St. Matthews Baptist Church of Livermore, Inc. v. Foundation Capital Resources, Inc.

Filing 58

ORDER DISMISSING CASE, ***Civil Case Terminated. Signed by Judge Maria-Elena James on 3/25/2015. (cdnS, COURT STAFF) (Filed on 3/25/2015)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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ST. MATTHEWS BAPTIST CHURCH OF
LIVERMORE, INC.,
Plaintiff,

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Case No. 13-cv-05765-MEJ
ORDER DISMISSING CASE

v.
FOUNDATION CAPITAL RESOURCES,
INC.,

United States District Court
Northern District of California

Defendant.
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INTRODUCTION
On February 6, 2015, the Court granted Schreiber & Schreiber Inc.’s Motion to Withdraw

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as Counsel of Record for Plaintiff St. Matthews Baptist Church of Livermore, Inc. Because

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corporations may not appear in federal court except by counsel, the Court granted St. Matthews 45

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days to find substitute counsel, but warned that the case would be dismissed if St. Matthews failed

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to file a substitution of counsel by March 23, 2015. For the reasons set forth below, the Court now

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DISMISSES this case WITHOUT PREJUDICE.

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BACKGROUND
The factual background of this case is set forth in the Court’s August 18, 2014 Order re:

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Motion to Dismiss and Motion to Expunge Lis Pendens. Dkt. No. 43. On January 15, 2015,

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Edwin C. Schreiber, counsel for St. Matthews, filed a Motion for Schreiber & Schreiberto

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Withdraw as Counsel of Record. Dkt. No. 55. Schreiber stated that St. Matthews had not paid

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attorney’s fees in over six months, and the unpaid expenses exceeded $40,000, making it difficult

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for their three-member law firm to manage. Schreiber Decl. ¶ 2, Dkt. No. 55. Schreiber also

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stated that St. Matthews refused to obtain a new attorney. Id. Schreiber pointed out that mail to

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St. Matthew’s last known address had been returned undelivered, but Federal Express packages to

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the same last known address were delivered. Id. St. Matthews did not respond to the motion or

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otherwise make an appearance.

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On February 6, 2015, the Court granted Schreiber & Schreiber’s motion, finding that St.
Matthew’s failure to pay attorney’s fees constituted good cause for withdrawal. Order re: Mot. by

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Pl.’s Counsel to Withdraw as Counsel Of Record, Dkt. No. 57. The Court also found that

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Schreiber & Schreiber (1) complied with the requirements of Civil Local Rule 11-5(a) and the

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California Rules of Professional Conduct in that it provided reasonable advance notice to St.

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Matthews and all the other parties that have appeared in this case of its intention to withdraw as

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counsel of record, and (2) took the necessary steps to avoid reasonably foreseeable prejudice to the

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rights of St. Matthews by giving due notice of its intent to withdraw and by allowing St. Matthews

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United States District Court
Northern District of California

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time to obtain substitute counsel. Id. As St. Matthews is a corporate client, the Court granted the

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motion on the condition that Schreiber & Schreiber remain counsel of record for forwarding

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purposes until St. Matthews retains alternate counsel as provided by Civil Local Rule 11-5(b). Id.

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The Court ordered St. Matthews to file substitution of counsel by no later than March 23, 2015, or

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the case would be dismissed without prejudice. Id. No substitution of counsel has been filed, and

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St. Matthews has not otherwise made an appearance since Schreiber & Schreiber’s withdrawal.

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LEGAL STANDARD
As noted by the Supreme Court, “[i]t has been the law for the better part of two centuries,

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for example, that a corporation may appear in the federal courts only through licensed counsel.”

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Rowland v. Cal. Men’s Colony, Unit II Men’s Advisory Council, 506 U.S. 194, 201-02 (1993)

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(citation and internal quotations omitted). This well-established rule applies equally to

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corporations or to associations. See In re Highley, 459 F.2d 554, 555 (9th Cir. 1972) ( “A

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corporation can appear in a court proceeding only through an attorney at law.”); United States v.

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High Country Broad Co., Inc., 3 F.3d 1244, 1245 (9th Cir. 1993) (“A corporation may appear in

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federal court only through licensed counsel.”). This same venerable common law rule exists in the

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State of California. “[A] corporation, unlike a natural person, cannot represent itself before courts

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of record in propria persona, nor can it represent itself through a corporate officer, director or other

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employee who is not an attorney. It must be represented by licensed counsel in proceedings
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before courts of record.” CLD Constr. Inc. v. City of San Ramon, 120 Cal. App. 4th 1141, 1145

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(2004).

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DISCUSSION
Despite the Court’s warning that this case would be dismissed, St. Matthews has not filed a

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substitution of counsel and has not otherwise appeared in this case since the Court’s February 6

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Order. Civil Local Rule 3-9(b) provides that “[a] corporation, unincorporated association,

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partnership or other such entity may appear only through a member of the bar of this court.”

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Accordingly, dismissal is appropriate where a corporate plaintiff is not represented by counsel.

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McGowan v. Boek, 402 Fed. App’x. 287, 288 (9th Cir. 2010) (collecting cases and affirming

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United States District Court
Northern District of California

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dismissal of case because corporate plaintiff was not represented by counsel).
At the same time, the Court also has the inherent power to dismiss a case sua sponte for

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lack of prosecution. Henderson v. Duncan, 779 F.2d 1421, 1423 (9th Cir. 1986) (citing Ash v.

