Case 2:21-cv-04246-ODW-JEM Document 44 Filed 08/09/22 Page 1 of 5 Page ID #:682
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6 7 United States District Court 8 9 Central District of California 10 11 TRAJKOVSKI INVEST AB, et al., Case № 2:21-cv-04246-ODW (JEMx)
12 Petitioners, ORDER DENYING 13 v. RESPONDENT’S MOTION FOR
14 I.AM.PLUS, ELECTRONICS, Inc. , RELIEF FROM FINAL 15 JUDGMENT [33] Respondent. 16 17 18 I. INTRODUCTION 19 Respondent I.AM.PLUS, Electronics, Inc. moves for relief from judgment, 20 pursuant to Federal Rule of Civil Procedure (“Rule”) 60(b). (Mot. Relief J. (“Motion” 21 or “Mot.”), ECF No. 33.) On January 10, 2022, the Court entered the challenged 22 judgment after granting Petitioners’ motion to enforce a foreign arbitral award, 23 thereby requiring I.AM.PLUS to satisfy outstanding debts owed to Petitioners. (Order 24 Granting Pet’rs’ Mot. Enforce Foreign Arbitral Award (“Order”), ECF No. 30.) For 25 the following reasons, the Court DENIES I.AM.PLUS’s Motion.1 26 27
28 1 Having carefully considered the papers filed in connection with the Motion, the Court deemed the matter appropriate for decision without oral argument. Fed. R. Civ. P. 78; C.D. Cal. L.R. 7-15. Case 2:21-cv-04246-ODW-JEM Document 44 Filed 08/09/22 Page 2 of 5 Page ID #:683
1 II. FACTUAL AND PROCEDURAL BACKGROUND 2 On December 31, 2017, I.AM.PLUS agreed to purchase Swedish technology 3 start-up, Earin AB, from Petitioners. (Pet. Recognition & Enforcement Foreign 4 Arbitral Award (“Petition” or “Pet.”) 2, ECF No. 1.) However, in April 2019, the 5 parties terminated the deal when I.AM.PLUS refused to pay the purchase price. (Id.) 6 The Earin Share Purchase Agreement, which governed the transaction, bound the 7 parties to arbitrate any disputes arising under the agreement in Sweden. (Id.) On 8 May 5–7 and 15, 2020, the parties arbitrated in Sweden, and the tribunal issued its 9 final award in favor of Petitioners, ordering I.AM.PLUS to pay Petitioners $520,234. 10 (Id. at 2–3; Order 3.) 11 On May 20, 2021, Petitioners initiated this action against I.AM.PLUS to 12 enforce the Swedish final arbitration award. (See generally Pet.) On August 2, 2021, 13 Petitioners filed a Motion to Enforce Judgment, (see Mot. Enforce J., ECF No. 20), 14 which the Court granted on December 29, 2021, (see Order). On January 10, 2022, 15 the Court issued a judgment consistent with its Order. (See J. (“Judgment”), ECF 16 No. 32.) I.AM.PLUS now moves for relief from the Judgment. (See generally Mot.) 17 The Motion is fully briefed.2 (See Opp’n, ECF No. 38; Reply, ECF No. 39.) 18 As of February 11, 2022, I.AM.PLUS’s foreign corporation registration with the 19 California Secretary of State was “forfeited” for failure to meet tax requirements 20 (i.e., failure to file a return, pay taxes, penalties, or interest). (Decl. Malcolm S. 21 McNeil (“McNeil Decl.”) ¶ 2 Ex. 1 (Email from Attorney Lynn Fiorentino), ECF 22 No. 38-1.) Accordingly, as explained below, I.AM.PLUS currently lacks the legal 23 privileges to litigate this action in California. 24 25 2 Although I.AM.PLUS notes in its Reply that Petitioners’ Opposition was filed seventeen days late, 26 the Court finds that it was actually only ten days late. See C.D. Cal. L.R. 7-9. In any case, 27 I.AM.PLUS was able to substantively reply to the Opposition and does not contend that the ten-day delay prejudiced it in any way. Thus, the Court declines to find that this delay constitutes 28 Petitioners’ concession to the arguments in the Motion pursuant to Local Rule 7-12.
