Case 2:12-cv-05948-GHK-JC Document 57 Filed 11/19/12 Page 1 of 20 Page ID #:529

1 Stephen C. Parker, Jr. (Pro Hac Vice) (AR BN: 2005290)

[email protected]
2 PARKER LAW FIRM, PLLC
3 310 W. Dickson St., Suite 220
Fayetteville, AR 72701
4 (479) 445-6295, ext. 1 telephone
(888) 680-6414 facsimile
5
6 Marc E. Hankin (SBN: 170505)
[email protected]
7 HANKIN PATENT LAW, APC
12400 Wilshire Blvd., Suite 1265
8 Los Angeles, CA 90025
9 (310) 979-3600 telephone
(310) 979-3603 facsimile
10
Attorneys for Defendants,
11
12 TRUMAN PRESS, INC.,
HANNOVER HOUSE RELEASING, LLC, and
13 HANNOVER HOUSE, INC.
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UNITED STATES DISTRICT COURT
15
CENTRAL DISTRICT OF CALIFORNIA
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17 BEDROCK VENTURES, INC., CASE NO. 12-CV-05948 GHK(JCx)
18 Plaintiff, DEFENDANTS NOTICE OF
v. MOTION AND MOTION TO
19 VACATE DEFAULT AND SET
20
TRUMAN PRESS, INC., et al. ASIDE JUDGMENT;
MEMORANDUM OF POINTS
21 Defendants. AND AUTHORITIES
22 Concurrently Filed With:
Declarations of Eric Parkinson and
23 Stephen C. Parker, Jr. and a
[Proposed Order]
24
Hearing Date: December 17, 2012
25 Hearing Time: 9:30 a.m.
26 Ctrm: 650, Roybal Building
27 Hon. George H. King
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TO THE COURT, ALL PARTIES AND THEIR COUNSEL OF RECORD:
2
PLEASE TAKE NOTICE THAT on December 17, 2012 at 9:30 AM, or
3
as soon thereafter as counsel may be heard, in Courtroom 650 of the Honorable
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George H. King located at 255 E. Temple St., Los Angeles, CA 90012,
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Defendants Truman Press, Inc., Hannover House Releasing, LLC, and Hannover
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House, Inc. (collectively, Hannover House) will and hereby do move the Court
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as follows: (1) to set aside the defaults entered by the Clerk against them on
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September 12, 2012 and September 21, 2012, pursuant to Fed. R. Civ. P. 55(c);
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and (2) to set aside the judgment entered against them on November 5, 2012,
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pursuant to Fed. R. Civ. P. 60(b).
11
The Motion to Vacate Default is brought for good cause and on the grounds
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that Hannover Houses actions were not culpable, it has bona fide meritorious

14
defenses and counterclaims, and Plaintiff, Bedrock Ventures, Inc. (Bedrock),

15 will not be prejudiced. Likewise, the Motion to Set Aside Judgment is brought for

16 good cause and on the grounds that Hannover Houses conduct constituted
17 excusable neglect, which is established by their lack of culpable conduct.
18 This motion is based on the Notice of Motion and Motion to Vacate Default
19 and Set Aside Judgment, Memorandum of Points and Authorities, and the
20 Declarations of Eric Parkinson and Stephen C. Parker in Support Thereof
21 (collectively, Motion to Vacate), Exhibits thereto, [Proposed] Order, and upon
22 such other exhibits, evidence and matters as may be presented to the Court in any
23 Reply Brief and/or at the time of the hearing of this matter.
24
25 Respectfully submitted,
26
Dated: November 19, 2012 PARKER LAW FIRM, PLLC
27
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2
By:
3 ______________________ ____________
4 Stepphen C. Paarker, Jr.
5 HAANKIN PA ATENT LA
AW, APC
6 By: /Maarc E. Hankkin/
Marrc E. Hankkin
7
8 Attoorneys for Defendants,
9
TRU UMAN PR RESS, INCC.,
HAANNOVER R HOUSE R RELEASIN NG, LLC,
10 andd HANNOV VER HOU USE, INC.
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DEF
FENDANTS NOTICE OF MOTION
M ANDD MOTION TO
O VACATE D
DEFAULT ANND
SET ASIDE JUDGMENT;
J MEMORAND
M DUM OF POIN
NTS AND AUT
THORITIES
Case 2:12-cv-05948-GHK-JC Document 57 Filed 11/19/12 Page 4 of 20 Page ID #:532

