Watts v. Truesdell et al

Filing 46

ORDER - 1. Plaintiffs' motion for entry of default against Kaizen (Doc. 21 ) is granted. The Clerk is directed to enter Kaizen's default pursuant to Rule 55(a). 2. Plaintiffs' motion for a ruling (Doc. 41 ) is denied as moot. See Do c. 44 . 3. A Rule 16 Case Management Conference is set for July 10, 2019 at 4:00 p.m. before the Honorable David G. Campbell, 401 West Washington Street, Courtroom 603, Phoenix, Arizona 85003. The Court will issue a separate order regarding the requirements for the Rule 16 Case Management Conference. (See document for further details). Signed by Senior Judge David G Campbell on 6/18/19. (LAD)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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No. CV-17-01035-PHX-DGC (Lead Case)
No. CV-17-01034-PHX-DGC
(Consolidated Actions)

Nancy Watts; and Frank Simoncini,
Plaintiffs,

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vs.

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Hans Truesdell and Myriam Hernandez
Mendoza, husband and wife; Pelican
Partners International, S. de R.L. de C.V.,
a Mexican variable capital company; and
Kaizen de Mexico, a Mexico business
entity,

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ORDER

Defendants.

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Plaintiffs Nancy Watts and Frank Simoncini have filed a motion for entry of

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default against Defendant Kaizen de Mexico (“Kaizen”). Docs. 21, 29. Defendant Hans

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Truesdell has filed a response to which Plaintiffs have replied. Docs. 34, 36. No party

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requests oral argument or an evidentiary hearing. For reasons stated below, the Court

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will grant the motion.

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I.

Background.

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These cases arise from title issues relating to condominiums Plaintiffs purchased

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in the Bella Sirena development in Puerto Peñasco, Mexico. Plaintiffs filed state court

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actions against Truesdell, his wife Mariam Hernandez Mendoza, Kaizen, and Pelican

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Partners International (“Pelican”), the Bella Sirena developer.

Plaintiffs allege that

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Defendants engaged in a fraudulent scheme by which Plaintiffs were induced to pay

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unnecessary legal fees to Kaizen to defend their titles from liens placed on the properties.

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Plaintiffs assert consumer fraud, negligent misrepresentation, and breach of fiduciary

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duty claims against Truesdell, Hernandez, and Kaizen (Counts 1, 2 and 5), breach of

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contract and breach of covenant of good faith and fair dealing claims against Kaizen

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(Counts 3 and 4), and state RICO claims against all Defendants (Count 6).

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The cases were removed to this Court and consolidated. Doc. 8. The RICO

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claims were dismissed. Docs. 15, 16.1 Truesdell and Hernandez filed answers. Docs. 8,

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17, 38, 39. The cases were reassigned to the undersigned judge on May 29, 2019.

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Doc. 45.

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Plaintiffs contend that on March 8, 2017, they properly served process on Kaizen

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in Arizona by delivering the summonses and complaints to Truesdell, an officer of

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Kaizen. Doc. 21 at 1-2; see Doc. 20 at 6, 12 (affidavits of service). Kaizen has not

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answered or otherwise responded to the complaints. Plaintiffs seek the entry of Kaizen’s

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default pursuant to Federal Rule of Civil Procedure 55(a).

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II.

Service of Process on a Foreign Business Entity.

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“[S]ervice of process can be effected on a foreign corporation through delivery of

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the summons and complaint to ‘an officer, a managing or general agent, or any other

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agent authorized by appointment or by law to receive service of process.’” Jones v. Bank

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of Am. NA, No. CV-17-08231-PCT-SMB, 2018 WL 6831961, at *1 (D. Ariz. Dec. 28,

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2018) (quoting Fed. R. Civ. P. 4(h)(1)(B)); see Fed. R. Civ. P. 4(e)(1), (h)(1)(A) (service

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may be made in a judicial district of the United States by following state law for serving a

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summons); Ariz. R. Civ. P. 4(i) (a foreign business entity “may be served by delivering a

