Heartland Memorial Hospital LLC v. Gupta MD et al

Filing 22

FINAL ORDER ON BANKRUPTCY APPEAL denying Trustee's appeal. Signed by Judge Jon E DeGuilio on 7/6/11. (smp)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
SOUTH BEND DIVISION
HEARTLAND MEMORIAL
HOSPITAL LLC,
Plaintiff,
v.
VIJAY K GUPTA MD, et al.,
Defendants.

)
)
)
)
)
)
)
)
)
)

Case No. 3:10-CV-396 JD

OPINION AND ORDER
On September 20, 2010, Plaintiff, Heartland Memorial Hospital, LLC (“Heartland”), by
and through Trustee, David Abrams (“Trustee”), filed an appeal from the dismissal of an
adversary proceeding for failure to prosecute in the United States Bankruptcy Court. See DE 1.
On October 7, 2010, the Trustee filed a opening brief. See DE 5. On October 21, 2010,
Defendant Accelerated Health Systems filed a response. See DE 6. On October 22, 2010,
Defendants Harold E. Collins, Collins & Collins, Cheng H. Lin, Theodore Christou, Phillip
Guastella, Brian French, Steven French, George Sreckovic, and James Gianfrancisco filed a
response. See DE 9; DE 11. On the same day, Defendants Laura Smitley and Ray Halum filed a
response. See DE 10. Also, on October 22, 2010, Defendant Vijay K Gupta filed a response.
See DE 12. On November 4, 2010, the Trustee filed a reply. See DE 16.
I. Procedural History
The following procedural history of this case is taken from the parties’ briefs and the
documents filed as part of the Trustee’s appeal. On May 16, 2007, the adversary proceeding was
filed in the United States Bankruptcy Court for the Northern District of Indiana by the attorneys
1

representing Heartland in a related Chapter 11 case. See DE 2-1; 2-128 at 12; DE 5 at 6. The
adversary proceeding implicated fifty-four defendants and sought a large monetary recovery, on
account of allegedly fraudulent transfers. See DE 2-1.
A year-and-a-half later, on November 19, 2008, the Bankruptcy Court confirmed a plan
for liquidizing and reorganizing Heartland in the Chapter 11 case. See DE 2-124; DE 2-126; DE
2-127; DE 5 at 7. Contemporaneously, the Bankruptcy Court also approved an accompanying
disclosure statement. See DE 2-123; DE 2-125; DE 5 at 7. Both the plan and the disclosure
statement explained that this adversary proceeding would be transferred to a liquidating trust and
that the Trustee would, thereafter, assume litigation control over the adversary proceeding. See
DE 2-123 at 38; DE 2-124 at 8; DE 5 at 7-8. A little over a month later, on December 24, 2008,
the Trustee’s counsel entered an appearance in this adversary proceeding. See DE 2-84; DE 285; DE 2-128 at 28. Then, for fourteen months, the adversary proceeding lay dormant. See DE
2-128 at 28-29.
On February 18, 2010, noting the lack of activity, the Bankruptcy Court issued an order
to show cause why the adversary proceeding should not be dismissed for failure to prosecute,
citing N.D. Ind. L.B.R. B-7041-1. See DE 2-128 at 29. On March 12, 2010, nearly three years
after the adversary proceeding was originally filed, the Trustee responded to the order to show
cause. See DE 2-95; DE 2-128 at 29. Therein, the Trustee provided the following explanation
for his inaction.
8. Upon confirmation, the Plan allocated certain funds to pay the initial legal fees and
costs associated with the prosecution of both the then existing lawsuits, such as this
adversary proceeding, as well as the ligation which the Liquidating Trustee intended
to bring after confirmation. While these initial funds were critical, they are
insufficient to meet all of Liquidating Trustee’s litigation needs. The Plan
contemplated that a significant portion of the legal fees and costs would be paid from
2

