Securities Regulation Daily Wrap Up, FRAUD AND MANIPULATION—W.D. Wash.: Court denies default judgment motion against California winery, (Jun 15, 2026)

By Kristin J. Angelino, J.D.

Plaintiffs failed to sufficiently establish district court’s specific personal jurisdiction over defendant, a California citizen.

The federal district court for the Western District of Washington declined the motion for a default judgment filed by husband and wife investors James and Dina Finta against Goldline Brands Inc., a California winery, in a suit alleging that Goldline breached its agreement to repurchase plaintiffs’ shares when the company was not sold within five years of their investment. In denying the default judgment motion, without prejudice, the court held that the complaint failed to provide sufficient factual allegations to satisfy the Ninth Circuit’s three-prong test to determine whether a defendant had sufficient contacts with the forum state (Finta v. Goldline Brands Inc., No. 3:26-cv-05054-TMC (W.D. Wash. June 12, 2026)).

In their complaint, the self-represented plaintiffs alleged that they invested $10,000 in Goldline Brands in 2016. The investment term sheet provided that “if no qualifying exit event occurred within five years,” the company had to offer investors the option to have their shares of preferred stock repurchased at five times the original investment value. Preferred stock investors also received one share free for every two shares purchased. The complaint also alleged that, when the five years expired in 2021, plaintiffs were entitled to repurchase of their original $10,000 investment at a value of $75,000. They further alleged that Goldline owed them unpaid dividends and prejudgment interest.

After the company failed to appear or otherwise respond to their complaint, the clerk of the court entered default and plaintiffs moved for default judgment.

Subject matter jurisdiction. The court first considered whether it had subject-matter jurisdiction over the claims asserted and concluded that it did. The court held that the Fintas’ allegations established subject-matter jurisdiction since (1) plaintiffs claimed that they are owed more than the minimum amount in controversy of $75,000, and (2) they alleged that they are citizens of Washington and Goldline is a citizen of California.

Personal jurisdiction. The court next considered whether it had personal jurisdiction over the defendant and concluded that it did not since the allegations in the complaint were insufficient. Applying the law of the state in which the court sits, the court noted that Washington’s long-arm statute extends the court’s personal jurisdiction to the broadest reach permitted by the Constitution and, therefore, the analysis under state law and federal due process is the same. The court further noted that, under federal law, personal jurisdiction over a defendant satisfies due process if defendants “have certain minimum contacts” with the forum state and that personal jurisdiction takes two forms, general and specific. The Finta’s complaint asserted specific personal jurisdiction.

To determine whether the defendant had sufficient contacts with the forum state to be subject to specific personal jurisdiction, the court applied the Ninth Circuit’s three-prong test and noted that plaintiffs have the burden of establishing the first two prongs. The court held that, although the complaint alleged the first prong–purposeful availment of the privilege of conducting activities in the forum—the allegation was conclusory and did not contain any facts that would allow the court to “meaningfully apply” the purposeful availment test. In addition, the court held that it was unclear what plaintiffs meant by alleging that Goldline directed “silence” and “withholding” of performance into Washington. Without considering the second prong, the court concluded that the plaintiffs failed to sufficiently establish the court’s personal jurisdiction over Goldline, and therefore the court did not have the power to enter a default judgment against the company.

Leave to amend. The court noted the Ninth Circuit’s instruction that, when a district court raises the issue of personal jurisdiction on a default judgment motion, it must give the moving party the opportunity to establish defendant’s minimum contact with the forum. Accordingly, the court gave plaintiffs until July 13, 2026, to resubmit their motion with additional supporting facts.

The case is No. 3:26-cv-05054.

Judge: Cartwright, T.

Attorneys: James Finta, pro se.

Companies: Goldline Brands Inc.

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