1 TABLE OF AUTHORITIES
2
FEDERAL CASES

3 Ashford v. Steuart,
4 657 F.2d 1053 (9th Cir. 1981) ..................................................................... 22
5 Bateman v. U.S. Postal Service,
6 231 F.3d 1220 (9th Cir. 2000) ..................................................................... 20
7
Gregorian v. Izvestia,
8 871 F.2d 1515 (9th Cir. 1989) ..................................................................... 21
9
INVST Financial Group, Inc. v. Chemical-Nuclear Systems, Inc.,
10 815 F.2d 391 (6th Cir. 1987) ....................................................................... 18
11
Lemoge v. United States,
12 587 F.3d 1188 (9th Cir. 2009) ..................................................................... 22
13
TCI Group Life Insurance Plan v. Knoebber,
14 244 F.3d 691 (9th Cir. 2001) ..................................................... 16, 18, 20, 21
15
Thompson v. American Home Assur. Co.,
16
95 F.3d 429 (9th Cir. 1996) ................................................................... 18, 20
17
18
United States v. Mesle,
615 F.3d 1085 (9th Cir. 2010) ..................................................................... 16
19
20 FEDERAL STATUES
21 Fed. R. Civ. P. 55(c) ............................................................................................. 15
22
Fed. R. Civ. P. 60(b) ............................................................................................. 20
23
24 Fed. R. Civ. P. 60(c)(1) ........................................................................................ 22
25
26
27
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1 TABLE OF CONTENTS
2
Page
3
4 I. INTRODUCTION ........................................................................................ 7
5 II. FACTUAL BACKGROUND .................................................................... 10
6
A. Hannover House, Inc. ...................................................................... 10
7
8 B. Merger Between Truman Press and Target ..................................... 10
9
C. Hannover House and Bedrock Negotiate a Loan for the
10 Acquisition of the Feature Length Film Twelve .............................. 11
11
D. Hannover House and Bedrock Negotiate a Loan for the
12 Marketing of Twelve ........................................................................ 12
13
E. Hannover House and Bedrock Negotiate a Settlement for
14 the P&A Expenses Loan .................................................................. 12
15
F. Bedrock Files Lawsuit Against Hannover House for
16
Breach of Contract ........................................................................... 13
17
18
III. HANNOVER HOUSE CAN SHOW GOOD CAUSE
WHY THE DEFAULT AND DEFAULT JUDGMENT
19 SHOULD BE SET ASIDE ......................................................................... 15
20
A. Setting Aside the Default is Proper Under the Circumstances ........ 15
21
22 1. Hannover Houses Default Was Innocent ................................... 16
23
2. Hannover House Has Meritorious Defenses to Bedrocks
24 Claims .......................................................................................... 18
25
3. Bedrock Will Not Be Prejudiced if the Default is Set Aside....... 20
26
27 B. Setting Aside the Judgment Is Proper Under the
Circumstances .................................................................................. 20
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1 1. The Judgment Against Hannover House Should Be

2
Overturned Based On Excusable Neglect ................................... 21

3 2. Hannover Houses Motion Was Made Within One Year

4 of Judgment and Within a Reasonable Time .............................. 22
5 IV. CONCLUSION .......................................................................................... 23
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MEMORANDUM OF POINTS AND AUTHORITIES
2
I. INTRODUCTION
3
Pursuant to Fed. R. Civ. P. 55(c) and 60(b), Defendants Truman Press, Inc.,
4
Hannover House Releasing, LLC, and Hannover House, Inc. (collectively,
5
Hannover House), by and through their undersigned counsel, move the Court to
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set aside the default and default judgment entered against them. There is good
7
cause to set aside the default and default judgment entered against Hannover
8
House because during the time period after Hannover House was served the
9
Summons and Complaint, it contacted Plaintiff, Bedrock Ventures, Inc.
10
(Bedrock) and engaged in good faith negotiations in an attempt to settle this
11
matter. It was only after the default was entered against Hannover House that it
12
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discovered Bedrock filed a Motion for Default and had no intention of negotiating

14
a settlement.

