Katz v. Liberty Power Corp., LLC et al

Filing 399

Judge Allison D. Burroughs: ELECTRONIC ORDER entered. Currently before the Court is Magistrate Judge Donald L. Cabell's Report and Recommendation, [ECF No. 398 ], which recommends that this Court dismiss plaintiffs' claims without prejudic e and dismiss defendant LP Corp's counterclaims against plaintiff Katz and the defendants' third-party claims against Mezzi Marketing for failure to prosecute. As of April 22, 2024, no objections have been filed. Accordingly, based on Magistrate Judge Cabell's well-reasoned analysis, the Report and Recommendation, [ECF No. 398 ], is ADOPTED in its entirety. (McManus, Caetlin)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
SAMUEL KATZ and LYNN RHODES,
individually, and on their own
behalf and on behalf of all
others similarly situated,
Plaintiffs,
v.
LIBERTY POWER CORP., LLC, and
LIBERTY POWER HOLDINGS, LLC,
Defendants.

No. 18-cv-10506-ADB

LIBERTY POWER CORP., LLC,
Counterclaim Plaintiff,
v.
SAMUEL KATZ,
Counterclaim Defendant.

REPORT AND RECOMMENDATION
CABELL, U.S.M.J.
I.

RELEVANT BACKGROUND
This long-enduring litigation began on March 16, 2018, when

plaintiff Samuel Katz filed a complaint against defendants Liberty
Power Holdings, LLC
LP

LP

, and Liberty Power Corp., LLC

alleging that Liberty Power violated certain provisions of the
1

(D. 1).

Katz and

his later-joining co-plaintiff Lynne Rhodes assert claims on their
own behalf and on behalf of multiple purported classes.2
asserts

two

counterclaims

against

Katz,

alleging

LP Corp
that

he

surreptitiously recorded certain conversations with Corp employees
in violation of Florida law.

(D. 209).

The defendants also

purportedly assert third-party claims against Mezzi Marketing,
LLC, for indemnification, contribution, breach of contract, and
negligence.

(D. 28, pp. 20-23, ¶¶ 18-44).

However, no one has

ever entered an appearance in this action on behalf of Mezzi
Marketing, and the defendants have never sought a default or
otherwise litigated their third-party complaint.
In April 2021, LP Holdings filed for Chapter 11 bankruptcy in
Florida, triggering an automatic stay pursuant to 11 U.S.C. §
362(a).

(D. 338).

to LP Corp.

In September 2021, the court extended the stay

(D. 363).

That stay remains in place.

(D. 392).

In the intervening years, the parties have filed reports to

proceeding.

(D. 383; D. 389; D. 394; D. 395).

In their most

1 The original complaint also asserted that the defendants and two of their
officers and owners fraudulently transferred Liberty Power assets in violation
of Florida state law.
(D. 1, ¶¶ 93-103).
The plaintiff later voluntarily
dismissed the individual officers from this suit. (D. 25).
2 A third named plaintiff, Alexander Braurman, voluntarily dismissed his
individual claims in 2019. (D. 192).

2

recent status report, the parties indicated that the bankruptcy
proceeding is complete and that both LP Holdings and LP Corp have
been completely liquidated.

(D. 395).

Counsel of record for the

defendants have been unable to contact anyone at either Liberty
Power entity.

(Id.).

By all accounts, Liberty Power no longer

exists.
The court convened a status conference with counsel on March
22, 2024.

(D. 397).

At that conference, the plaintiffs expressed

counterclaims were also dismissed.

Counsel of record for the

defendants agreed that the court should dismiss the counterclaims,
but there remained some uncertainty as to whether counsel still
truly represented the defendants.
II.

VOLUNTARY DISMISSAL OF

CLAIMS

Federal Rule of Civil Procedure 41 governs dismissals.
plaintiff may voluntarily dismiss his or her own claims.
Civ. P. 41(a), (c).

A

Fed. R.

However, when the opposing party has served

a responsive pleading and does not stipulate to the dismissal, the
plaintiff must request a court order.

Fed. R. Civ. P. 41(a)(2);

see Fed. R. Civ. P. 41(a)(1)(A), (c)(1).

P. 41(a)(2).

The court may grant the

Such a dismissal is without prejudice unless the

order states otherwise.

Id.

3

The

plaintiffs

are

effectively

unable

to

continue

this

litigation because the defendants are no longer participating.
Notably, there is reason to believe that the defendants are out of
business and that their assets have been liquidated.