the projected recoveries from the various legal proceedings.
9. Unfortunately, the recoveries from these other matters have not been as significant
or as timely as the undersigned originally believed. The available financial resources
have been used by the Liquidating Trustee to commence the legal proceedings,
undertake the necessary steps to protect the Debtor’s existing financial records, and
locate records in the possession of other parties.
10. The Liquidating Trustee has been spending both time and money on those maters
that would allow the Trustee to raise monies quickly. As a result, the Liquidating
Trustee, and his counsel, have not advanced this adversary proceeding forward as
quickly as they had hoped.
11. However, the Liquidating Trustee is now in a better position to advance this
adversary proceeding.
See DE 2-95 at 2-3. The Trustee then indicated that he would soon file motions for default
against the six defendants who had failed to answer and that he would serve written discovery
requests on the remaining defendants “as soon as possible”. See DE 2-95 at 2-3.
On May 20, 2010, the Bankruptcy Court issued an order dismissing the adversary
proceeding for failure to prosecute, pursuant to Fed. R. Civ. P. 41 and N.D. Ind. L.B.R. B-70411. See DE 2-108; DE 2-128 at 30. Noting the Trustee’s explanations and the applicable law for
dismissal under Rule 41, the Bankruptcy Court held, in relevant part, as follows,
The court finds a clear record of delay. Once the court granted the plaintiff’s request
in December 2007 for a continuance of all the deadlines, conferences and hearings
scheduled in the case, activity in this case almost completely halted. Although
Answers were filed, no discovery was initiated and no progress was demonstrated
by the plaintiff. The court finds that this case exhibits a long-term pattern of
inactivity. . . .
In short, this case deliberately was not advanced because the Liquidating Trustee
thought he could raise more funds quickly in more lucrative cases. This is clearly an
admission that, by prioritizing other cases, this adversary case remained dormant.
The decision not to act in this case was intentional. . . .
This decision left the defendants, medical professionals, vulnerable. . . . The court
notes that its continuance of the plaintiff’s deadlines in this case, granted on
3

December 11, 2007, was never meant to be an open-ended reason to stop prosecution
of the case. . . .
In this case, the court concludes that there is good cause to dismiss this case because
of the excessive, intentional delay in prosecution, the prejudice to the 54 defendants,
and the lack of any demonstration of potential merit to the plaintiff’s claim.
See DE 2-108 at 4-6.
On June 3, 2010, the Trustee filed a motion to reconsider the Bankruptcy Court’s
dismissal order, pursuant to Fed. R. Civ. P. 59(e). See DE 2-109; DE 2-128 at 30. Therein, the
Trustee argued that dismissal of the adversary proceeding was a disproportionate sanction in
relation to the Trustee’s inaction. See DE 2-109 at 6. Further, the Trustee argued that the
Court’s warning was rendered meaningless on account of the Court’s failure to consider the
Trustee’s subsequent efforts to begin discovery shortly after the show cause order was issued.
See DE 2-109 at 5.
On July 22, 2010, the Bankruptcy Court issued an order denying the motion for
reconsideration. See DE 2-116; DE 2-128 at 31. In regards to the Trustee’s former argument,
the Bankruptcy Court pointed out the Trustee’s failure to present new facts or point out errors of
law that would warrant reconsideration of the Bankruptcy Court’s decision to dismiss. See DE
2-116 at 3-4 (noting the standard for reconsideration under Rule 59(e)). In regards to the
Trustee’s latter argument, the Bankruptcy Court noted “[the Trustee’s issuance of written
discovery requests and filing of motions for default] may have been attempts to cure the inaction
and to move the case forward, but they were not explanations of the plaintiff’s failure to
prosecute.” See DE 2-116 at 4. Responding to both arguments, the Bankruptcy Court
concluded, as follows:
Although the Trustee tries to disassociate himself from the delays of plaintiff’s
4

previous counsel, he does not deny the clear record of his own (or his counsel’s)
delay in prosecuting this adversary proceeding and cannot deny the earlier delays
before he was appointed Trustee. He claims he met all the court’s deadlines, but is
unwilling to acknowledge his failure to comply with the deadline set forth in this
court’s Local Bankruptcy Rule B-7041-1.
See DE 2-116 at 4-5. Thereafter, the Trustee appealed both of the Bankruptcy Court orders to
this Court.1
II. Appeal from Bankruptcy Court Dismissal
A. Applicable Law
District courts possess the inherent authority to dismiss a case sua sponte for failure to
prosecute. Williams v. Chi. Bd. of Educ., 155 F.3d 853, 857 (7th Cir. 1998); Bluestein & Co. v.
Hoffman, 68 F.3d 1022, 1025 (7th Cir. 1994); Dickerson v. Bd. of Educ. of Ford Heights Ill., 32
F.3d 1114, 1116 (7th Cir. 1994); GCIU Emp’r Ret. Fund v. Chi. Tribune Co., 8 F.3d 1195, 1199
(7th Cir. 1993); Link v. Wabash R.R. Co., 370 U.S. 626, 629-31 (1962). Bankruptcy courts
possess the same authority under Bankruptcy Rule 7041, which incorporates Fed. R. Civ. P. 41
into adversary bankruptcy proceedings. Fed. R. Bankr. 7041; Pyramid Energy, Ltd. v. Heyl &
Patterson, Inc., 869 F.2d 1058, 1060 (7th Cir. 1989). Courts have the power to invoke this
sanction in order “to achieve the orderly and expeditious disposition of cases” or to deter
litigants from engaging in dilatory behavior. Williams, 155 F.3d at 857; Washington v. Walker,
734 F.2d 1237, 1239 (7th Cir. 1984); Link, 370 U.S. at 629-31.
1

