United States District Court, S.D. California
ORDER: (1) DENYING PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT
AGAINST DEFENDANT MOHAMAD REZA GHASEMI, (DOC. NO. 77); (2) GRANTING IN PART AND
DENYING IN PART PLAINTIFF'S MOTION TO STRIKE DEFENDANT MOHAMAD REZA GHASEMI'S
AFFIRMATIVE DEFENSES, (DOC. NO. 78); AND (3) GRANTING PLAINTIFF'S EX PARTE
MOTION TO CONTINUE PRE-TRIAL CONFERENCE AND ASSOCIATED DEADLINES, (DOC. NO. 88).
ANTHONY J. BATTAGLIA, District Judge.
Presently before the Court are Plaintiff Comercializadora Recmaq Limitada's ("Recmaq") Partial Motion for Summary Judgment, (Doc. No. 77), Motion to Strike Defendant Mohamad Reza Ghasemi's ("Ghasemi") Affirmative Defenses, (Doc. No. 78), and ex parte motion to continue the final Pre-trial Conference and associated deadlines, (Doc. No. 88). Recmaq also filed a request for judicial notice in conjunction with its partial motion for summary judgment. (Doc. No. 77-12.) Ghasemi is not represented by counsel and did not file an opposition to either motion, but did appear at the July 10, 2014 motion hearing to contest both noticed motions. (Doc. No. 89.) For the reasons set forth below, the Court DENIES Recmaq's partial motion for summary judgment, GRANTS Recmaq's request for judicial notice,  GRANTS IN PART AND DENIES IN PART Recmaq's motion to strike Ghasemi's affirmative defenses, and GRANTS Recmaq's motion to continue the Pre-trial Conference and corresponding deadlines.
I. Factual Background
A. Formation of Hollywood Auto Mall, LLC
In August 1998, Ghasemi filed Articles of Organization with the California Secretary of State to form Hollywood Auto Mall, LLC ("Hollywood Motors"). (TAC, Ex. C; Doc. No. 77, Hewitt Decl., Ex. A, Ghasemi Depo. at 84:20-25.) The Articles of Organization listed Ghasemi as the initial agent for service of process, and indicated that Hollywood Motors would by managed by one manager. ( Id. ) The Articles of Organization did not list the names of Hollywood Motors' member(s) and/or manager(s), and the Court is unaware of whether Hollywood Motors had/has an Operating Agreement. ( Id. )
In early 1999, Jaime Sotomayor ("Sotomayor") approached Ghasemi and informed Ghasemi that he could provide the necessary capital to keep Hollywood Motors operational. (Ghasemi Depo. at 23:21-24:6.) At this time, Hollywood Motors had little or no inventory and was about to close. ( Id. at 23:21-25.) Ghasemi knew Sotomayor through Mossy Nissan, where Sotomayor was his supervisor. ( Id. at 24:7-8.) After Sotomayor leased property at 1427 Broadway to be used for the benefit of Hollywood Motors, both Sotomayor and Ghasemi left their employment with Mossy Nissan. ( Id. at 24:14-24.) As reflected on Ghasemi and Sotomayor's 2004 Schedule K-1 Tax Forms, Ghasemi owned 1% of Hollywood Motors and Sotomayor owned 99%. (Hewitt Decl., Ex. B.) By 2005, ownership of Hollywood Motors was split evenly between Ghasemi and Sotomayor, each owning a 50% interest. ( Id. )
During the course of Ghasemi and Sotomayor's business relationship, Ghasemi was responsible for buying and selling used automobiles for Hollywood Motors and Sotomayor served as the manager. (Ghasemi Depo. at 24:9-13.) Ghasemi and Sotomayor agreed that Ghasemi would initially receive $3, 000 a month in compensation, but that after the business was "up and running, " Ghasemi would receive $5, 000 a month, plus a 20% commission. ( Id. at 24:25-25:2, 27:20-25.) It was also understood that when Hollywood Motors was "hurting for money, " Ghasemi would be paid "at a later date." ( Id. at 58:18-23.) At one point, Sotomayor owed Ghasemi $20, 000 to $30, 000 in un-paid compensation. ( Id. at 24-25.)
