James H Donell v. Majid Mandi Ghomi, No. 2:2012cv00519 - Document 24 (C.D. Cal. 2013)
Court Description: ORDER DENYING 20 DEFENDANTS MOTION TO SET ASIDE AND VACATE DEFAULT AND DEFAULT JUDGMENT PURSUANT TO FED. R. CIV. P. 60(b)(1) by Judge Dean D. Pregerson . (lc) .Modified on 7/30/2013 .(lc).
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James H Donell v. Majid Mandi Ghomi Doc. 24 1 2 O 3 4 CLOSED 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 12 JAMES H. DONELL, Receiver for NewPoint Financial Services, Inc., and NewPoint Mortgage Bankers, Inc., 13 Plaintiffs, 14 v. 15 MAJID MANDI GHOMI 16 17 Defendant. ___________________________ 18 ) ) ) ) ) ) ) ) ) ) ) ) ) Case No. CV 12-00519 DDP (JEMx) ORDER DENYING DEFENDANT’S MOTION TO SET ASIDE AND VACATE DEFAULT AND DEFAULT JUDGMENT PURSUANT TO FED. R. CIV. P. 60(b)(1) [Dkt. No. 20] Presently before the Court is Defendant’s Motion (“Motion”) to 19 set aside and vacate the default and default judgment pursuant to 20 Fed. R. Civ. P. 60(b)(1) . 21 submissions and heard oral argument,1 the Court denies the Motion 22 and adopts the following Order. 23 I. 24 Having considered the parties’ BACKGROUND The Defendant Majid Mandi Ghomi (“Defendant”) invested 25 $40,000.00 (the “Principle Investment”) with NewPoint Financial 26 Services Inc. (“NewPoint”), a defendant in a separate enforcement 27 action with the SEC, entitled Securities and Exchange Commission v. 28 1 No appearance was made on behalf of Defendant at the hearing. Dockets.Justia.com 1 NewPoint Financial Services, Inc., et al., Case No. 10-CV-0124-DPP- 2 (JEMx) (“SEC Action”). (Complaint ¶ 12.) In the SEC Action, the SEC 3 alleged that NewPoint was operating a Ponzi Scheme and returned 4 money to certain favored investors at the expense of other 5 investors who were not repaid. (Id. at ¶¶ 55-57.) 6 the SEC Action, the Court appointed Plaintiff, James H. Donell 7 (“Plaintiff” or “Receiver”) as acting permanent receiver of 8 NewPoint and specifically authorized the Receiver to bring an 9 action against the Defendant. (Id. at ¶¶ 22-23.) The Receiver As a result of 10 alleges that the Defendant invested $40,000.00 in NewPoint 11 (“Principle Investment”), but received payments from NewPoint 12 amounting to $74,183.00. (Id. at ¶¶ 61-63.) As a result of the 13 payments made to him, the Defendant received $34,183.00 more than 14 his Principal Investment such that the Receiver is therefore 15 entitled to recover from the Defendant damages in a sum of 16 $34,183.00 with interest. (Id. at ¶ 69.) 17 Between February and April 2012, the Receiver’s process server 18 made twenty service attempts at the Defendant’s last known 19 residential address in Woodland Hills, California (“Residence”) at 20 various hours of the day and evening to no avail. (Decl. re 21 Diligence by Miguel Leyva.) Following the failed service attempts, 22 the Receiver’s counsel contacted attorney David Willingham who had 23 previously indicated he represent the Defendant in this matter. 24 (Id. at 6.) Receiver’s counsel asked Willingham whether he would 25 accept service of summons and complaint on behalf of the Defendant, 26 which Willingham agreed to do. (Davidson Decl. in Opposition to 27 Motion to Set Aside/Vacate Default ¶ 2.) Receiver’s counsel 28 prepared a Notice of Acknowledgment of Receipt of Summons and 2 1 Complaint, and sent it by Fedex to Willingham, along with copies of 2 Summons and Complaint. (Id.) On August 1, 2012, Receiver’s counsel 3 contacted Willingham about returning the Acknowledgment of Receipt 4 of Summons and Complaint. (Id. ¶ 3.) Willingham responded that the 5 firm did not represent the Defendant in the present matter and that 6 he would “get them to sign it and send it to [Willingham] for 7 return to [Receiver’s counsel].” 8 any documents to Receiver’s counsel. (Id. ¶ 4.) 9 (Id.) Willingham did not return Receiver’s counsel conducted further proprietary database 10 searches in an attempt to locate additional information as to the 11 whereabouts of the Defendant. (Eandi Decl. in support of Motion for 12 Service ¶ 5.) 13 unsuccessful service attempts were made at the Residence. 14 (Affidavit of Process Server, Dkt. No. 11-3.) 15 2013, the Receiver filed a motion to allow him to serve the 16 Defendant by publication. (Dkt. No. 11.) While the Court 17 subsequently granted that motion on February 20, 2013, (Dkt. No. 18 13) the Receiver did not serve the Defendant by publication. (Proof 19 of Service, Dkt. No. 12.) The Defendant was sub served, by service 20 on his wife, Nazanian Ghomi, at their home on February 14, 2013, 21 and then by US mail. (Dkt. No. 12.) The Defendant later confirmed 22 receipt of the documents. (Ghomi Declaration ¶ 7.) 