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Watts v. Truesdell

United States District Court, D. Arizona

June 18, 2019

Nancy Watts; and Frank Simoncini, Plaintiffs,
Hans Truesdell and Myriam Hernandez Mendoza, husband and wife; Pelican Partners International, S. de R.L. de C.V., a Mexican variable capital company; and Kaizen de Mexico, a Mexico business entity, Defendants.


          David G. Campbell Senior United States District Judge.

         Plaintiffs Nancy Watts and Frank Simoncini have filed a motion for entry of default against Defendant Kaizen de Mexico (“Kaizen”). Docs. 21, 29. Defendant Hans Truesdell has filed a response to which Plaintiffs have replied. Docs. 34, 36. No. party requests oral argument or an evidentiary hearing. For reasons stated below, the Court will grant the motion.

         I. Background.

         These cases arise from title issues relating to condominiums Plaintiffs purchased in the Bella Sirena development in Puerto Peñasco, Mexico. Plaintiffs filed state court actions against Truesdell, his wife Mariam Hernandez Mendoza, Kaizen, and Pelican Partners International (“Pelican”), the Bella Sirena developer. Plaintiffs allege that Defendants engaged in a fraudulent scheme by which Plaintiffs were induced to pay unnecessary legal fees to Kaizen to defend their titles from liens placed on the properties. Plaintiffs assert consumer fraud, negligent misrepresentation, and breach of fiduciary duty claims against Truesdell, Hernandez, and Kaizen (Counts 1, 2 and 5), breach of contract and breach of covenant of good faith and fair dealing claims against Kaizen (Counts 3 and 4), and state RICO claims against all Defendants (Count 6).

         The cases were removed to this Court and consolidated. Doc. 8. The RICO claims were dismissed. Docs. 15, 16.[1] Truesdell and Hernandez filed answers. Docs. 8, 17, 38, 39. The cases were reassigned to the undersigned judge on May 29, 2019. Doc. 45.

         Plaintiffs contend that on March 8, 2017, they properly served process on Kaizen in Arizona by delivering the summonses and complaints to Truesdell, an officer of Kaizen. Doc. 21 at 1-2; see Doc. 20 at 6, 12 (affidavits of service). Kaizen has not answered or otherwise responded to the complaints. Plaintiffs seek the entry of Kaizen's default pursuant to Federal Rule of Civil Procedure 55(a).

         II. Service of Process on a Foreign Business Entity.

         “[S]ervice of process can be effected on a foreign corporation through delivery of the summons and complaint to ‘an officer, a managing or general agent, or any other agent authorized by appointment or by law to receive service of process.'” Jones v. Bank of Am. NA, No. CV-17-08231-PCT-SMB, 2018 WL 6831961, at *1 (D. Ariz. Dec. 28, 2018) (quoting Fed.R.Civ.P. 4(h)(1)(B)); see Fed. R. Civ. P. 4(e)(1), (h)(1)(A) (service may be made in a judicial district of the United States by following state law for serving a summons); Ariz. R. Civ. P. 4(i) (a foreign business entity “may be served by delivering a copy of the summons and the pleading being served to a partner, an officer, [or] a managing or general agent”); Mach 1 Air Servs., Inc. v. Mainfreight, Inc., No. CV-14- 01444-PHX-SPL, 2015 WL 11181334, at *2 n.4 (D. Ariz. Mar. 5, 2015) (noting that the requirements for serving foreign corporations are the same under federal and Arizona law). “Once service is challenged, plaintiffs bear the burden of establishing that service was valid[.]” Brockmeyer v. May, 383 F.3d 798, 801 (9th Cir. 2004); see Mach 1, 2015 WL 11181334, at *2; EFX Performance Inc. v. Lindley, No. SACV 10-01261-JVS (AGRx), 2011 WL 13227775, at *3 (C.D. Cal. Jan. 4, 2011) (plaintiffs must show valid service by a preponderance of the evidence); Nicks v. Brewer, No. 10-CV-1220-JAR-JPO, 2010 WL 4868172, at *4 (D. Kan. Nov. 23, 2010) (same). The reviewing court may consider declarations and other evidence in determining whether service was valid. See Benson v. 750 Pine Mgmt., LLC, No. CV-18-9199 PSG (GJSx), 2019 WL 1744853, at *2 (C.D. Cal. Feb. 7, 2019).

         III. Service of Process on Kaizen Was Valid.

         Plaintiffs present sworn declarations showing that Truesdell is a Kaizen officer. Doc. 29-1. Watts states that in June 2010, Pelican informed her that liens had been placed on her condominium and it was her responsibility to defend against a seizure lawsuit. Pelican recommended that she contact Truesdell to retain Kaizen's legal services. Watts called Kaizen and spoke with Truesdell. He explained that he and his wife own Kaizen and offered to remove the liens from the property. Id. at 2-3.

         Three months later, Watts met with Truesdell and Hernandez in Arizona to discuss Kaizen's services. Truesdell stated that he was Kaizen's CEO and Hernandez was the company's CFO. Truesdell explained that Kaizen had a legal strategy to defeat the seizure action against Watts's condominium and that Kaizen represented other Bella Sirena property owners facing similar lawsuits. Id. at 3-4.

         Based on these representations, Watts met with Truesdell and Hernandez in Mexico to further discuss the scope of Kaizen's representation. Truesdell presented Watts with a Kaizen contract for services, which she signed. Watts frequently contacted Truesdell regarding Kaizen's progress on the case until she terminated Kaizen's services in June 2015. Id. at 4; Doc. 1-2 at 8. Watts had no dealings with any other Kaizen personnel except for the attorney Kaizen hired to help with her case. Doc. 29-1 at 5. Watts understood Truesdell to be the principal officer of Kaizen at all relevant times. Id.

         Simoncini had a similar experience. He states that in August 2010, Truesdell called him on behalf of Kaizen to discuss a group legal effort to oppose the seizure of Bella Sirena properties. The next month, Simoncini met with Truesdell and Hernandez in Arizona to discuss Kaizen's legal strategy. Truesdell made clear that he and Hernandez operated Kaizen. Id. at 7-8.

         Simoncini rarely received updates from Truesdell in the ensuing years, but managed to arrange a meeting with him in late 2015 to discuss the status of the case. Simoncini never met or communicated with anyone from Kaizen other than Truesdell and Hernandez. During this entire time, Simoncini understood Truesdell to be the principal officer of Kaizen. Id. at 8-9. Simoncini and Watts ...

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