FINDINGS AND RECOMMENDATIONS

ALLISON CLAIRE, Magistrate Judge.

Plaintiff-in-Interpleader ("plaintiff") moves for the entry of a default judgment against defendant-in-interpleader ("defendant") Linda Wilson. This proceeding was referred to this court by Local Rule 302(c)(19) (motions for entry of default judgment under Fed. R. Civ. P. 55(b)(2)).

Alvin M. Wheeler (the "decedent"), is the late father of defendants-in-interpleader ("defendants") James E. Wheeler, Daniel M. Wheeler, Patricia Smith and Linda Wilson. The Alvin M. Wheeler Revocable Trust ("the Trust") is a trust that the decedent established during his lifetime; defendant Carolyn Young is the Trustee, and is sued in that capacity. Plaintiff insurance company issued a life insurance policy ("Policy") on the decedent's life, which was in effect at the time of his death on May 5, 2014. Plaintiff admits its liability under the Policy in the amount of $86,525.56, plus interest, but is unable to determine who among the several defendants is entitled to receive the proceeds.

I. PROCEDURAL BACKGROUND

On October 3, 2014, following the California procedure applicable to these interpleader actions, plaintiff deposited $87,241.47 into the registry of the court (presumably $86,525.56 plus interest to the date of the deposit). See Cal. Civ. Proc. Code § 386(c) (plaintiff may deposit "[a]ny amount which a plaintiff . . . admits to be payable . . . with the clerk of the court at the time of the filing of the complaint . . . in interpleader without first obtaining an order of the court therefor") . On April 16, 2015, plaintiff filed an amended interpleader complaint naming all the actual and potential claimants to the Policy proceeds as defendants-in-interpleader.

The court exercises diversity jurisdiction over this state-law matter. 28 U.S.C. § 1332(a)(1).1

Plaintiff has filed Linda Wilson's Waiver of the Service of Summons. It appears that all other defendants have been served.2 The time for Wilson to respond to the complaint has expired.3 Plaintiff filed this Motion for Default Judgment ("Motion") against Wilson on August 25, 2015, about a month after Wilson's time to respond had expired. Plaintiff also served Wilson with the default judgment motion.

II. LEGAL STANDARDS

A. Motion for Default Judgement

The Federal Rules of Civil Procedure provide for the court-ordered entry of a default judgment following the entry of a default by the Clerk of the Court. Fed. R. Civ. P. 55(a), (b)(2); see Eitel v. McCool, 782 F.2d 1470, 1471 (9th Cir. 1986) (distinguishing Clerk's entry of default under Rule 55(a) from court's entry of default judgment under Rule 55(b)). It is within the sound discretion of the district court to grant or deny an application for default judgment. Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980) (per curiam). "`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.'" TeleVideo Systems, Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987) (per curiam) (quoting Geddes v. United Financial Group, 559 F.2d 557, 560 (9th Cir. 1977) (per curiam)). Those well-pleaded factual allegations must be sufficient to establish plaintiff's entitlement to a judgment under the applicable law. DIRECTV, Inc. v. Hoa Huynh, 503 F.3d 847, 855 (9th Cir. 2007) (district court properly refused to grant default judgment where the complaint failed to state violations of the relevant statute), cert. denied, 555 U.S. 937 (2008); Cripps v. Life Ins. Co. of North America, 980 F.2d 1261, 1267 (9th Cir. 1992) ("claims which are legally insufficient, are not established by default").

Even when a default judgment is warranted, the propriety of its entry is committed to the sound discretion of the court. Eitel, 782 F.2d at 1471 (although all requirements for default judgment were met, "[t]he denial of a default judgment here was within the court's discretion").

Eitel, 782 F.2d at 1471-72.