23 On December 27 and 28, 2012, three additional On February 11, April 1, 2013, filed and served on the Defendant a request for 24 entry of default. (Dkt. No. 14.) 25 April 2, 2013. The Receiver filed a motion for default judgment on 26 April 10, 2013. The Defendant took no action until April 25, 2013, 27 when the Defendant called counsel for the Receiver and told him 28 that the Defendant did not believe he owed anything because, he The clerk entered default on 3 1 contended, he had loaned $40,000 to his brother, using NewPoint as 2 an intermediary. On May 13, 2013, counsel for the Receiver received 3 a telephone call from David Scott Kadin (“Kadin”) in which Kadin 4 stated that his firm might represent the Defendant and requested 5 that the Receiver set aside the Defendant’s default. (Kadin 6 Declaration ¶ 2.) Counsel for the Receiver denied this request. Id. 7 No appearance was made on behalf of the Defendant at the May 8 20, 2013, hearing on the Receiver’s Motion for Default Judgment. 9 (Minutes, Application for Default Judgment, Dkt. No. 16.) On May 10 20, 2013, the Court granted the Receiver’s Motion for Default 11 Judgment and judgment was entered. (Dkt. No. 19.) On June 25, 2013, 12 the Defendant filed the present Motion to set aside the default 13 judgment. (Dkt. No. 20.) 14 Defendant moves to set aside the default and default judgment 15 on the basis that he was not personally served with the Complaint 16 and he was not aware that he was responsible for responding to the 17 court documents delivered to his previous attorney. (Mot. at 4-5.) 18 The Defendant also contends that he has a meritorious defense to 19 the action in that he never invested in NewPoint but rather loaned 20 money to his brother and used NewPoint as the intermediary. (Id. at 21 5.) 22 II. 23 LEGAL STANDARD A Court has the power to set aside a default for “mistake, 24 inadvertence, surprise or excusable neglect.” Fed. R. Civ. P. 25 60(b)(1); Lemoge v. U.S., 587 F.3d 1188, 1192 (9th Cir. 2009). 26 the Ninth Circuit, a motion to set aside a default judgment can be 27 denied when “(1) the plaintiff would be prejudiced if the judgment 28 is set aside, (2) defendant has no meritorious defense, or (3) the 4 In 1 defendant’s culpable conduct led to the default.” 2 940 F.2d 524, 525-26 (9th Cir. 1991). 3 “[o]nly one of those factors need be present to justify denial of a 4 motion to set aside a default judgment.” 5 States Co., 201 F.R.D. 493, 500 (C.D. Cal. 2000)(citing In re 6 Hammer, 940 F.2d at 526.). 7 vacate the default judgment to demonstrate that the factors are 8 present and favor vacating the judgment.TCI Grp. Life Ins. Plan v. 9 Knoebber, 244 F.3d 691, 696 (9th Cir. 2001). 10 11 In re Hammer, The test is disjunctive, and McManus v. American The burden is on the party seeking to III. DISCUSSION The Defendant contends that the default and default judgment 12 were entered against him due to his mistake, surprise and/or 13 excusable neglect and therefore, the default and default judgment 14 should be set aside and vacated. 15 A. Service 16 As a threshold matter, the Defendant argues that he was not 17 personally served with the Complaint and Summons. 18 Federal Rules of Civil Procedure, an individual has been properly 19 served where service is made by leaving copies of the summons and 20 complaint at defendant’s “dwelling or usual place of abode with 21 someone of suitable age and discretion who resides there.” Fed. R. 22 Civ. P. 4(e)(2)(B). 23 Defendant’s wife Nazanian Ghomi at Defendant’s home at 20857 Martha 24 Street, Woodland Hills, CA, as well as by U.S. mail. 25 Service, Dkt. No. 12.) Under the Here, the Receiver effected service to (Proof of The court finds that service was proper. 26 B. Culpable Conduct 27 “A defendant’s conduct is culpable if he has received actual 28 or constructive notice of the filing of the action and failed to 5 1 answer.” Meadows v. Dominican Republic, 817 F.2d 517, 521 (9th 2 Cir. 1987). 3 Summons and Complaint because of his mistaken assumption that these 4 documents related to the SEC Action and that since he was no longer 5 part of that action, he was not required to respond. 