2004 KAORU SENO REVOCABLE TRUST ET AL VS MORGAN STANLEY ET A

Tentative Rulings

Case Number: ****9671    Hearing Date: January 27, 2020    Dept: 34

PLAINTIFF’S REQUEST FOR ENTRY OF DEFAULT JUDGMENT

The Court GRANTS default judgment in the amount of $301,977.62, as indicated below.

BACKGROUND:

On May 1, 2017, Plaintiffs 2004 Kaoru Seno Revocable Trust as Amended and Restated in 2007, by Sias Carr LLP solely in its capacity as Trustee pursuant to Trustee Appointment Agreement dated as of March 17, 2014 and Keith Seno filed a complaint against Defendants Morgan Stanley, Darrell Rideaux, Oreoagney Redcross, Temescal Financial Group, Brian Fierson, and Michael Fierson for (1) breach of oral contract; (2) breach of written contract; (3) breach of covenant of good faith and fair dealing; (4) fraud and constructive fraud; (5) fraudulent misrepresentation; (6) fraudulent inducement; (7) fraudulent concealment; (8) negligence; (9) negligent hiring, training, and supervision; (10) conspiracy to defraud; (11) conversion; and (12) declaratory relief.

On August 25, 2017, the Court granted Defendant Morgan Stanley Smith Barney LLC’s motion to compel arbitration.

On December 22, 2017, Plaintiffs filed notices of preservation of right to seek punitive damages as to Defendants Temescal Financial Group, Michael Fierson, Brian Fierson.

On January 17, 2018, the Court ordered that Oreoagney Redcross may be served by publication in the Sumter Item and the Daily Journal.

On August 15, 2019, dismissal was entered as to Defendants Darrell Rideaux and Morgan Stanley Smith Barney LLC.

On December 9, 2019 and on January 17, 2020, dismissal was entered as to Defendants Oreoganey Redcross and Does 1-50.

ANALYSIS:

Plaintiff’s interest calculation is slightly incorrect; 7% interest on the demand of the complaint of $245,000.00 from April 30, 2015 to April 27, 2018 is $51,356.03, not $51,396.12.

With that one correction, the Court will GRANT default judgment in the amount of $301,977.62, as indicated below:

Case Number: ****9671    Hearing Date: December 12, 2019    Dept: 34

PLAINTIFF’S REQUEST FOR ENTRY OF DEFAULT JUDGMENT

BACKGROUND:

On May 1, 2017, Plaintiffs 2004 Kaoru Seno Revocable Trust as Amended and Restated in 2007, by Sias Carr LLP solely in its capacity as Trustee pursuant to Trustee Appointment Agreement dated as of March 17, 2014 and Keith Seno filed a complaint against Defendants Morgan Stanley, Darrell Rideaux, Oreoagney Redcross, Temescal Financial Group, Brian Fierson, and Michael Fierson for (1) breach of oral contract; (2) breach of written contract; (3) breach of covenant of good faith and fair dealing; (4) fraud and constructive fraud; (5) fraudulent misrepresentation; (6) fraudulent inducement; (7) fraudulent concealment; (8) negligence; (9) negligent hiring, training, and supervision; (10) conspiracy to defraud; (11) conversion; and (12) declaratory relief.

On August 25, 2017, the Court granted Defendant Morgan Stanley Smith Barney LLC’s motion to compel arbitration.

On December 22, 2017, Plaintiffs filed notices of preservation of right to seek punitive damages as to Defendants Temescal Financial Group, Michael Fierson, Brian Fierson.

On January 17, 2018, the Court ordered that Oreoagney Redcross may be served by publication in the Sumter Item and the Daily Journal.

On August 15, 2019, dismissal was entered as to Defendants Darrell Rideaux and Morgan Stanley Smith Barney LLC.

On October 21, 2019, the Court denied Entry of Default Judgement. The Court continued the OSC re Entry of Default Judgement until December 12, 2019 and stated that if there was no Entry of Default Judgement by the next hearing on December 12, 2019, the Court would dismiss the case. (Minute Order of 10/21/2019.)

