CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No. 8:21-cv-01310-JVS-ADS Date December 2, 2021
Title United States of America v. $1,707,197.13 from Fidelity Investment Bank
Funds Account Number ‘6516, et al.
Present: The James V. Selna, U.S. District Court Judge
Honorable
Lisa Bredahl Not Present
Deputy Clerk Court Reporter
Attorneys Present for Plaintiffs: Attorneys Present for Defendants:
Not Present Not Present
Proceedings: [IN CHAMBERS] Order Regarding Motion for Default Judgment
Before the Court is a motion for default judgment filed by Plaintiff United States of
America (the “Government”) against the interests of William Nicoloff (“W. Nicoloff”),
Michelle Nicoloff (“M. Nicoloff”), Coastridge Capital Partners (“Coastridge”), Bentley
Energy Partners, LLC (“Bentley”), David Capital LLC (“David”), Stonecreek Capital
Partners (“Stonecreek”), and all other potential claimants (collectively,“potential
claimants”) as to Defendants $1,707,197.13 from Fidelity Investment Bank Funds
Account Number ‘6516 (“Account 6516”) and $1,953.93 from Fidelity Investment Bank
Funds Account Number ‘3501 (“Account 3501”) (collectively, the “defendant funds”).
Mot., Dkt. No. 17. No potential claimant has filed an opposition.
For the following reasons, the Court GRANTS the motion for default judgment.
I. BACKGROUND
On August 6, 2021, the Government filed a Verified Complaint for Forfeiture
against the defendant funds. Compl., Dkt. No. 1. The Government alleges that W.
Nicoloff submitted loan applications for Bentley, Coastridge, David, Stonecreek, M.
Nicoloff, and W. Nicoloff. Id. ¶ 9. The loan applications included altered documentation
and other false information to obtain loans guaranteed by the SBA through the Paycheck
Protection Program (“PPP”), a program created by the Coronavirus Aid, Relief, and
Economic Security Act (“CARES Act”). Id. ¶ 10. W. Nicoloff obtained over $1.5 million
in PPP loans from lenders. Id. ¶ 11. Instead of using loan proceeds for their intended
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No. 8:21-cv-01310-JVS-ADS Date December 2, 2021
Title United States of America v. $1,707,197.13 from Fidelity Investment Bank
Funds Account Number ‘6516, et al.
trading activity unrelated to the businesses for which the loans were obtained. Id. ¶ 12.
On loan applications submitted for Bentley, David, Stonecreek, and Coastridge, W.
Nicoloff made numerous false statements involving the number of employees and the
businesses’ payrolls, and the use for the loan proceeds. Id. ¶¶ 18-36, 45-50. On loan
applications submitted for M. Nicoloff and W. Nicoloff, W. Nicoloff made numerous
false statements involving the businesses’ payrolls and the use for the loan proceeds. Id.
¶¶ 37-39, 45-47. Nicoloff also submitted fraudulent IRS forms in support of all of the
above loan applications. Id. ¶¶ 18-20, 26-29, 33-34, 37-39, 45-47. The Government
traced the loan proceeds into Account 6516 and Account 3501. Id. ¶¶ 51-58. The
Government alleges that the defendant funds constitute or are derived from proceeds
traceable to violations of

18 U.S.C. §§ 1341

 (mail fraud) and/or 1344 (bank fraud);
constitute property involved in multiple transactions or attempted transactions in
violation of

18 U.S.C. § 1956

(a)(1)(A)(i) or (a)(1)(B)(i), or property traceable to such
property, with the specified unlawful activity being a violation of

18 U.S.C. § 1343

 (wire
fraud) and/or 1344 (bank fraud); and/or constitute property involved in multiple
transactions or attempted transactions in violation of 18 U.S.C. ¶ 1957(a), or property
traceable to such property, with the specified unlawful activity being a violation of

18 U.S.C. § 1343

 and/or 1344.

