ORDER
(1) GRANTING MOTION TO VACATE THE COURT’S AUGUST 29, 2011 ORDER
(2) GRANTING MOTION FOR RECONSIDERATION
[Doc. No. 15]
(3) DENYING MOTION FOR DEFAULT JUDGMENT;
AND [Doc. No. 7]
(4) DISMISSING COMPLAINT WITH PREJUDICE
Presently before the Court is Plaintiff Stephen J. Donell (“Plaintiff”)’s motion to vacate the Court’s August 29, 2011 Order denying Plaintiffs motion for default judgement without prejudice and Plaintiffs motion for reconsideration of his motion for default judgment. [Doc. No. 15.] After a thorough review of all submissions, and for the reasons stated below, the Court GRANTS Plaintiffs motion to vacate the Court’s August 29, 2011 Order, GRANTS Plaintiffs motion fоr reconsideration of his motion for default judgment, DENIES Plaintiffs motion for default judgment, and DISMISSES WITH PREJUDICE Plaintiffs complaint.
BACKGROUND
Defendant Renae Keppers (“Defendant”) allegedly obtained funds derived from a Ponzi scheme perpetrated by Learned Waterhouse, Inc. (“LWI”), its subsidiaries and affiliates, and its principals. [Doc. No. 1, Compl. ¶¶ 37-38.] All of LWI’s payments to Defendant occurred оn or before November 6, 2003. [Doc. No. 7-4, Declaration of James T. Schaefer (“Schaefer Decl.”) ¶¶ 5-8, Exs. 2-4.]
Following the commencement of an action by the Securities and Exchange Commission (“SEC”) against LWI and its affiliates, the district court appointed a receiver, Thomas F. Lennon, and that receiver was later succeeded by Plaintiff Stephen Donell. See SEC v. Learn Waterhouse, Inc., No. 04-cv-2037-W (LSP) (S.D. Cal., Order filed Oct. 12, 2004 [Doc. No. 9]); id. (Order filed Nov. 4, 2009 [Doc. No. 566]). Acting in his role as receiver, Plaintiff filed a complaint in this Court on December 20, 2010. [Compl.] Alleging that LWI’s payments to Defendant amounted to fraudulent transfers, Plaintiff asserted three claims under California’s Uniform Fraudulent Transfer Act (“UFTA”), and one claim for unjust enrichment. [See id.] When Defendant failed to respond to the complaint, and after the Clerk of Court entered default, Plaintiff filed a motion for default judgment. [Doc. Nos. 6-8.]
Because Plaintiffs complaint and motion revealed that approximately seven years passed between the fraudulent transfers and the filing of Plaintiffs complaint, on July 25, 2011, the Court ordered Plaintiff to show cause why each of his claims
In addition, because neither Plaintiffs complaint nor his motion for default judgment established that the Court has personal jurisdiction over Defendant, on August 10, 2011, the Court ordered Plaintiff to show cause why the matter should not be dismissed for lack of persоnal jurisdiction. [Doc. No. 12.] Plaintiff filed a response to the order to show cause where he argued that the Court has personal jurisdiction over Defendant through the interplay of Federal Rule of Civil Procedure 4(k)(l)(D), 28 U.S.C. § 1692, and 28 U.S.C. § 754. [Doc. No. 13.]
On August 29, 2011, the Court denied without prejudice Plaintiffs motion for default judgment and dismissed without prejudice the action for lack of pеrsonal jurisdiction. [Doc. No. 14.] Specifically, the Court found that Plaintiff failed to show that a copy of the complaint in the original SEC action had been filed in the District of Minnesota in compliance with 28 U.S.C. § 754. [Id. at 4.] In the order, the Court did not address whether Plaintiffs claims were barred by the relevant statute of limitations. [See id.] By the present motion, Plaintiff seeks an order vаcating the Court’s August 29, 2011 order denying his motion for default judgment and dismissing the action for lack of personal jurisdiction. [Doc. No. 15.] In addition, Plaintiff seeks reconsideration of his motion for default judgment. [Id.]
