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WOOD v. HAMPTON-PORTER INVESTMENTS BANKERS

United States District Court, N.D. California


March 11, 2004.

GLADSTONE WOOD. Plaintiff
v.
HAMPTON-PORTER INVESTMENT BANKERS, et al., Defendant

The opinion of the court was delivered by: MAXINE CHESNEY, District Judge

ORDER GRANTING DEFAULT JUDGMENT; CONFIRMING ARBITRATION AWARD
Before the Court is the petition to confirm arbitration award, filed November 8, 2002, by plaintiff Gladstone Wood (`Wood"). Also before the Court is a proposed default judgment which Wood submitted to the Court on February 17, 2004, and which the Court construes as a request for entry of default and motion for default judgment, The Court fines the matter appropriate for decision without a hearing. See Civil L.R. 73 b). For the reasons set forth below, the Court GRANTS Wood's request for entry of default and and motion for default judgment and GRANTS Wood's petition to confirm the arbitration award against Hampton-Porter investment. Bankers.

BACKGROUND

  On November 5, 2001, an arbitration award was entered in an arbitration between Wood and respondents Hampton-Porter Investment Bankers ("Hampton-Porter") and Page 2 David C Adams ("Adams"), NASD case number 00-005373. (See Exhibit to Petition to Confirm Arbitration Award ("Arbitration Award"). According to the Arbitration Award, Wood asserted claims against Hampton-Porter and Adams for "breach of contract, breach of fiduciary duty, fraud negligence and failure to supervise in regard to investments made through respondent Hampton-Porter beginning around March 1999." (See id. at 2.) Hampton-Porter moved to dismiss the claims Wood asserted against it, but did not appear at the arbitration hearing. (See id.)

  After the arbitration hearing, the arbitrators issued the following award:

1. Claimant's claim against respondent David Adams is dismissed with prejudice.
2. Claimant is awarded a default judgment against respondent Hampton-Porter investment Bankers for Hampton-Porter's failure to appear at the hearing. Accordingly, respondent Hampton-Porter shall pay $30,000, plus interest, to Claimant upon Claimant tendering AMMI two-year 10% Convertible Debenture to Hampton-Porter. Pre-Award interest is awarded at a rate of 7% for the time from July 15, 1999 until October 22, 2001. Post-Award interest is awarded at a rate of 10% per annum from October 22, 2001 until the Award is paid in full.
3. Sanction of $1000.00 is imposed against respondent Hampton-Porter for failure to appear at the arbitration hearing. The sanction shall be paid by respondent Hampton-Porter to Claimant.
4. Each party shall bear its own costs, including attorney's fees. Claimant shall also bear the cost of respondent David Adams' airfare to and from the hearing.
5. All other relief not expressly granted is denied,
(See id. at 3)

  On November 8, 2002, Wood filed a petition with this Court to confirm the Arbitration Award Wood's petition lists Hampton-Porter and Adams as the only respondents.

  On February 17, 2004, Wood submitted a proposed default judgment to the Court. The proposed default judgment identifies Hampton-Porter, Gregory D. Walker, James Green, and John Laurienti as respondents,

DISCUSSION
A. Service of Process

  The Court granted Wood several extensions of time for effecting service of process, and most recently ordered Wood to file proofs of service no later than January 26, 2004. (See Order file January 20 2004.) On January 25, 2004, Wood filed several proofs of Page 3 service. I See Submittal of Declarations of Service, filed Jan. 26, 2004.)*fn1

  The Federal Rules of Civil Procedure permit a business entity such as Hampton-Porter to 36 served in the United States either pursuant to state law "or by delivering a copy the summons and of the complaint to an officer, a managing or general agent, or to an other agent authorized by appointment or by law to receive service of process and, if the agent is one authorized by statute to receive service and the statute so requires, by as mailing a copy to the defendant[.]" See Fed.R.Civ.P. 4(h) Wood appears to have chosen the latter method as he has filed proofs of service indicating attempts at service on certain of Hampton-Porters officers. (See Submittal of Declarations of Service, filed Jan. 26, 2004.)

