its burden of establishing that it is owed these amounts under the loan agreement.
Principal amount of debt
$53,695.04
Costs for moorage and storage fees
$ 7,050.66
Late fees
$ 110.97
V. Eitel Analysis
Even where a plaintiff has established damages, the district court's decision whether to enter a default judgment remains a discretionary one. Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). In exercising its discretion, the court considers the following factors under Eitel v. McCool, 782 F.2d 1470 (9th Cir. 1986):
(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.Id. at 1471-72. The Eitel factors weigh heavily in favor of default judgment in this case, as discussed below.
A. Factor One: Possibility of Prejudice to Plaintiff
In assessing the possibility of prejudice, courts have considered whether a plaintiff would be without recourse for recovery if the motion for default judgment is not granted. See, e.g., J &J Sports Prods., Inc. v. Cardoze, No. C 09-05683 WHA, 2010 WL 2757106, at *5 (N.D. Cal. July 9, 2010); PepsiCo, Inc. v. California Sec. Cans, 238 F.Supp.2d 1172, 1177 (C.D. Cal. 2002). Here, plaintiff has no recourse for recovery other than to file this action.
B. Factors Two and Three: Merits of Claims and Sufficiency of Complaint
Again, upon entry of default, this court must take the well-pleaded factual allegations of the complaint as true. See Geddes, 559 F.2d at 560 (“The general rule of law is that upon default the factual allegations of the complaint, except those relating to the amount of damages, will be taken as true.”); Cripps v. Life Ins. Co. of N. Am., 980 F.2d 1261, 1267 (9th Cir. 1992) (“In reviewing a default judgment, this court must take the well-pleaded factual allegations of [the complaint] as true.”).
Plaintiff's well-pleaded complaint alleges facts establishing the merits of its claims.
C. Fourth Factor: Sum of Money at Stake
Under the fourth Eitel factor, “the court must consider the amount of money at stake in relation to the seriousness of [defendant's conduct.” PepsiCo, 238 F.Supp.2d at 1176-77; see also J & J Sports, 2010 WL 2757106, at *5 (“a large sum of money at stake would disfavor default damages,” such as a request for $114,200 in damages); Board of Trustees of the Sheet Metal Workers v. Vigil, No. C 07-01508 WHA, 2007 WL 3239281, at *2 (N.D. Cal. Nov. 1, 2007) (“[D]efault judgment is disfavored if there were a large sum of money involved.”).
Here, the sum of money sought is not particularly large, and plaintiff has presented evidence that it is due under the terms of the loan agreement.
D. Fifth Factor: Possibility of Dispute Over Material Facts
In addressing the fifth factor, the court considers the possibility that there is a dispute concerning material facts. “The fifth factor . . . weighs in favor of default judgment when the claims in the complaint are well-pleaded.” Joe Hand Prods. v. Holmes, No. 2:12-cv-00535-SU, 2015 WL 5144297, at *7 (D. Or. Aug. 31, 2015). “Because all allegations in a well-pleaded complaint are taken as true after the court clerk enters default judgment, there is no likelihood that any genuine issue of material fact exists.” Elektra Entm't Grp., Inc. v. Crawford, 226 F.R.D. 388, 393 (C.D. Cal. 2005).
As noted, plaintiff's complaint is well-pleaded. Additionally, plaintiff has submitted exhibits showing the loan is in default. Thus, while it is possible there is a dispute regarding material facts, the possibility is low.
E. Sixth Factor: Excusable Neglect
The sixth factor pertains to the possibility that the default resulted from excusable neglect. “This factor favors default judgment where the defendant has been properly served or the plaintiff demonstrates that the defendant is aware of the action.” Wecosign, Inc. v. IFG Holdings, Inc., 845 F.Supp.2d 1072, 1082 (C.D. Cal. Jan. 23, 2012). As noted, the heirs and beneficiaries were properly served and noticed, but have declined to appear. There is no indication of excusable neglect.
F. Policy Favoring Decision on the Merits
Factor seven is “the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits,” specifically the policy that “[c]ases should be decided upon their merits whenever reasonably possible.” Eitel, 782 F.2d at 1472. However, “this policy, standing alone, is not dispositive, especially where a defendant fails to appear or defend itself in an action.” Joe Hand Promotions, Inc. v. Machuca, No. 2:13-cv-1228 GEB KJN, 2014 WL 1330749, at *6 (E.D. Cal. Mar. 31, 2014). Where a defendant has failed to answer a complaint, this “makes a decision on the merits impractical, if not impossible.” PepsiCo, 238 F.Supp.2d at 1177. “[T]he mere existence of Fed. R.Civ.P. 55(b) indicates that ‘this preference, standing alone, is not dispositive.'” Id. “Thus, the preference to decide cases on the merits does not preclude a court from granting default judgment.” Id. (internal quotation omitted).
Here, a decision on the merits is impossible because defendants have failed to appear, plead, or defend this action. But, as noted, that factor is not dispositive. All of the other Eitel factors support the court's exercise of discretion in entering a default judgment.