The Court notes that, although the Trustee states that he is appealing both orders, the Trustee does not
substantively articulate a legal or procedural error within the Bankruptcy Court’s order denying reconsideration. As
such, this Court considers the Trustee to be primarily challenging the Bankruptcy Court’s dismissal order. Further,
the Court considers the Trustee to be only appealing the reconsideration order to the extent that the reconsideration
order affirms the conclusions made in the prior dismissal order and to the extent that the reconsideration order
represents a final, appealable order of the Bankruptcy Court. Therefore, because the Trustee does not raise a specific
challenge to the reconsideration order, this Court will not substantively analyze whether the Bankruptcy Court
properly applied Rule 59(e) in denying reconsideration. Rather, the Court will exclusively focus on whether the
Bankruptcy Court’s dismissal order was free of legal error and did not amount to an abuse of discretion.

5

In exercising this authority, however, courts must “perpetually balance the competing
interests of keeping a manageable docket against deciding cases on their merits.” Bluestein &
Co., 68 F.3d at 1025; GCIU Emp’r Ret. Fund, 8 F.3d at 1199. Indeed, because a dismissal with
prejudice is a harsh sanction, courts are cautioned that it should only be employed in extreme
situations, when there is a clear record of delay or contumacious conduct or when other less
drastic sanctions have proven unavailing. Williams, 155 F.3d at 857; Bluestein & Co., 68 F.3d at
1025; GCIU Emp’r Ret. Fund, 8 F.3d at 1199; Pyramid Energy, Ltd., 869 F.2d at 1061.
Nevertheless, appellate review of a dismissal under Fed. R. Civ. P. 41 is highly
deferential; and this Court’s review is, necessarily, limited to the narrow, abuse-of-discretion
standard. Aura Lamp & Lighting, Inc. v. Int’l Trading Corp., 325 F.3d 903, 907 (7th Cir. 2003);
Moffitt v. Ill. State Bd. of Educ., 236 F.3d 868, 872 (7th Cir. 2001); Williams, 155 F.3d at 857;
Dickerson, 32 F.3d at 1116; Bluestein & Co., 68 F.3d at 1025; Ball v. City of Chi., 2 F.3d 752,
760 (7th Cir. 1993); GCIU Emp’r Ret. Fund, 8 F.3d at 1199; Lowe v. City of E. Chi., Ind., 897
F.2d 272, 274 (7th Cir. 1990); Pyramid Energy, Ltd., 869 F.2d at 1061; Washington, 734 F.2d at
1240.
Given the variability of circumstances from case to case, the fact that the district
judge will have acquired a better feel than we appellate judges can for the attitudes
of the litigants and lawyers in the district court, the judge’s greater familiarity with
his own calendar, and the inherently judgmental character of managerial
decision-making, appellate review of a decision to dismiss a suit for failure to
prosecute should be deferential.
Ball, 2 F.3d at 755.
Applying the abuse of discretion standard, a judge is presumed to have acted reasonably,
and reversal is warranted only if it is plain that dismissal was a mistake or that the judge did not
consider factors essential to the exercise of a sound discretion. Moffitt, 236 F.3d at 873; Ball, 2
6