Hollywood Motors maintained bank accounts at Wells Fargo and North Island Credit Union. ( Id. at 64:7-12.) Ghasemi had access to both accounts and signed several checks on behalf of Hollywood Motors. ( Id. at 64:19-24, 132:11-146.) Some of the checks that were signed by Ghasemi on behalf of Hollywood Motors were made out to Ghasemi. ( Id. at 128-144.) Ghasemi also had a Hollywood Motors American Express credit card. ( Id. at 103:18-25.) Ghasemi used this credit card for personal expenses, with Sotomayor's approval, when he did not receive timely compensation. ( Id. at 104:1-23.)
B. Business Relationship Between Hollywood Motors and Recmaq
In or around 2002, Recmaq, acting through its then manager Anibal Ortiz ("Ortiz"), and Sotomayor, acting on behalf of Hollywood Motors, entered into an oral contract. ( Id. at 53-55, 57.) Pursuant to this oral contract, Hollywood Motors would locate heavy machinery for sale through private dealers and at United States auctions, and then advise Recmaq of the availability, condition, and specifications of the identified products. ( Id. ) Ghasemi was responsible for locating all heavy machinery requested by Recmaq. ( Id. at 52:24-25, 100.) Once Ghasemi located heavy machinery he thought Recmaq might be interested in purchasing, either he or Sotomayor would contact Recmaq to see if Recmaq wanted to purchase the equipment. ( Id. at 54.) Sometimes, Ghasemi personally emailed Recmaq information about equipment from Sotomayor's email account and/or responded to emails sent by Recmaq to Sotomayor regarding equipment requests. (Ghasemi Depo. at 52.) Ghasemi emailed Recmaq from Sotomayor's email account because Sotomayor wasn't "tech savvy." ( Id. at 55:18-21.)
Some of the auctions Ghasemi bid at on behalf of Recmaq required a deposit before a bid could be placed. ( Id. at 177.) The amount needed for the deposit was different for each auction. ( Id. ) Some auctions required a percentage of the purchase price, while others required a flat fee. ( Id. ) Ghasemi is not aware of any auction that required a flat $60, 000 deposit. ( Id. ) Hollywood Motors received a commission for each piece of machinery it sold by marking up each piece of machinery by $3, 000. ( Id. at 151:11-20.) Ghasemi testified that he generally received 20% of the $3, 000 commission paid to Hollywood Motors as an "independent contractor." (Doc. No. 77-8 at 12.)
If Recmaq advised Hollywood Motors that it wanted to purchase equipment that had been located by Ghasemi, Ghasemi would purchase the equipment and Sotomayor would pay all remaining fees and ship the equipment to Recmaq. (Ghasemi Depo. at 57:4-9.) Hollywood Motors mailed and/or emailed invoices to Recmaq for equipment that had been purchased by Ghasemi from January 21, 2008 to September 15, 2010. (TAC, Ex. D.) After receiving an invoice, Recmaq would transfer the appropriate funds via electronic funds transfer to Hollywood Motors' Wells Fargo bank account. (Doc. No. 77, Hewitt Decl., Ex. F, Costabal Decl. ¶ 5.) Recmaq wired funds to Hollywood Motors on several occasions from May 9, 2007 to August 27, 2010, to purchase heavy equipment located by Ghasemi. ( Id. ) Ghasemi was aware that Recmaq was purchasing the heavy machinery from Hollywood Motors in order to refurbish and resell the equipment to its customers in Chile. (Ghasemi Depo. at 156:16-20.)
Recmaq purchased several pieces of heavy machinery from Hollywood Motors. (Costabal Decl. ¶¶ 6-10.) To facilitate these purchases, Recmaq kept a balance of funds on deposit with Hollywood Motors. ( Id. ) Defendants periodically prepared balance statements for Recmaq to confirm and validate Recmaq's balance of funds held on deposit by Defendants. (Costabal Decl. ¶ 3.) In or about August 2005, Drago Gluscevic ("Gluscevic"), Recmaq's owner, and Ortiz, Recmaq's then manager, visited Defendants in California. (Ghasemi Depo. at 44:8-21, 51:4-52:5.) Ghasemi personally met with Gluscevic on three different occasions during this visit: (1) at the office of Hollywood Motors in El Cajon, ( Id. at 44:8-21); (2) at Sotomayor's house, ( Id. at 51:4-18); and (3) at Ghasemi's house, ( Id. at 49:8-18). During the meeting at Ghasemi's house, Ghasemi showed Gluscevic his work computer to demonstrate how Ghasemi bid at auctions. ( Id. at 49:12-18.)
