Global Acquisitions Network et al v. Bank of America Corporation et al

Filing 18

ORDER by Judge Dean D. Pregerson: granting 13 defendant Bank of America Corporation Motion to Set Aside Default 12 . (lc). Modified on 12/14/2012 (lc).

1
2

O

3
4
5
6
7
8

UNITED STATES DISTRICT COURT

9

CENTRAL DISTRICT OF CALIFORNIA

10
11
12

GLOBAL ACQUISITIONS NETWORK,
a Wyoming corporaiton; SHAWN
CORNEILLE, an individual,

13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

Plaintiff,
v.
BANK OF AMERICA CORPORATION,
a Delaware corporation;
ORIANA CAPITAL PARTNERS,LLC,
a Connecticut limited
liability company; ZANCO, a
company of unknown business
form, HLB FINANCIAL, LLC, a
company of unknown form; W/C
INVESTMETN HOLDINGS INC., a
Florida corporatin; DEXTER
CHAPPELL, an individual;
VALERIE CHAPPELL, an
individual; JON LEARY, an
individual; GLEN McINERNEY
also known as LARRY BENNETT,
an individual; CHRISTOPHER
RAY ZANCO, an individual;
BERNARD WOODSON, an
individual,
Defendants.
___________________________

)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)

Case No. CV 12-08758 DDP (CWx)
ORDER GRANTING DEFENDANT’S MOTION
TO SET ASIDE ENTRY OF DEFAULT
[Dkt. No. 13]

Presently before the court is Defendant Bank of America
Corporation (“BAC”)’s Motion to Set Aside Entry of Default.

After

1

considering the parties’ submissions, the court adopts the

2

following order.

3

I. BACKGROUND

4

Plaintiffs’ Complaint seeks damages of $2.5 billion from BAC

5

and other defendants.

6

of two “collateralized mortgage obligations” in the amount of $2.5

7

billion.

8

Capital Partners (“OCP”) agreed to use these “collateralized

9

mortgage obligations” as collateral for an $18 million loan.

Plaintiffs allege that they are the owners

They allege that Defendants Dexter Chappell and Oriana

10

(Compl. ¶¶ 20, 21, 25.)

11

allegedly told Plaintiff that they intended to obtain this loan

12

from BAC.

13

Officer informed them by phone that OCP and Chappell had the

14

financial resources to obtain credit line funding for a “non-

15

recourse loan.” (Compl. ¶ 36.)

16

sufficient funding, Plaintiffs transferred their securities to OCP

17

and Chappell.

18

fact have the funds through a BAC credit line or through any other

19

resources.

20

for themselves. (Compl. ¶ 85.)

21

claims against all Defendants, including claims for negligence,

22

breach of fiduciary duty, and fraudulent inducement.

23

Chappell, OCP and other defendants

(Compl. ¶ 28.)

Plaintiffs allege that a BAC Bank

In reliance on this assurance of

(Compl. ¶ 40.) However, OCP and Chappell did not in

(Compl. ¶ 76.)

OCP and Chappell kept the securities
Plaintiffs assert a number of

Plaintiffs filed their Complaint on October 12, 2012.

BAC was

24

served on October 16, 2012, making its deadline to respond to the

25

Complaint November 6, 2012.

26

counsel for BAC, contacted counsel for Plaintiffs, Jon Divens, by

27

telephone.

28

of time, but they disagree on what the extension was for.

On November 2, 2012, John Amberg,

Parties agree that the attorneys discussed an extension

2

1

According to Plaintiffs, Mr. Divens agreed only to a 21-day

2

extension for BAC to file an answer.

3

Mr. Divens agreed to a 21-day extension for BAC to respond to the

4

complaint.

5

“confirm our telephone conversation this morning in which you

6

agreed to extend the time for Bank of America to respond to the

7

complaint to and including November 27, 2012.”

8

Exh. A.)

9

email.

10

According to Defendant BAC,

That same day, Mr. Amberg emailed Mr. Divens to

(Amberg Decl. ¶ 6,

Mr. Divens does not appear to have responded to this

On November 5, 2012, BAC counsel sent Mr. Divens a stipulation

11

for a 21-day extension to respond.

12

Having received no response, on November 6, 2012, BAC counsel sent

13

another message regarding the same stipulation.

14

Exh. C.)

15

my Signature to the stip to allow time to file an answer.”

16

Decl. ¶ 8, Exh. D.)

17

been to extend BAC’s deadline to respond to the complaint, not

18

merely to answer it.

19

asserted that he had never agreed to this extension, but only to

20

the extension for an answer.

21

(Amberg Decl. ¶ 7, Exh. B.)

(Amberg Decl. ¶ 8

Mr. Divens replied to this email stating, “You may attach
(Amberg

BAC counsel responded that the agreement had

(Amberg Decl., ¶ 9, Exh. E.)