15 Furthermore, prior to default judgment being entered, Hannover Houses

16 attorneys notified Bedrocks counsel that they would be filing a responsive

17 pleading and to rescind Bedrocks Motion for Default Judgment, which was
18 subsequently ignored.
19 This lawsuit arises out of a Film Distribution Finance Agreement (Finance
20 Agreement) entered into by Bedrock and Truman Press, Inc. and Hannover
21 House Releasing, LLC, on February 1, 2010. According to the Finance
22 Agreement, Bedrock would contribute $500,000.00 towards the purchase of the
23 North American distribution rights of the motion picture Twelve (Film) from
24 Gaumont Film Company (Gaumont) in exchange for a share of any profits
25 realized from the distribution of the Film.
26 On March 1, 2010, Bedrock and Hannover House agreed to an amendment
27 to the Finance Agreement whereby Bedrock would provide additional financing of
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approximately $300,000.00 to Hannover House. This amount was eventually paid
2
back after a negotiated settlement was reached between Hannover House and
3
Bedrock on May 16, 2011.
4
On August 8, 2012, Bedrock served Hannover House Releasing, LLCs
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registered agent with Summons and Complaint. Hannover House Releasing, LLC
6
is a dissolved limited liability company registered in Delaware. Hannover House
7
was unaware of service on Hannover House Releasing, LLC.
8
On August 28, 2012, Truman Press, Inc. and Hannover House, Inc. were
9
served with Summons and Complaint. This was the first time that Hannover
10
House was aware that this lawsuit was being brought against them.
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Eric Parkinson (Mr. Parkinson), as C.E.O. of Hannover House, Inc.
12
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immediately contacted Fotis Georgiadis (Mr. Georgiadis), principal of Bedrock,

14
to discuss the lawsuit and the Finance Agreement. Mr. Parkinson continued to

15 negotiate in good faith with Mr. Georgiadis and Bedrocks attorneys in an attempt

16 to reach a settlement that would be beneficial to all parties. On October 2, 2012,

17 Hannover House sent a letter to Bedrocks attorney, Robert J. Allan, requesting an
18 extension of time to file an answer the Complaint so the parties could continue
19 negotiating a settlement. Hannover House was unaware that on September 19,
20 2012, Bedrock filed a Motion for Default against Truman Press, Inc. and
21 Hannover House, Inc., which was granted on September 21, 2012.
22 Hannover House received a response from Bedrocks attorneys on October
23 2, 2012 via facsimile denying an extension of time. Since then, Hannover House
24 has acted as quickly as possible to secure representation and defend themselves in
25 this action. Because Hannover House is based in Arkansas, it is essential for it to
26 retain counsel in both Arkansas and local counsel in California to comply with the
27 Federal Rules of Civil Procedure. Good cause exists to set aside the default and
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default judgment against Hannover House because it is the product of deception
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by Bedrock and its attorneys and not the result of any bad faith by Hannover
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House. Hannover House, at all times after being served with the lawsuit, was
4
under the impression that they were negotiating in good faith with Bedrock, when
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in fact Bedrock had no intention of settling. Furthermore, Hannover House has
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claims against Bedrock that arise out of the same transactions and occurrences that
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are the subject matter of this lawsuit. In the interests of judicial economy it is
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better for the administrative Default entered by the clerk and the Default Judgment
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entered by the Court be vacated and Hannover House allowed to file a responsive
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pleading with the Court, than another lawsuit be filed to determine the merit of
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Hannover Houses defenses and counterclaims. Accordingly, the Default and
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Default Judgment entered against Hannover House should be vacated.