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copy of the summons and the pleading being served to a partner, an officer, [or] a

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managing or general agent”); Mach 1 Air Servs., Inc. v. Mainfreight, Inc., No. CV-14-

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Given the dismissal of the RICO claims, Pelican is no longer a party. See
Doc. 23 at 2.
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01444-PHX-SPL, 2015 WL 11181334, at *2 n.4 (D. Ariz. Mar. 5, 2015) (noting that the

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requirements for serving foreign corporations are the same under federal and Arizona

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law). “Once service is challenged, plaintiffs bear the burden of establishing that service

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was valid[.]” Brockmeyer v. May, 383 F.3d 798, 801 (9th Cir. 2004); see Mach 1, 2015

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WL 11181334, at *2; EFX Performance Inc. v. Lindley, No. SACV 10-01261-JVS

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(AGRx), 2011 WL 13227775, at *3 (C.D. Cal. Jan. 4, 2011) (plaintiffs must show valid

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service by a preponderance of the evidence); Nicks v. Brewer, No. 10-CV-1220-JAR-

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JPO, 2010 WL 4868172, at *4 (D. Kan. Nov. 23, 2010) (same). The reviewing court

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may consider declarations and other evidence in determining whether service was valid.

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See Benson v. 750 Pine Mgmt., LLC, No. CV-18-9199 PSG (GJSx), 2019 WL 1744853,

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at *2 (C.D. Cal. Feb. 7, 2019).

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III.

Service of Process on Kaizen Was Valid.

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Plaintiffs present sworn declarations showing that Truesdell is a Kaizen officer.

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Doc. 29-1. Watts states that in June 2010, Pelican informed her that liens had been

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placed on her condominium and it was her responsibility to defend against a seizure

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lawsuit.

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services. Watts called Kaizen and spoke with Truesdell. He explained that he and his

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wife own Kaizen and offered to remove the liens from the property. Id. at 2-3.

Pelican recommended that she contact Truesdell to retain Kaizen’s legal

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Three months later, Watts met with Truesdell and Hernandez in Arizona to

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discuss Kaizen’s services. Truesdell stated that he was Kaizen’s CEO and Hernandez

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was the company’s CFO. Truesdell explained that Kaizen had a legal strategy to defeat

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the seizure action against Watts’s condominium and that Kaizen represented other Bella

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Sirena property owners facing similar lawsuits. Id. at 3-4.

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Based on these representations, Watts met with Truesdell and Hernandez in

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Mexico to further discuss the scope of Kaizen’s representation. Truesdell presented

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Watts with a Kaizen contract for services, which she signed. Watts frequently contacted

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Truesdell regarding Kaizen’s progress on the case until she terminated Kaizen’s services

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in June 2015. Id. at 4; Doc. 1-2 at 8. Watts had no dealings with any other Kaizen

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personnel except for the attorney Kaizen hired to help with her case. Doc. 29-1 at 5.

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Watts understood Truesdell to be the principal officer of Kaizen at all relevant times. Id.

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Simoncini had a similar experience. He states that in August 2010, Truesdell

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called him on behalf of Kaizen to discuss a group legal effort to oppose the seizure of

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Bella Sirena properties. The next month, Simoncini met with Truesdell and Hernandez in

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Arizona to discuss Kaizen’s legal strategy. Truesdell made clear that he and Hernandez

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operated Kaizen. Id. at 7-8.

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Simoncini rarely received updates from Truesdell in the ensuing years, but

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managed to arrange a meeting with him in late 2015 to discuss the status of the case.

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Simoncini never met or communicated with anyone from Kaizen other than Truesdell and

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Hernandez. During this entire time, Simoncini understood Truesdell to be the principal

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officer of Kaizen. Id. at 8-9. Simoncini and Watts note that Truesdell continues to

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identify himself as the CEO of Kaizen on his LinkedIn profile. Id. at 3, 9.