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Cvetkov, 739 F.2d 493, 496 (9th Cir. 1984) (citing Link v. Wabash R.R., 370 U.S. 626, 630

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(1962))). A dismissal pursuant to Federal Rule of Civil Procedure 41(b) is committed to the sound

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discretion of the district court. Link, 370 U.S. at 633; see also Fed. R. Civ. P. 41 advisory

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committee’s note (no substantive changes in 1963 amendment or subsequent amendments to Rule

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41(b) for dismissal for failure to prosecute). Before dismissing a case for failure to prosecute, a

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court should weigh the following factors: “(1) the public’s interest in expeditious resolution of

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litigation; (2) the court’s need to manage its docket; (3) the risk of prejudice to the defendants; (4)

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the public policy favoring disposition of cases on their merits[;] and (5) the availability of less

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drastic sanctions.” Henderson, 779 F.2d at 1423 (citations omitted).

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Here, the Court finds that the Henderson factors support dismissal. First, “the public’s

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interest in expeditious resolution of litigation always favors dismissal.” Yourish v. Cal. Amplifier,

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191 F.3d 983, 990 (9th Cir. 1999). St. Matthews has delayed adjudication of the claims in this

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case by failing to file a substitution of counsel or otherwise responding to the Court’s February 6

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Order. Further, the discovery deadline in this case was March 17, with a deadline of April 16 to

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file dispositive motions. Dkt. No. 53. Although the Court vacated these deadlines to permit St.

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Matthews time to obtain substitute counsel, St. Matthews failed to respond, thereby preventing the
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expeditious resolution of this case.

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Second, the Court’s need to manage its docket also weighs in favor of dismissal. Non-

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compliance with procedural rules and the Court’s orders wastes “valuable time that [the Court]

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could have devoted to other . . . criminal and civil cases on its docket.” Ferdik v. Bonzelet, 963

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F.2d 1258, 1261 (9th Cir. 1992).
As for the third Henderson factor, the mere pendency of a lawsuit cannot constitute

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sufficient prejudice to require dismissal. Yourish, 191 F.3d at 991. However, “prejudice . . . may .

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. . consist of costs or burdens of litigation.” In re Phenylpropanolamine (PPA) Prods. Liab. Litig.

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(“In re PPA”), 460 F.3d 1217, 1228 (9th Cir. 2006). Moreover, “a presumption of prejudice arises

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from a plaintiff’s unexplained failure to prosecute.” Laurino v. Syringa Gen. Hosp., 279 F.3d 750,

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United States District Court
Northern District of California

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753 (9th Cir. 2002). A plaintiff has the burden of demonstrating a non-frivolous reason for failing

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to meet a court deadline. Id.; see also Yourish, 191 F.3d at 991. Here, St. Matthews failed to

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respond to the Court’s previous Order, offered no explanation for the failure to file a substitution

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of counsel, and did not request a further extension of time to locate counsel. Therefore, the Court

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concludes that the third Henderson factor also supports dismissal.

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The fourth Henderson factor, that public policy favors disposition of cases on their merits,

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normally weighs strongly against dismissal. See, e.g., Hernandez v. City of El Monte, 138 F.3d

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393, 399 (9th Cir. 1998). “At the same time, a case that is stalled or unreasonably delayed by a

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party’s failure to comply with deadlines . . . cannot move forward toward resolution on the

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merits.” In re PPA, 460 F.3d at 1228. The Ninth Circuit has “recognized that this factor ‘lends

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little support’ to a party whose responsibility it is to move a case toward disposition on the merits

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but whose conduct impedes progress in that direction.” Id. (quoting In re Exxon Valdez, 102 F.3d

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429, 433 (9th Cir. 1996)). Thus, if the fourth Henderson factor weighs against dismissal here, it

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does so very weakly.

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Finally, as to the availability of less drastic sanctions, St. Matthews cannot appear without

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counsel. While the Court has already provided St. Matthews additional time to retain substitute

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counsel, St. Matthews failed to do so and is therefore unable to prosecute this case. “Though there

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are a wide variety of sanctions short of dismissal available, the district court need not exhaust
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them all before finally dismissing a case.” Nevijel v. N. Coast Life Ins. Co., 651 F.2d 671, 674

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(9th Cir. 1981). Further, the February 6 Order warned St. Matthews of the risk of dismissal; thus

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it cannot maintain that the Court has failed in its “obligation to warn the plaintiff that dismissal is

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imminent.” Oliva v. Sullivan, 958 F.2d 272, 274 (9th Cir. 1992). Accordingly, the Court finds

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that the fifth factor also weighs in favor of dismissal.
CONCLUSION

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Based on the analysis above, the Court finds that dismissal is appropriate because (1) St.

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Matthews is not represented by counsel, and (2) at least four of the five Henderson factors weigh

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in favor of dismissal. However, a less drastic alternative is to dismiss without prejudice. See
Ferdik, 963 F.2d at 1262. Dismissal will minimize prejudice to Defendant Foundation, but

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United States District Court
Northern District of California

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dismissing the case without prejudice will preserve the ability of St. Matthews to seek relief.

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Thus, “[i]n an abundance—perhaps overabundance—of caution,” the Court finds that dismissal

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without prejudice is appropriate. Faulkner v. ADT Sec. Servs., Inc., 706 F.3d 1017, 1021 (9th Cir.

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2013) (remanding to the district court in order to consider whether dismissal should have been

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without prejudice).

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Accordingly, this case is DISMISSED WITHOUT PREJUDICE. The Clerk of Court shall
close the file.
IT IS SO ORDERED.

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Dated: March 25, 2015
______________________________________
MARIA-ELENA JAMES
United States Magistrate Judge

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