Mr. Divens then

(Amberg Decl., ¶ 10, Exh. F.)

The next day, November 7, 2012, Plaintiffs filed a request for

22

the clerk to enter default against BAC.

23

a deficiency, default by clerk was entered on November 14, 2012.

24

II. LEGAL STANDARD

25

After Plaintiffs corrected

“The court may set aside an entry of default for good cause.”

26

Fed. R. Civ. P. 55(c).

27

consider three factors: “(1) whether the party seeking to set aside

28

the default engaged in culpable conduct that led to the default;

To determine “good cause,” a court must

3

1

(2) whether it had no meritorious defense; or (3) whether reopening

2

the default judgment would prejudice the other party.” U.S. v.

3

Signed Personal Check No. 730 of Yubran S. Mesle, 615 F.3d 1085,

4

1091 (9th Cir. 2010)(internal quotation marks and citation

5

omitted).

6

any one of these factors is true is sufficient reason for the

7

district court to refuse to set aside the default.”

8

“[J]udgment by default is a drastic step appropriate only in

9

extreme circumstances; a case should, whenever possible, be decided

This standard is disjunctive, “such that a finding that

10

on the merits.”

11

omitted.)

12

Id.

III. DISCUSSION

Id. (internal quotation marks and citations

13

A. Culpability

14

The court finds that BAC’s conduct was not culpable.

15

initial email sent by Mr. Amberg to Mr. Divens to confirm their

16

conversation addresses an extension of time to respond to the

17

complaint, not only to submit an answer.

18

Mr. Divens denies having orally agreed to such extension, but he

19

does not deny having received this confirmation email.

20

taken in conjunction with BAC’s other efforts to obtain the

21

stipulation to respond, show that BAC did not behave culpably.

22

fact that BAC’s request came four days before the deadline for the

23

answer does not on its own indicate bad faith.

The

(Amberg Decl., Exh. A.)

This email,

24

B. Meritorious Defenses

25

The court also finds that Defendant BAC did not have “no

26

meritorious defense.”

27

judgment must present specific facts that would constitute a

28

defense. But the burden on a party seeking to vacate a default

“A defendant seeking to vacate a default

4

The

1

judgment is not extraordinarily heavy.

2

satisfy the ‘meritorious defense’ requirement is to allege

3

sufficient facts that, if true, would constitute a defense: the

4

question whether the factual allegation is true is not to be

5

determined by the court when it decides the motion to set aside the

6

default. Rather, that question would be the subject of the later

7

litigation.”

8

Mesle, 615 F.3d 1085, 1094 (9th Cir. 2010)(internal quotation marks

9

and citations omitted).

10

All that is necessary to

U.S. v. Signed Personal Check. No. 730 of Yubran S.

Here, BAC asserts that it has at least six defenses: (1)

11

Plaintiff Global Acquisitions Network lacks standing because its

12

corporate status is “forfeited,” meaning that it may not prosecute

13

or defend and action; (2) BAC is a holding company that did not

14

make, purchase, or service any loans, such that it is not a proper

15

defendant; (3) BAC owed Plaintiffs no fiduciary duty because the

16

“relationship between a lending institution and its borrower-client

17

is not fiduciary in nature.”

18

¶ Loan Ass’n, 231 Cal. App. 3d 1089, 1092 (1991); (4) BAC owed

19

Plaintiffs no duty of care.

20

fail to plead fraud claims with particularity because they fail to

21

plead the “who, what, when, where, and how” that would suggest

22

fraud by BAC, insofar as they do not state the name, title,

23

authority, or location of the purported BAC employee with whom they

24

spoke on the phone; and (6) Accounting is not a cause of action but

25

a remedy, so that claim fails.

26

See e.g. Nymark v. Heart Fed. Sav.

See e.g. id. at 1096; (5) Plaintiffs

(Mot. at 7-8.)

Although Plaintiffs make arguments that may well be relevant

27

to the ultimate success of these defenses, those issues are more

28

properly the subject of later litigation.
5

BAC has raised

1

“sufficient facts that, if true, would constitute a defense,” and

2

that is all it need do to demonstrate that it does not have “no

3

meritorious defense.”

4

C. Prejudice

5

Finally, the court finds that setting aside the default would

6

not prejudice Plaintiffs.

Plaintiffs argue that they would be

7

prejudiced because a further delay in the investigation of the more

8

than two billion dollars allegedly lost or stolen “has caused and

9

continues to cause severe financial hardship,” but it is not clear

10

what hardship in particular would be caused by setting aside the

11

default.

12

IV. CONCLUSION

13
14

(Opp. at 15.)

The court finds that there is good cause to side aside the
default.

The Motion is GRANTED.

15
16

IT IS SO ORDERED.

17
18
19

Dated: December 14, 2012
DEAN D. PREGERSON
United States District Judge

20
21
22
23
24
25
26
27
28
6