COVAD COMMUNICATIONS COMPANY v. REVONET INC

Filing 214

MEMORANDUM OPINION. Signed by Judge Colleen Kollar-Kotelly on April 3, 2014. (lcckk1)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

COVAD COMMUNICATIONS COMPANY,
Plaintiff,
v.

Civil Action No. 06-1892 (CKK)

REVONET, INC.,
Defendant.

MEMORANDUM OPINION
(April 3, 2014)
Presently before the Court is Plaintiff’s [210] Motion to Extend Deadline to Move to
Reopen Case. Upon consideration of the pleadings 1, the relevant legal authorities, and the record
as a whole, the Court DENIES Plaintiff’s [210] Motion to Extend Deadline to Move to Reopen
Case. Accordingly, this action is dismissed with prejudice in its entirety.
On August 24, 2010, Defendant Revonet, Inc. (“Revonet”) filed a [195] Notice of
Bankruptcy advising the Court that it had filed for Chapter 7 bankruptcy in the United States
Bankruptcy Court for the District of Connecticut.

In light of this filing, this action was

automatically stayed pursuant to 11 U.S.C. § 362(a). See Minute Order (Aug. 25, 2010). More
than two years later, in their November 11, 2013 [207] Joint Status Report, the parties advised
the Court that “the Bankruptcy Court docket report reflects that the case was closed on October

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Mot. of Pl. to Extend Deadline to Move to Reopen Case, ECF No. [210] (“Pl.’s Mot.”);
Mem. of Pl. in Supp. of Mot. to Extend Deadline to Move to Reopen Case, ECF No. [210-1]
(“Pl.’s Mem.”); Def.’s Opp’n Mot. to Extend Deadline to Reopen Case, ECF No. [211] (“Def.’s
Opp’n”); Reply Mem. of Pl. in Supp. of Mot. to Extend Deadline to Move to Reopen Case, ECF
No. [212] (“Pl.’s Reply”).

21, 2013, following the Chapter 7 Trustee’s October 17, 2013 submission of a Final Account,
Certification that the Estate has Been Fully Administered and Application to be Discharged.”
Upon receiving this Status Report, the Court ordered that the parties file a Supplemental
Joint Status Report “advising the Court (1) of the effect of the resolution of these bankruptcy
proceedings on the stay of this matter, including whether such stay is terminated, (2) whether the
resolution of the bankruptcy proceedings resolves the disputes at issue in this matter, and (3) if
the stay is terminated and the bankruptcy proceedings did not resolve this matter, how the parties
wish to proceed in this matter.” See Minute Order (Nov. 11, 2013). In the parties’ [208]
Supplemental Joint Status Report, the parties agreed that resolution of the bankruptcy
proceedings terminated the automatic stay of this matter. Defendant further argued that the
bankruptcy proceedings mooted any issues before this court, as the Chapter 7 liquidation
proceeding liquidated all of Revonet’s assets, leaving only a shell corporation with no employees
and no operations. Plaintiff did not directly dispute these statements but requested additional
time to consider whether the bankruptcy proceeding resolved all of the disputes and liability
issues in this matter.
On November 20, 2013, in light of the fact that neither party could presently identify any
live issue remaining in this matter after the conclusion the bankruptcy proceedings, this Court
issued an [209] Order dismissing this case without prejudice until January 15, 2014. The Court
further ordered that Plaintiff could move to reopen the case or extend this deadline prior to this
date should it conclude that some live issue remained in the case even after the resolution of the
bankruptcy proceedings. If Plaintiff failed to move to extend or reopen the case by this date,
however, the Court stated that the case would stand dismissed with prejudice.