Id. ¶¶ 60-64

. The Government alleges that the defendant
funds are therefore subject to forfeiture pursuant to 18 U.S. C. §§ 981(a)(1)(A) and (C).
Id.
Beginning on August 9, 2021, notice of civil forfeiture was posted on an official
government website for 30 consecutive days pursuant to Rule G(4)(a)(iv)(C) of the
Supplemental Rules of Admiralty or Maritime Claims and Asset Forfeiture Actions.
Whittlesey Decl. ¶ 4; Ex. B, Dkt. No. 17-2. On August 12, 2021, process was executed
upon the defendant funds by the United States Marshals Service in accordance with
Supplemental Rule E(4)(b). Whittlesey Decl. ¶ 3; Ex. A, Dkt, No. 17-1. On August 13,
2021, the Government sent notices of the Complaint to potential claimants W. Nicoloff,
M. Nicoloff, Coastridge, Bentley, David, and Stonecreek at their respective last known
addresses. Whittlesey Decl. ¶¶ 5-10. The notices were sent by certified mail with a claim
letter describing the defendant funds and giving notice as to the time within which a
claim and answer were required to be filed. Id. The United States Postal Service certified
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No. 8:21-cv-01310-JVS-ADS Date December 2, 2021
Title United States of America v. $1,707,197.13 from Fidelity Investment Bank
Funds Account Number ‘6516, et al.
action expired on September 17, 2021, and the time to file an answer expired on October
8, 2021. Whittlesey Decl. ¶ 11. In accordance with Supplemental Rule G(5), the time for
all interested parties who did not receive direct notice were required to file a claim and
answer expired on October 8, 2021 and October 29, 2021, respectively. Id. ¶ 12. None of
the potential claimants W. Nicoloff, M. Nicoloff, Coastridge, Bentley, David, and
Stonecreek or any other potential claimant has filed a claim or answer. Id. ¶ 13.
On November 4, 2021, the Clerk entered a default against the interests of potential
claimants W. Nicoloff, M. Nicoloff, Costridge, Bentley, David, Stonecreek, and all other
potential claimants. Default, Dkt. No. 16. On November 10, 2021, the Government filed
the instant motion. Mot. Pursuant to Local Rule 7-9, any opposition to the Government’s
Motion was due no later twenty-one days before the December 16, 2021 hearing date.
The Court received no opposition to the Motion.
II. LEGAL STANDARD
Before a court can enter a default judgment against a defendant, a plaintiff must
satisfy the procedural and substantive requirements for default judgment.
A. Procedural Requirements
For a default judgment, a plaintiff must satisfy the procedural requirements of the
Federal Rules of Civil Procedure. Rule 54(c) states that a default judgment cannot grant
relief that is different from the requested relief in a complaint. Fed. R. Civ. P. 54(c).
Under Rule 55(a), a clerk must enter a default when a defendant has failed to plead,
defend, or appear in any form. Fed. R. Civ. P. 55(a). Lastly, if a defaulting party has
appeared in an action, then a plaintiff needs to serve a motion for default on the
defaulting party. Fed. R. Civ. P. 55(b)(2).
In addition, a party seeking a default judgment must satisfy the requirements of
Local Rule 55-1. To satisfy Local Rule 55-1, a plaintiff needs to submit a declaration
establishing (1) when and against who the clerk entered a default, (2) the pleading on
which default was entered, (3) whether the defaulting party is an infant or incompetent
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No. 8:21-cv-01310-JVS-ADS Date December 2, 2021
Title United States of America v. $1,707,197.13 from Fidelity Investment Bank
Funds Account Number ‘6516, et al.
whether the plaintiff served a notice of the motion on the defaulting party, if required by
Federal Rule of Civil Procedure 55(b)(2). L.R. 55-1.
B. Substantive Requirements
The Ninth Circuit has identified seven factors (together, the “Eitel factors”) that a
court considers when determining whether to grant a default judgment: (1) the possibility
of prejudice to the plaintiff; (2) the merits of the plaintiff’s substantive claim; (3) the
sufficiency of the complaint; (4) the sum of money at issue; (5) the possibility of a
dispute regarding material facts; (6) whether the default was due to excusable neglect;
and (7) the strong policy favoring decisions on the merits. Eitel v. McCool,

