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Omni Financial, LLC v. Global Petroleum, LLC

United States District Court, N.D. California, San Jose Division

October 31, 2019

GLOBAL PETROLEUM, LLC, a Minnesota limited liability company; SUZETTE JEREZ, aka SUZETTE JEREZ-NEAL; EDWARD FORTE, Individually and as Trustee of the Forte Family Trust; and PRECISE CONSTRUCTION & DISMANTLEMENT SYSTEMS, INC., an Illinois corporation doing business as PRECISE CONSTRUCTION, Defendants.



         Plaintiff Omni Financial, LLC moves for default judgment against the only defendants remaining in this action, Edward Forte, Individually and as Trustee of the Forte Family Trust and Precise Construction & Dismantlement Systems, Inc., dba Precise Construction. The Court hereby SUBMITS the motion for decision without oral argument and VACATES the hearing scheduled for November 7, 2019. See Civ. L.R. 7-1(b). The motion is GRANTED for the reasons discussed below. However, because the amount of reasonable attorneys' fees and costs recoverable in connection with this default judgment are not adequately documented, Plaintiff is directed to submit a supplemental brief addressing reasonable attorneys' fees and costs.

         In light of the Court's ruling on the motion for default judgment, the Court VACATES the Initial Case Management Conference scheduled for November 7, 2019 and TERMINATES AS MOOT Omni's motions for telephonic appearance at the motion hearing and the Initial Case Management Conference.

         I. BACKGROUND

         Plaintiff Omni Financial, LLC (“Omni”) is an investment pool made up of approximately 500 members located in and around Santa Cruz, California. Boone Decl. ¶ 1, ECF 35-2. Omni filed this action against Defendants Global Petroleum, LLC (“Global”), Suzette Jerez (“Jerez), Edward Forte (“Forte”), and Precise Construction & Dismantlement Systems, Inc. (“Precise Construction”). Compl., ECF 1. Omni alleges that Defendants entered into a scheme “to fraudulently induce the plaintiff to enter into a joint venture and to invest money in the purported purchase and sale of gold ore.” Compl. ¶ 1. Defendants “represented that the plaintiff's investment would be used to purchase gold from a third-party seller, that the defendants would contribute an amount equal to plaintiff's investment toward the purchase transaction, that the gold would be sold at a profit to a buyer procured by defendants, and that OMNI's investment would be returned along with a share of profits from the sale transaction.” Id. Omni invested funds, but Defendants did not use Omni's funds to buy gold, did not contribute equal funds, and did not have a third-party buyer available to purchase gold. Compl. ¶ 2. Despite Omni's demands, Defendants did not return Omni's investment money or a share of profits. Id. Omni alleges that as a result of Defendants' fraudulent representations and promises, Omni was damaged in the amount of $2, 412, 474.66. Compl. ¶ 4.

         The complaint alleges the specifics of the joint venture agreement entered into by Omni and Defendant Global in May 2018, and attaches a copy of the joint venture agreement and an addendum to the agreement as Exhibits D and E to the complaint. Compl. ¶¶ 17-23 & Exhs. D, E. Omni agreed to provide Global with the sum of $1, 375, 000 in return for a priority return on its investment plus and additional 25% of the net profit from the gold venture. Compl. ¶ 18. As security for the transaction, Global executed a Straight Note in the principal sum of $1, 375, 000.00, plus profit sharing as provided in the joint venture agreement. Compl. ¶ 22. Global had six months from the date of the agreement to provide a return on Omni's investment. Id. Omni wired Global the $1, 375, 000 but Global did not use the funds to purchase gold. Compl. ¶ 22. Global did not have an arrangement with a third-party buyer to repurchase gold acquired with Omni's funds, and had no intention of returning Omni's investment or sharing profits with Omni. Compl. ¶ 23.

         In May 2018, Defendant Forte executed a loan guarantee agreement (“the Forte Guaranty”), promising to pay the indebtedness owned by Global to Omni up to the sum of $1, 375, 000. Compl. ¶ 24. Forte is the president of Defendant Precise Construction. Compl. ¶ 9. Defendant Precise Construction also executed a payment guaranty in May 2018 (“the Precise Construction Guaranty”), promising to pay the indebtedness owned by Global to Omni up to the sum of $1, 375, 000. Compl. ¶ 25.