F.3d at 755. So long as the dismissal was not tainted by a legal error or the failure to consider an
essential factor, the Court will conclude that reversal is warranted only when the decision to
dismiss “strikes [the Court] as fundamentally wrong” or it is clear that “no reasonable person
could concur in the trial court’s [decision to dismiss]”. Aura Lamp & Lighting, Inc., 325 F.3d at
907-08; Moffitt, 236 F.3d at 873; Williams, 155 F.3d at 857 (“[t]he abuse of discretion standard
means something more than our belief that we would have acted differently if placed in the
circumstance confronting the district judge”); Bluestein & Co., 68 F.3d at 1025; GCIU Emp’r
Ret. Fund, 8 F.3d at 1199; Pyramid Energy, Ltd., 869 F.2d at 1061.
B. Analysis
The Trustee’s appeal of the Bankruptcy Court’s dismissal consists of three challenges.
First, the Trustee asserts that the Bankruptcy Court did not offer sufficient warning before
dismissing the case for failure to prosecute. Second, the Trustee contends that the Bankruptcy
Court did not allow the Trustee sufficient opportunity to “cure” the admitted period of extended
inactivity. Third, the Trustee argues that the Bankruptcy Court did not properly apply the
discretionary factors for dismissal that are articulated in Ball. As described in detail below, the
Court is not persuaded by the Trustee’s arguments and concludes that the Bankruptcy Court’s
dismissal was free of legal error and did not amount to an abuse of discretion.
1. The Bankruptcy Court provided sufficient warning prior to dismissal.
To the extent that the Trustee argues that the Bankruptcy Court failed to offer any
warning prior to dismissal, the argument is unavailing for two reasons. First, providing an
explicit warning in advance of dismissal, though advisable in most circumstances, is not required
by a judge in every case. Link, 370 U.S. at 633. See Moffitt, 184 F.R.D. at 303 (noting that

7

warnings are not necessary when it is clear that counsel would have expected his action or
inaction would be met with dismissal). See also Williams, 155 F.3d at 857 n.4; Fischer v.
Cingular Wireless, 446 F.3d 663, 665 (7th Cir. 2006) (recognizing the variability between cases
and a judge’s need to appropriately sanction dilatory tactics and, consequently, tempering the
holding in Ball, 2 F.3d at 755, that a judge “must” provide a warning to plaintiff’s counsel before
dismissing a case). Second, even though the Bankruptcy Court was not required to provide an
explicit warning prior to dismissal, the Bankruptcy Court did offer sufficient warning to the
Trustee in the form of a show cause order. See e.g. Swarm v. Siemens Bus. Commc’n Sys., 9 Fed.
Appx. 512, 515 (7th Cir. 2001) (unpublished opinion) (noting that a plaintiff received “due
warning” that failure to advance her case would be fatal via a show cause order).
2. The Bankruptcy Court was not required to allow the Trustee an opportunity to
“cure” his prior failure to advance the adversary proceeding.
The Trustee’s related argument, that the Bankruptcy Court’s warning was rendered
meaningless by the Bankruptcy Court’s failure to consider the Trustee’s subsequent efforts to
cure his prior, fourteen-month delay, is similarly unpersuasive. Notably, the Trustee cites no
relevant case law wherein a court was required to first allow a plaintiff an opportunity to correct
its prior delay before dismissing a case for failure to prosecute. Indeed, the Seventh Circuit has
held that the opposite is true, noting that such a rule would unreasonably reward litigants who
ignore the court’s schedule and would prevent courts from effectively managing their dockets.
See Fischer v. Cingular Wireless, 446 F.3d 663, 665 (7th Cir. 2006).
Were district courts required to warn litigants before dismissing a case, we would in
effect be granting each litigant one opportunity to disregard the court’s schedule
without fear of penalty regardless of the harm done to other litigants. Such a rule
would impermissibly burden the district courts in their efforts to manage their
dockets.
8

