Trinchitella v. American Realty Partners LLC, et al

Filing 68

FINDINGS and RECOMMENDATIONS signed by Magistrate Judge Edmund F. Brennan on 9/14/2020 RECOMMENDING that plaintiff's 59 motion for default judgment against American Housing Income Trust., Inc. be denied. Matter REFERRED to Chief District Judge Kimberly J. Mueller. Within 14 days after being served with these findings and recommendations, any party may file written objections with the court and serve a copy on all parties.(Kastilahn, A)

1
2
3
4
5
6
7
8

UNITED STATES DISTRICT COURT

9

FOR THE EASTERN DISTRICT OF CALIFORNIA

10
11

RONALD F. TRINCHITELLA,

12

Plaintiff,

13
14
15

No. 2:15-cv-2365-KJM-EFB

v.

FINDINGS AND RECOMMENDATIONS

AMERICAN REALITY PARTNERS,
LLC, et al.,
Defendants.

16
17
18

This case is before the court on plaintiff’s motion for default judgment against defendant

19

American Housing Income Trust, Inc (“AHIT”).1 ECF No. 59. For the reasons stated below, it is

20

recommended the motion be denied.2

21

I.

22

Background
This action arises from a $150,000 investment plaintiff made with defendant American

23

Reality Partners, Inc. (“ARP”) in February 2014. Representatives of ARP and defendant

24

Performance Reality Management (“PRM”) allegedly solicited plaintiff to make the investment.

25
26
27
28

1

This case was referred to the undersigned pursuant to Eastern District of California
Local Rule 302(c)(19). See 28 U.S.C. § 636(b)(1).
2

The court determined that oral argument would not materially assist in the resolution of
plaintiff’s motion. Accordingly, the matter was ordered submitted on the briefs. ECF No. 65.
See E.D. Cal. L.R. 230(g).
1

1

During the solicitation, plaintiff was assured that his investment would generate a minimum

2

annual return of 8 percent, although the projected return was reported to be substantially higher.

3

More than a year after making the investment, no returns materialized. Instead, in early 2015

4

plaintiff allegedly was notified that his investment resulted in a loss exceeding $35,000.

5

In September 2015, plaintiff filed this action in the San Joaquin County Superior Court

6

against ARP and PRM, both limited liability companies organized under Arizona law; AHIT, a

7

Maryland corporation alleged to be the successor in interest to ARP; and Sean Zarinegar, AHIT’s

8

CEO. ECF No. 1. The original complaint alleged claims for: (1) breach of written contract, (2)

9

breach of oral contract, (3) promissory fraud, (4) consumer fraud, (5) intentional

10

misrepresentation, (6) negligent misrepresentation, and (7) common law fraud. See generally id.

11

Defendants removed the case to this court (ECF No. 1) and moved to dismiss the

12

complaint for lack of personal jurisdiction (ECF No. 4). Alternatively, ARP moved to compel

13

arbitration. Id. The court denied the motion to dismiss as to ARP, PRM, and Zarinegar, but

14

granted it as to AHIT, finding it was not subject to personal jurisdiction in this court. ECF No.

15

22. Plaintiff, however, was granted leave to amend to cure the jurisdictional deficiency. Id. The

16

court also granted ARP’s motion to compel arbitration and stayed the case pending arbitration of

17

all claims against ARP. Id.

18

Following arbitration, the court granted plaintiff’s motion to confirm the arbitration award

19

against ARP. ECF No. 46. The parties also stipulated to plaintiff filing an amended complaint

20

“to add a successor entity (Corix Bioscience, Inc., . . . which is the successor to AHIT).” ECF

21

No. 33. Plaintiff subsequently filed a first amended complaint, alleging claims against ARP,

22

PRM, Zaniegar, AHIT, and Corix Bioscience, Inc. (“Corix”). ECF No. 35.

23

Thereafter, ARP, PRM, Zaniegar, and Corix moved for dismissal of the first amended

24

complaint. ECF No. 41. Although AHIT was represented by the same attorney representing all

25

other defendants, it did not join in the motion to dismiss nor advance arguments on its behalf. Id.;

26

see ECF No. 47 at 9 n.9. After resolution of that motion—which was granted in part and denied

27

in part—plaintiff filed a second amended complaint (ECF No. 48) and a request for entry of

28

AHIT’s default (ECF No. 50), which the clerk entered on July 10, 2019 (ECF No. 52). Shortly
2

1

thereafter, defendants ARP, PRM, Zarinegar, and Corix filed an answer (ECF No. 53), which was

2

concurrently filed with their attorney’s request to withdraw as counsel (ECF No. 54).3

3

In February 2020, plaintiff filed the instant motion seeking default judgment against

4

AHIT. ECF No. 59.

