Lin v. Suavei, Inc.

Opinion

9 UNITED STATES DISTRICT COURT

10 SOUTHERN DISTRICT OF CALIFORNIA

11 JADE LIN, et al., ) CASE NO. 3:20-cv-00862-L-AHG ) 12 Plaintiffs, ) v. ) ORDER: 13 ) (1) GRANTING PLAINTIFFS’ SUAVEI, INC., ) MOTION FOR ENTRY OF 14 ) DEFAULT AGAINST Defendants. ) SUAVEI, INC; [ECF NO 93] 15 ) ) (2) GRANTING COUNTER- 16 ) CLAIMANT FRANK DE ) JOY’S MOTION FOR 17 ) ENTRY OF DEFAULT ) AGAINST SUAVEI, INC 18 ) [ECF NO 91]; and ) 19 ) (3) DENYING PLAINTIFFS’ ) MOTION FOR SUMMARY 20 JUDGMENT AS MOOT [ECF NO. 85] 21 ) Suavei, Inc., a Delaware corporation, ) 22 ) Third-Party Plaintiff, ) 23 v. ) ) 24 Frank DeJoy, an individual, ) ) 25 Third-Party Defendant. ) ) 26 ) Frank DeJoy, an individual, ) 27 ) Counter-Claimant, ) 1 ) Suavei, Inc., a Delaware Corporation, ) 2 ) Counter-Defendant. ) 3 )

4 Pending before the Court are Motions for Entry of Default against Defendant 5 Suavei (“Suavei”) filed by Plaintiffs Jade Lin, Jay Li, Minh Hong (“Plaintiffs”) and 6 Counter-claimant Frank DeJoy (“DeJoy”). [ECF Nos. 91, 93.] The Court decides the 7 matter on the papers submitted and without oral argument. See Civ. L. R. 7.1(d.1). 8 For the reasons stated below, the Court GRANTS the Motions for Entry of Default 9 and Strikes the Answer. 10 I. RELEVANT BACKGROUND 11 On May 7, 2020, Plaintiffs filed a Complaint against Afonso Infante, Allison 12 Wong, cofounders and the only board members of Suavei, and Suavei alleging: (1) 13 fraudulent inducement; (2) fraudulent concealment; (3) breach of fiduciary duty; (4) 14 breach of duty of loyalty; and (4) negligent misrepresentation. (See Complaint [Doc. 15 1].) The Court dismissed the Complaint sua sponte with leave to amend for lack of 16 subject matter jurisdiction on May 8, 2020. [ECF NO. 3.] On May 11, 2020, 17 Plaintiffs filed a First Amended Complaint. [ECF No. 4.] On June 29, 2020, 18 Plaintiffs filed a request to file a Second Amended Complaint, which the Court 19 granted on October 8, 2020. [ECF Nos. 14, 30.] On October 9, 2020, Plaintiffs filed 20 a Second Amended Complaint. On October 23, 2020, Defendants filed a motion to 21 dismiss. [ECF No. 33.] On September 1, 2021, the Court granted in part and denied 22 in part Defendants’ motion to dismiss, and dismissed Defendant Wong, leaving only 23 Suavei and Infante as Defendants. [ECF No. 54.] 24 On July 15, 2022, counsel for Suavei filed a Motion to Withdraw. [ECF No. 83.] 25 On July 22, 2022, Plaintiffs filed a notice of settlement and a motion for summary 26 judgment. [ECF Nos. 84, 85.] On July 26, 2022, the Court granted the motion to 27 withdraw in part because Suavei was no longer able to pay for its defense. [ECF No. 1 88.] On August 15, 2022, Counter-Claimant Frank DeJoy (“DeJoy”) filed a motion 2 for entry of default against Defendant Suavei. [ECF No. 91.] On September 15, 2022, 3 Plaintiffs filed a motion for entry of default against Suavei. [ECF No. 93.] On 4 November 10, 2022, a Joint Stipulation of Dismissal of Defendant Afonso Infante 5 was filed in this Court. [ECF No. 103.] The Notice states that “Plaintiffs and 6 Individual Defendant Afonso Infante (“Infante”) (together, the “Parties”) have 7 reached a settlement agreement, which results in the dismissal of Infante from this 8 action” [Id.]