B. Interpleader Action Under Cal. Civ. Proc. Code § 386(b)

Cal. Civ. Proc. Code § 386(b). Once the plaintiff "admits liability and deposits the money with the court, he or she is discharged from liability and freed from the obligation of participating in the litigation between the claimants." City of Morgan Hill v. Brown, 71 Cal.App.4th 1114, 1122 (6th Dist. 1999). "The purpose of interpleader is to prevent a multiplicity of suits and double vexation" in respect to one liability. Id. at 1122 (citing Hancock Oil Co. of Cal. v. Independent Distributing Co., 24 Cal.2d 497, 510 (1944)).

III. ANALYSIS

A. Procedural Requirements

Plaintiff has satisfied the procedural requirements predicate to this court's entry of a default judgment. As discussed above, plaintiff filed a Waiver of the Service of Summons executed by Wilson. See ECF No. 21. Wilson failed to answer or otherwise respond to the summons and complaint within the 60 days allotted. Upon application by plaintiff (ECF No. 26), the Clerk of the Court properly entered a default against Wilson pursuant to Fed. R. Civ. P. 55(a). See ECF No. 27. Plaintiff then filed the current motion for default judgment, showing proper service of the summons and complaint, Wilson's failure to respond, and the entry of default. See ECF No. 28. The motion further avers that Wilson is not a minor, incompetent person, in military service or otherwise exempt from default judgment. See ECF No. 28. Finally, the motion complies with Fed. R. Civ. P. 54(c) in that it requests a remedy that is not different in kind from that prayed for in the Complaint. Thus, the court, in its discretion, may order a default judgment against Wilson based on the Eitel factors, outlined below.

B. Eitel Factors

1. Factor One: Possibility of Prejudice to Plaintiff

The first Eitel factor considers whether the plaintiff would suffer prejudice if default judgment is not entered, and such potential prejudice to the plaintiff militates in favor of granting a default judgment. Here, plaintiff would be prejudiced if the court did not enter a default judgment, since plaintiff would be without another recourse for relief. See PepsiCo, Inc. v. California Security Cans, 238 F.Supp.2d 1172, 1177 (C.D. Cal. 2002). Accordingly, the first Eitel factor favors the entry of default judgment.

2. Factors Two and Three: The Merits and the Sufficiency of the Complaint

The undersigned considers the merits of plaintiff's substantive claims and the sufficiency of the complaint together because of the relatedness of the two inquiries. The undersigned must consider whether the allegations in the complaint are sufficient to state a claim that supports the relief sought. See Cripps, 980 F.2d at 1267 ("claims which are legally insufficient, are not established by default").

Plaintiff states a claim for interpleader where it alleges that (1) the proceeds of the Policy are claimed, or may be claimed, by all the parties against whom relief is demanded, and (2) plaintiff is a "disinterested stakeholder" in that it does not claim any interest in the proceeds of the Policy. See Hancock Oil Co., 24 Cal. 2d at 502-03 (setting out common law elements as modified by Section 386(b)); Pacific Loan Management Corp. v. Superior Court, 196 Cal.App.3d 1485, 1489 (6th Dist. 1987) (the interpleader statute "requires only that the stakeholder file a verified pleading disclaiming any interest in the money or property claimed").4

a. Conflicting actual or potential claims

According to the complaint, each defendant, including Wilson, has made a claim for the proceeds of the Policy, or has a potential claim for the proceeds of the Policy.5 The interpleader statute may be used where multiple claims "are made, or may be made" against the Policy proceeds. See Cal. Civ. Proc. Code § 386(b) (emphasis added). In particular, Wilson, as a daughter and heir to decedent, is a "potential beneficiar[y] of Alvin M. Wheeler's estate," of which the Policy proceeds are, or potentially are, a part. See Complaint ¶ 38.

b. Disinterested stakeholder

Plaintiff admits that it is obligated to pay out the policy proceeds, plus interest. Complaint

¶ 45. It further alleges that it "claims no interest in the Policy Proceeds," and "is a mere stakeholder in this action." Complaint ¶ 44.

Plaintiff has accordingly alleged facts sufficient to support an interpleader claim against Wilson.

