(PS)Trinchitella v. Performance Realty Management, LLC ( 2020 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 RONALD F. TRINCHITELLA, No. 2:15-cv-2365-KJM-EFB 12 Plaintiff, 13 v. FINDINGS AND RECOMMENDATIONS 14 AMERICAN REALITY PARTNERS, LLC, et al., 15 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. Background 22 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 1 This case was referred to the undersigned pursuant to Eastern District of California 26 Local Rule 302(c)(19). See 28 U.S.C. § 636(b)(1). 27 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. 28 See E.D. Cal. L.R. 230(g). 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 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. Discussion 6 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 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). 25 26 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. 27 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 28 State’s website). 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. Conclusion 19 For the reasons stated above, it is hereby RECOMMENDED that plaintiff’s motion for 20 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 ///// wOASe 2 MEUM ING VEE MVOC VO PR Te PAY VI 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. Yist, 951 F.2d 1153 (9th Cir. 1991). 3 | DATED: September 14, 2020. ‘ tid, PDEA 5 EDMUND F. BRENNAN UNITED STATES MAGISTRATE JUDGE 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28