VI. Motion for Attorney's Fees and Costs
A. Relevant Law Regarding Attorney's Fees and Plaintiff's Burden
“The customary method of determining fees . . . is known as the lodestar method.” Morales v. City of San Rafael, 96 F.3d 359, 363 (9th Cir. 1996), opinion amended on denial of reh'g, 108 F.3d 981 (9th Cir. 1997); see also Perdue v. Kenny A., 559 U.S. 542, 551 (2010) (holding “the lodestar approach” is “the guiding light” when determining reasonable fees). The “lodestar” is calculated by multiplying the number of hours the prevailing party reasonably expended on the litigation by a reasonable hourly rate. McGrath v. Cnty. of Nevada, 67 F.3d 248, 252 (9th Cir. 1995). The court excludes hours “that are excessive, redundant, or otherwise unnecessary.” McCown v. City of Fontana, 565 F.3d 1097, 1102 (9th Cir. 2009) (quoting Hensley v. Eckerhart, 461 U.S. 424, 434 (1983)).
“[T]here is a strong presumption that the lodestar is sufficient.” Perdue, 559 U.S. at 556. The court may “assess whether the presumptively reasonable lodestar figure should be adjusted on the basis of Kerr factors not already subsumed in the initial calculation.” McGrath, 67 F.3d 248 at 252: The Kerr factors are:
(1) the time and labor required; (2) the novelty and difficulty of the questions involved; (3) the skill requisite to perform the legal service properly; (4) the preclusion of other employment by the attorney due to acceptance of the case; (5) the customary fee; (6) whether the fee is fixed or contingent; (7) any time limitations imposed by the client or the circumstances; (8) the amount involved and the results obtained; (9) the experience, reputation, and ability of the attorneys; (10) the undesirability of the case; (11) the nature and length of the professional relationship with the client; and (12) awards in similar cases.Kerr v. Screen Extras Guild, Inc., 526 F.2d 67, 70 (9th Cir. 1975), abrogated on other grounds, City of Burlington v. Dague, 505 U.S. 557 (1992). “Although the court must consider the Kerr factors, it need not discuss all of them ‘because most are not matters on which anything is at issue or needs to be said,' McGinnis v. Ky. Fried Chicken of Cal., 51 F.3d 805, 809 (9th Cir. 1994), and many of the Kerr factors are subsumed within the lodestar calculation, see Jordan v. Multnomah County, 815 F.2d [1258,] 1262 [(9th Cir. 1987)].” Jones v. Mintzias, No. 220CV11106VAPPDX, 2021 WL 6618562, at *3 (C.D. Cal. Sept. 8, 2021).
Plaintiff, as the party seeking fees, bears “the burden of documenting the appropriate hours expended in the litigation, and [is] required to submit evidence in support of those hours worked.” United Steelworkers of Am. v. Ret. Income Plan For Hourly-rated Emps. of Asarco, Inc., 512 F.3d 555, 565 (9th Cir. 2008) (quotations omitted). In determining the “reasonable hourly rate,” the court looks to the “prevailing market rates in the relevant community.” Gonzalez v. City of Maywood, 729 F.3d 1196, 1205 (9th Cir. 2013) (citations and internal quotation marks omitted). The relevant community “is one in which the district court sits.” Davis v. Mason County, 927 F.2d 1473, 1488 (9th Cir. 1991). This court uses the most recent Oregon State Bar Economic Survey as a benchmark for comparing an attorney's billable rate with the fee customarily charged in the locality. Precision Seed Cleaners v. Country Mut. Ins. Co., 976 F.Supp.2d 1228, 1244 (D. Or. 2013); see also Copeland-Turner v. Wells Fargo Bank,N.A., No. 11-cv-37-HZ, 2012 WL 92957, at *2 (D. Or. Jan. 11, 2012) (same). The Economic Survey sets forth rates charged by Oregon attorneys in the relevant year, including rates specific to communities such as the Portland area.
B. Requested Attorney's Fees
The loan agreement allows for attorney's fees. Hayman Decl., Ex. 3, ECF 33, at 18. Plaintiff requests fees as follows:
| Name | Position and Experience | Current Billing Rate | No. of Hours | Total Fees |
| Michelle M. Bertolino | Attorney, 25 years | $330.00 | 1.4 | $462.00 |
| Holly Hayman | Attorney, 12 years | $280.00 | 28.0 | $7,840.00 |
| Holly Hayman | Attorney, 12 years | $310.00 | 15 .20 | $4,712.00 |
| Michelle Bodenheimer | Paralegal, 20 years | $145.00 | 21.60 | $3,132.00 |
| Paralegal, 20 years | $155.00 | 3.60 | $558.00 | |
| Total: | $16,704.00 |
These hourly rates fall within the range for Portland attorneys practicing civil litigation with the respective years of experience. See OREGON STATE BAR, 2022 ECONOMIC SURVEY 43 tbl. 36, 44 tbl. 37 (2022).
