Wordtech Systems Inc v. Integrated Network, et al

Filing 466

ORDER signed by Chief Judge Morrison C. England, Jr. on 11/6/2012 DISMISSING, for lack of subject matter jurisdiction, 457 , 459 Motions seeking Injunction and Sanctions. (Michel, G)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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WORDTECH SYSTEMS, INC., a
California corporation,
Plaintiff,

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MEMORANDUM AND ORDER
v.

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No. 2:04-cv-01971-MCE-EFB

INTEGRATED NETWORK
SOLUTIONS, INC., a Nevada
corporation, dba INTEGRATED
NETWORK SOLUTIONS, CORP. aka
INTEGRATED NETWORK
SOLUTIONS aka INTEGRATED
SYSTEMS aka INTERNET NETWORK
STORAGE COMPANY aka INSC,
et al.,
Defendants.

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Through this action Plaintiff Wordtech Systems, Inc. (“Plaintiff”) seeks redress

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from Defendants Integrated Network Solutions, Inc. (“INSC”), Hamid Assadian, and

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Nasser Khatemi, among others (collectively, “Defendants”), for direct and contributory

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patent infringement. Presently before the Court is Defendant Khatemi’s Motion Seeking

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Injunctions and Sanctions for Plaintiff’s attorneys’ alleged violations of the automatic stay

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of the case against Khatemi ordered by the bankruptcy court.

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(ECF Nos. 457, 459.) For the reasons set forth below, Defendant Khatemi’s motion is

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dismissed.1

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BACKGROUND2

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The following general factual background is relevant to the instant motion. On

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August 6, 2012, the Court ordered the parties to file a Joint Pretrial Statement within

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thirty days. On August 17, 2012, Plaintiff sent a draft of the Joint Pretrial Statement to

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Defendants Assadian, Khatemi, both proceeding pro se, and to Defendant INSC.

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Defendant INSC informed Plaintiff that Defendants had no money and would likely be

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filing for bankruptcy. However, Plaintiff received no further communication from

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Defendants INSC or Khatemi. On August 29, 2012, Defendants INSC and Khatemi filed

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Chapter 7 bankruptcy petitions, resulting in an automatic stay of Plaintiff’s case against

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those two Defendants pursuant to 11 U.S.C. § 362(a)(1).3 That same day, Defendant

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INSC filed a notice of commencement of bankruptcy proceedings with this Court.

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The following day, August 30, 2012, Plaintiff sent Defendants Khatemi and

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Assadian an email that included a new draft of the Joint Pretrial Statement. On

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August 31, 2012, INSC’s counsel informed Plaintiff that he believed Defendant Khatemi

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had filed a bankruptcy petition. On September 4, 2012, Plaintiff searched PACER and

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confirmed that Defendant Khatemi had, in fact, filed a bankruptcy petition. On

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September 5, 2012, Defendant Khatemi filed notice of the petition with the Court.

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Because oral argument will not be of material assistance, the Court orders this matter submitted
on the briefs. E.D. Cal. Local Rule 230(g).

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The following facts are taken from Plaintiff’s Statement of Facts. (ECF No. 463 at 2-4.)

11 U.S.C. § 362(a)(1) provides: “Except as provided in subsection (b) of this section, a petition
filed under section 301, 302, or 303 of this title, . . . operates as a stay, applicable to all entities, of the
commencement or continuation . . . of a judicial, administrative, or other action or proceeding against the
debtor that was or could have been commenced before the commencement of the case under this title, or
to recover a claim against the debtor that arose before the commencement of the case under this title.”

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On September 5, 2012, Plaintiff filed a Joint Pretrial Statement. On September 6,

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2012, Plaintiff and Defendant Assadian filed a Corrected Joint Pretrial Statement. On

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September 7, 2012, Plaintiff’s counsel emailed the Corrected Joint Pretrial Statement to

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Defendant Khatemi, as his address for service listed in this case is different from that

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listed in his bankruptcy petition.

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Defendant Khatemi brought the instant motion on September 26, 2012, alleging

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that Plaintiff’s August 30 and September 7 emails violated the bankruptcy court’s

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automatic stay of the case against him. (ECF No. 457, 459.) He requests that the Court

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issue an order requiring Plaintiff and Plaintiff’s attorneys, Richard Peterson and Marilyn

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Riddervold, to abide by the terms of the automatic stay. Moreover, Defendant Khatemi

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requests that the Court sanction Plaintiff and Plaintiff’s attorneys for their conduct.

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Plaintiff timely opposed the motion. (ECF No. 463.)

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ANALYSIS

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Plaintiff contends that the Court lacks subject matter jurisdiction over Defendant

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Khatemi’s claim for violation of the automatic stay. Pursuant to 28 U.S.C. § 157(a),

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“each district court may provide that any or all cases under title 11 and any or all

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proceedings arising under title 11 or arising in or related to a case under title 11 shall be

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referred to the bankruptcy judges for the district.” Furthermore, the Eastern District of

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California’s Local General Order 1824 states: “[t]his [C]ourt hereby refers to the

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bankruptcy judges of this district all cases under [t]itle 11, and all proceedings arising

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under [t]itle 11 or rising in or related to cases under [t]itle 11.” An action alleging a willful

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violation of the automatic stay is created by § 362(h) of title 11 of the United States

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Code, and therefore arises under title 11 for purposes of 28 U.S.C. § 157(a) and Local

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General Order 182. See In re Davis, 177 B.R. 907, 912 (B.A.P. 9th Cir. 1995) (citing

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Price v. Rochford, 947 F.2d 829, 832 n.1 (7th Cir. 1991)).

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Reenacted by E.D. Cal. General Order 223.

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Thus, “the bankruptcy court [has] subject matter jurisdiction over all claims alleging willful

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violation of the automatic stay . . . .” Id.

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Because Defendant Khatemi’s claim alleging that Plaintiff and Plaintiff’s attorneys

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willfully violated the bankruptcy court’s automatic stay arises under title 11, the

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bankruptcy court has subject matter jurisdiction over Defendant Khatemi’s claim.

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CONCLUSION

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For the reasons set for above, Defendant Khatemi’s Motion Seeking Injunction
and Sanctions is dismissed for lack of subject matter jurisdiction. (ECF Nos. 457, 459.)

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IT IS SO ORDERED.

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Dated: November 6, 2012
__________________________________
MORRISON C. ENGLAND, JR
UNITED STATES DISTRICT JUDGE

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DEAC_Signature-END:

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