Tung Tai Group v. Oblon et al

Filing 60

ORDER by Judge JEREMY FOGEL denying 45 Motion to Vacate and denying 50 Motion to Vacate. (jflc3, COURT STAFF) (Filed on 7/6/2010)

Tung Tai Group v. Oblon et al

Doc. 60

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**E-Filed 7/6/10**

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION TUNG TAI GROUP, a California corporation, Plaintiff and Counterclaim Defendant, v. AARON OBLON, DEVONSHIRE METALS CORP., HASMUKH D. PATEL, and DOES 1-500, Defendants and Counterclaimants. Case Number C 08-5370 JF ORDER1 DENYING DEFENDANTS' MOTIONS TO VACATE ORDER GRANTING SUMMARY JUDGMENT [re: doc. nos. 45 and 50]

Defendants Aaron Oblon ("Oblon") and Hasmukh D. Patel ("Patel") (collectively, the "Moving Defendants") move to vacate this Court's order of April 12, 2010 granting summary judgment in favor of Plaintiff Tung Tai Group ("Plaintiff"). Plaintiff opposes the motions. The Court has considered the moving and responding papers, declaration and exhibits, and the oral arguments of Oblon, Patel, and Plaintiff's counsel presented at the hearing on June 18, 2010. For the reasons discussed below, the motions will be denied. //

This disposition is not designated for publication in the official reports.

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I. BACKGROUND The instant action arises out of a series of transactions between Plaintiff and Defendants Devonshire Metals Corporation ("Devonshire Metals"), Oblon, and Patel (collectively, "Defendants"). Plaintiff is a buyer, seller, and recycler of scrap materials, including metal. (Chen Decl. in Support of Plaintiff's MSJ ("Chen Decl.") ¶ 1.) Between February and July 2008, Plaintiff and Defendants engaged in a series of contracts in which Plaintiff agreed to purchase steel scrap from Defendants. (Chen Decl. ¶ 2-11.) Plaintiff alleges that Defendants failed to deliver the materials despite receiving payments for them. On September 9, 2008, Plaintiff filed suit, alleging that Defendants were liable for breach of contract, fraud, and conversion. During the same month, Devonshire Metals' operations suffered serious damage as a result of Hurricane Ike. (Oblon Decl. ¶ 23.) As a result of that damage, Devonshire Metals filed for Chapter 7 bankruptcy protection. (Id. at ¶ 25). Although Plaintiff received notice as a debtor presumably with respect to Defendants' counterclaims in the instant action, it did not make a claim in the bankruptcy proceedings. (Id.) Defendants retained the law firm of Manatt, Phelps & Phillips, LLP ("Manatt") to represent them in the instant action and retained separate counsel for Devonshire Metals in the bankruptcy matter. (See Birkheimer Decl. in Support of Plaintiff's Opp'n to Mot. to Vacate ("Birkheimer Decl."), Ex. A.) In May 2009, Manatt moved to withdraw as Moving Defendants' counsel of record, citing "irreconcilable differences".2 (See Docket No. 26.) The Court granted that motion on May 26, 2009, but directed Plaintiff to continue to serve papers on Manatt until Moving Defendants either obtained new counsel or filed notice(s) to appear pro se. At a case management conference on July 24, 2009, Manatt appeared and represented that it had been unable to communicate with Defendants. The Court then directed Manatt to provide Moving Defendants' most recent contact information to Plaintiff. Later that day, Manatt emailed Plaintiff's counsel, providing the required information, including active email addresses for Oblon and Patel.