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On January 15, 2014, Plaintiff filed the present [210] Motion to Extend Deadline to Move
to Reopen Case. Plaintiff requests that the Court extend the deadline by which Plaintiff must
move to reopen the case until September 15, 2014 in order to permit Plaintiff sufficient time to
ensure that Defendant has in fact ceased doing business and that no successors or third parties
face liability for the conduct at issue in this case. As evidence that Defendant has not in fact
ceased doing business, Plaintiff cites the following information: (1) Defendant has not filed a
certificate of cancellation or a certificate of dissolution with the State of Delaware, (2)
Defendant’s status with the State of Connecticut is listed as active, (3) on LinkedIn.com – a
website used for professional networking – Defendant’s CEO still identifies himself as CEO of
the corporation and 20 other individuals still identify Defendant as their current employer, and
(4) Defendant has continued to retain legal counsel in this case. See Pl.’s Mem. at 1; Pl.’s Reply
at 1. Plaintiff also argues that because of Defendant’s “nefarious” activity in other facets of this
case – the bankruptcy proceedings, the underlying substantive claims, and potential spoliation of
evidence during discovery – the Court should allow additional time for Plaintiff to investigate
Defendant’s status by holding this case in a dismissed without prejudice status. Pl.’s Mem. at 23.
Defendant opposes the request to suspend dismissal of this case with prejudice. In its
Opposition, Defendant contends that “[t]he fact that Revonet has ceased to do business is
conclusively established by the bankruptcy trustee’s final accounting in Revonet’s Chapter 7
liquidation proceeding. The trustee’s accounting shows that during the entire three years that
Revonet was in bankruptcy, it did not conduct any business or pay any employees.” Def.’s
Opp’n at 1. Revonet, according to Defendant, “is nothing more than a corporate shell that has no
employees and no operations.” Id. Because no evidence provided by Plaintiff contradicts this

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description, Defendant argues that this case should be dismissed with prejudice. To the extent
Plaintiff seeks to hold successors of Defendant or third parties liable for the conduct at issue,
Defendant argues that the proper course is to bring suit against those parties rather than holding
in abeyance claims that are no longer viable against Defendant. Id. at 2.
The Court agrees with Defendant that Plaintiff’s reasons for preserving this lawsuit are
unavailing. Plaintiff’s claims have been mooted by the bankruptcy proceedings. Plaintiff does
not contest Defendant’s citations to the bankruptcy trustee’s final accounting, and provides no
reason to doubt that Revonet (1) no longer has any assets, and (2) during the three years of
bankruptcy proceedings did not conduct any business or pay any employees. As support for the
proposition that Revonet has continued operations, Plaintiff offers as evidence the fact that
Revonet remains registered as a corporation with Connecticut and Delaware.

Yet these

registrations do not contradict Defendant’s characterization of Revonet as a shell corporation
with no assets, operations, or employees. Similarly, although Plaintiff points to LinkedIn.com
profiles of individuals who list Revonet as their employer, it has provided no evidence to
contradict the bankruptcy trustee’s report that Defendant did not pay any operating expenses
such as wages, salaries and rents during the course of its bankruptcy. Finally, the fact that
Defendant has retained legal counsel shows little, as a corporate defendant is barred from
proceeding pro se in federal court. See Rowland v. Cal. Men’s Colony, 506 U.S. 194, 201-02
(1993) (“It has been the law for the better part of two centuries . . . that a corporation may appear
in the federal courts only through licensed counsel.”). Moreover, the Court notes that any
continued operations by Revonet, in contradiction of the bankruptcy trustee’s final accounting,
would likely constitute fraud on the bankruptcy court.

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Plaintiff argues that it would be greatly prejudiced if this Court dismissed this case in its
entirety and it turns out that Revonet is continuing to operate. Pl.’s Reply at 2. But Plaintiff has
provided insufficient evidence for the theory it proffers. Plaintiff has had more than six months
since the close of the bankruptcy proceedings to find evidence of Revonet’s continued
operations. Yet it has turned up little in the way of persuasive evidence. Accordingly, the Court
is reluctant to grant Plaintiff another six months for a fishing expedition, particularly in waters
carefully trawled by the bankruptcy court. Indeed, the Court fears that granting Plaintiff’s
present request on such meager evidence would set a bad precedent, fostering additional requests
for extensions beyond September 2014 that would only prolong this already hoary litigation.
Accordingly, for the foregoing reasons, the Court DENIES Plaintiff’s [210] Motion to
Extend Deadline to Reopen Case. This case is DISMISSED WITH PREJUDICE in its entirety.
An appropriate Order accompanies this Memorandum Opinion.
_____/s/______________________
COLLEEN KOLLAR-KOTELLY
United States District Judge

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