835 F. Supp. 2d 871
S.D. Cal.2011Background
- Donell, acting as receiver for LWI funds, sues Minnesota-resident Keppers for allegedly fraudulent transfers tied to a Ponzi scheme.
- Transfers at issue occurred on or before November 6, 2003, with approximately seven years passing before filing suit.
- SEC had previously initiated action against LWI; a receiver (Lennon, later Donell) was appointed.
- Plaintiff sought default judgment after Defendant failed to answer; the Clerk entered default.
- Court ordered show cause why claims are not time-barred by the statute of limitations and for lack of personal jurisdiction; order denies default and dismisses without prejudice on Aug. 29, 2011.
- Plaintiff now seeks to vacate that order and obtain reconsideration; court grants vacatur, grants reconsideration, but denies default judgment and dismisses with prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the order should be vacated and reconsideration granted. | Donell argues Rule 60(b)(6) extraordinary circumstances justify relief. | Keppers contends no basis to vacate the prior decision. | Yes; Court grants vacatur and reconsideration. |
| Whether the court has personal jurisdiction over Keppers. | Plaintiff relies on §1692 and §754 with §4(k)(l)(D) to argue jurisdiction via receivership. | Keppers contends lack of proper filing under §754 undermines jurisdiction. | Court finds personal jurisdiction exists under §1692 after proper filing under §754. |
| Whether the UFTA claims are time-barred by §3439.09(c) seven-year backstop. | Argues tolling or continued discovery extends period. | Argues seven-year backstop is absolute and cannot be tolled. | UFTA claims are barred; dismissed with prejudice. |
| Whether unjust enrichment claim is barred by §3439.09(c) or waived. | Argues unjust enrichment not subject to UFTA time limits and could be waivable. | Argues section 3439.09(c) controls and is not waivable. | Unjust enrichment claim dismissed with prejudice. |
Key Cases Cited
- Donell v. Kowell, 533 F.3d 762 (9th Cir. 2008) (receiver recovery under UFTA; statute of repose implications)
- Riordan v. State Farm Mut. Auto. Ins. Co., 589 F.3d 999 (9th Cir. 2009) (docketing and filing considerations; clerical errors and supplemental evidence)
- Eitel v. McCool, 782 F.2d 1470 (9th Cir. 1986) (default judgment factors; policy favoring merits decisions)
- In re Tuli, 172 F.3d 707 (9th Cir. 1999) (district courts must determine personal jurisdiction before default judgment)
- Levald, Inc. v. City of Palm Desert, 998 F.2d 680 (9th Cir. 1993) (sua sponte dismissal for limitations; reasonable grounds to consider timeliness)