Enslein v. Di Mase et al

Filing 659

ORDER granting 638 Plaintiff's motion for default judgment against the DuraSeal Defendants; granting 639 Plaintiff's motion for default judgment against Jensvold; deferring entry of order on 640 Plaintiff's motion to voluntarily dismiss certain claims; and requesting input from the parties on damages issues. Signed on 2/28/2020 by District Judge Ortrie Smith. (A copy of this order will be mailed by Chambers to parties who do not have Pacer accounts.) (Kitsmiller, Julia)

IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MISSOURI
WESTERN DIVISION
JERALD S. ENSLEIN, in his capacity as )
Chapter 7 Trustee for Xurex, Inc.,
)
)
Plaintiff,
)
)
vs.
)
)
GIACOMO E. DI MASE, et al.,
)
)
Defendants.
)

Case No. 16-09020-CV-W-ODS

ORDER AND OPINION (1) GRANTING PLAINTIFF’S MOTION FOR DEFAULT
JUDGMENT AGAINST THE DURASEAL DEFENDANTS, (2) GRANTING PLAINTIFF’S
MOTION FOR DEFAULT JUDGMENT AGAINST JENSVOLD, (3) DEFERRING ENTRY
OF ORDER ON PLAINTIFF’S MOTION TO VOLUNTARILY DISMISS CERTAIN
CLAIMS, AND (4) REQUESTING PARTIES’ INPUT ON ISSUE OF DAMAGES
Pending are Plaintiff’s Motion for Default Judgment or Entry of Default Against
Defendants DuraSeal Pipe Coatings Company LLC, DuraSeal Holdings S.r.L., and HDI,
Holding Development Investment, S.A. (collectively, “DuraSeal Defendants”) (Doc.
#638); Plaintiff’s Motion for Default Judgment or Entry of Default Against Defendant
Tristram Jensvold (Doc. #639); and Plaintiff’s Motion to Voluntarily Dismiss Certain
Claims (Doc. #640). For the following reasons, the Court grants Plaintiff’s motion for
default judgment against the DuraSeal Defendants and grants Plaintiff’s motion for
default judgment against Defendant Jensvold. Regarding Plaintiff’s motion to voluntarily
dismiss certain claims, the Court intends to dismiss those claims with prejudice. Plaintiff
has seven days from the date of this Order to seek to withdraw his motion, or, if no
motion is filed, accept the Court’s decision to dismiss the claims with prejudice. Finally,
the Court requests input from the parties on the issue of damages.
I.

SUMMARY OF PROCEDURAL HISTORY

In October 2016, Plaintiff Jerald Enslein, the Chapter 7 Trustee for Xurex, Inc.,
asked this Court to withdraw the reference of an adversary proceeding he filed with the
Bankruptcy Court. Doc. #1. In April 2017, the Honorable Howard Sachs granted
Plaintiff’s request. Doc. #5. The matter was then reassigned to the undersigned.

In August 2018, Plaintiff filed his Amended Complaint. Doc. #244. Plaintiff
alleged three corporate entities – i.e., DuraSeal Pipe Coatings Company LLC
(“DuraSeal Pipe”), DuraSeal Holdings S.r.L. (“DuraSeal Holdings”), and HDI, Holding
Development Investment, S.A. (“HDI”) – and nine individuals – i.e., Giacomo Di Mase,
Jose Di Mase, Leonard Kaiser, Tristram Jensvold, Steve McKeon, Lee Kraus, Joseph
Johnston, Dietmar Rose, and Robert Olson – breached contracts, violated the covenant
of good faith and fair dealing, misappropriated trade secrets, engaged in a civil
conspiracy, breached fiduciary duties, aided and abetted breaches of fiduciary duties,
and made fraudulent transfers. Doc. #1-2; Doc. #244. In total, Plaintiff asserted
fourteen causes of action and sought monetary and equitable relief.
In June 2019, the Court issued decisions on, among other things, eleven
summary judgment motions. Doc. #434-1. The Court entered summary judgment in
favor of DuraSeal Pipe and DuraSeal Holdings on Plaintiff’s breach of implied covenant
of good faith and fair dealing claims (Count IV); granted summary judgment in favor of
the DuraSeal Defendants, Kraus, Jose Di Mase, and Giacomo Di Mase on Plaintiff’s
misappropriation of trade secrets claims (Count V); and entered summary judgment in
favor of Giacomo Di Mase, Jose Di Mase, Kraus, and the DuraSeal Defendants on
Plaintiff’s claims of aiding and abetting breach of fiduciary duty (Count VIII). Id.
In July 2019, counsel for the DuraSeal Defendants, Giacomo Di Mase, Jose Di
Mase, and Kraus moved to withdraw. Doc. #439. The Court granted the motion. Doc.
#442. In its Order, the Court informed the individual Defendants that they could
proceed pro se but the corporate entities, the DuraSeal Defendants, were not permitted
to represent themselves. Id. at 2. The Court stated: “The corporate defendants must
secure legal representation before the pretrial conference is held in this matter. If legal
representation is not secured by the corporate defendants, they may be subject to
default judgment against them and in Plaintiff’s favor.” Id. at 2-3 (citations omitted).
On August 20, 2019, the Court reminded the parties of the pretrial conference
scheduled for September 11, 2019. Doc. #471. On September 4, 2019, the Di Mases,
on behalf of themselves and the DuraSeal Defendants, moved for leave to appear at the
pretrial conference via telephone or video. Doc. #504. On September 6, 2019, the
Court granted the Di Mases’ request to appear on behalf of themselves at the pretrial

