United States District Court, W.D. North Carolina, Charlotte Division
FRANK D. WHITNEY, District Judge.
THIS MATTER is before the Court on Plaintiff Aaron Kevin Danielson's ("Plaintiff") Second Motion for Default Judgment (Doc. No. 19). Plaintiff Danielson seeks relief for losses sustained as a result of a joint business venture between him and Defendants Jan Petrus Human and Albertus Johannes Human (collectively "Defendants"). Defendants have not responded to Plaintiff's Complaint, (Doc. No. 1), and the time for doing so has expired. Having considered Plaintiff's Motion, Memorandum (Doc. No. 19-2), and Affidavits in Support (Docs. Nos. 19-4, 19-34), the Court GRANTS Plaintiff's Motion in part and DENIES in part.
Plaintiff met Defendants Jan Petrus Human and Albertus Johannes Human, residents of South Africa and brothers, in 2006. (Doc. No. 1, ¶ 32). Defendants presented Plaintiff with a "highly profitable [joint] business venture" involving the commercialization of a hybrid battery technology. (Doc. No 1, ¶¶ 33-35). In exchange for an eight hundred thousand (800, 000) dollar investment and five hundred thousand (500, 000) dollar line of credit, Defendants offered Plaintiff (1) an ownership interest in three companies, Boerinbase, Inc., Energy X, Inc. and U.S. Energy X, Inc., (2) the position of Managing Director in U.S. Energy X, Inc., (3) and exclusive licensing rights to the hybrid battery technology. (Doc. No. 1, ¶¶ 35, 45; Docs. Nos. 1-4, 1-23, 1-24).
Plaintiff accepted the offer June 28, 2007, and assumed his role as Managing Director of U.S. Energy X, Inc. (Doc. No. 1, ¶¶ 35-36). Plaintiff "worked assiduously and quickly to jumpstart operations" spending one hundred eighty-four thousand five hundred and ninety-five dollars and fifty-one cents (184, 595.51) on employee hiring, company domain registrations, trademark applications and other business start-up expenses. (Doc. No. 1, ¶¶ 36-37, Doc. No. 34-19). During this time, Defendants relayed development updates to Plaintiff via email and telephone. (Doc. No. 1, ¶¶ 36-37, 64-65, 67-69, 87-88; Docs. Nos. 1-5, 1-19). Along with the development updates, Defendants requested Plaintiff finance tests on "automotive hybrid car batteries" and the construction of "solar applications." (Doc. No. 1, ¶¶ 67-69, 142; Docs. Nos. 1-5, 1-16, 1-19, 1-20, 1-21, 1-22). Relying on Defendants' representations and assurances that "very advanced negotiations" existed with "numerous interested parties, " Plaintiff wired six hundred and seventy-five thousand dollars (675, 000) dollars to Defendants' South African Company Bank Account in four separate installments between June 29, 2007, and December 18, 2007. (Doc. No. 1, ¶¶ 54, 67-69, 89-90; Docs. Nos. 1-10, 1-11, 1-13, 1-14). Plaintiff later moved his family to the United States in March of 2008 to continue commercialization of the hybrid technology. (Doc. No. 1, ¶¶ 35-36, 136).
By June of 2008, Plaintiff's frequent requests for testing documentation and hybrid battery prototypes remained unfulfilled, which brought commercialization to a halt, and sparked disagreement that led to settlement negotiations. (Doc. No. 1, ¶¶ 146-48, Docs. Nos. 1-26, 1-28, 1-29-42). After a year of negotiations, Defendants stopped responding. (Doc. No. 1, ¶¶ 148-70). Plaintiff hired an "international legal consultant" to locate Defendants and determine ownership of the hybrid technology. (Doc. No. 1, ¶ 170). On or about October 13, 2011, Plaintiff learned that Defendants were actively seeking out other investors in both Nevada and North Carolina to whom they had also promised exclusive licensing rights to the technology. (Doc. No. 1, ¶¶ 6-7, 170-71). Upon further investigation, Plaintiff discovered Defendants' ownership of several companies purporting to hold licensing rights including three Defendants, H-Power Worldwide, LLC, H-Power Energy Storage Technologies, Inc., and H-Power Americas, Inc. (collectively "NC Corporate Defendants"). (Doc. No. 1, ¶ 7, Docs. Nos. 1-2, 1-3, 1-44, 1-55, 1-56).
Based on this information, Plaintiff, appearing Pro se, filed a 63-page Complaint (Doc. No. 1) against Defendants J. Human, A. Human, the NC Corporate Defendants, and John Does 1-100, seeking retention of exclusive licensing rights within the United States of Defendants J. Human and A. Human's patented hybrid battery technology, one million (1, 000, 000) dollars in compensatory damages, treble damages, lost profits, reasonable attorney's fees and expenses, court costs, issuance of "appropriate orders" to restrain Defendants, and imprisonment of Defendants for no less than 30 years. (Doc. No. 1, ¶¶ 270-84).
