MedCapGroup, LLC v. Mesa Pharmacy, Inc., 2:14-cv-01864

MedCapGroup sued Paxsyn/Mesa over accounts-receivable purchase agreements; Mesa filed a third-party claim against Dave Brown alleging Brown arranged the deals.
Brown denied involvement and filed a fourth-party complaint (Sept. 1, 2015) against Medcare Finance LLC and Greg Sundem asserting indemnification, contribution (alternative), and declaratory-relief claims, alleging Sundem/Medcare—not Brown—facilitated the transactions.
Brown served Medcare via the Nevada Secretary of State on Oct. 9, 2015; Medcare did not answer. The Clerk entered default against Medcare (Dec. 17, 2015).
Brown moved for default judgment under Fed. R. Civ. P. 55(b); no opposition was filed. The matter was referred to the magistrate judge for findings and recommendations.
The magistrate applied the Eitel factors, found service adequate, concluded Brown’s indemnification and declaratory-relief claims were sufficiently pled, and recommended entry of default judgment in Brown’s favor, including indemnification and recognition that any alleged wrongful conduct was in Brown’s capacity as a Medcare employee (imputing liability to Medcare, not Brown individually).

Issue	Plaintiff's Argument	Defendant's Argument	Held
Was service of process on Medcare adequate?	Brown: served Medcare via Nevada Secretary of State because Medcare was in default status.	Medcare: no responsive pleading or defense asserted.	YES — service via Secretary of State was adequate.
Should the Clerk’s default be converted into default judgment under Rule 55?	Brown: Medcare failed to defend; Eitel factors support default judgment.	Medcare: no opposing argument (did not appear).	YES — default judgment recommended after weighing Eitel factors.
Are Brown’s indemnification allegations sufficient?	Brown: he was Medcare’s COO; actions were on behalf of Medcare and made in good faith; NRS 86.411 supports indemnification.	Medcare: no response.	YES — indemnification claim sufficiently pled; judgment should indemnify Brown from liability.
Is declaratory relief appropriate to declare Brown’s limited-liability protection?	Brown: a justiciable controversy exists; NRS 86.371 shields members/employees from individual liability; declaratory relief is ripe.	Medcare: no response.	YES — declaratory judgment appropriate that alleged wrongful conduct, if any, was in Brown’s capacity as a Medcare employee and liability is imputed to Medcare.

Direct Mail Specialists, Inc. v. Eclat Computerized Tech., Inc., 840 F.2d 685 (9th Cir.) (service of process required for court jurisdiction)
Eitel v. McCool, 782 F.2d 1470 (9th Cir.) (seven-factor test for default-judgment discretion)
TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915 (9th Cir.) (well-pleaded allegations accepted as true after clerk’s default)
TCI Group Life Ins. Plan v. Knoebber, 244 F.3d 691 (9th Cir.) (prejudice standard in default context)
Liberty Ins. Underwriters Inc. v. Scudier, 53 F. Supp. 3d 1308 (D. Nev.) (application of Eitel factors)
Philip Morris USA, Inc. v. Castworld Products, Inc., 219 F.R.D. 494 (C.D. Cal.) (default deemed admission of well-pleaded allegations)