Id.
Further, a review of the Bankruptcy Court’s orders reveals that the Bankruptcy Court did
not disregard the Trustee’s subsequent actions, as the Trustee suggests, but, rather, considered
the Trustee’s belated efforts and found them to be too-little, too-late. In the Trustee’s response
to the order to show cause, the Trustee admitted that he had not advanced this particular
adversary proceeding, due to his prioritizing other adversary proceedings ahead of it and due to
the slower-than-anticipated acquisition of litigation funds from those other cases. See DE 2-95
at 2-3. Noting the extensive period of inaction in the immediate case and the complete lack of
discovery in nearly three years, the Bankruptcy Court considered the Trustee’s explanation to be
an admission of “deliberate[]” and “intentional” inaction. See DE 2-108 at 4-6. In addition, the
Bankruptcy Court concluded that the Trustee’s purposeful delay unduly prejudiced the fifty-four
Defendants, who were confronted with million-dollar fraud charges and were forced to incur vast
sums of attorneys fees while the Trustee chose not to act. Id. Drawing a clear distinction
between the Trustee’s prior inaction and the Trustee’s subsequent attempts to begin discovery,
the Bankruptcy Court stated in the reconsideration order, “[the Trustee’s issuance of written
discovery requests and filing of motions for default] may have been attempts to cure the inaction
and to move the case forward, but they were not explanations of the plaintiff’s failure to
prosecute.” See DE 2-116 at 4.
Reviewing this thorough discussion by the Bankruptcy Court, this Court does not agree
that the Bankruptcy Court ignored or failed to give credence to the Trustee’s after-the-fact
attempts to cure his prior inaction. Rather, the Bankruptcy Court’s discussion reveals that the
Bankruptcy Court considered the Trustee’s subsequent actions but found them to be insufficient

9

to warrant against dismissal, particularly in light of the Trustee’s candid admission of prior
inaction and the resulting prejudice to the Defendants. In light of the holding in Fischer, this
Court does not consider the Bankruptcy Court’s decision to amount to an abuse of discretion.
See Fischer, 446 F.3d at 665 (concluding that courts do not have to tolerate a litigant’s inactivity
or delay by giving them a warning and an opportunity to respond before issuing a dismissal).
Additionally, this Court does not conclude that the Bankruptcy Court’s dismissal decision
amounted to an error of law. Instead, relevant case law demonstrates that a judge’s decision to
dismiss a case for want of prosecution may be reasonably grounded when a plaintiff fails to
move his case forward. See e.g. Cohen, 32 Fed.Appx. at 759-60 (unpublished case) (affirming
dismissal wherein the plaintiffs took no action to advance their case for a year and half after
initially filing their complaint, considering such delay to amount to “a long-term pattern of
inactivity”); Moffitt, 236 F.3d at 873 (upholding dismissal, even where there was no record of
delay or contumacious behavior, where graduated sanctions were not employed, and where no
express warning was provided beforehand, but where the plaintiff’s attorney was unprepared to
proceed on the date of trial); Washington, 734 F.2d at 1240 (concluding that dismissal for failure
to prosecute was not an abuse of discretion wherein a plaintiff failed to move a case forward in
five years).
[F]ailure to prosecute under the rule does not mean that the plaintiff must have taken
any positive steps to delay the trial or prevent it from being reached by the regular
machinery of the court. It is quite sufficient if he does nothing, knowing that until
something is done there will be no trial.
Washington, 734 F.2d at 1238. Thus, although dismissal of the adversary proceeding was,
indeed, a harsh sanction, the Bankruptcy Court was not without legal grounds for doing so, given
the Trustee’s intentional, fourteen-month period of inaction, which came on the heels of an
10

eighteen month period of additional inactivity by Heartland’s prior attorneys.

3. The Bankruptcy Court was neither required to apply the discretionary factors for
dismissal nor did it fail to do so.
Finally, the Trustee contends that the Bankruptcy Court failed to properly apply the
discretionary factors for dismissal, as articulated in Ball, 2 F.3d at 760. To begin, however, the
Court notes that the factors articulated in Ball and its progeny are not mandatory but are, rather,
discretionary in nature. Indeed, taking into account the deference afforded to a judge’s decision
to dismiss for failure to prosecute, the Ball Court explained that “only loose and approximate
guidelines” are provided to guide a judge’s discretion. Ball, 2 F.3d at 755. See also Washington,
734 F.2d at 1240 (reminding reviewing courts that “no exact rule can be laid down to when
dismissal for failure to prosecute is justified” and noting that each dismissal must be considered
in light of the procedural history and status of the case at the time of the dismissal); Pyramid
Energy, Ltd., 869 F.2d at 1061 (same).
A few factors, which the Seventh Circuit has suggested should “ideally” guide a judge’s
decision to dismiss for failure to prosecute2, include: the frequency and magnitude of the
plaintiff’s failure to comply with court deadlines; the effect of these failures on the court’s
schedule; the prejudice to other litigants; and the possible merits of the underlying action. Aura