2 Case 2:21-cv-04246-ODW-JEM Document 44 Filed 08/09/22 Page 3 of 5 Page ID #:684
1 III. LEGAL STANDARD 2 Pursuant to Rule 60(b), “the court may relieve a party . . . from a final 3 judgment, order, or proceeding for . . . (1) mistake, inadvertence, surprise, or 4 excusable neglect; . . . or (6) any other reason that justifies relief.” Fed. R. Civ. 5 P. 60(b). Motions for relief from judgment are “addressed to the sound discretion of 6 the . . .court.” Casey v. Albertson’s Inc., 362 F.3d 1254, 1257 (9th Cir. 2004). “In 7 exercising its discretion in determining whether Rule 60(b) applies, courts should be 8 mindful that there is a compelling interest in finality of judgments and final judgments 9 should not be disturbed lightly.” Fed. Trade Comm’n v. Apex Cap. Grp., No. CV 18- 10 9573-JFW (JPRx), 2021 WL 7707269, at *2 (C.D. Cal. Sept. 3, 2021). 11 IV. DISCUSSION 12 I.AM.PLUS contends that the Court committed clear error in granting 13 Petitioners’ Motion to Enforce Judgment, because Petitioners failed to comply with 14 Article IV of the Convention on the Recognition and Enforcement of Arbitral Awards. 15 (Mot. 3.) However, Petitioners argue that the Court should not address the Motion on 16 its merits because I.AM.PLUS’s California business registration has been suspended 17 and it therefore currently lacks the legal privilege to appeal or otherwise litigate the 18 Judgment in California. (Opp’n 2.) The Court agrees and therefore denies the Motion 19 without prejudice to refile after I.AM.PLUS’s business registration has been 20 reinstated, subject to the filing deadlines set forth in Rule 60(c) and the Local Rules. 21 In general, “a corporation may not prosecute or defend an action, nor appeal 22 from an adverse judgment in an action while its corporate rights are suspended for 23 failure to pay taxes.” Bourhis v. Lord, 56 Cal. 4th 320, 324 (2013) (citing Reed v. 24 Norman, 48 Cal. 2d 338 (1957)). Further, “[a] corporation’s incapacity to sue or 25 defend in state court also precludes it from suing or defending in federal court.” 26 AMESCO Exp., Inc. v. Associated Aircraft Mfg. & Sales, Inc., 977 F. Supp. 1014, 1015 27 (C.D. Cal. 1997) (citing In re. Christian & Porter Aluminum Co., 584 F.2d 326, 331 28 (9th Cir. 1978)).
3 Case 2:21-cv-04246-ODW-JEM Document 44 Filed 08/09/22 Page 4 of 5 Page ID #:685
1 Generally, foreign corporations that do not conduct intrastate business need not 2 register. See Cal. Corp. Code § 2105(a). However, once a foreign corporation does 3 register, if the corporation later forfeits that registration, “[a] status of ‘forfeited’ 4 applies . . . and holds the same legal consequences as a ‘suspension’ for a domestic 5 corporation.” MS & Sons Hosp., LLC v. DB Ins. Co., Ltd., No. CV 20-1994 JGB 6 (SHKx), 2022 WL 1395329, at *5 (C.D. Cal. Apr. 7, 2022) (citing Alhambra- 7 Shumway Mines, Inc. v. Alhambra Gold Mine Corp., 155 Cal. App. 2d 46, 50 (1957)). 8 I.AM.PLUS argues that, as a foreign corporation that does not transact intrastate 9 business, it had no duty to register in California in the first place. (Reply 1–2 (citing 10 Cal. Corp. Code § 2105(a).) Accordingly, I.AM.PLUS concludes, the suspension of 11 its non-mandatory registration cannot preclude its right to defend itself from an 12 adverse judgment. (Id.) However, whether I.AM.PLUS had a legal duty to register in 13 California is irrelevant; the Court need only look to its status with the California 14 Secretary of State, which currently is “forfeited.” (McNeil Decl. ¶ 4, Ex. 2 (Secretary 15 of State Online Registration Page).) Therefore, I.AM.PLUS’s forfeited status holds 16 the same legal consequences as those of a suspended corporation, including a loss of 17 litigation privileges. MS & Sons Hosp., LLC, 2022 WL 1395329, at *5.