To determine the reasonable hourly rate for paralegal services, the court again looks to the prevailing market rate. Gonzalez, 729 F.3d at 1205. In other cases, this court has relied on the National Utilization and Compensation Survey Report (“NALA Report”) published by the National Association of Legal Assistants and Paralegals. See, e.g., Anderson v. Ross Island Sand& Gravel Co., No. 3:18-CV-00898-SB, 2018 WL 5993581, at *4 (D. Or. Oct. 24, 2018), report and recommendation adopted, 2018 WL 5985671 (D. Or. Nov. 12, 2018) (citing Aichele v. Blue Elephant Holding, LLC, No. 3:16-CV-2204-BR, 2018 WL 2357533, at *4 (D. Or. May 24, 2018)). Judges in this district also have held that a reasonable hourly rate for a paralegal should not exceed that of a first-year associate. See Precision Seed Cleaners, 976 F.Supp.2d at 1248. The average hourly rate for a Portland lawyer with one- to three-years' experience is $300. 2022 ECONOMIC SURVEY 42 tbl. 36.
Plaintiff seeks fees for paralegals who have 20 years of experience at $145 and $155 per hour. This falls within the range of compensation for paralegals with such years of experience. NALA REPORT, 41 fig. 34 (2022).
Finally, an examination of the billing records show that the work is not duplicative and the amounts requested are reasonable and not excessive considering the Kerr factors, including the novelty and difficulty of the questions involved, the skill needed to perform the legal representation properly, and the amount involved and the results obtained.
C. Requested Costs
Plaintiff seeks the following costs:
| COSTS ADVANCED | UNITS | RATE | ||
| 08/26/22 | USDC Portland Filing Fee | 402.00 | ||
| 08/30/22 | Pay.gov Search | 25.00 | ||
| 09/26/22 | ABC Legal Services, LLC Service | 63.50 | ||
| 09/26/22 | ABC Legal Services, LLC Service | 63.50 | ||
| 09/26/22 | ABC Legal Services, LLC Service | 129.00 | ||
| 09/26/22 | ABC Legal Services, LLC Service | 129.00 | ||
| 09/30/22 | DJC Oregon Publication | 276.90 | ||
| 10/10/22 | TransUnion Risk and Alternative Data Solutions Inc Search | 20.00 | ||
| 10/24/22 | Bridge Tower OpCO, LLC Publication | 542.40 | ||
| 10/31/22 | Pacer Service Center Search | 1 .80 | ||
| 10/31/22 | Pacer Service Center Search | 1 .60 | ||
| 10/31/22 | Pacer Service Center Search | 0.30 | ||
| 10/31/22 | Pacer Service Center Search | 2.20 | ||
| 01/30/23 | Pacer Service Center Search | 0.40 | ||
| 01/30/23 | Pacer Service Center Search | 0.90 | ||
| 02/13/23 | Trans Union Risk and Alternative Data Solutions Inc Search | 10.00 | ||
| 04/19/23 | Pacer Service Center Search Pacer | 12.90 | ||
| 12/31/59 | Postage | 2 | 8.30 | 16.60 |
| COSTS SUBTOTAL | $1,698.00 |
“Unless a federal statute, these rules or a court order provides otherwise, costs-other than attorney's fees-should be allowed to the prevailing party.” FED. R. CIV. P. 54(D)(1). “Rule 54(d)(1) creates a presumption in favor of awarding costs to the prevailing party, and a district court has limited discretion to deny fees under the rule.” Goldberg v. Pac. Indem. Co., 627 F.3d 752, 758 (9th Cir. 2010).
Filing fees are “fees of the clerk” and allowable costs under 28 U.S.C. § 1920(1). Docket fees are allowed under 28 U.S.C. § 1920(5). Additionally, “private process servers' fees are properly taxed as costs.” Alflex Corp. v. Underwriters Lab'ys, Inc., 914 F.2d 175, 178 (9th Cir. 1990). Postage may be awarded as a portion of attorney's fees and are not generally considered to be part of a cost bill under 28 U.S.C. § 1920. Lasha v. Tharp, 907 F.2d 154 (9th Cir. 1990). The other costs requested by plaintiff include publication and search costs. The loan agreement allows for plaintiff to recover “expenses for taking possession of and selling the property,” and plaintiff's counsel has explained that these costs were reasonably and necessarily incurred to pursue this action against defendants. Hayman Decl., ¶ 10, ECF 33. Therefore, the costs are allowed.
RECOMMENDATIONS
Plaintiff's Motion for Default Judgment (ECF 31) and Motion for Attorney's Fees (ECF 32) should be GRANTED, and the proposed General Judgment and Degree of Foreclosure (ECF 36) submitted by plaintiff should be entered.
SCHEDULING ORDER
These Findings and Recommendations will be referred to a district judge. Objections, if any, are due Monday, August 28, 2023. If no objections are filed, then the Findings and Recommendations will go under advisement on that date.
If objections are filed, then a response is due within 14 days after being served with a copy of the objections. When the response is due or filed, whichever date is earlier, the Findings and Recommendations will go under advisement.
NOTICE
These Findings and Recommendations are not an order that is immediately appealable to the Ninth Circuit Court of Appeals. Any Notice of Appeal pursuant to Rule 4(a)(1), Federal Rules of Appellate Procedure, should not be filed until entry of a judgment.