782 F.2d 1470, 1471-72

 (9th Cir. 1986).                                               
    Taken together, the second and third Eitel factors, related to the merits of a
plaintiff’s claims and the sufficiency of the complaint, address whether the party seeking
default judgment has stated a claim upon which it may recover. See, e.g., Philip Morris
USA, Inc. v. Castworld Prods., Inc.,

219 F.R.D. 494, 498

 (C.D. Cal. 2003) (citing
PepsiCo Inc. v. Cal. Sec. Cans,

238 F. Supp. 2d 1172

 (C.D. Cal. 2002)).      
    On an application for a default judgment, the factual allegations in the complaint
are taken as true, with the exception of those regarding damages. See Pope v. United
States,

323 U.S. 1, 12

 (1944); Geddes v. United Fin. Grp.,

559 F.2d 557

, 560 (9th Cir.
1977). “[N]ecessary facts not contained in the pleadings, and claims which are legally
insufficient, are not established by default.” Cripps v. Life Ins. Co.,

980 F.2d 1261, 1267

(9th Cir.1992). “A default judgment must not differ in kind from, or exceed in amount,
what is demanded in the pleadings.” Fed. R. Civ. P. 54(c).
III. DISCUSSION
A. Procedural Requirements
The Government satisfies the procedural requirements for a default judgment
against potential claimants.
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No. 8:21-cv-01310-JVS-ADS Date December 2, 2021
Title United States of America v. $1,707,197.13 from Fidelity Investment Bank
Funds Account Number ‘6516, et al.
The Government satisfies Rule 55(c) because it requests the same relief of
forfeiture in its motion for default judgment as it did in its complaint. Compl. ¶¶ 60-64;
Mot at 9-11. Service of motion for default is not required by Rule 55(b)(2) because the
potential claimants have not appeared in this action.
The Government satisfies Local Rule 55-1. The Government has submitted a
declaration establishing that (1) the Clerk entered a default against the interests of W.
Nicoloff, M. Nicoloff, Coastridge, Bentley, David, Stonecreek, and all other potential
claimants on November 4, 2021, (2) that the default was entered on the Government’s
Complaint, (3) that W. Nicoloff and M. Nicoloff (the known claimants against whom
default is sought and who are natural persons) are neither infants nor incompetent
persons, (4) that the Servicemembers Civil Relief Act does not apply, and (5) that the
Government served a notice of the motion on W. Nicoloff, M. Nicoloff, Coastridge,
Bentley, David, and Stonecreek although not required by Federal Rule of Civil Procedure
55(b)(2). Whittlesey Decl. ¶¶ 14-17.
C. Substantive Requirements
The Government satisfies the substantive requirements for a default judgment
against potential claimants.
i. Possibility of Prejudice to Plaintiff
The first Eitel factor favors default judgment because the Government has
expended effort and incurred costs and fees in prosecuting this action. The Clerk entered
a default against the potential claimants, but they have not subsequently moved the Court
to set aside the default. Without default judgment, the Government will be left without a
remedy. As such, the Court finds that the first Eitel factor favors default judgment.
ii. Merits of Claims and Sufficiency of Complaint
The Government has alleged sufficient facts in the Complaint to show that the
defendant funds constitute or are derived from proceeds traceable to violations of 18
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No. 8:21-cv-01310-JVS-ADS Date December 2, 2021
Title United States of America v. $1,707,197.13 from Fidelity Investment Bank
Funds Account Number ‘6516, et al.
1956(a)(1)(A)(I) or (a)(1)(B)(I), or property traceable to such property, with the specified
unlawful activity being a violation of