2

conference telephonically. Doc. #506. However, the Court stated the following about
the corporate entities’ request:
To this Court’s knowledge, neither Di Mase Defendant is licensed
to practice law or admitted to this Court’s bar. They may NOT represent
the corporate entities or file documents on behalf of the corporate entities.
The Court notes the corporate entities are designated as “pro se” in
the pending motion. To be clear, the corporate entities are not permitted
to represent themselves. And, if they are not represented by counsel, the
corporate entities may not attend or participate in the pretrial conference.
Without representation, no one is permitted to speak on behalf of the
corporate entities or carry out any order issued by the Court to the
corporate entities. If they fail to secure counsel to represent them at the
pretrial conference, the corporate entitles will be in violation of this Court’s
Orders, which will justify the Court entering a monetary judgment against
them and in Plaintiff’s favor….
The Court ignores the request made for the corporate entities to
appear telephonically at the pretrial conference. Inasmuch as they are
unrepresented by counsel, the corporate entities may not file documents
or otherwise defend themselves in this action.
Id. at 2. The corporate entities continued to be unrepresented, defying the Court’s
Orders that they secure counsel before the pretrial conference. Further violating the
Court’s Orders, the corporate entities did not obtain counsel to appear for them at the
pretrial conference or file any of the required pretrial filings.
On September 16, 2019, based on the corporate entities’ willful violations of the
Court’s Orders and their failure to defend against the lawsuit, the Court entered default
as to liability against DuraSeal Pipe and DuraSeal Holdings on Plaintiff’s breach of
contract claims (Counts I, II, and III). Doc. #516, at 1-6. The Court held in abeyance
entry of damages on these claims because they were not for sums certain. Id. at 6. To
avoid inconsistent results, the Court did not enter default against the corporate entities
on the remaining claims because those claims were brought against other Defendants
who could be jointly and severally liable for damages. Id. at 6-7.
On November 1, 2019, the Court denied Plaintiff’s request to enter default
judgment against Jensvold because the claims against him were also brought against
other Defendants who could be jointly and severally liable for damages. Doc. #609.
Thus, the Court would wait until those claims were adjudicated against the other
Defendants before finding Jensvold in default. Id.

3

That same day, the Court noted the corporate entities remained unrepresented.
Id. at 6. The Court reiterated: “DuraSeal Pipe, DuraSeal Holdings, and HDI are not
permitted to present evidence, argument, or otherwise participate in the trial. They are
not allowed to file pretrial or trial documents. Further, the individual Defendants, who
are not licensed attorneys and are not admitted to practice in this Court, are prohibited
from presenting evidence or argument on behalf of DuraSeal Pipe, DuraSeal Holdings,
and HDI.” Id. at 6-7.
On November 4, 2019, trial began.1 The only claims Plaintiff submitted to the
jury were civil conspiracy (Count VI) against Jose Di Mase and Kraus, and breach of
fiduciary duty (Count VII) against Johnston, Jose Di Mase, Giacomo Di Mase, and
Kaiser. Regarding the claims arising from the 2012 Amendment, the jury found in favor
of Johnston on Plaintiff’s breach of fiduciary duty claim; however, the jury found in favor
of Plaintiff on his conspiracy and breach of fiduciary duty claims against Jose Di Mase
and awarded $93,506,632.00 in actual damages but no punitive damages. Doc. #630,
at 1-2. Regarding the claims arising from elimination of minimum purchase obligations,
creation of the rights to manufacture and produce Xurex products, and/or the 2014
Amendment, the jury found in favor of Plaintiff on his conspiracy claims against Jose Di
Mase and Kraus and in favor of Plaintiff on his breach of fiduciary duty claims against
Jose Di Mase, Giacomo Di Mase, and Kaiser. Id. at 3-4. The jury awarded
$24,414,522.00 in actual damages but no punitive damages. Id.
On January 10, 2020, Plaintiff filed two motions for default judgment and a
motion to voluntarily dismiss certain claims. Docs. #638-40. Kraus timely opposed the
motion to dismiss. Doc. #651. The Court directed Defendants to show cause why the
relief requested by Plaintiff should not be granted. Docs. #652-54. Jose Di Mase,
purportedly on behalf of the corporate entities and possibly on behalf of himself,
opposed the motion for default judgment against the DuraSeal Defendants and the
motion to dismiss.2 Doc. #655. Plaintiff filed replies on February 7, 2020, and February
19, 2020. Docs. # 657-58.
Before trial commenced, Plaintiff’s claims against Rose, McKeon, and Olson were
dismissed with prejudice. Doc. #599, 600, 604.
2
As far back as July 2019, the corporate entities knew they were required to be
represented by counsel. Doc. #442, at 2-3. In September 2019, the corporate entities
1