At the hearing on the instant motions, Oblon represented that the relationship with Manatt broke down because of a dispute over legal fees. 2
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(Birkheimer Decl. Ex. A.) Manatt also stated that "I believe you already have contact information for Devonshire's BK counsel [bankruptcy counsel] . . . ." (Id.) Plaintiff proceeded with the instant action. On September 1, 2009, Plaintiff served Oblon with its first set of requests for admissions ("RFAs"), using at the last known address provided by Manatt.3 (Birkheimer Decl. ¶ 4 and Ex. B.) Oblon did not respond to the RFAs within thirty days. On February 12, 2010, Plaintiff moved for summary judgment, again serving Moving Defendants at their last known addresses.4 (Docket No. 39.) A hearing on the motion was set for April 16, 2010. Oblon acknowledged having received an email from Plaintiff's counsel at about that time. After receiving no opposition to the motion for summary judgment from either Oblon or Patel, the Court vacated the scheduled hearing and granted the motion in an order dated April 12, 2010. On April 26, 2010, Oblon moved to vacate that order. Patel filed a similar motion on May 12, 2010. II. DEFENDANTS' MOTIONS TO VACATE The instant motions apparently are brought under Fed. R. Civ. P. 60, which governs relief from a judgment or order. Rule 60(b) provides that "a court may relieve a party or its legal representative from a final judgment, order, or proceeding" for any of several reasons, including "mistake, inadvertence, surprise, or excusable neglect." Fed. R. Civ. P. 60(b)(1). Moving Defendants claim that their failure to oppose Plaintiff's motion for summary judgment was the result of excusable neglect. Plaintiff contends that Defendants must show "`extraordinary circumstances which prevented or rendered [them] unable to [participate in their case].'" Cmty. Dental Servs. v. Tani, 282 F.3d 1164, 1168 (9th Cir. 2002) (quoting Martella v. Marine Cooks & Stewards Union, 448 F.2d 729, 730 (9th Cir. 1971) (per curiam)). However, the "extraordinary circumstances" test applies only under Rule 60(b)(6). Under Rule 60(b)(1), excusable neglect "`encompass[es] situations in which the failure to comply with a . . . deadline is attributable to

At the hearing on the instant motions, Plaintiff's counsel indicated that he also transmitted the RFAs to Oblon's email address. Plaintiff's counsel also indicated that he transmitted Plaintiff's summary judgment papers by email to Oblon and Patel. 3
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negligence,' [citation], and includes `omissions caused by carelessness, [citation].'" Lemoge v. United States, 587 F.3d 1188, 1192 (9th Cir. 2009) (quoting Pioneer Inv. Servs. Co. v. Brunswick Assocs., 507 U.S. 380, 394, 388 (1993)). "To determine when neglect is excusable, [courts] conduct the equitable analysis specified in Pioneer [507 U.S. 380] by examining `at least four factors: (1) the danger of prejudice to the opposing party; (2) the length of the delay and its potential impact on the proceedings; (3) the reason for the delay; and (4) whether the movant acted in good faith.'" Lemoge, 587 F.3d at 1192 (quoting Bateman v. U.S. Postal Serv., 231 F.3d 1220, 1223-24 (9th Cir. 2000)). "The determination of whether neglect is excusable `is at bottom an equitable one, taking account of all relevant circumstances surrounding the party's omission.'" Lemoge, 587 F.3d at 1192 (quoting Pioneer, 507 U.S. at 395). A. Prejudice to the opposing party

"Prejudice requires greater harm than simply that relief would delay resolution of the case." Lemoge, 587 F.3d at 1196 (citing TCI Group Life Ins. Plan v. Knoebber, 244 F.3d 691, 701 (9th Cir. 2001)). Plaintiff does not argue that granting the instant motions would cause it undue prejudice. B. Length of the delay

Fed. R. Civ. P 60(c) requires that a Rule 60(b)(1) motion be made "within a reasonable time" and "no more than a year after the entry of the judgment or order or the date of the proceeding." "`What constitutes `reasonable time' depends upon the facts of each case, taking into consideration the interest in finality, the reason for delay, the practical ability of the litigant to learn earlier of the grounds relied upon, and prejudice to the other parties.'" Lemoge, 587 F.3d at 1196-1197 (quoting Ashford v. Steuart, 657 F.2d 1053, 1055 (9th Cir. 1981) (per curiam)). Here, Oblon moved to vacate the order granting summary judgment within fourteen days, and Patel filed his motion to vacate within thirty days. Assuming that Moving Defendants could show excusable neglect, such minimal delays would be reasonable. // // 4
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C.