DISCUSSION
I. Plaintiffs Motion to Vacate and Motion for Reconsideration
A district court may reconsider a prior order “under either Federal Rule of Civil Procedure 59(e) (motion to alter or amend a judgment) or Rule 60(b) (relief from judgment).” Sch. Dist. No. 1J v. ACandS, Inc.,
Plaintiff moves for relief pursuant to Federal Rule of Civil Procedure 60(b). [Doc. No. 15-1 at 6-7.] “Rule 60(b) provides for reconsideration only upon a showing of (1) mistake, surprise, оr excusable neglect; (2) newly discovered evidence; (3) fraud; (4) a void judgment; (5) a satisfied or discharged judgment; or (6) extraordinary circumstances which would justify relief.” Sch. Dist. No. 1J,
Plaintiff argues that both subsection (2) — “newly discovered evidence” — and subsection (6) — “extraordinary circumstances” — apply to the present situation. [Doc. No. 15-1 at 6-7.] Newly discovered evidence for purposes of Rule 60(b)(2) is evidence that was not “in the moving party’s possession at the time ... or could [not] have been discovered with reasonable diligence.” Coastal Transfer Co. v. Toyota Motor Sales, U.S.A., Inc.,
In the Court’s prior order, the Court found that Plaintiff failed to show that a copy of the complaint in the original SEC action had been filed in the District of Minnesota in compliance with 28 U.S.C. § 754. [Doc. No. 14.] This conclusion was based on the Court’s review of the docket in SEC v. Learn Waterhouse, Inc., 04-mc-63 (D.Minn., filed Oct. 18, 2004), which showed that only the ordеr appointing Lennon as the receiver was filed in the District of Minnesota. In support of his motions, Plaintiff has presented evidence showing that the SEC complaint was indeed filed, and the complaint not appearing on the docket appears to be due to a clerical error by the intake clerk in the District of Minnesota. Speсifically, Plaintiff has presented a copy of the original SEC complaint bearing a stamp showing that it was received by the clerk of the District of Minnesota on October 18, 2004. [Doc. No. 15-2, Declaration of Catherine Schiajfo (“Schiajfo Decl”) Ex. A.] This time stamp is sufficient evidence to show that the complaint was indeed filed in that district. See Riordan v. State Farm Mut. Auto. Ins. Co.,
Although the evidence presented by Plaintiff does not constitute “newly discovered evidence” for the purposes of Rule 60(b)(2), the Court concludes that this is an “extraordinary circumstance” justifying relief pursuant to Rule 60(b)(6). The Court’s рrior order appears to be based on a clerical error by the intake clerk in the District of Minnesota. In addition, the Court’s denial of Plaintiffs motion for default and its dismissal of the action were both without prejudice. [See Doc. No. 14.] Accordingly, the Court GRANTS Plaintiffs motion to vacate the Court’s August 29, 2011 order, and GRANTS Plaintiffs motion for reconsideration of his motion for default judgment. The Court reconsiders Plaintiffs motion for default judgment below.
II. Plaintiffs Motion for Default Judgment
A. Legal Standard for a Default Judgment
A district court has discretion to grant or deny a motion for default judgment. Aldabe v. Aldabe,
(1) the possibility of prejudice to the plaintiff, (2) the merits of plaintiffs substantive claim, (3) the sufficiency of the complaint, (4) the sum of money at stakе in the action; (5) the possibility of a dispute concerning material facts; (6) whether the default was due to excusable neglect, and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits.
Eitel v. McCool,
B. Analysis
For the reasons stated below, although Plaintiff has shown that this Court has personal jurisdiction over Defendant, all of Plaintiffs claims аre barred by the relevant statute of limitations and should be dismissed with prejudice. Therefore, the third Eitel factor — the sufficiency of the complaint — outweighs, and in some cases impacts, the Eitel factors that would otherwise weigh in favor of granting the motion. See, e.g., Taiwan Civ. Rights Litig. Org. v. Kuomintang Bus. Mgmt. Comm.,
1. Personal Jurisdiction
A district court “has an affirmative duty” to determine whether it has personal jurisdiction over the defendant before entering a default judgment. In re Tuli
Plaintiff argues that the interplay of Federal Rule of Civil Procedure 4(k)(l)(D), 28 U.S.C. § 1692, and 28 U.S.C. § 754 confers personal jurisdiction in a receivership action over any person with minimum contacts to any district where a section 754 filing has been timely made. [See Doc. No. 13 at 2-4.] Plaintiff further argues that this Court has personal jurisdiction over Defendant, a Minnesota resident, because the original receiver filed documents in the District of Minnesota in compliance with section 754. [Id. at 4.]