14
II. FACTUAL BACKGROUND

15 A. HANNOVER HOUSE, INC.

16 Hannover House, Inc., is a publicly traded over the counter (OTC)

17 company based out of Springdale, Arkansas. Declaration of Eric Parkinson
18 (Parkinson Decl.) 2. Hannover House, Inc. came into existence as the result
19 of a reverse merger between Truman Press, Inc. (Truman Press) and Target
20 Development Group, Inc. (Target), a publicly traded company under the control
21 of Fotis Georgiadis (Mr. Georgiadis) in December of 2009. Parkinson Decl.
22 3. Hannover House, Inc.s principal business is the production and distribution of
23 feature films onto DVD format for retail. Parkinson Decl. 2. Recently,
24 Hannover House, Inc. has expanded its business to include the promotion and
25 distribution of feature-length films for theatrical releases. Id.
26
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B. MERGER BETWEEN TRUMAN PRESS AND TARGET
2
On or about December 1, 2009, Truman Press and Target entered into an
3
agreement whereby the two companies would merge, with Target continuing to
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exist as the surviving company. Parkinson Decl. 3. Target then immediately
5
took steps with the applicable regulatory authorities to change changed its
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corporate name to Hannover House, Inc. Parkinson Decl. 4. As part of the
7
consideration for the merger, Bedrock Ventures, Inc. (Bedrock) would be
8
retained as a financial consultant, with the express purpose of raising
9
$1,500,000.00 worth of financing for Hannover House. Parkinson Decl. 5. This
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money was to be raised by May 24, 2010. Parkinson Decl. 7.
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C. HANNOVER HOUSE AND BEDROCK NEGOTIATE A LOAN
12
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FOR THE ACQUISITION OF THE FEATURE LENGTH

14
FILM TWELVE

15 Twelve is a feature-length film released by French motion picture studio

16 Gaumont in 2010. On January 29, 2010, Hannover agreed to become the sole and
17 exclusive North American distributor of Twelve at a cost of $1,750,000.00.
18 Parkinson Decl. 8. The initial deposit payment of $500,000.00 to Gaumont was
19 provided by Bedrock and paid directly to Gaumont. Parkinson Decl. 9. In
20 exchange for providing the initial payment of $500,000.00, Bedrock and
21 Hannover entered into a Film Distribution Finance Agreement (Finance
22 Agreement) whereby Bedrock would earn a share of the profits realized from the
23 distribution of Twelve. Id.
24 D. HANNOVER HOUSE AND BEDROCK NEGOTIATE A LOAN
25 FOR THE MARKETING OF TWELVE
26 Once the distribution rights of Twelve were purchased, Hannover House
27 began the process of marketing the film. In order to do so, Hannover House
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incurred considerable print and advertising expenses (P&A expenses).
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Parkinson Decl. 10. Because Bedrock had not fulfilled its duty as the financial
3
consultant and secured the full $1,500,000.00 in financing, Hannover House found
4
itself in a precarious position. If it was unable to effectively market the film, it
5
would be unable to realize any profits and would lose substantial money. At the
6
same time, Bedrock offered to finance an additional $300,000.00 in order to pay
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the P&A expenses. Parkinson Decl. 11. With little other options available, on
8
July 24, 2010, Hannover House agreed to borrow $300,000.00 from Bedrock with
9
the stipulation that the money must be paid back with an additional twenty percent
10
(20%) service charge. Id.
11
E. HANNOVER HOUSE AND BEDROCK NEGOTIATE A
12
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SETTLEMENT FOR THE P&A EXPENSES LOAN

14
By May 16, 2011, Hannover House had fallen behind on repayment of the

15 P&A expenses loan from Bedrock. Bedrock had yet to fulfill its duty as financial

16 consultant, and the release of Twelve had not garnered as much profit as expected.
17 Hannover House had only repaid $262,500.00 of the $303,379.36 that had been
18 provided by Bedrock. Parkinson Decl. 12. As a product of their long-standing
19 working relationship, and in an effort to avoid litigation, Hannover House and
20 Bedrock negotiated a settlement whereby the entire loan amount, plus the twenty-
21 percent (20%) service charge would be repaid by May 31, 2011. Id. This
22 money was repaid to Bedrock according to the settlement agreement. Id. This
23 was the last of a long line of examples where Hannover House, Bedrock, and their
24 respective principals engaged in constructive negotiations concerning their
25 dealings and related problems.
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F. BEDROCK FILES LAWSUIT AGAINST HANNOVER HOUSE
2
FOR BREACH OF CONTRACT
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As of July 11, 2012, Bedrock had not received what it felt it was due under
4
the Finance Agreement from Hannover House. In response, Bedrock filed a
5
lawsuit for breach of contract and related claims against Hannover House
6
Releasing, LLC, Truman Press, Inc. and Hannover House, Inc. A copy of the
7
Complaint was mailed to Hannover House Releasing, LLC, on August 8, 2012.
8
Hannover House Releasing, LLC, is a Delaware limited liability company that has
9
been dissolved since June 1, 2010.
10
On August 28, 2012, Truman Press, Inc. and Hannover House, Inc. received
11
a copy of the Complaint at their business addresses in Springdale, Arkansas.
12
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Parkinson Decl. 13. Hannover House by way of its C.E.O., Mr. Parkinson