Reason for the delay

Analysis of the reason for a delay includes "whether it was within the reasonable control of the movant." Pioneer, 507 U.S. at 395. Patel claims that he was unable to participate in this action because he was in Gujarat, India between September 21, 2009 and April 2, 2010 and had no knowledge of "the court proceedings". (Patel Decl. ¶¶ 4-5.) However, though he may not have known specifically of Plaintiff's motion for summary judgment, Patel obviously knew that this action was pending, as he retained Manatt to represent him. He does not provide any explanation as to why he left the country for such a lengthy period of time without making provisions for receiving communications regarding the action. See Feeney v. AT&E, Inc., 472 F.3d 560, 563 (8th Cir. 2006) (concluding that a defendant who "[failed] to make adequate plans to receive his mail for two months, at a time when he was a defendant in a pending legal proceeding . . . . was careless to the point of indifference," and that such indifference could not serve as the basis for "excusable neglect" pursuant to Rule 60(b)(1)). Moreover, even accepting his factual assertions, Patel returned from India on April 2, 2009. The hearing on Plaintiff's motion for summary judgment was scheduled for April 16, 2009. Patel does not explain why at a minimum he did not request additional time to respond to the motion. Oblon asserts that he was unable to participate in this action because of the combined effects of an injury and the medication that was prescribed as a result of that injury. (Oblon Decl. ¶¶ 4-12). Oblon states that he was effectively bedridden, (id. at ¶ 6), that he received physical therapy two to three times per week, (id. at ¶ 7), that he was required to use a back brace whenever he was standing, (id.), that he received a number of injections in his back to reduce the pain, (id. at ¶ 10), and that he was prescribed a number of medications that caused the loss of concentration, nausea, restlessness, lack of sleep, irritability, blurry vision, and constipation, (id. at ¶ 9). While his medical condition obviously was serious, Oblon does not claim that he was unaware of the motion for summary judgment, nor does he explain why at a minimum he did not inform the Court of his situation. As noted previously, Oblon acknowledged at the hearing that he received an email from Plaintiff's counsel in April 2010. Plaintiff's counsel represented ­ and Oblon did not dispute ­ that the RFAs and summary judgment papers also were emailed to 5
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Moving Defendants at the email addresses provided by Manatt. Oblon does not explain how it is that he could receive the email from counsel in April 2010 but not other legal papers sent to the same address. Oblon does not assert that his ability to access his email or regular mail was limited by his medical condition or other factors outside of his reasonable control. To the contrary, Oblon's ability to travel to physical therapy sessions suggests that he was able to check email and draft letters even while he was suffering from his injury. Moving Defendants also contend that they believed that the instant case was stayed as a result of Devonshire Metals' bankruptcy proceeding. Such a belief was unreasonable. Devonshire Metals entered bankruptcy in September 2009. Defendants retained separate counsel for this action presumably because they knew that they needed to do so notwithstanding the bankruptcy of the corporation. Manatt withdrew from representing Defendants not because the instant case had been stayed, but apparently because of a dispute over the legal fees. Finally, Moving Defendants assert that service of the RFAs and the motion for summary judgment was improper. While Plaintiff did mail papers to the last known address for Devonshire Metals, Oblon and Patel made no effort to comply with Civil L.R. 3-11, which requires a party to inform the Court and the other parties if the party's address changes while the action is pending. Nor do Moving Defendants explain how they did not receive or why they did not respond to the email versions of Plaintiff's moving papers. D. Lack of bad faith

Though Oblon and Patel obviously could have handled this matter more effectively, there is no evidence that their actions are the result of "deviousness or willfulness". See Lemoge, 587 F.3d at 1197 (quoting Laurino v. Syringa Gen. Hosp., 279 F.3d 750, 753 (9th Cir. 2002)). III. CONCLUSION While the delay was not unreasonable and there is no evidence of undue prejudice or bad faith, Moving Defendants have failed to show that their neglect was excusable under Rule 60(b)(1). It is clear that they knew of the instant action and that it was proceeding despite the bankruptcy of Devonshire Metals. They do not offer a credible explanation as to why they did not receive emails from Plaintiff containing the RFAs and the summary judgment papers or why 6
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they did not inform the Court of their change of address or circumstances. Accordingly, the instant motions will be denied.5

IT IS SO ORDERED. DATED: 7/6/10 ___________________________ JEREMY FOGEL United States District Judge

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Defendants counterclaimed for breach of contract, breach of the covenant of good faith and fair dealing, and fraud in connection with the same transactions identified in Plaintiff's motion for summary judgment. The grant of Plaintiff's motion for summary judgment as to these transactions precludes Defendants' counterclaims. Accordingly, Defendants' counterclaims will be dismissed. 7
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