2

As further evidence that the Ball factors are discretionary rather than mandatory in nature, the Court notes
several cases wherein consideration or satisfaction of a Ball factor was found to be not required prior to dismissal.
For example, it is now well-established that a judge is not required, in all circumstances, to consider or impose
graduated sanctions before dismissing a case for lack of prosecution. See Aura Lamp & Lighting, Inc., 325 F.3d at
908; Williams, 155 F.3d at 858 n.5; Bluestein & Co., 68 F.3d at 1026; Dickerson, 32 F.3d at 1116 (“[w]here the
pattern of dilatory conduct is clear, dismissal need not be preceded by the imposition of less severe sanctions”); Ball,
2 F.3d at 756; Pyramid Energy, Ltd., 869 F.2d at 1062 (“[a] trial court is entitled to say, under proper circumstances,
that enough is enough, and less severe sanctions than dismissal need not be imposed where the record of dilatory
conduct is clear”). Similarly, a judge is also not required, in every case, to make a finding of prejudice before
issuing a dismissal. GCIU Emp’r Ret. Fund, 8 F.3d at 1199; Washington, 734 F.2d at 1239 (“prejudice may be
presumed from an unreasonable delay.”).

11

Lamp & Lighting, Inc., 325 F.3d at 908; Cohen v. Hoyer, 32 Fed.Appx. 755, 759 (7th Cir. 2002)
(unpublished case); Williams, 155 F.3d at 857; Ball, 2 F.3d at 759-60.
Despite being discretionary, the dismissal order evidences that the Bankruptcy Court did,
in fact, consider and discuss each of these factors. Specifically, after a thorough review of the
procedural history, the Bankruptcy Court concluded that dismissal was warranted on account of
the Trustee’s “extensive, intentional delay in prosecution”. See DE 2-108 at 4-6. The Court
further explained that the Trustee’s deliberate, fourteen-month period of inaction, compounded
with prior delays, resulted in the case lying dormant on the Court’s docket for nearly three-years
and unduly prejudiced the fifty-four Defendants. See DE 2-108 at 4-6. Further, the Bankruptcy
Court also held, albeit with very-little explanation, that dismissal was additionally warranted on
account of the Trustee’s failure to demonstrate “potential merit” to the adversary proceeding.
See DE 2-108 at 6.
Given the discretionary nature of the Ball factors and the Bankruptcy Court’s
consideration of the same, it can not be said that the Bankruptcy Court committed an error of law
in articulating the reasons for dismissal.
The Court also does not consider the Bankruptcy Court’s decision to dismiss, as
articulated under the Ball factors, to amount to an abuse of discretion. For instance, the Court is
not persuaded by the Trustee’s argument that the Bankruptcy Court should have considered
imposing less severe sanctions before dismissing the case. The Seventh Circuit has rejected this
argument on numerous occasions. See e.g. Aura Lamp & Lighting, Inc., 325 F.3d at 908;
Williams, 155 F.3d at 858 n.5; Bluestein & Co., 68 F.3d at 1026; Dickerson, 32 F.3d at 1116
(“[w]here the pattern of dilatory conduct is clear, dismissal need not be preceded by the

12

imposition of less severe sanctions”); Ball, 2 F.3d at 756; Pyramid Energy, Ltd., 869 F.2d at
1062 (“[a] trial court is entitled to say, under proper circumstances, that enough is enough, and
less severe sanctions than dismissal need not be imposed where the record of dilatory conduct is
clear”). Similarly, the Court is not persuaded by the Trustee’s argument that dismissal was
unwarranted because the Trustee did not miss any court deadlines or display other contumacious
behavior. As explained above, the Seventh Circuit has held on numerous occasions that
inaction, alone, is sufficient to justify dismissal.3 See e.g. Cohen, 32 Fed.Appx. at 759-60
(unpublished case); Moffitt, 236 F.3d at 873; Washington, 734 F.2d at 1240. In addition, the
Court is not persuaded by the Trustee’s assertions that his inactivity did not negatively impact
the Bankruptcy Court’s docket and did not prejudice the Defendants. The Bankruptcy Court
sufficiently supported and explained its conclusions regarding these factors, and this Court
considers there to be sufficient evidence for a reasonable person to concur with the Bankruptcy
Court’s conclusions. See Moffitt, 236 F.3d at 873 (explaining that, in the absence of legal error,
reversal of a dismissal for failure to prosecute is warranted only when “no reasonable person
3