5

II.

6

Discussion
As explained below, AHIT has not failed to respond to the second amended complaint. It

7

timely filed an answer under its current corporate name, Corix Bioscience, Inc. See ECF No. 53

8

at 1 (answer filed on behalf of “CORIX BIOSCIENCE, INC., A WYOMING CORPORATION

9

F/K/A AMERICAN HOUSING INCOME TRUST INC. a Wyoming corporation.”). Although

10

plaintiff has treated AHIT and Corix as separate entities, that is not the case. In the second

11

amended complaint, plaintiff specifically alleges that on May 12, 2017, AHIT changed its name

12

to Corix Bioscience, Inc. ECF No. 48 ¶ 4. Despite acknowledging AHIT merely changed its

13

corporate name, plaintiff’s complaint asserts claims against AHIT and Corix as two separate and

14

distinct defendants. See generally ECF No. 48.

15

Presumably, plaintiff’s confusion stems from AHIT being incorporated in Maryland while

16

Corix’s current state of incorporation is Wyoming. But records maintained by those states

17

reflects that AHIT and Corix are one and the same, not that Corix is a separate corporation that

18

acquired the assets and liabilities of AHIT. The Maryland Secretary of State’s website reflects

19

that in May 2017, AHIT changed its name to Corix Bioscience, Inc.4 This action was completed

20

by amending the corporate charter, not by creating a new corporate entity. See Md. Corp. &

21

Assns § 2-605; Pitman v. Aran, 935 F. Supp. 637, 644 (D. Md. 1996) (under Maryland law,

22

change in corporate name “is without legal effect.”); see also Alley v. Miramon, 614 F.2d 1372,

23
24
25
26
27
28

3

Although counsel’s motion was denied (ECF No. 60), the court recently granted
counsel’s renewed motion to withdraw as attorney (ECF Nos. 63 & 67).
4

The court takes judicial notice of the AHIT entity profile from the Maryland Secretary
of State’s website and the Corix entity profile from the Wyoming Secretary of State’s website.
Fed. R. Evid. 201; see Gerritsen v. Warner Bros. Entm’t, Inc., 112 F. Supp. 3d 1011, 1033 34
(C.D. Cal. 2015) (taking judicial notice of business entity profile from the California Secretary of
State’s website).
3

1

1384 (5th Cir. 1980) (“[A] change of corporate name does not change the identity of a

2

corporation, nor does it affect the corporation’s rights, properties, or liabilities).

3

Under its new name, Corix Bioscience, Inc., the corporation then filed “Foreign Profit

4

Corporation Articles of Continuance” with the Wyoming Secretary of State. See Wyo. Stat. Ann.

5

§ 17-16-1810 (permitting a foreign corporation to “apply to the secretary of state for registration

6

under this act, thus continuing the foreign corporation in Wyoming as if it had been incorporated

7

in this state.”). Corix’s redomestication to Wyoming had no legal impact on the corporation’s

8

assets and liabilities. See Wyo. Stat. § 17-16-1810(f) (a corporation’s domestication to Wyoming

9

“shall not affect the corporation’s ownership of its property or liability for any existing

10

obligations, causes of action, claims, pending or threatened prosecutions or civil or administrative

11

actions, convictions, rulings, orders, judgments, or any other characteristics or aspects of the

12

corporation and its existence.”).

13

Accordingly, it is clear that American Housing Income Trust., Inc. and Corix Bioscience,

14

Inc. are the same entity. American Housing Income Trust., Inc. is simply a prior name used by

15

the corporation now known as Corix Bioscience, Inc. Since Corix responded to both the first and

16

the second amended complaints (ECF Nos. 62 & 41), it is not in default. Accordingly, plaintiff’s

17

motion for default judgment against American Housing Income Trust., Inc. must be denied.

18

III.

19
20

Conclusion
For the reasons stated above, it is hereby RECOMMENDED that plaintiff’s motion for

default judgment against American Housing Income Trust., Inc. (ECF No. 59) be denied.

21

These findings and recommendations are submitted to the United States District Judge

22

assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(l). Within fourteen days

23

after being served with these findings and recommendations, any party may file written

24

objections with the court and serve a copy on all parties. Such a document should be captioned

25

“Objections to Magistrate Judge’s Findings and Recommendations.” Failure to file objections

26

/////

27

/////

28

/////
4

1

within the specified time may waive the right to appeal the District Court’s order. Turner v.

2

Duncan, 158 F.3d 449, 455 (9th Cir. 1998); Martinez v. Ylst, 951 F.2d 1153 (9th Cir. 1991).

3

DATED: September 14, 2020.

4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
5