14
immediately contacted Mr. Georgiadis to discuss the lawsuit and determine what

15 kind of settlement could be negotiated. Parkinson Decl. 14. These discussions

16 took place via phone calls, emails, and text messages. Parkinson Decl. 15. As
17 late as September 25, 2012, Hannover House and its principals were still under the
18 impression that a good-faith negotiation was taking place. Parkinson Decl. 16.
19 However, Hannover House was unaware that on September 19, 2012, Bedrock
20 filed motions for default against Truman Press, Inc. and Hannover House, Inc.,
21 and that Default was entered against them by the clerk on September 21, 2012.
22 On October 2, 2012, Hannover House sent a letter to Robert J. Allan (Mr.
23 Allan), counsel for Bedrock, requesting an extension of time to file a response in
24 the lawsuit. Parkinson Decl. 18. Mr. Allan responded via facsimile later that
25 day, stating that he would not allow an extension. Parkinson Decl. 19. At no
26 time did he notify Hannover House that Bedrock had already filed Motion for
27 Default and that the Default was entered.
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Upon receipt of the facsimile from Mr. Allan, Hannover House
2
immediately began contacting attorneys to obtain representation and file
3
responsive pleading(s). Parkinson Decl. 21. On October 5, 2012, Hannover
4
House contacted Parker Law Firm, PLLC (Parker Law Firm) to provide an
5
initial consultation and discovered that Default had been entered in the case.
6
Parkinson Decl. 22.
7
Consequently, Hannover House hired Parker Law Firm to represent their
8
interests. Parker Decl. 3. Parker Law Firm began the process of finding local
9
counsel to comply with local rules. Parker Decl. 4. While local counsel was
10
running the necessary conflict checks and preparing the appropriate documents,
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Parker Law Firm determined that Bedrock had filed an Application for Default
12
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Judgment. Parker Decl. 5. In order to prevent a waste of judicial resources and

14
to prevent unnecessary time and effort being spent by both sides, on October 22,

15 2012, Parker Law Firm notified Mr. Allan that Hannover House would be filing

16 responsive pleadings, and asked that Bedrock rescind their application. Parker
17 Decl. 6. Mr. Allan did not reply, and did not rescind the application. During the
18 next seventeen (17) days, numerous attempts were made by Parker Law Firm to
19 contact Mr. Allan by both telephone and email. Parker Decl. 9. Despite these
20 attempts, Mr. Allan did not contact Parker Law Firm until November 8, 2012,
21 after the default judgment had been entered. Parker Decl. 10.
22 III. HANNOVER HOUSE CAN SHOW GOOD CAUSE WHY THE
23 DEFAULT AND DEFAULT JUDGMENT SHOULD BE SET ASIDE
24 A. SETTING ASIDE THE DEFAULT IS PROPER UNDER THE
25 CIRCUMSTANCES
26 A court may set aside an entry of default for good cause pursuant to Fed. R.
27 Civ. P. 55(c). To determine good cause, this Court must analyze three factors: (1)
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whether the moving partys culpable conduct led to the default; (2) whether the
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moving party has a meritorious defense; and (3) the danger of prejudice to the
3
non-moving party if the default is set aside. United States v. Mesle, 615 F.3d
4
1085, 1091 (9th Cir. 2010). Here, Hannover House can show good cause because:
5
(1) Bedrock led Hannover House to believe that a good faith negotiation was
6
taking place after the filing of a lawsuit, despite the fact that Bedrock was actively
7
moving the case towards default; (2) Hannover House has meritorious defenses to
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Bedrocks claims for breach of contract because the contract in question was part
9
of a larger transaction between the parties, which also gives rise to counterclaims;
10
and (3) there is no danger of prejudice to Plaintiff.
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1. Hannover Houses Default was Innocent
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Hannover Houses default should be set aside because it was no fault of its

14
own. Conduct is culpable only if the moving party has actual or constructive

15 notice of the action and intentionally failed to answer. TCI Group Life Ins. Plan v.