Plaintiff asserts federal causes of action for Civil RICO; and state law causes of action for Fraud, Constructive Fraud, Breach of Fiduciary Duty, Breach of Contract, Conversion, and Unfair & Deceptive Trade Practices. (Doc. No. 1). A myriad of federal criminal charges were also alleged including Mail Fraud, Wire Fraud, Extortion, Laundering of Monetary Instruments, Transportation of Stolen Goods, Securities & Monies, and Engaging in Monetary Transactions in Property Derived from Specified Unlawful Activity. (Doc. No. 1).
Plaintiff initially filed his Complaint December 17, 2012. (Doc. No. 1). The three NC Corporate Defendants waived service, (Doc. No. 5), and filed a Motion to Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). (Doc. No. 26). The Court dismissed this action as to the three NC Corporate Defendants February 26, 2014, (Doc. No. 30), leaving only Defendants A. Human, J. Human, and John Does 1-100. Defendants John Does 1-100 have yet to be identified and served in this action.
Plaintiff filed his First Motion for Default Judgment against Defendants A. Human and J. Human October 4, 2013. (Doc. No. 15). The Court struck Plaintiff's First Motion because Plaintiff failed to file for an Entry of Default. (Doc. No. 16). Now, Defendant's time to respond has long run, and on December 10, 2013, Plaintiff filed a Motion for Entry of Default and a Second Motion for Default Judgment. (Docs. Nos. 18, 19). The Clerk of Court Entered the Default March 18, 2014. (Docs. Nos. 31, 32).
Service of Process
Plaintiff must effectuate service to obtain an entry of default or default judgment. See FED. R. CIV. P. 55(a) (requiring entry of default when a defendant has "failed to plead or otherwise defend as provided by these rules). Federal Rule of Civil Procedure 4(f) provides that an individual may be served in a foreign country by "a method that is reasonably calculated to give notice" proscribed by that country's law or, unless prohibited by that country, personal service, service by mail or as the court orders. FED. R. CIV. P. R. 4(f)(2-3).
While service is not invalidated by technical deficiencies where a Plaintiff can show actual notice, ignoring the plain requirements for service implicates strict compliance. Armco, Inc. v. Penrod-Stauffer Bldg. Sys., Inc. , 733 F.2d 1087, 1089 (4th Cir. 1984) ("When the process gives the defendant actual notice of the pendency of the action, the rules, in general, are entitled to a liberal construction."); see also Maid to Perfection Global, Inc. v. Ensor, No. RDB-09-cv-0958, 2010 WL 1254194, at *3 (D. Md. Mar. 29, 2010) (citing Armco and declining to invalidate process where Defendant's counsel contacted Plaintiff indicating actual notice of the pending suit). The Court keeps in mind due process requirements when applying a liberal construction noting proper service is "notice reasonably calculated under all the circumstances to apprise interested parties of the pendency of the action." Mullane v. Central Hanover Bank & Trust Co. , 339 U.S. 306, 314 (1950).
Plaintiff made several attempts at service that suffer from technical deficiencies: (1) personal service to J. Human at his residence in Sommerset West, South Africa accepted bv his wife but lacking an affidavit from the individual whom effected service; (2) personal service of J. Human and A. Human's attorney, Mr. Andre P. de la Rey in Tygervalley Bellville, South Africa also lacking an affidavit from the individual whom effected service; (3) service by mail to Defendants residence without a signed return receipt; and (4) service by mail to Attorney de la Rey without a signed return receipt. (Doc. No. 6 ¶¶ 5-10). See FED. R. CIV. P. R. 4(l)(1), (f)(2)(ii) (requiring individual who served defendant personally to attest to act and for defendant's signed acceptance acknowledging receipt for service by mail). While the service attempts are each lacking, the facts of the case clearly indicate Defendants are well aware of the suit. After the attempts were made, Plaintiff received a letter from Defendant's attorney, Mr. de la Rey, acknowledging his receipt of the summons and complaint. The letter reads, "I refer to the above matter and in particular the summons delivered to my office recently. Both Bert and Jan intend opposing [sic] your action on a number of grounds and you will shortly be furnished with their papers in reply." (Doc. No. 6-5). Like Maid where the Court refused to invalidate process because Defense counsel contacted Plaintiff indicating actual notice, the Defendants' attorney contacted Plaintiff in regards to the above-captioned dispute. Maid, No. RDB-09-cv-0958, 2010 WL 1254194, at *3. Even further, ...