Federal court denies motion for entry of default

The federal court has denied an investor and his company’s motion to issue a default judgment against two companies that he sued over the alleged forging of his signature and causing the fraudulent transfer of his $200,000 worth of a company’s shares.

U.S. District Court for the NMI Chief Judge Ramona V. Manglona, in an order last week, ruled that although there was no formal entry of default, had there been one, the court would have granted defendants Black Bison Travel Corp.’s and Jili Corp.’s motion to set it aside.

Manglona determined that that Black Bison and Jili Corp. have shown good cause as to why an entry of default should be set aside.

Manglona said representatives of Black Bison and Jili Corp. speak limited English and were not aware of the deadline to file their answer to the lawsuit until after it had passed, despite their efforts to obtain legal advice.

The judge said she sees no evidence of bad faith in defendants’ conduct.

Manglona said defendants’ counsel, William Fitzgerald, states that he contacted counsel of plaintiffs Junjie Wu and Chimeng Science & Technology Co. Ltd. (CST) who agreed not to pursue the motion for entry of default and to allow the late filing of the answer.

“As such, the court finds no prejudice against the plaintiffs,” Manglona said.

Wu and CST, through counsel Colin M. Thompson, are suing Black Bison, Jili Corp. and 10 other unnamed co-defendants, for fraud, conversion, breach of contract, unjust enrichment, and fraudulent transfer.

Wu and CST asked the court to hold defendants liable to pay them damages, court costs, and attorney’s fees.

Plaintiffs filed their complaint last July 17. The defendants were then served with the summons and the complaint.

Plaintiffs Wu and CST then moved the court to enter default against Black Bison and Jili Corp. because they did not file an answer to their lawsuit. However, no entry of default was entered by the court’s clerk.

The court then ordered defendants to show cause why the court should not enter a default judgment against them.

In his declaration filed in support of defendants’ reply to the court’s show cause order, Fitzgerald said defendants are Chinese and speak very little English.

Fitzgerald said when the complaint was served, nobody in their office understood what it was and they did not understand that an answer to the complaint had to be filed within 21 days.

Fitzgerald said defendants went to a local law firm, presented the front desk with the complaint and were told they would be contacted, but not told that there was a time limit to answer the complaint.

Fitzgerald said after failing to get legal advice from the office that they visited thrice, they were recommended to his law office and were seen last Aug. 26.

Fitzgerald said he checked with the court and found out that defendants had been served with the complaint last July 17, and that no answer had been filed.

The lawyer said he immediately sent an email to plaintiffs’ counsel, Thompson, informing him that he would be representing Black Bison and Jili Corp. and could he agree to withdraw his motion for default and allow him to answer by Sept. 6, 2019.

Fitzgerald said Thompson agreed that he would not pursue the motion for entry of default and that he could file an answer.

Fitzgerald said he realizes that this informal way of solving the problem was not appropriate and that a motion, which included the reason for the tardy answer, should have been filed with the court.

On Sept. 6, defendants filed an answer, but failed to acknowledge plaintiffs’ pending motion or the untimeliness of their pleading.
The court then issued an order directing defendants to show cause why plaintiffs’ motion for entry of default should not be granted.

According to the complaint, Ji Li Corp. was established under CNMI laws in 2011 and that in late 2016, Wu as president and corporate representative of CST, had invested in Ji Li Corp.

On June 11, 2017, Wu was elected president and treasurer of Ji Li Corp. after he invested $200,000 in exchange for 200,000 shares of the company.