On December 31, 2009, Defendants promised to ship eight Caterpillar "backhoe loaders" to Recmaq for $338, 400. (Costabal Decl. ¶ 6, Ex A, figure 1(a).) In connection with this purchase, Defendants withdrew $338, 400 from the balance of funds Recmaq kept on account with Hollywood Motors. ( Id. ) In or around March 2010, Sotomayor advised Recmaq that there was a problem with the sale of the eight Caterpillar "backhoe loaders, " and promised to either complete the sale and arrange to have the equipment delivered to Recmaq, or return the funds to Recmaq by June 2010. ( Id. at ¶ 7.) Recmaq agreed. Defendants failed to deliver the machinery as promised or return the $338, 400. ( Id. )
On March 3, 2010, Defendants promised to ship three Caterpillar "420 E 2008" units to Recmaq for $139, 500. ( Id. at ¶ 8, Exhibit A, figure 2(a).) In connection with this purchase, Defendants withdrew $139, 500 from the balance of funds Recmaq kept on account with Hollywood Motors. ( Id. at ¶ 8, Ex. A, figure 2(b).) To date, Recmaq has not received the three units or a return of the $139, 500. ( Id. at ¶ 8, Ex. A, figure 2(c).)
On August 21, 2010, Defendants shipped six "New Holland LB75B" heavy machinery units to Recmaq. ( Id. at ¶ 10, Ex. A, figure 5.) Recmaq alleges that in connection with this transaction, Sotomayor promised Recmaq a $2, 000 refund for shipping costs that were lower than originally stated because the machinery was shipped out of Houston, Texas rather than Newark, New Jersey. ( Id. at ¶ 10, Ex. D.) To date, Recmaq has not received the $2, 000 refund in overstated shipping costs. ( Id. at ¶ 10, Ex. F.) As of about September 21, 2010, Recmaq had a standing account balance on deposit with Defendants in the amount of $619, 100. ( Id. at ¶ 9, Ex. A, figure 3, Ex. B, figures 4(a)-4(d).) As of the date of this Order, Hollywood Motors has not returned these funds to Recmaq. ( Id. at ¶¶ 9, 11.)
II. Procedural History
Recmaq filed the original Complaint against Defendants Ghasemi, Hollywood Motors, and Sotomayor on April 17, 2012. (Doc. No. 1.) The Complaint alleged fifteen causes of action: (1) fraud; (2) conspiracy to commit fraud; (3) breach of contract; (4) RICO, 18 U.S.C. § 1962(c); (5) RICO conspiracy, 18 U.S.C. § 1962(d); (6) conversion; (7) unfair business practices under California's Unfair Competition Law ("UCL"); (8) intentional interference with prospective economic advantage; (9) breach of the implied covenant of good faith and fair dealing; (10) breach of fiduciary duty; (11) unjust enrichment; (12) account stated; (13) debt; (14) money lent; and (15) money paid. ( Id. ) The Clerk entered default against Hollywood Motors and Sotomayor on July 12, 2012. (Doc. No. 9.)
On November 13, 2012, the Clerk entered default against Ghasemi. (Doc. No. 18.) On November 14, 2012, Ghasemi filed a motion to dismiss the Complaint, which was rejected by the Court as untimely. (Doc. No. 19.) Recmaq filed a motion for default judgment against all Defendants on November 26, 2012. (Doc. No. 20.) Recmaq's motion was denied after Ghasemi filed a motion to set aside entry of default on December 14, 2012. (Doc. No. 23.) After Recmaq filed the First Amended Complaint ("FAC"), Ghasemi filed a motion to dismiss. (Doc. No. 38.)
