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Court rejects Omniverse's bid for default judgment against HovSat

A last-gasp effort by Omniverse One World Television to pin the blame of a video copyright suit led by major Hollywood studios at the feet of erstwhile partner HovSat has come up short.

On Tuesday, March 5, a California court denied Omniverse's motion to issue a default judgement against HovSat due largely to a procedural issue because the court could not determine if HovSat was properly served.

Omniverse filed its motion and proposed order in February, roughly a year after the original lawsuit was brought against Omniverse. It also came about two months after the same court hit Omniverse with a $50 million consent judgment stemming from a case led by The Alliance for Creativity and Entertainment (ACE) on behalf of several major Hollywood studios.

Before it shut down its service last June, Omniverse operated a streaming TV service with several third-party partners such as TikiLive, Flixon and Clikia based on a joint venture with a New Jersey-based private cable operator called HovSat. Omniverse said it was led to believe that HovSat held a long-term contract with DirecTV affixed with "no limitations" regarding US distribution and delivery method. Full documentation of the HovSat-DirecTV contract in question never materialized in court.

Questions about HovSat's 'registered agent'
Omniverse claimed that HovSat, a company owned by Shant Hovnanian, misled it to believe that HovSat held valid licenses and contracts with DirecTV that allowed for the national distribution of OTT-TV services. As part of its defense, Omniverse sought indemnification while also accusing HovSat of breach of contract, negligent misrepresentation and a breach of "good faith and fair dealing."

However, according to court documents, Shant Hovnanian, the subject of a $16 million US civil tax enforcement judgment, is believed to be in Armenia. Omniverse's legal representation attempted to serve Arthur P. Havighorst II ESQ, referred to as the "registered agent" of HovSat, multiple times in recent months. Omniverse served Havighorst last September when it filed a third-party complaint against HovSat, and served him again more recently when Omniverse filed the motion for a default judgment against HovSat.

That's where things appear to have gone sideways in the eyes of the court.

"The critical issue … is whether HovSat has been properly served," the court said in its March 5 order, noting that this is one of a handful of key procedural requirements that would permit a court-ordered default judgment.

According to the court, Havighorst sent a letter the court last November asserting that HovSat has not asked him to act as HovSat's agent of process at any time since 2010. Furthermore, Havighorst stated that he has not remained in contact with anyone at HovSat since 2012, and that he likewise has "no knowledge of any person's location who may still be involved with Hov[S]at."

Omniverse countered that Havighorst remained the current agent of process for HovSat despite his assertions. Omniverse showed the court that Havighorst was the listed agent for HovSat on the New Jersey Secretary of State website, arguing this meant Havighorst did not properly resign as HovSat's agent.

That argument was not enough to sway the court. "While Havighorst appears to be the last registered agent of process for HovSat, the Court cannot ignore Havighorst's Letter," which indicated he has not remained in contact with anyone at HovSat for about eight years. "Omniverse has not established that HovSat has been properly served, and therefore, has not satisfied procedural requirements for obtaining entry of a default judgment."

Omniverse will take another shot
In response to an emailed question, a lawyer representing Omniverse affirmed that the company intends to file another motion that attempts to meet all the procedural requirements of the court.

Although HovSat is a revoked New Jersey corporation, even a dissolved corporation in that state can still be sued in the same manner as if dissolution had not occurred, according to a New Jersey statute.

Read more about the Omniverse saga:

— Jeff Baumgartner, Senior Editor, Light Reading

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