3. Factor Four: The Sum of Money at Stake in the Action

Under the fourth factor cited in Eitel, "the court must consider the amount of money at stake in relation to the seriousness of Defendant's conduct." PepsiCo, Inc., 238 F. Supp. 2d at 1177. The money at stake in this litigation is the $87,241.47 which plaintiff has deposited with the court. However, it is not clear whether this sum favors or disfavors default judgment, since the judgment sought is only to enjoin Wilson from suing plaintiff over the money. The proposed default judgment does not purport to preclude plaintiff from making a claim for the money as against the other defendants, and no party has briefed the court on how a default judgment here would, or would not, affect Wilson's ability to make a claim for the funds against the other defendants.

The underlying facts involving the various iterations of the trust and the Policy, and the state court litigation about them, are a bit convoluted. See Complaint ¶¶ 11-39. However, the basic fact that each of the defendants is now an actual or potential claimant to the funds does not appear to be subject to any dispute. Assuming the truth of the well-pleaded facts in the complaint, each of the defendant children of the decedent, as well as and the Trustee of the Trust, all have actual or potential claims on the proceeds of the Policy, and the plaintiff has no claim on the proceeds.

Upon review of the record before the Court, and based upon the representations of plaintiff's counsel at the hearing, the undersigned finds that the default was not the result of excusable neglect. Plaintiff properly served Wilson with the summons and complaint. Despite ample notice of this lawsuit and plaintiff's intention to seek a default judgment, Wilson has not appeared in this action to date. In addition, plaintiff's counsel has communicated with Wilson by telephone about the case, but Wilson at some point stopped returning counsel's calls. Thus, the record suggests that defendant has simply chosen not to defend this action. Accordingly, this Eitel factor favors the entry of a default judgment.

"Cases should be decided upon their merits whenever reasonably possible." Eitel, 782 F.2d at 1472. However, where a defendant's failure to appear "makes a decision on the merits impracticable, if not impossible," entry of default judgment is warranted. Pepsico, Inc., 238 F. Supp. 2d at 1177. Therefore, where as here, defendants have failed to appear or respond — making a decision on the merits impossible — the entry of default judgment is warranted, as district courts have concluded with regularity. See, e.g., Microsoft Corp. v. Nop, 549 F.Supp.2d 1233, 1237 (E.D. Cal. 2008) (England, J.) ("defendant's failure to appear and defend against plaintiff's claims has made a decision on the merits impossible in this case"); Craigslist, Inc. v. Naturemarket, Inc., 694 F.Supp.2d 1039, 1061 (N.D. Cal. 2010) (same). Accordingly, although the undersigned is cognizant of the policy in favor of decisions on the merits — and consistent with existing policy would prefer that this case be resolved on the merits — that policy does not, by itself, preclude the entry of default judgment.

III. CONCLUSION

For the reasons stated above, IT IS HEREBY RECOMMENDED that:

1. Plaintiff's motion for default judgment against defendant Linda Wilson (ECF No. 14), be GRANTED.

2. The court APPROVE the proposed judgment submitted by plaintiff (ECF No. 28-4); and

3. Plaintiff be ORDERED to file dispositional documents within 30 days of the entry of the default judgment, based upon its representation that all remaining defendants have "reached an agreement for payment of the Policy proceeds."

These findings and recommendations are submitted to the United States District Judge assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(1). Within twenty one days after being served with these findings and recommendations, any party may file written objections with the court and serve a copy on all parties. Id.; see also Local Rule 304(b). Such a document should be captioned "Objections to Magistrate Judge's Findings and Recommendations." Any response to the objections shall be filed with the court and served on all parties within fourteen days after service of the objections. Local Rule 304(d). Failure to file objections within the specified time may waive the right to appeal the District Court's order. Turner v. Duncan, 158 F.3d 449, 455 (9th Cir. 1998); Martinez v. Ylst, 951 F.2d 1153, 1156-57 (9th Cir. 1991).