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Truesdell does not refute these facts. See Doc. 35. He states that he was a part-

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time employee of Kaizen from 2010 to 2015 and did not have a job title. Id. at 1. He

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further states that he has never been an officer, director, or shareholder of Kaizen and was

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not authorized to accept service of process for the company. Id. at 2. But other than

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these conclusory assertions, Truesdell presents no evidence regarding his actual position

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with Kaizen or his purported departure from the company in 2015.

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employment records or corporate documents. He identifies no other current or former

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officer of Kaizen. And he fails to explain why he identified himself as Kaizen’s CEO

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during meetings with Plaintiffs and in phone calls and emails to them. See id. at 1. He

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claims that Kaizen did not actually have a CEO, but admits that his LinkedIn profile

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states that he has been the company’s CEO from “2001 to the present – 18 years.” See

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id.; https://www.linkedin.com/in/hans-truesdell-a2114812 (last visited June 14, 2019).2

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Truesdell’s assertion that he has never been an officer of Kaizen is simply not credible.

He offers no

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The profile indicates that Truesdell’s position as the CEO of another Mexican
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Plaintiffs have shown by a preponderance of the evidence that Truesdell was a

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Kaizen officer when he was served with process on March 8, 2017. See Doc. 20 at 6, 12.

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Service of process on Kaizen was therefore valid. See Fed. R. Civ. P. 4(h)(1)(B); Ariz.

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R. Civ. P. 4(i); Lassiter v. Coxcom, Inc., No. 08-CV-1561-HCAB, 2008 WL 4646334,

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at *4 (S.D. Cal. Oct. 20, 2008) (finding that the plaintiff met his burden of proving

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service by a preponderance of the evidence based on the parties’ declarations).3

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Truesdell contends that because Kaizen is a Mexican company and Mexico has

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ratified the Hague Convention, service of process pursuant to the Convention is

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mandatory. Doc. 34 (citing OGM, Inc., v. Televisa, S.A. de C.V., No. CV 08-5742-JFW

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(JCx), 2009 WL 1025971, *1 (C.D. Cal. Apr. 15, 2009)). But the Convention applies

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only to service outside the United States. See Brockmeyer, 383 F.3d at 801 (“Because

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service of process was attempted abroad, the validity of that service is controlled by the

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Hague Convention[.]”); Codigo Music, LLC v. Televisa S.A. de C.V., No. 15-CIV-21737,

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2017 WL 4346968, at *7 (S.D. Fla. Sept. 29, 2017) (“The express language of the Hague

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Convention makes clear that the Convention only applies to service in other countries.”);

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Tiangang Sun v. China Petro. & Chem. Corp., No. CV 13-05355 BRO (EX), 2014 WL

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11279466, at *5 (C.D. Cal. Apr. 15, 2014) (“Rule 4(f) governs service of a corporation if

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service is made outside of any judicial district of the United States [and] provides that

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service may be made pursuant to . . . any internationally agreed means of service, such as

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the Hague Convention[.]”).

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at 6, 12), the Hague Convention does not apply. See Codigo Music, 2017 WL 4346968,

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at *7 (distinguishing OGM because the plaintiffs sought to serve Televisa in the United

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States).

Because Kaizen was served in Arizona (see Doc. 20

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company (Unibiolab) ended in 2015, but no separation is indicated with respect to
Kaizen. See id.
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Given this ruling, the Court need not decide whether Truesdell was an agent of
Kaizen. See Docs. 34 at 4-5, 36 at 4-5.
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IT IS ORDERED:

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Plaintiffs’ motion for entry of default against Kaizen (Doc. 21) is granted.

The Clerk is directed to enter Kaizen’s default pursuant to Rule 55(a).

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2.

Plaintiffs’ motion for a ruling (Doc. 41) is denied as moot. See Doc. 44.

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3.

A Rule 16 Case Management Conference is set for July 10, 2019 at 4:00

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p.m. before the Honorable David G. Campbell, 401 West Washington Street, Courtroom

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603, Phoenix, Arizona 85003. The Court will issue a separate order regarding the

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requirements for the Rule 16 Case Management Conference.

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Dated this 18th day of June, 2019.

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