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Case 2:21-cv-04246-ODW-JEM Document 44 Filed 08/09/22 Page 1 of 5 Page ID #:682
O 1
6 7 United States District Court 8 9 Central District of California 10 11 TRAJKOVSKI INVEST AB, et al., Case № 2:21-cv-04246-ODW (JEMx)
12 Petitioners, ORDER DENYING 13 v. RESPONDENT’S MOTION FOR
14 I.AM.PLUS, ELECTRONICS, Inc. , RELIEF FROM FINAL 15 JUDGMENT [33] Respondent. 16 17 18 I. INTRODUCTION 19 Respondent I.AM.PLUS, Electronics, Inc. moves for relief from judgment, 20 pursuant to Federal Rule of Civil Procedure (“Rule”) 60(b). (Mot. Relief J. (“Motion” 21 or “Mot.”), ECF No. 33.) On January 10, 2022, the Court entered the challenged 22 judgment after granting Petitioners’ motion to enforce a foreign arbitral award, 23 thereby requiring I.AM.PLUS to satisfy outstanding debts owed to Petitioners. (Order 24 Granting Pet’rs’ Mot. Enforce Foreign Arbitral Award (“Order”), ECF No. 30.) For 25 the following reasons, the Court DENIES I.AM.PLUS’s Motion.1 26 27
28 1 Having carefully considered the papers filed in connection with the Motion, the Court deemed the matter appropriate for decision without oral argument. Fed. R. Civ. P. 78; C.D. Cal. L.R. 7-15. Case 2:21-cv-04246-ODW-JEM Document 44 Filed 08/09/22 Page 2 of 5 Page ID #:683
1 II. FACTUAL AND PROCEDURAL BACKGROUND 2 On December 31, 2017, I.AM.PLUS agreed to purchase Swedish technology 3 start-up, Earin AB, from Petitioners. (Pet. Recognition & Enforcement Foreign 4 Arbitral Award (“Petition” or “Pet.”) 2, ECF No. 1.) However, in April 2019, the 5 parties terminated the deal when I.AM.PLUS refused to pay the purchase price. (Id.) 6 The Earin Share Purchase Agreement, which governed the transaction, bound the 7 parties to arbitrate any disputes arising under the agreement in Sweden. (Id.) On 8 May 5–7 and 15, 2020, the parties arbitrated in Sweden, and the tribunal issued its 9 final award in favor of Petitioners, ordering I.AM.PLUS to pay Petitioners $520,234. 10 (Id. at 2–3; Order 3.) 11 On May 20, 2021, Petitioners initiated this action against I.AM.PLUS to 12 enforce the Swedish final arbitration award. (See generally Pet.) On August 2, 2021, 13 Petitioners filed a Motion to Enforce Judgment, (see Mot. Enforce J., ECF No. 20), 14 which the Court granted on December 29, 2021, (see Order). On January 10, 2022, 15 the Court issued a judgment consistent with its Order. (See J. (“Judgment”), ECF 16 No. 32.) I.AM.PLUS now moves for relief from the Judgment. (See generally Mot.) 17 The Motion is fully briefed.2 (See Opp’n, ECF No. 38; Reply, ECF No. 39.) 18 As of February 11, 2022, I.AM.PLUS’s foreign corporation registration with the 19 California Secretary of State was “forfeited” for failure to meet tax requirements 20 (i.e., failure to file a return, pay taxes, penalties, or interest). (Decl. Malcolm S. 21 McNeil (“McNeil Decl.”) ¶ 2 Ex. 1 (Email from Attorney Lynn Fiorentino), ECF 22 No. 38-1.) Accordingly, as explained below, I.AM.PLUS currently lacks the legal 23 privileges to litigate this action in California. 24 25 2 Although I.AM.PLUS notes in its Reply that Petitioners’ Opposition was filed seventeen days late, 26 the Court finds that it was actually only ten days late. See C.D. Cal. L.R. 7-9. In any case, 27 I.AM.PLUS was able to substantively reply to the Opposition and does not contend that the ten-day delay prejudiced it in any way. Thus, the Court declines to find that this delay constitutes 28 Petitioners’ concession to the arguments in the Motion pursuant to Local Rule 7-12.
2 Case 2:21-cv-04246-ODW-JEM Document 44 Filed 08/09/22 Page 3 of 5 Page ID #:684
1 III. LEGAL STANDARD 2 Pursuant to Rule 60(b), “the court may relieve a party . . . from a final 3 judgment, order, or proceeding for . . . (1) mistake, inadvertence, surprise, or 4 excusable neglect; . . . or (6) any other reason that justifies relief.” Fed. R. Civ. 5 P. 60(b). Motions for relief from judgment are “addressed to the sound discretion of 6 the . . .court.” Casey v. Albertson’s Inc., 362 F.3d 1254, 1257 (9th Cir. 2004). “In 7 exercising its discretion in determining whether Rule 60(b) applies, courts should be 8 mindful that there is a compelling interest in finality of judgments and final judgments 9 should not be disturbed lightly.” Fed. Trade Comm’n v. Apex Cap. Grp., No. CV 18- 10 9573-JFW (JPRx), 2021 WL 7707269, at *2 (C.D. Cal. Sept. 3, 2021). 11 IV. DISCUSSION 12 I.AM.PLUS contends that the Court committed clear error in granting 13 Petitioners’ Motion to Enforce Judgment, because Petitioners failed to comply with 14 Article IV of the Convention on the Recognition and Enforcement of Arbitral Awards. 15 (Mot. 3.) However, Petitioners argue that the Court should not address the Motion on 16 its merits because I.AM.PLUS’s California business registration has been suspended 17 and it therefore currently lacks the legal privilege to appeal or otherwise litigate the 18 Judgment in California. (Opp’n 2.) The Court agrees and therefore denies the Motion 19 without prejudice to refile after I.AM.PLUS’s business registration has been 20 reinstated, subject to the filing deadlines set forth in Rule 60(c) and the Local Rules. 21 In general, “a corporation may not prosecute or defend an action, nor appeal 22 from an adverse judgment in an action while its corporate rights are suspended for 23 failure to pay taxes.” Bourhis v. Lord, 56 Cal. 4th 320, 324 (2013) (citing Reed v. 24 Norman, 48 Cal. 2d 338 (1957)). Further, “[a] corporation’s incapacity to sue or 25 defend in state court also precludes it from suing or defending in federal court.” 26 AMESCO Exp., Inc. v. Associated Aircraft Mfg. & Sales, Inc., 977 F. Supp. 1014, 1015 27 (C.D. Cal. 1997) (citing In re. Christian & Porter Aluminum Co., 584 F.2d 326, 331 28 (9th Cir. 1978)).