16 Knoebber, 244 F.3d 691, 697 (9th Cir. 2001). Intentionally in this context
17 means that a movant cannot be treated as culpable simply for having made a
18 conscious choice not to answer; rather, to treat a failure to answer as culpable, the
19 movant must have acted with bad faith, such as an intention to take advantage of
20 the opposing party, interfere with judicial decisionmaking, or otherwise
21 manipulate the legal process. Mesle, 615 F.3d at 1093 (citing TCI, 244 F.3d at
22 697).
23 Hannover House did not intentionally fail to answer, as it was always their
24 belief that they were engaged in good faith negotiations with Bedrock to settle the
25 matter without further expense or time being expended by either party or the
26 Court. Parkinson Decl. 17. Upon finding out that a lawsuit had been filed
27 against them, Hannover House immediately contacted Bedrock. Parkinson Decl.
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14. Due to their long-standing business relationship with Bedrock, Hannover
2
House believed that as long as the negotiation was ongoing, Bedrock would not
3
push the lawsuit forward. Parkinson Decl. 12.
4
Hannover House did not know that Bedrock was acting in bad faith
5
regarding the negotiations until it received notice of Default from Parker Law
6
Firm on October 5, 2012. Had it known settlement discussions were not in good
7
faith, it would have incurred the expense of hiring an attorney and filing
8
responsive pleading(s) timely.
9
In short, Hannover Houses failure to defend this case was based on its
10
belief that good faith settlement negotiations were ongoing and that the lawsuit
11
would not be pursued until those were completed not some ploy to take
12
13
advantage of Bedrock, to interfere with this Courts decision-making, or otherwise

14
manipulate the legal process.

15 2. Hannover House has Meritorious Defenses to Bedrocks

16 Claims
17 To establish a meritorious defense, the moving party must state a good
18 defense at law which is sufficient if it contains even the hint of a suggestion
19 which, proven at trial, would constitute a complete defense. Thompson v.
20 American Home Assur. Co., 95 F.3d 429, 434 (9th Cir. 1996) (citing INVST
21 Financial Group, Inc. v. Chem-Nuclear Systems, Inc., 815 F.2d 391, 398-99 (6th
22 Cir. 1987)); see TCI, 244 F.3d at 700 (discussing that the moving party need only
23 allege sufficient facts to constitute a defense, while leaving the question as to their
24 truth to be the subject of later litigation). Here, Hannover House has such
25 meritorious defenses.
26 First, the money that was provided by Bedrock to Hannover House to
27 purchase the distribution rights of Twelve is part of a larger transaction that
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occurred between Hannover House and Bedrock and the competing contractual
2
duties and rights of the parties relieve Hannover Houses obligation to repay any
3
amount remaining on the loan. As part of the merger of Target and Truman Press,
4
Inc., Hannover agreed to a Consultation Services Agreement whereby Bedrock
5
would be retained as a consultant for the sole purpose of generating $1,500,000.00
6
of working capital for Hannover House. Parkinson Decl. 6. To date, Bedrock
7
has only provided Hannover House a series of payments totaling $500,000.00 in
8
January and February of 2010, notwithstanding the $500,000.00 that is the subject
9
of this lawsuit and approximately $300,000.00 that has since been repaid to
10
Bedrock and Mr. Georgiadis. Hannover House believes Bedrock had no intention
11
of raising the $1,500,000.00 and agreed to the Consultation Services Agreement
12
13
for the purpose of inducing Hannover House into merging Truman Press, Inc. and