Likewise, the Trustee also contends that dismissal was inappropriate because there was, arguably, only “a
single instance of non-compliance” in this case. In so arguing, the Trustee cites Casteel v. Pieschek, 3 F.3d 1050,
1055-56 (7th Cir. 1993), and Lowe, 897 F.2d at 274. However, as stated above, the 7th Circuit has held, on
numerous occasions that inaction, alone, is sufficient to justify dismissal, regardless of the lack of contumacious
behavior. See e.g. Cohen, 32 Fed.Appx. at 759-60 (unpublished case); Moffitt, 236 F.3d at 873; Washington, 734
F.2d at 1240.
Further, the cases cited by the Trustee had markedly distinguishable procedural histories than the immediate
case; and the cited cases had numerous, additional factors which tilted against dismissal for failure to prosecute,
none of which are present in the immediate case. For instance, the dismissal in Casteel was reversed because the
plaintiff, proceeding pro se, had responded quickly to the court’s show cause order and had made attempts to keep
his claim alive, thereafter; there was no prejudice to the defendants; and there had been no delay to the Court’s
docket. See Casteel, 3 F.3d at 1055-56. In contrast, the Bankruptcy Court found, in the immediate case, that the
Trustee, represented by counsel, deliberately did not advance this case for fourteen months; that the delay was
“excessive”and “long-term”, and that the Defendants, medical professionals, had been prejudiced as a result. See
DE 2-108 at 4-6. In Lowe, the 7th Circuit reversed a dismissal for want of prosecution because the Court considered
it “unreasonable” to attribute contumacious behavior to a newly-pro se litigant, who was unable to quickly proceed
to trial on account of the prior discovery delays and sudden withdrawal of his former counsel. See Lowe, 897 F.2d at
274-75. In the immediate case, the Trustee has been represented by counsel throughout the Trustee’s involvement in
the adversary proceeding; and the Trustee’s counsel has admitted taking no action to advance this case.

13

could concur in the trial court’s [decision to dismiss]”); Williams, 155 F.3d at 857 (“[t]he abuse
of discretion standard means something more than our belief that we would have acted
differently if placed in the circumstance confronting the district judge”); Bluestein & Co., 68
F.3d at 1025; GCIU Emp’r Ret. Fund, 8 F.3d at 1199; Pyramid Energy, Ltd., 869 F.2d at 1061.
Indeed, the only factor that the Trustee discusses somewhat persuasively is whether the
Bankruptcy Court adequately explained why there was no demonstrated merit to the adversary
proceeding. However, in making this argument, the Court notes that the Trustee does not dispute
the Bankruptcy Court conclusion that he failed to articulate the merits of the adversary
proceedings in his response to the Bankruptcy Court’s show cause order. Rather, the Trustee
argues that dismissal of the adversary proceeding is prejudicial to the creditors who stood to
benefit from potential monetary recoveries from the adversary proceeding.
However, this Court considers any prejudice in this regard to be, at least partially, the
fault of the Trustee and the fault of the attorneys who initiated the adversary proceeding. Both
chose not to initiate discovery and let this case lay dormant for nearly three years until the
Bankruptcy Court issued the order to show cause. Nevertheless, even if this one Ball factor
were to tip in the Trustee’s favor, it does not sufficiently establish that the balance should have
absolutely tipped the scales against dismissal. Put differently, even considering the potential
prejudice to the creditors who may be impacted by the Trustee’s inaction and the Bankruptcy
Court’s resulting dismissal order, this Court does not consider the Bankruptcy Court’s dismissal
to be “fundamentally wrong”. See Moffitt, 236 F.3d at 873 (explaining that, in the absence of
legal error, a reviewing court will reverse a dismissal order only if it “strikes [the Court] as
fundamentally wrong”); Williams, 155 F.3d at 857; Bluestein & Co., 68 F.3d at 1025; GCIU

14

Emp’r Ret. Fund, 8 F.3d at 1199; Pyramid Energy, Ltd., 869 F.2d at 1061.
III. Conclusion
For the aforementioned reasons, this Court concludes that the Bankruptcy Court provided
adequate warning, was not required to allow the Trustee an opportunity to cure his prior inaction
before dismissal and that the application of the discretionary Ball factors neither amounted to an
error of law nor an abuse of discretion. Accordingly, the Court now DENIES the Trustee’s
appeal from the Bankruptcy Court’s dismissal of the adversary proceeding.
SO ORDERED.
ENTERED:

July 6, 2011

/s/ JON E. DEGUILIO
Judge
United States District Court

15