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Bellingham LLC v. Fidelis Capital Investments Ltd

United States District Court, D. Utah, Central Division

May 31, 2017

BELLINGHAM, LLC, WESTERN FRONTIER ENTERPRISES, LLC, ASHBY ACRES LLC, for and in the name of INTERNATIONAL MONETARY SPECIALISTS LLC, Plaintiffs,
v.
FIDELIS CAPITAL INVESTMENTS LIMITED, Defendant.

          MEMORANDUM DECISION AND ORDER

          DALE A. KIMBALL United States District Judge.

         This matter is before the court on Defendant Fidelis Capital Investments Limited's Motion to Dismiss Pursuant to Fed. R. Civ. Pro. 12(b)(2), (3), (4), (5) & (6) and To Set Aside Judgment As Void Pursuant to Fed. R. Civ. Pro. 60(b). On May 10, 2017, the court held a hearing on the motion. At the hearing, Plaintiffs were represented by Donald L. Dalton and Defendant was represented by Steven M. Rogers. The court took the motion under advisement. After carefully considering the memoranda filed by the parties and the law and facts relevant to the pending motion, the court issues the following Memorandum Decision and Order.

         BACKGROUND

         Plaintiffs are Utah limited liability companies who were majority and controlling members of International Monetary Specialists, LLC (“IMS”), a Delaware limited liability company. The parties dispute where IMS's principal place of business was at the times relevant to the present dispute. Plaintiffs allege that IMS's principal place of business was in Utah and Fidelis alleges that it was Delaware.

         On or about July 11, 2013, IMS signed a Memorandum of Understanding (“MOU”) with Fidelis. IMS was an expired Delaware entity when the parties signed the MOU. Fidelis knew, through contact with Joshua Trent, co-founder of IMS, that IMS was an expired Delaware company that did not have sufficient funds to revive itself in Delaware. Fidelis provided $2165.06 to Joshua Trent to revive IMS as a Delaware entity. Fidelis never registered the revived IMS to do business in Utah.

         Pursuant to the MOU, Fidelis acquired IMS with the responsibility of securing its patent rights and establishing a $5 million licensing structure with a ten percent interest in profits to Plaintiffs. Plaintiffs allege that Fidelis' principal, Max Day, told Plaintiffs that Fidelis had millions of dollars behind it and that he had business ready and he would proceed.

         When Fidelis took control over IMS there was a large outstanding bill for attorney fees to Greenburg Taurig for securing intellectual property developed by IMS co-founders John Golding and Joshua Trent. Fidelis contacted Greenburg Taurig and negotiated a settlement of IMS' attorney fees bill. Fidelis paid Greenburg Taurig $85, 000.00 for the negotiated settlement.

         However, Plaintiffs claim that they became suspicious when Defendant failed to pay for the prosecution of its patents. On April 3, 2014, patent counsel withdrew from representation with a patent application pending. The patent was issued but Plaintiff's claim that it was at their expense. At that point, Plaintiffs allege that Defendant went virtually silent. From time-to-time, Day would make an appearance with some excuse for why action had not been taken. Shortly before this action was filed, Defendant contacted Plaintiffs about unwinding the transaction. However, Defendant owed money to one of the Plaintiffs, which it was unwilling to release, and nothing came of the proposal.

         Plaintiffs filed the present action on March 2, 2015, alleging a cause of action for rescission for material breach and failure of consideration. Plaintiffs' Complaint sought rescission of the MOU, revocation of the First Amendment and Restatement of the IMS Operating Agreement, and restoration of IMS to its original owners.

         Plaintiffs attempted service on Max Day at the Texas address Plaintiffs had for him but the constable was told that Max Day no longer lived at the residence and the person at the residence was a renter. Fidelis claims that Plaintiffs had contact information for multiple officers and directors of Fidelis, such as Jayson Lopez who signed the MOU, but Plaintiffs did not attempt to inform any of them of the pending lawsuit.

         Since Defendant was a registered New Zealand limited company, Plaintiffs also made efforts to serve Defendant in New Zealand. Plaintiffs contacted the U.S. Department of State, Bureau of Consular Affairs, International Judicial Assistance and was told that New Zealand was not a party to the Hague Convention. Plaintiffs were then directed to the U.S. Department of Justice, Office of Foreign Litigation, which advised Plaintiffs to use a New Zealand process server.

         Plaintiffs used WaiVista Limited, and its owner and server Raymon Terence, to attempt service on Defendant at Defendant's registered office and address for service. Keenan advised Plaintiffs that the office was vacant and looked as though it had been for some time. Keenan then attached the Summons and Complaint to the front door and took a picture. Keenan also signed a declaration stating that service of process was “in accordance with New Zealand statute.” All of this, including the photograph and the date and place of service, appear in the Summons Returned Executed that Plaintiffs filed with this court.

         The court entered Default Judgment against Defendant on February 1, 2016. In June 2016, one of the co-founders of IMS was included on an email sent by Knight Nguyen Investments (“KNI”), the successor in interest to Fidelis, in which KNI was attempting to set up an exclusive master agreement with another entity in the name of IMS. At the time, Plaintiffs had no knowledge of KNI and had not authorized the transfer of any rights from Fidelis to another entity under the MOU. At that point, Plaintiffs assert that Fidelis had no rights to give under the MOU because the MOU had been rescinded as a result of the default judgment on February 1, 2016. However, unbeknownst to Plaintiffs, KNI had organized IMS as a Florida limited liability company. Therefore, Plaintiffs retained counsel, who wrote a cease and desist letter to KNI dated June 15, 2016. The cease and desist letter made specific reference to the default judgment entered in this action.

         When KNI received the cease and desist letter referencing a federal court judgment, it was the first that Fidelis and KNI had heard of a judgment. KNI contacted an attorney in Utah, Steven Rogers. Rogers sent an email to the attorney who sent the cease and desist letter at the email from which the cease and desist letter had been sent and the one listed with the Utah State Bar. Rogers also left several telephone messages with the attorney at his office over the next ...


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