  One of the proofs of service indicates that a registered process server served Hampton Porter by serving Gregory D Walker ("Walker), as President of Hampton-Porter, on January 23 2004. Specifically, the process server states under oath that he delivered a copy of the summons and petition to Walker's home and left the documents with `Charity Biddel-Walker — Spouse/Resident." (See id.) Such service on Walker was effective, pursuant to Rule 4(e)(2) of the Federal Rules of Civil Procedure, As noted above Ha Tip-ton Porter could be served by serving one of its officers. See Fed. R Civ. P. 4(h). As Walker was served, the Court finds that Hampton-Porter was also served, The Court need not review the remaining proofs of service submitted by Wood. B. Default

  As Hampton-Porter was served on January 23, 2004, it had twenty clays to file an answer to Wood's petition. (See Fed. R Civ. P 12(a)(1)(A).) That twenty-day period elapsed on February 12, 2004. To date, Hampton-Porter has not filed an answer

  When a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend as provided by these rules and that fact is made to appear by default or otherwise, the clerk shall enter the party's default." As Hampton-Porter has been Page 4 properly served, and it has not filed an answer Hampton-Porter is in default

 C. Default Judgment Against Hampton-Porter

  On February 17, 2004, Wood submitted a proposed default judgment to the Court There is no indication in the record that the proposed default judgment has been served on Hampton-Porter, Rule 55(b)(2) only requires the defaulting party to be given written notice of a motion for default judgment when the defaulting party has appeared in the action, however See Fed.R. Civ, P. 55(b)(2). As Hampton-Porter has never appeared in the action there is no requirement that it must be given notice of Wood's request for a default judgment.

  When a party seeks an order confirming an arbitration award, "the court must grant such an order unless the award is vacated, modified, or corrected as prescribed in sections (and 1 r of the Federal Arbitration Act. See 9 U.S.C. § 9. Section 10 provides that the Court may vacate an arbitration award where the award "was procured by corruption, fraud, or undue means", or where the arbitrators (1) acted with "evident partiality or corruption." (2) were guilty of prejudicial misconduct, or (3) "exceeded their powers or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made." See 9 U.S.C. § 10, Section 11 provides for modification or correction of the award where there "was an evident material miscalculation of figures or an evident material mistake in the description of any person, thing, or property referred to in he award"; where the arbitrators made an award on "a matter not submitted to them, unless it is a matter not affecting the merits of the decision upon the matte" submitted"; or where the award "is imperfect in matter of form not affecting the merits of the controversy " (See S. U.S.C. § 11) No basis for vacating the arbitration award appears on the face of Wood's petition or in the terms of the award itself.

  Accordingly, the Court will GRANT Wood's petition and CONFIRM the Arbitration Award against Hampton-Porter.

 C. Default Judgment Against Walker Green and Laurienti

  Wood's proposed default judgment also seeks judgment against Walker, Green, Page 5 and Launenti None of them is identified as a respondent in Wood's petition, however, and Wood has never sought permission to amend his petition. In addition, the Arbitration Award was issued against Hampton-Porter, and not against any of its officers. Hampton-Porter is alleged to be a limited liability company, As such, its officers generally are not "personally liable under any judgment of a court, or in any other manner, for any debt, obligation, or liability of the limited liability company, whether that liability or obligation arises n contract, tort, or otherwise, solely by reason of being a member of the limited liability company." See Cal. Corp. Code § 17101, Wood has demonstrated no ground upon which Walker, Green and/or Laurienti can be held individually liable under the arbitration award issued against Hampton-Porter,

  Accordingly, Wood's request for default judgment against Walker, Green, and Lauriernti is DENIED.

 D. Wood's Claim Against Adams

  Although Wood's petition is asserted against Adams, the arbitrators did not award any relief n Wood's favor against Adams. Moreover, there is no indication in he record that Wood ever served Adams, As the deadline for filing proofs of service has passed, the Court DISMISSES Wood's petition against Adams, without prejudice, pursuant to Rule 4(m) of the Federal Rules of Civil Procedure.

  CONCLUSION

  For the reasons set forth above,

1. Default is ENTERED against Hampton-Porter
  2. Wood's motion for default judgment against Hampton-Porter, and Wood's petit on for confirmation of the arbitration award against Hampton-Porter, are GRANTED, and in accordance with the terms of the arbitration award:

  a. Hampton-Porter shall pay $30,000, plus interest, to Wood upon Wood tendering AMMl two-year 10% Convertible Debenture to Hampton-Porter. Hampton-Porter shall pay to Wood pre-award interest at a rate of 7% for the period between July 15, 1999 and October 22, 2001, for a total of $4769.58, Hampton-Porter shall pay to Wood post-award Page 6 interest at a rate of 10% per annum from October 22, 2001 until the award is paid in full

  b. Hampton-Porter shall pay Wood a sanction of $1000 for failure to appear at the arbitration hearing

  c. Wood and Hampton-Porter shall bear their own costs, including attorney's fees, incurred during the arbitration.

  3. Wood's request for default judgment against Gregory D. Walker, James Green, and John Laurienti is DENIED,

  4. Wood's petition against David C. Adams is DISMISSED, without prejudice, pursuant to Rule 4(m) of the Federal Rules of Civil Procedure.

  5. The Clerk shall close the file

 IT IS SO ORDERED.


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