ANALYSIS:

On December 5, 2019, the Court posted its tentative decision denying the request for Entry of Default Judgement because Plaintiffs had not filed the documents necessary for the Court to grant Entry of Default Judgement; in particular, Plaintiffs had not filed any documents at all since the Court previously denied its request for Entry of Default Judgement on October 21, 2019.

On December 9, 2019, three days before today’s hearing, Plaintiffs filed their default judgment package. Unfortunately, the documents filed do not support Plaintiffs’ claim for Entry of Default Judgement.

Plaintiffs assert that the demand of the complaint is $2,524,000.00, the credits acknowledged are $9,000.00, and a balanced owed of $2,515,000.00. Plaintiffs assert that the $2,524,000.00 amount is alleged in the complaint, ¶¶ 25-31, 56-63 (see MPA, ¶ 47); however, this amount is not alleged in any of the above paragraphs of the complaint. Nor is this $2,515,000.00 figure explained by the evidence presented in the Sias Declaration.

According to the documents filed as part of the default judgment package, the evidence shows that:

• “Defendants offered the following terms that Plaintiffs accepted: Plaintiffs would loan $230,000.00 to Defendants Brian, Frierson, Michael Frierson, and the Temescal Financial Group as a bridge loan to close the GCV investment. In exchange for the loan the Plaintiffs would receive a 12% return on $200,000.00 of the principal investment, the proceeds from a Treasury Bill purchased with Morgan Stanley, and either a return of their principal in 6 months or, if the GCV Investment closed, $2,500,000.00 return on their investment.” (MPA, ¶ 3.)

• “On May 09, 2015, Defendants failed to pay Plaintiffs the interest payment pursuant to the aforementioned agreement, and Plaintiffs notified the Defaulted Defendants that they were in breach of the contract, demanding immediate payment.” (Id. at ¶ 9.)

• “On May 15, 2015, Defaulted Defendants failed to return the Plaintiffs $230,000.00 principal.” (Id. at ¶ 10.)

• “On June 15, 2015, Plaintiffs again did not receive a return of their principal. Since that time, Plaintiffs have never received a payment for return of their principal or the interest payments.” (Id. at ¶ 12.)

According to the Sias Declaration, Exh. 8 shows the promissory note signed by Sias for $230,000.00. (Sias Declaration, ¶¶ 39, 40; Exh. 8.) However, that note is not signed by the defendants.

The Court notes that various of the statements made in the Sias declaration are inadmissible hearsay. (See, e.g., Sias Declaration, ¶¶ 54, 64, 65.) Other statements are not supported by the attached exhibits. (See, e.g., Sias Declaration, ¶ 65 and Exh. 19.)

It is possible that this evidence might be sufficient to show a breach of contract for $230,000.00; however it does not support a default judgment of $2,515,000.00.

Similarly, Plaintiffs are requesting interest in the amount of $523,326.71. (Request for Entry of Default, ¶ 2; MPA, ¶31.) This is based on a principal amount of $2,515,000.00, which as indicated above, has no evidentiary support.

The Court notes that there is a small discrepancy (perhaps a typographical error) in the costs sought: the memorandum of costs requests $1,281.59 (Request for Entry of Default, ¶ 7) but the proposed judgment and the MPA state costs are $1,285.59 (Judgment, at ¶ 2; MPA at ¶ 32; Sias Declaration at ¶ 17.)

Lastly, the Court notes that Plaintiffs are requesting that the Court award punitive damages against defendants. (Sais Declaration, ¶ 16.) However, there is no request for an amount of punitive damages, nor is there any evidence submitted of the defendants wealth on which the Court could determine an appropriate amount of punitive damages.

This is the fourth continuation of the OSC re Dismissal. At the October 21, 2019 OSC re Entry of Default Judgement, the Court once again denied Entry of Default Judgement. At that time, the Court stated that it would continue this matter one further time, but if default judgment was not entered at the next OSC re DM, the Court would dismiss the case.

Plaintiffs chose not to submit their default judgment package until December 9, 2019, three days prior to the hearing. (Four days previously, on December 5, 2019, the Court posted its tentative decision denying the request for Entry of Default Judgement because Plaintiffs had not submitted any documents supporting their request.) As indicated above, the documents submitted are insufficient to allow for entry of default judgement.

The request for Entry of Default Judgement is DENIED. The case is DISMISSED.