14
Target, thereby making a lot of money for Mr. Georgiadis, the largest shareholder

15 of Target and the principal of Bedrock. These actions constitute breach of

16 contract, fraud, and may be brought as counterclaims and defenses to Bedrocks

17 claims in this lawsuit.
18 Second, the distribution rights to Twelve have been assigned to 20th Century
19 Fox (Fox). Pursuant to that transaction, Bedrock agreed to become an assignee
20 of any revenues generated through the distribution of Twelve by Fox. Bedrock has
21 received money under these assignment rights, and will continue to do so.
22 Therefore, Bedrocks claims are untimely, as there remains the possibility that
23 they will receive the money claimed.
24 Third, Hannover House denies that venue is proper in United States District
25 Court for the Central District of California because all events giving rise to the
26 claims in Bedrocks Complaint occurred on or about January 21st through 31st,
27 2010 at the Sundance Film Festival in Park City, Utah, exclusively. Hannover
28
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DEFENDANTS NOTICE OF MOTION AND MOTION TO VACATE DEFAULT AND
SET ASIDE JUDGMENT; MEMORANDUM OF POINTS AND AUTHORITIES
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1
House asserts the Fed. R. Civ. P. 12(b)(3) defense of improper venue, among
2
other Fed. R. Civ. P. 12(b) defenses.
3
3. Bedrock Will Not Be Prejudiced if the Default is Set Aside
4
Bedrock will not be prejudiced if this Court sets aside the default against
5
Hannover House. Setting aside a default, in order to be prejudicial, must result
6
in greater harm than simply delaying resolution of the case. TCI, 244 F.3d at
7
701. Rather, the delay must result in tangible harm such as loss of evidence,
8
increased difficulties of discovery, or greater opportunity for fraud or collusion.
9
Thompson, 95 F.3d at 434. Merely having to prove its case is not sufficient to
10
show that Bedrock will be prejudice. Lacy v. Sitel Corp., 277 F.3d 290, 293 (5th
11
Cir. 2000).
12
13
In this case, setting aside the default against Hannover House will not cause

14
any tangible harm to Bedrock. There can be no suggestion that evidence has been

15 or will be lost, that discovery will become more difficult, or that there will be a

16 greater opportunity for fraud or collusion. Simply put, Bedrock will not suffer
17 any prejudice from setting aside the default against Hannover House.
18 B. SETTING ASIDE THE JUDGMENT IS PROPER UNDER THE
19 CIRCUMSTANCES
20 Fed. R. Civ. P. 60(b)(1) allows a court to relieve a party from a judgment
21 based on excusable neglect. In determining whether there has been excusable
22 neglect, a court should analyze: (1) danger of prejudice to opposing party; (2)
23 length of delay and its potential impact on proceedings; (3) reason for delay; and
24 (4) whether the moving party acted in good faith. Bateman v. U.S. Postal Service,
25 231 F.3d 1220, 1223-24 (9th Cir. 2000). Further, where a defendant seeks timely
26 relief from the judgment and has a meritorious defense, doubt, if any, should be
27 resolved in favor of the motion to set aside the judgment. Gregorian v. Izvestia,
28
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DEFENDANTS NOTICE OF MOTION AND MOTION TO VACATE DEFAULT AND
SET ASIDE JUDGMENT; MEMORANDUM OF POINTS AND AUTHORITIES
Case 2:12-cv-05948-GHK-JC Document 57 Filed 11/19/12 Page 18 of 20 Page ID #:546

1
871 F.2d 1515, 1523 (9th Cir. 1989). Because this motion is timely and Hannover
2
Houses has a meritorious defense, this motion should be granted and the judgment
3
against Hannover House should be set aside.
4
1. The Judgment Against Hannover House Should Be Overturned
5
Based on Excusable Neglect
6
If the moving party successfully shows his or her conduct was not culpable
7
for purposes of Rule 55(c)s good cause standard, this showing is ordinarily
8
sufficient to demonstrate as well the excusable neglect or mistake criteria
9
under Rule 60(b)(1), and there is therefore no reason to require those 60(b)(1)
10
criteria to be established separately. TCI, 244 F.3d at 697. As discussed above,
11
Hannover Houses conduct was not culpable. In short, Hannover House had a
12
13
good faith basis to believe that they and Bedrock were negotiating a settlement.