18 U.S.C. § 1343

 (wire fraud) and/or 1344 (bank
fraud); and/or constitute property involved in multiple transactions or attempted
transactions in violation of 18 U.S.C. ¶ 1957(a), or property traceable to such property,
with the specified unlawful activity being a violation of

18 U.S.C. § 1343

 and/or 1344.
Compl. ¶¶ 60-64. Accordingly, the Government has established that the defendant funds
are subject to forfeiture pursuant to 18 U.S. C. §§ 981(a)(1)(A) and (C). Id. Deeming the
allegations set forth in the Complaint as true, the Court concludes that the Government
has sufficiently pled meritorious claims on which it may recover. Hence, the second and
third Eitel factors favor default judgment.                                  
         iii. Sum of Money at Issue                                         
    The fourth Eitel factor examines whether a sum of money at stake is proportionate
to the plaintiff’s harm. Landstar Rager, Inc. v. Parth Enters., Inc.,

725 F. Supp. 2d 916, 921

 (C.D. Cal. 2010). Here, the United States provides no additional evidence concerning
the amount of money at stake. The Complaint alleges that W. Nicoloff obtained
$1,554,054 in PPP loans from lenders, including US Bank, NA and Transportation
Alliance Bank, d/b/a TAB Bank. Compl. ¶ 11. While the Court generally accepts the
factual allegations of the complaint as true on a motion for default judgment, the Court
cannot accept as true those allegations relating to the amount of damages. See Geddes v.
United Fin. Grp.,

559 F.2d 557

, 560 (9th Cir. 1977). However, in this case, the Complaint
is verified, and the allegations carry evidentiary weight. Thus, the fourth Eitel factor
favors default judgment.                                                     
         iv.  Possibility of Dispute Regarding Material Facts               
    The fifth Eitel factor weighs in favor of default judgment because “[u]pon entry of
default, the well-pleaded allegations of the complaint relating to a defendant’s liability
are taken as true.” PepsiCo,

238 F. Supp. 2d at 1175

. As discussed earlier, the
Government has adequately pled its claims against the potential claimants. Because no
potential claimant has opposed the motion, no factual disputes exist that would preclude
the entry of default judgment. Thus, the fifth Eitel factor favors default judgment.
                  CENTRAL DISTRICT OF CALIFORNIA                            
                       CIVIL MINUTES - GENERAL                              
Case No.  8:21-cv-01310-JVS-ADS               Date December 2, 2021         
Title   United States of America v. $1,707,197.13 from Fidelity Investment Bank
        Funds Account Number ‘6516, et al.                                  
    The sixth Eitel factor weighs in favor of default judgment. The Court finds that a
default was unlikely to have resulted from excusable neglect in this case. The potential
claimants W. Nicoloff, M. Nicoloff, Coastridge, Bentley, David, and Stonecreek were
served with notice of this action by certified mail. Whittlesey Decl. ¶¶ 5-10. Given the
period of time that has elapsed, the possibility of excusable neglect is remote.
Accordingly, the sixth Eitel factor favors default judgment.                 
         vi.  Policy Favoring Decision on the Merits                        
    Only the seventh Eitel factor, the strong policy favoring decisions on the merits,
weighs against entry of a default judgment. But this factor alone is insufficient to
counterbalance the other factors in this case. See PepsiCo,

238 F. Supp. 2d at 1177

.
    Weighing all the Eitel factors, the Court finds that entry of judgment is proper. 
                           IV.  CONCLUSION                                  
    For the foregoing reasons, the Court GRANTS the motion for default judgment. 
         IT IS SO ORDERED.                                                  
    The Court finds that oral argument would not be helpful in this matter. Fed. R. Civ.
P. 78; L.R. 7-15. Hearing set for December 16, 2021, is VACATED.             

                                                            :    0          
                                      Initials of Preparer lmb