Rather than

spending further time and money to pursue a default judgment on
which they will likely never be able to collect, the plaintiffs
instead agree that their claims should be dismissed conditional on
o

being

dismissed.

circumstances, this request is wholly reasonable.
is

some

doubt

dismissal

on

whether

behalf

of

counsel
the

of

record

defendants,

can
see

Under

the

Because there

stipulate
Fed.

R.

to

Civ.

a
P.

41(a)(1)(A)(ii), the best way to effect the dismissal is through
a court order.
III. DISMISSAL OF LP

COUNTERCLAIMS FOR FAILURE TO PROSECUTE

. . . because of [its] failure to prosecute
Link v. Wabash R.R. Co., 370 U.S.
626, 629 (1962); see also
fails to prosecute or to comply with . . . a court order, a
defendant may move to dismiss the action or any claim against
Such a dismissal is usually with prejudice unless stated

states otherwise, a dismissal under this subdivision . . . operates

4

recognized [that] the sanction of dismissal with prejudice for
Pomales v.
Celulares

Telefonica,

(collecting cases).

Inc., 342

F.3d 44, 48

(1st Cir.

2003)

Because dismissal with prejudice is a harsh

sanctio
protracted inaction (measured in years), disobedience of court
orders, ignorance of warnings, contumacious conduct, or some other
Id. (quoting Cosme Nieves v. Deshler,
826 F.2d 1, 2 (1st Cir. 1987)).
should prefer less severe sanctions that preserve the possibility
Id.; see also Corujo v. Eurobank,

district court has discretion to order dismissal for want of
prosecution without prejudice even when a dismissal with prejudice
would be appropriate).
As detailed above, the defendants have not been in touch
with their counsel for over a year.

(D. 395, p. 3).

Both

defendants have been liquidated and neither appears to have any
remaining officers or employees.

(Id.).

Under the circumstances,

the defendants are clearly both unwilling and unable to prosecute
their

counterclaims.

Dismissal

for

want

of

prosecution

is

therefore appropriate.3

3
-party
claims against Mezzi Marketing, as the defendants have apparently not taken any

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protracted as to warrant dismissal with prejudice.

See Pomales,

342 F.3d at 48. Regardless, in this instance there would be little
practical difference between a dismissal with prejudice and a

communications in 2018 in violation of Fla. Stat. § 934.03.
actions have a two-year statute of limitations.
934.10(3).
refile

Such

Fla. Stat. §

Consequently, even if the defendants were to decide to

their

counterclaims,

they

would

be

time-barred,

particularly since Florida, unlike Massachusetts, has no savings
statute that might otherwise make a refiled claim timely.

HCA

Health Servs. Of Fla., Inc. v. Hillman, 906 So. 2d 1094, 1098 (Fla.
Dist. Ct. App. 2004).

As such, there no longer appears to be a
Pomales, 342 F.3d at

48.

steps to litigate these claims since serving Mezzi Marketing in July 2018.
33).

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(D.

IV.

CONCLUSION AND RECOMMENDATION
For the foregoing reasons, this case should now come to a

close.

To effect that result, the court recommends that the
claims be dismissed without prejudice (and with their

assent).

The court further recommends that

against Katz and

-party claims against Mezzi

Marketing be dismissed for failure to prosecute.4
/s/ Donald L. Cabell
DONALD L. CABELL, U.S.M.J.
DATED:

March 28,2024

The parties are hereby advised that under the provisions of Federal Rule of
Civil Procedure 72(b), any party who objects to this recommendation must file
specific written objections thereto with the Clerk of this Court within 14 days
of the party's receipt of this Report and Recommendation.
The written
objections must specifically identify the portion of the proposed findings,
recommendations, or report to which objection is made and the basis for such
objections. The parties are further advised that the United States Court of
Appeals for this Circuit has repeatedly indicated that failure to comply with
Rule 72(b) will preclude further appellate review of the District Court's order
based on this Report and Recommendation. See Keating v. Secretary of Health
and Human Servs., 848 F.2d 271 (1st Cir. 1988); United States v. Emiliano
Valencia-Copete, 792 F.2d 4 (1st Cir. 1986); Park Motor Mart, Inc. v. Ford Motor
Co., 616 F.2d 603 (1st Cir. 1980); United States v. Vega, 678 F.2d 376, 378379 (1st Cir. 1982); Scott v. Schweiker, 702 F.2d 13, 14 (1st Cir. 1983); see
also Thomas v. Arn, 474 U.S. 140, 106 S. Ct. 466, 88 L.Ed.2d 435 (1985).
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