Isaac v. Daniels

• Decision Date: 23 June 2017
• Docket Number: CIVIL NO. 16-00507 DKW-RLP
• Parties: ISAAM ISAAC, Plaintiff, v. ARI DANIELS, JERRY KMIEC, AND DOE DEFENDANTS 3-10, Defendants.
• Court: U.S. District Court — District of Hawaii

ISAAM ISAAC, Plaintiff, v. ARI DANIELS, JERRY KMIEC, AND DOE DEFENDANTS 3-10, Defendants.

CIVIL NO. 16-00507 DKW-RLP

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF HAWAII

June 23, 2017

FINDINGS AND RECOMMENDATION TO GRANT IN PART AND DENY IN PART PLAINTIFF'S MOTION FOR DEFAULT JUDGMENT AS TO COUNT I OF THE FIRST AMENDED COMPLAINT¹

Before the Court is Plaintiff's Motion for Default Judgment as to Count I of the First Amended Complaint, filed on June 9, 2017 ("Motion"). ECF No. 27. The Court found the Motion suitable for disposition without a hearing pursuant to Rule 7.2(d) of the Local Rules of Practice of the United States District Court for the District of Hawaii. ECF No. 29. After careful consideration of the Motion, the declarations, exhibits, and the record established in this action, the Court FINDS AND RECOMMENDS that the Motion be GRANTED IN PART and DENIED IN PART.

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BACKGROUND

Plaintiff, a Hawaii resident, has been engaged in multiple tourism businesses, including World Discovered, LLC, World Discovered Pacific, LLC, and Waikiki Segway, LLC. ECF No. 27-3, Decl. of Isaam Isaac, ¶¶ 2, 15-19. Defendant Ari Daniels, a Nevada resident, ran a business that contracted with World Discovered, LLC to provide travel services. ECF No. 15, First Amended Complaint, ¶ 2; ECF No. 27-3, ¶¶ 13, 15. However, World Discovered, LLC terminated the contract with Mr. Daniels' company and entered into a contract with another company for similar services. Id. ¶¶ 17, 19.

In August 2016, Mr. Daniels and Defendant Jerry Kmiec created a website that contained a number of false statements about Plaintiff, Plaintiff's businesses, and the company that Plaintiff's businesses contracted with. ECF No. 15 ¶¶ 7-15; ECF No. 27-4. The website stated that Plaintiff committed a number of crimes, that Plaintiff was residing illegally in the United States, and that Plaintiff's businesses were scamming tourists. ECF No. 27-3. ¶¶ 4-8; ECF No. 27-4. It included a map pinpointing Plaintiff's residence and an image of Plaintiff's Hawaii driver's license. ECF No. 27-3 ¶¶ 7, 11; ECF No. 27-4. Defendants knew that the statements in the website were false, and Plaintiff has been injured by the false statements. ECF No. 15 ¶¶ 17, 18; ECF No. 27-1 at 8-10. The website was published to the public and available to anyone with internet access. ECF No.27-1 at 12. Plaintiff's acquaintances viewed the website and informed Plaintiff about its existence. ECF No. 15 ¶ 3.

In October 2016, an individual appeared outside of World Discovered Pacific, LLC's offices in Honolulu and handed out flyers stating that World Discovered Pacific, LLC was selling fraudulent vacation packages and stealing thousands of dollars from tourists. ECF No. 27-1 at 7-8; ECF No. 27-3 ¶¶ 20-21; ECF No. 27-10. The individual was given the flyers from Mr. Daniels and was hired by Mr. Daniels to distribute them. ECF No. 27-3 ¶ 20; ECF No. 27-11.

On February 7, 2017, Plaintiff filed his First Amended Complaint, asserting claims against Mr. Daniels and Mr. Kmiec for defamation, extortion, negligent infliction of emotional distress, and intentional infliction of emotional distress. ECF No. 15. Mr. Kmiec was personally served in Las Vegas, Nevada on February 26, 2017. ECF No. 19-2. Jon Ledo, an individual that Plaintiff alleges is Mr. Daniels's agent, was served by certified mail in Las Vegas, Nevada on March 25, 2017. ECF No. 19-2. Pursuant to Rule 55(a) of the Federal Rules of Civil Procedure, the Clerk entered default against Mr. Kmiec on March 30, 2017, and against Mr. Daniels on April 21, 2017. ECF Nos. 20, 24. On June 9, 2017, Plaintiff filed the instant Motion, seeking default judgment against Mr. Daniels and Mr. Kmiec on his claim for defamation.

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DISCUSSION

Default judgment may be entered for the plaintiff if the defendant has defaulted by failing to appear and the plaintiff's claim is for a "sum certain or for a sum which can by computation be made certain[.]" Fed. R. Civ. P. 55(b)(1), (2). The granting or denial of a motion for default judgment is within the discretion of the court. Haw. Carpenters' Trust Funds v. Stone, 794 F.2d 508, 511-12 (9th Cir. 1986). Entry of default does not entitle the non-defaulting party to a default judgment as a matter of right. Valley Oak Credit Union v. Villegas, 132 B.R. 742, 746 (9th Cir. 1991). Default judgments are ordinarily disfavored, and cases should be decided on their merits if reasonably possible. Eitel v. McCool, 782 F.2d 1470, 1472 (9th Cir. 1986). The court should consider the following factors in deciding whether to grant a motion for default judgment:

(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.