         In November 2018, after payment had become due to Omni, Defendant Jerez (Global's president) requested a thirty-day extension on behalf of Global. Compl. ¶¶ 26-28. Global agreed to pay Omni the sum of $2, 295, 287.50 due under the agreements, plus an additional amount of $117, 187.16, for a total sum payment of $2, 412, 474.66, by December 10, 2018. Compl. ¶¶ 28-30. On December 11, 2018, after the extended deadline for payment had expired, Defendant Jerez proposed a second modification to Global's payment terms. Compl. ¶ 31. Omni agreed to the proposed second modification, under which Global was to send a wire transfer to Omni in the sum of $1, 512, 474.66 by close of business on December 11, 2018, a second payment of $100, 000 by March 11, 2019, and a final payment of $800, 000 by May 11, 2019. Compl. ¶ 31. Global did not wire any funds on December 11, 2019. Compl. ¶ 33. On December 13, 2018, Defendant Jerez sent Omni an email advising that Global had decided not to wire the funds due as agreed, but that Global would wire $1, 500, 000 to Omni by December 14, 2018. Id. Global did not wire funds by December 14, 2018. Compl. ¶ 34. On December 17, 2018, Omni's counsel sent a written letter to Defendants giving notice of default under the agreements and demanding that Defendants pay the outstanding balance of $2, 412, 474.66 due and owing to Omni. Compl. ¶ 35.

         Omni filed this suit on January 2, 2019, asserting claims against Global and its president Jerez (collectively, “GP Defendants”), Forte, and Precise Construction for: (1) fraud - intentional misrepresentation (against GP Defendants); (2) negligent misrepresentation (against GP Defendants); (3) conversion (against GP Defendants); (4) breach of written contract (against GP Defendants); (5) breach of fiduciary duty (against Global); (6) unjust enrichment (against GP Defendants); (7) declaratory relief (against GP Defendants); (8) breach of written guaranty (against Forte); and (9) breach of written guaranty (against Precise Construction).

         Omni thereafter entered into a Stipulation for Entry of Judgment upon Default (“Stipulation”) with Defendants Global and Jerez only, providing for settlement of the action conditioned on certain payments being made by Defendants Global and Jerez to Omni. See Stipulation p. 5 ¶ 4, ECF 20. In the event Defendants Global and Jerez defaulted on any of their settlement obligations, Omni was entitled to enter judgment against Defendants Global and Jerez on an ex parte basis in the amount of the outstanding payments due plus reasonable attorneys' fees and costs incurred in prosecuting the action or enforcing the Stipulation. See Stipulation p. 6 ¶ 6, ECF 20. Defendants Global and Jerez ultimately defaulted on their settlement obligations, after which the Court granted Omni's ex parte application for entry of judgment against Global and Jerez. See Order Granting Plaintiff's Ex Parte Application, ECF 29. On February 27, 2019, the Court entered judgment in favor of Omni and against Defendants Global and Jerez jointly and severally in the sum of $2, 500, 000.00, plus attorneys' fees and costs in the sum of $34, 383.74, for a total judgment of $2, 534, 383.74 against Defendants Global and Jerez. See Judgment Pursuant to Stipulation and Order, ECF 30.

         On April 11, 2019, the Clerk entered default against Defendants Forte and Precise Construction. See Entry of Default, ECF 34. Omni now seeks default judgment against Defendants Forte and Precise Construction for breach of the written guaranty agreements as set forth in Claims 8 and 9. See Motion for Default Judgment, ECF 35. Omni seeks judgment in the sum of $1, 375, 000 (the guaranty amount set forth in the Forte Guaranty and the Precise Construction Guaranty), as well as attorneys' fees and costs in the amount of $62, 405.65. See Id. Omni served the motion for default judgment and supporting documents on Forte and Precise Construction by mail on May 15, 2019. See Proof of Service, ECF 36. Forte and Precise Construction have not responded.


         A. ...

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