14
Parkinson Decl. 17. The parties long history of business relationships and

15 previous negotiations led Hannover House to believe that Bedrock was engaging

16 in the negotiations in good faith, when in fact they were not. As such, Hannover
17 House did not act in bad faith or with intent to take advantage of Bedrock, to
18 interfere with this Courts decisionmaking, or otherwise manipulate the legal
19 process.
20 2. Hannover Houses Motion Was Made Within One Year of
21 Judgment And Within a Reasonable Time
22 The moving party must submit its motion to set aside a judgment based on
23 excusable neglect within one (1) year of the judgment and within a reasonable
24 time[.] Fed. R. Civ. P. 60(c)(1). This Court entered judgment against Hannover
25 House on November 5, 2012, which puts this motion within the one-year limit.
26 In addition, this motion is made within a reasonable time. Reasonable
27 time is determined by the facts of the case, taking into consideration the interest
28
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DEFENDANTS NOTICE OF MOTION AND MOTION TO VACATE DEFAULT AND
SET ASIDE JUDGMENT; MEMORANDUM OF POINTS AND AUTHORITIES
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1
in finality, the reason for delay, the practical ability of the litigant to learn earlier
2
of the grounds relied upon, and prejudice to the other parties. Lemoge v. United
3
States, 587 F.3d 1188, 1197 (9th Cir. 2009) (quoting Ashford v. Steuart, 657 F.2d
4
1053, 1055 (9th Cir. 1981) (internal quotations omitted).
5
Here, Hannover House acted within a reasonable time once they learned of
6
the judgment via the PACER/ECF system for the United States Federal Courts.
7
While the case was pending, Hannover House thought they were negotiated with
8
Bedrock in good faith to reach a settlement. Once it became clear that this was
9
not the case, they immediately contacted Parker Law Firm. Parker Law Firm
10
immediately began the process of obtaining local counsel for the Central District
11
of California in order to be admitted to the Court. Before Parker Law Firm could
12
13
be admitted to practice, counsel for Bedrock filed an Application for Default

14
Judgment. Despite notification by Parker Law Firm that responsive pleadings

15 were forthcoming on behalf of Hannover House, Bedrock proceeded with the

16 Application for Default Judgment. In short, once Hannover House knew that
17 Bedrock was not negotiating in good faith, it acted immediately to defend itself
18 and get the judgment set aside.
19 Finally, setting aside the judgment will not adversely affect the interest in
20 finality, nor will it prejudice Bedrock. Judgment was entered on November 5,
21 2012. This motion was filed on November 12, 2012, a week later. Given the
22 short time period between these dates, the only way in which Bedrock could be
23 considered prejudiced is that they must now put forth an actual case.
24 Furthermore, there are counterclaims involved with the factual background of this
25 case that should be heard at the same time.
26
27
28
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DEFENDANTS NOTICE OF MOTION AND MOTION TO VACATE DEFAULT AND
SET ASIDE JUDGMENT; MEMORANDUM OF POINTS AND AUTHORITIES
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1
IV
V. CON
NCLUSION
2
For the
t reason
ns set fortth above, Truman P
Press, Incc., Hannovver House
3
Releasing,
R LLC,
L and Hannover House, Innc. respectffully requeest that thee Court set
4
aside the default
d and default judgment against tthem. A Proposedd Order is
5
attached to this motion.
6 Resspectfully ssubmitted,
7
Dated:
D vember 19, 2012
Nov PAR
RKER LA
AW FIRM
M, PLLC
8
9
10
11 By:
12 ______________________ ____________
Stepphen C. Paarker, Jr.
13
14 HAANKIN PA ATENT LA
AW, APC
By: /Maarc E. Hankkin/
15
Marrc E. Hankkin
16
Attoorneys for Defendants,
17
TRU UMAN PR RESS, INCC.,
18 HAANNOVER R HOUSE R RELEASIN NG, LLC,
19 andd HANNOV VER HOU USE, INC.

20
21
22
23
24
25
26
27
28
- 200 -
DEF
FENDANTS NOTICE OF MOTION
M AND D MOTION TO
O VACATE D
DEFAULT ANND
SET ASIDE JUDGMENT;
J MEMORAND
M DUM OF POIN
NTS AND AUT
THORITIES