On default "the factual allegations of the complaint, except those relating to the amount of damages, will be taken as true." TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987) (quoting Geddes v. United Fin. Group, 559 F.2d 557, 560 (9th Cir. 1977)). The allegations in the complaint regarding liability are deemed true, but the plaintiff must establish the relief to which it is entitled. Fair Hous. of Marin v. Combs, 285 F.3d 899, 906 (9th Cir. 2002). Also, "necessary facts not contained in the pleadings, and claims which are legally insufficient, are not established by default." Cripps v. Life Ins. Co. of N. Am., 980 F.2d 1261, 1267 (9th Cir. 1992) (citing Danning v. Lavine, 572 F.2d 1386, 1388 (9th Cir. 1978)).

I. Request for Default Judgment Against Defendant Daniels

Before considering the merits of Plaintiff's motion for default judgment against Mr. Daniels, the Court has an affirmative obligation to determine whether it has jurisdiction. See In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999) ("To avoid entering a default judgment that can later be successfully attacked as void, a court should determine whether it has the power, i.e., the jurisdiction, to enter the judgment in the first place."). Default judgment is not proper "if the court lack[s]jurisdiction over the defendant[] due to insufficient service of process." United States v. 4268 Los Angeles Ave. Simi Valley California 93063, 672 F. App'x 770 (9th Cir. 2017). Under the Federal Rules of Civil Procedure, service of process is sufficient if it complies with state law for serving a summons in the state where the district court is located. Fed. R. Civ. P. 4(e)(1). Hawaii law permits service of a summons by registered or certified mail when the defendant is unknown or resides outside of Hawaii only when authorized by a court order. See Haw. Rev. Stat. §§ 634-23, 634-24; see also Sommers v. Okamoto, No. CV 16-558 JMS-KJM, 2017 WL 393612, at *3 (D. Haw. Jan. 5, 2017), adopted by, No. CV 16-00558 JMS-KJM, 2017 WL 393597 (D. Haw. Jan. 27, 2017) (discussing Section 634-24 and explaining that "this method of service is only proper when authorized by court order").

Here, Jon Ledo, an individual Plaintiff alleges is Mr. Daniels's agent,² was served with the Complaint by certified mail in Las Vegas, Nevada on March 25, 2017. ECF No. 19-2. However, Plaintiff did not seek or obtain an order from this Court authorizing service by mail. Accordingly, the Court FINDS thatservice of process was improper as to Mr. Daniels. The Court RECOMMENDS that the district court DENY Plaintiff's request for default judgment against Mr. Daniels and VACATE the entry of default against Mr. Daniels. See ECF No. 24.

II. Request for Default Judgment Against Defendant Kmiec

A. Jurisdiction

As discussed above, the Court has an affirmative obligation to determine whether or not it has subject matter jurisdiction over this action and personal jurisdiction over the defendants. See In re Tuli, 172 F.3d 707 at 712.

1. Subject Matter Jurisdiction

Plaintiff is a resident of Honolulu, Hawaii. ECF No. 1, Compl., ¶ 1. Mr. Kmiec is a resident of Las Vegas, Nevada. ECF No. 15 ¶¶ 2, 3. Plaintiff seeks "damages of $1,420,100, plus attorneys' fees and costs." ECF No. 27-1 at 15; see also ECF No. 15 ¶ 5. Because Plaintiff is a citizen of Hawaii and Mr. Kmiec is a citizen of a foreign state and the amount in controversy exceeds $75,000.00, this Court has diversity jurisdiction over this matter. See 28 U.S.C. § 1332(a)(2).

2. Personal Jurisdiction

Personal jurisdiction is proper if it is consistent with Hawaii's long-arm statute and it comports with due process of law. Boschetto v. Hansing, 539 F.3d 1011, 1021-22 (9th Cir.2008). Because Hawaii's long-arm statute reaches to the full extent permitted by the United States Constitution, the Court need only determine whether due process permits the exercise of personal jurisdiction. Television Events & Mktg., Inc. v. Amcon Distrib. Co., 416 F. Supp. 2d 948, 958 (D. Haw. 2006) (citing Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800-01 (9th Cir. 2004)); Haw. Rev. Stat. § 634-35.

For due process to be satisfied, a defendant must have "minimum contacts" with the forum state such that the assertion of jurisdiction "does not offend traditional notions of fair play and substantial justice." Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1155 (9th Cir. 2006) (citing Int'l Shoe Co. v. Wash., 326 U.S. 310, 315 (1945)). Here, the Court must determine whether it has specific jurisdiction over Mr. Kmiec. Specific jurisdiction exists if (a) the defendant has performed some act or consummated some transaction within the forum or otherwise purposefully availed himself of the privileges of conducting activities in the forum; (b) the claim arises out of or results from the defendant's forum related activities; and (c) the exercise of jurisdiction is reasonable. Boschetto, 539 F.3d at 1021.

a. Purposeful Availment

First,...