3 Case 2:21-cv-04246-ODW-JEM Document 44 Filed 08/09/22 Page 4 of 5 Page ID #:685
1 Generally, foreign corporations that do not conduct intrastate business need not 2 register. See Cal. Corp. Code § 2105(a). However, once a foreign corporation does 3 register, if the corporation later forfeits that registration, “[a] status of ‘forfeited’ 4 applies . . . and holds the same legal consequences as a ‘suspension’ for a domestic 5 corporation.” MS & Sons Hosp., LLC v. DB Ins. Co., Ltd., No. CV 20-1994 JGB 6 (SHKx), 2022 WL 1395329, at *5 (C.D. Cal. Apr. 7, 2022) (citing Alhambra- 7 Shumway Mines, Inc. v. Alhambra Gold Mine Corp., 155 Cal. App. 2d 46, 50 (1957)). 8 I.AM.PLUS argues that, as a foreign corporation that does not transact intrastate 9 business, it had no duty to register in California in the first place. (Reply 1–2 (citing 10 Cal. Corp. Code § 2105(a).) Accordingly, I.AM.PLUS concludes, the suspension of 11 its non-mandatory registration cannot preclude its right to defend itself from an 12 adverse judgment. (Id.) However, whether I.AM.PLUS had a legal duty to register in 13 California is irrelevant; the Court need only look to its status with the California 14 Secretary of State, which currently is “forfeited.” (McNeil Decl. ¶ 4, Ex. 2 (Secretary 15 of State Online Registration Page).) Therefore, I.AM.PLUS’s forfeited status holds 16 the same legal consequences as those of a suspended corporation, including a loss of 17 litigation privileges. MS & Sons Hosp., LLC, 2022 WL 1395329, at *5. As such, 18 I.AM.PLUS may not seek relief from the Judgment until it rectifies its forfeited status. 19 I.AM.PLUS also argues that its suspension is immaterial to its ability to defend 20 actions brought in California. (Reply 2.) I.AM.PLUS cites two cases to support this 21 proposition: Conseco Mktg., LLC v. IFA & Ins. Servs., Inc., 221 Cal. App. 4th 831, 840 22 (2013), and United Med. Mgmt. Ltd. v. Gatto, 49 Cal. App. 4th 1732 (1996). 23 However, these cases concern only foreign corporations that failed to register with the 24 Secretary of State in the first instance, and do not consider foreign corporations that 25 registered and later forfeited. (Id.) Thus, I.AM.PLUS does not cite to any apposite 26 precedent supporting the notion that a forfeited foreign entity may nevertheless defend 27 an action brought against them in California. The Court therefore cannot conclude 28
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1 || that LAM.PLUS may move for relief from judgment despite its forfeited registration 2 || status. 3 Vv. CONCLUSION 4 For the reasons discussed above, the Court may not consider the merits of 5 || LAM.PLUS’s Motion at this time. Thus, the Court DENIES without prejudice 6 || IL.AM.PLUS’s Motion for Relief from Judgment. (ECF No. 33.) LAM.PLUS may 7 || renew its Motion once its registration is reinstated, subject to the filing deadlines set 8 | forth in Rule 60(c) and the Local Rules. 10 IT IS SO ORDERED. 11 12 August 9, 2022 hy ; 3 ~
15 OTIS D. WRIGHT, I 16 UNITED STATES DISTRICT JUDGE 17 18 19 20 21 22 23 24 25 26 27 28