On May 20, 2013, the Court granted in part and denied in part Ghasemi's motion to dismiss the FAC. (Doc. No. 43.) The Court dismissed the fourth, fifth, seventh, and tenth causes of action with leave to amend, and denied Ghasemi's motion with respect to the remaining claims. Recmaq filed the Second Amended Complaint ("SAC") on July 1, 2013, (Doc. No. 45), and Ghasemi filed an answer to the SAC on July 26, 2013, (Doc. No. 46). On December 6, 2013, Recmaq filed the Third Amended Complaint ("TAC") with Ghasemi's consent. (Doc. No. 60.) The only change to the TAC was the addition of Defendant Chris Sotomayor, Defendant Jaime Sotomayor's son. (Doc. No. 57.) The parties agreed that Ghasemi would not need to refile his answer and that his answer to the SAC would apply to the TAC. ( Id. at 2:1-4.) Default was entered against Chris Sotomayor on January 24, 2014. (Doc. No. 65.)
Ghasemi has not noticed or taken any depositions, propounded any document requests, requests for admission, or interrogatories, or issued any third party subpoenas. (Doc. No. 77, Hewitt Decl. ¶ 2.) Ghasemi has also failed to file a Rule 26(a) disclosure, designate any witnesses or experts, or disclose the existence of any evidence. The discovery cut-off was March 28, 2014. (Doc. No. 56.)
I. Recmaq's Motion for Partial Summary Judgment
A. Legal Standard
Summary judgment is appropriate under Federal Rule of Civil Procedure 56 if the moving party demonstrates the absence of a genuine issue of material fact and entitlement to judgment as a matter of law. See Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). A fact is material when, under the governing substantive law, it could affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Freeman v. Arpaio, 125 F.3d 732, 735 (9th Cir. 1997). A dispute is genuine if a reasonable jury could return a verdict for the nonmoving party. Anderson, 477 U.S. at 248.
A party seeking summary judgment always bears the initial burden of establishing the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323. The moving party can satisfy this burden in two ways: (1) by presenting evidence that negates an essential element of the nonmoving party's case; or (2) by demonstrating that the nonmoving party failed to establish an essential element of the nonmoving party's case on which the nonmoving party bears the burden of proof at trial. Id. at 322-23. "Disputes over irrelevant or unnecessary facts will not preclude a grant of summary judgment." T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987).
Once the moving party establishes the absence of a genuine issue of material fact, the burden shifts to the nonmoving party to set forth facts showing that a genuine issue of a disputed fact remains. See Celotex, 477 U.S. at 314. The nonmoving party cannot oppose a properly supported summary judgment motion by "rest[ing] on mere allegations or denials of his pleadings." Anderson, 477 U.S. at 256. When ruling on a summary judgment motion, the court must view all inferences drawn from the underlying facts in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
A trial court may not grant a motion for summary judgment simply because the nonmoving party does not file opposing material. See Heinemann v. Satterberg, 731 F.3d 914, 917 (9th Cir. 2013) (concluding the district court should consider the motion on the merits despite the existence of a local rule permitting default summary judgment when the nonmovant fails to file an opposition). Under Rule 56(e), "[i]f a party fails to properly support an assertion of fact or fails to properly address another party's assertion of fact... the court may: (1) give an opportunity to properly support or address the fact; (2) consider the fact undisputed for purposes of the motion; (3) grant summary judgment if the motion and supporting materials-including the facts considered undisputed-show that the movant is entitled to it; or (4) issue any other appropriate order." Fed.R.Civ.P. 56(e).
Recmaq moves for summary judgment on thirteen of its fifteen causes of action: (1) fraud; (2) breach of contract; (3) RICO; (4) conversion; (5) unfair business practices under the UCL; (6) intentional interference with prospective economic advantage; (7) breach of the implied covenant of good faith and fair dealing; (8) breach of fiduciary duty; (9) unjust enrichment; (10) account stated; (11) debt; (12) money lent; and (13) money paid. Recmaq contends Ghasemi's liability for each cause of action is based on his joint venture or partnership with Sotomayor. The Court ...