Federal Rule of Civil Procedure 4(k)(l)(D) provides that “service of a summons or filing a waiver of service is effective to establish jurisdiction over the person of a defendant ... when authorized by a statute of the United States.” Fed. R. Civ. P. 4(k)(l)(D) (emphasis added). 28 U.S.C. § 1692 is a statute that provides the needed authorization to establish jurisdiction over a person within the meaning of Rule 4(k)(l)(D). SEC v. Bilzerian,
In proceedings in a district court where a receiver is appointed for property, real, personal, or mixed, situated in different districts, process may issue and be executed in any such district as if the property lay wholly within one district but orders affecting the property shall be entered of record in each of such districts.
28 U.S.C. § 1692. The Ninth Circuit has explained that section “1692 extends ‘the territorial jurisdiction of the appointing court ... to any district of the United States where property believed to be that of the receivership estate is found, provided that the prоper documents have been filed in each such district as required by § 754.’ ” SEC v. Ross,
Such receiver shall, within ten days after the entry of his order of appointment, file copies of the complaint and such order of appointment in the district court for each district in which property is located. The failure to file such copies in any district shall divest the rеceiver of jurisdiction and control over all such property in that district.
28 U.S.C. § 754.
The Court agrees with Plaintiff that if the previous receiver had complied with the filing requirements of section 754, then the Court would have personal jurisdiction over Defendant pursuant to section 1692. The complaint alleges that Defendant is a resident of Minnesota. [Compl. ¶ 15.] Therefore, in order to comply with section 754, the original receiver, Thomas F. Lennon, must have filed both a copy of the complaint and a copy of the order appointing him as a receiver in the District of Minnesota within 10 days of being appointed as the receiver. See 28 U.S.C. § 754. Plaintiff has submitted documents showing that both a copy of the complaint and а copy of the order appointing Lennon as a receiver were filed in the District of
2. Statute of Limitations
“Although the statute of limitаtions is ordinarily an affirmative defense that the defendant must raise at the pleadings stage and that is subject to rules of forfeiture and waiver, district courts may dismiss an action sua sponte on limitations grounds in certain circumstances where the facts supporting the statute of limitations defense are set forth in the papers plaintiff himself submitted.” Walters v. Indus. & Commer. Bank of China, Ltd.,
Moreover, “a district court may sua sponte dismiss a complaint as untimely so long as the defendant has not waived the defense.” Levald, Inc. v. City of Palm Desert,
, i. California’s Uniform Fraudulent Transfer Act
Plaintiffs complaint asserts three claims under California’s Uniform Fraudulent Transfer Act (“UFTA”), California Civil Code §§ 3439 et seq. [Compl. ¶¶ 39-62.] In his response to the Court’s order to show cause, Plaintiff acknowledges that all but one of the fraudulent transfers took place outside the statute of limitations, but
Under the UFTA, a receiver may recover monies lost by Ponzi-scheme investors. See Donell v. Kowell,
Plaintiff argues that section 3439.09(e)’s seven-year backstop is subject to tolling by California Code of Civil Procedure § 356. [Doc. No. 10 at 4-5.] However, this contention is inconsistent with the plain language оf section 3439.09(c). “The phrase ‘notwithstanding any other provision of law’ is a ‘term of art’ that ‘expresses a legislative intent to have the specific statute control despite the existence of other law which might otherwise govern.’ ” Roach v. Lee,
ii. Unjust Enrichment
Plaintiffs complaint also asserts a cause of action for unjust enrichment. [Compl. ¶¶ 63-67.] Plaintiff argues that this claim is not barred by the relevant statute of limitation because it is governed by California Code of Civil Procedure § 338, which is waivable. [Doc. No. 10 at 5-6.] Plaintiff further argues that by defaulting in the present action, Defеndant waived her ability to assert section 338 as a defense. [Id. at 6.]
As an initial matter, the Court notes that California courts are split as to whether an independent cause of action for unjust enrichment even exists. See Manantan v. Nat’l City Mortg., 2011 WL
Moreover, with respect to Plaintiffs argument that Defendant waived her statute of limitations defense, the Court has previously explained that section 3439.09(c) is a statute of repose and is not waivable. See Warfield,
CONCLUSION
For the reasons stated above, the Court:
1. VACATES the Court’s August 29, 2011 order denying Plaintiffs motion for default judgment without prejudice and dismissing the action without prejudice for lack of personal jurisdiction [Doc. No. 14];
2. GRANTS Plaintiffs motion for reconsideration;
3. DENIES Plaintiffs motion for default judgment; and
4. DISMISSES WITH PREJUDICE
Plaintiffs complaint. The clerk is directed to close the case.
IT IS SO ORDERED.