9 II. LEGAL STANDARD 10 “When a party against whom a judgment for affirmative relief is sought has failed 11 to plead or otherwise defend, and that failure is shown by affidavit or otherwise, the 12 clerk must enter the party's default.” Fed.R.Civ.P. 55(a). If a corporation fails to 13 appear through counsel, its answer may be stricken and a default judgment entered 14 against the party. Employee Painters’ Trust v. Ethan Enterprises, Inc., 480 F.3d 993, 15 998 (9th Cir. 2007); see also Civil Local Rule 83.3j (“[A]ll other parties, including 16 corporation, partnerships and other legal entities may appear in court only through an 17 attorney[];” D-Beam Ltd. Partnership v. Roller Derby Skates, Inc., 366 F.3d 972, 18 973-74 (9th Cir. 2004)(“It is a longstanding rule that ‘[c]orporations and other 19 unincorporated associations must appear in court through an attorney.’”)

20 III. DISCUSSION 21 Plaintiffs and DeJoy seek entry of default based on Suavei’s lack of counsel and 22 abandonment of its defenses. (Plaintiff Motion at 1 [ECF No 93-1]; DeJoy Motion at 23 2 [ECF No. 91-1.]) In light of Suavei’s abandonment of its defenses, Plaintiffs and 24 DeJoy request that the Answer be stricken. (Pl. Mot. at 5; DeJoy Mot. at 4).

25 Plaintiffs further request that the Court grant the pending motion for summary 26 judgment because Suavei has not responded to the motion, therefore, there are no 27 genuine disputes of material fact. (Pl. Mot. at 5-6). 1 It is undisputed that Suavei is without counsel to defend itself in this action.

2 Furthermore, in the motion to withdraw, Suavei’s counsel represented that Suavei 3 was no longer able to pay for its defense, and that Suavei did not intend to defend 4 against Plaintiffs’ or DeJoy’s claims. (Mot. Withdraw at 5-6 [ECF No. 83.]) Afonso 5 Infante stated:

6 1. I am the lone principal for Suavei, Inc., meaning I serve as Suavei’s only officer, including as Suavei’s Chief Executive Officer, and only board 7 member. I knowingly and freely assent to the termination of Wilson, Elser, 8 Moskowitz, Edelman & Dicker, LLP, including attorneys David Aveni and Michael McCloskey’s representation of Suavei in this matter, and I instructed 9 Wilson Elser to withdraw as counsel, as Suavei has no further means of paying 10 for its defense. I understand that by assenting to the termination of Wilson, Elser, Moskowitz, Edelman & Dicker, LLP, including attorneys’ David Aveni 11 and Michael McCloskey’s representation of Suavei in this matter, Suavei will 12 no longer be represented by counsel, and will not be able to defend itself in this matter. Suavei does not intend to defend itself against the pending claims. 13 14 2. Should Wilson, Elser, Moskowitz, Edelman & Dicker, LLP, including attorneys David Aveni and Michael McCloskey be permitted to withdraw as 15 counsel, Suavei does not intend to present a defense to Plaintiffs claims or 16 Third-Party Defendant Frank DeJoy’s counterclaims. I understand this means if Plaintiffs or Frank DeJoy choose to continue to pursue their claims, a default 17 judgment may be entered against Suavei. 18 (Infante Dec. at 2, 3 [ECF No. 83-2])(emphasis added). 19 First, Suavei no longer has counsel as required to continue in this action, 20 therefore, the Court may enter default judgment against Suavei. Employee Painters’ 21 Trust v. Ethan Enterprises, Inc., 480 F.3d 993, 998 (9th Cir. 2007). Moreover, it is 22 clear from Infante’s declaration that Suavei has abandoned its defenses against the 23 claims raised by Plaintiffs and DeJoy, supporting entry of default pursuant to Fed. R. 24 Civ. P. 55. See, Employee Painters, Trust v. Ethan Enterprises, Inc., 480 F.3d 993, 25 998 (9th Cir. 2007). Rule 55(a) provides: “When a party against whom a judgment 26 for affirmative relief is sought has failed to plead or otherwise defend, and that 27 failure is shown by affidavit or otherwise, the clerk must enter the party's default.” 1 || Fed.R.Civ.P.55. In light of the abandonment of its defenses, the Court further strike 2 ||the Answer. Ethan Enterprises, Inc., 480 F.3d at 998. 3 IV. CONCLUSION AND ORDER 4 For the foregoing reasons, the Court GRANTS Plaintiffs’ motion for entry o: 5 || default against Suavei, GRANTS Counter-Claimant Frank DeJoy’s motion for entr 6 || of default against Suavei, Orders that the Answer be STRICKEN, and DENIES 7 || Plaintiffs motion for summary judgment as moot.

IT IS SO ORDERED

10 Dated: February 9, 2023 12 United States District Judge 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28