6 default judgment is obtained because of a mistaken understanding of 7 the facts concerning the duty to respond, relief may be granted. 8 See 999 v. Cox & Co., 574 F.Supp. 1026, 1029 (E.D.M.O 9 1983)(granting relief where a defendant’s answer was late because Defendant argues that he did not respond to the If the 10 defendant’s counsel acted in good faith reliance on the client’s 11 mistaken statement as to the date the summons was received). 12 mistake must be excusable under the circumstances, and relief will 13 not be granted where a party should know the consequence of 14 ignoring service of process. 15 Eclat Computerized Technologies, Inc., 840 F.2d 685, 690 (9th Cir. 16 1988). The Direct Mail Specialists, Inc. v. 17 The Defendant’s asserted reason for not answering the 18 Complaint was that he was previously represented by an attorney 19 relating to a grand jury subpoena in the SEC action, and that he 20 mistakenly assumed that the Summons related to that action. 21 Summons in this case states, “A lawsuit has been filed against you” 22 and named him in capital letters as a defendant. 23 The Even if the court gives Defendant, a non-lawyer, the benefit 24 of the doubt and finds that he made a mistake as to the Summons, 25 subsequent conduct indicates that he was not innocent in the entry 26 of default judgment. 27 for not answering the Complaint, based on his phone calls he 28 appears to have understood the need to respond to the Receiver’s Even if Defendant has an excuse of mistake 6 1 application for default judgment. 2 Receiver had filed an application for default judgment on April 1, 3 Defendant called the Receiver and stated his defense. 4 Decl. ¶ 7.) 5 call from David Scott Kadin, who informed the Receiver that Kadin’s 6 firm might represent Defendant and asked the Receiver to set aside 7 the default, which the Receiver declined to do. 8 Neither Defendant nor counsel for the Defendant appeared at the 9 hearing on the application for default judgment on May 20, 2013. 10 On April 25, 2013, after the (Davidson On May 13, 2013, Receiver’s counsel received a phone (Id. ¶ 9.) (Id. ¶ 10.) 11 Because both Defendant and his representative phoned the 12 Receiver regarding the application for default judgment, Defendant 13 appears to have been aware of the application and concerned about 14 it. 15 comply with a filing deadline is attributable to negligence” and 16 “includes omissions caused by carelessness”. Lemoge,587 F.3d at 17 1192 (quoting Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd., 18 507 U.S. 380, 394 (1993)). 19 default judgment does not fall within excusable neglect. 20 has given no explanation for why he should be excused for not 21 opposing the default judgment application. Excusable neglect “encompasses situations where the failure to Defendant’s failure to defend the Defendant 22 C. Meritorious Defense 23 A motion to set aside a default judgment will not be granted 24 when the Defendant does not have a “meritorious defense.” 25 Hammer, 940 F.2d at 525. 26 not invest in Newpoint but rather made a loan to his brother and 27 used Newpoint as the intermediary. 28 evidence Defendant offers to support this claim is unconvincing. In re Defendant claims as a defense that he did 7 The court finds that the 1 The evidence consists of the accounting prepared by Receiver’s 2 accountants with handwriting of an unknown origin indicating “home 3 repair” next to certain checks. 4 Defendant’s claim that he loaned money to his brother through 5 Newpoint, or that six of the checks to him were given to him by 6 Farahi so that he could cash them. 7 has not presented a meritorious defense. This does not in any way support The court finds that Defendant 8 D. Prejudice to Plaintiff 9 The court finds that Plaintiff would be prejudiced if the 10 default judgment were set aside. 11 attorney’s fees in seeking the default and default judgment against 12 Defendant, and the estate and innocent investors will be prejudiced 13 if the judgment is set aside and the Receiver is obligated to 14 expend more estate resources in prosecuting the action, 15 particularly when Defendant has no meritorious defense. 16 IV. 17 18 The Receiver has expended CONCLUSION For the above reasons, Defendant’s motion to set aside and vacate the default and default judgment is DENIED. 19 20 21 IT IS SO ORDERED. 22 Dated: July 30, 2013 23 DEAN D. PREGERSON United States District Judge 24 25 26 27 28 8
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