4

II.

PLAINTIFF’S MOTIONS

A. Motion for Default Judgment Against the DuraSeal Defendants (Doc. #638)
Plaintiff seeks entry of default judgment against DuraSeal Pipe, DuraSeal
Holdings, and HDI on his claims of breach of fiduciary duty (Count VII); against
DuraSeal Pipe on his cause of action for objection to a bankruptcy claim (Count XI); and
against DuraSeal Pipe on his equitable subordination claim (Count XII).3 Doc. #638.
Plaintiff contends entry of default judgment is appropriate pursuant to Rules 16 and 55
of the Federal Rules of Civil Procedure.
(1) Unrepresented Corporate Entities
Once the DuraSeal Defendants’ attorneys were granted leave to withdraw, each
corporate entity was, according to the Eighth Circuit, “technically in default.” Ackra
Direct Mktg. Corp. v. Fingerhut Corp., 86 F.3d 852, 857 (8th Cir. 1996) (citation and
internal quotations omitted) (finding an unrepresented company was “technically in
default” once counsel withdrew); Blank v. Broadsword Grp., LLC, No. 14CV1550, 2017
WL 5132662, at *4 (E.D. Mo. Nov. 6, 2017) (finding an unrepresented company in
default for “being without counsel and for its failure to appear at a long-set trial of the
case”); Barth v. Patinan Tuatanto, LLC, No. 11-950, 2012 WL 13029571, at *2 (D. Minn.
Apr. 12, 2012) (entering default judgment against an unrepresented company).
Since July 2019, when the Court granted their attorneys’ motion to withdraw, the
DuraSeal Defendants knew they could not represent themselves. Docs. #442, 471
(citations omitted). And they were forewarned at least three times that if they did not
obtain counsel, the Court would be justified in entering judgment against them. Doc.
#442, at 2-3; Doc. #506, at 2. Seven months have passed since counsel was permitted
to withdraw, but the DuraSeal Defendants remain unrepresented. Thus, they have
been in default since July 2019.

knew the Court would ignore any filings not filed by an attorney. Doc. #506, at 2. The
latest filing, which is signed by Jose Di Mase purportedly on behalf of the corporate
entities, was not filed by an attorney. Doc. #655. Thus, the Court ignores the filing as it
relates to the DuraSeal Defendants’ response to the motion for default judgment.
3
As discussed infra, section III, Plaintiff moves to voluntarily dismiss the remaining
claims against the DuraSeal Defendants.
5

(2) Federal Rule of Civil Procedure 16(f)
If a party fails to appear at a pretrial conference or fails to obey a scheduling or
pretrial order, the Court “may issue any just orders,” which includes sanctioning a party.
Fed. R. Civ. P. 16(f)(1)(A), (C); see also Nick v. Morgan’s Foods, Inc., 270 F.3d 590,
594-96 (8th Cir. 2001) (stating “[d]istrict courts have explicit authority to require pretrial
conferences” and “Rule 16(f) expressly permits a judge to impose any other sanction
the judge deems appropriate”). Available sanctions include, but are not limited to,
prohibiting a party from “opposing designated claims,” “dismissing the action,” “striking
pleadings,” and “rendering a default judgment against the disobedient party.” Fed. R.
Civ. P. 37(b)(2)(A)(ii)-(vii); see also Chrysler Corp. v. Carey, 186 F.3d 1016, 1020-21
(8th Cir. 1999) (citation omitted) (stating, if “default judgment lies within the spectrum of
appropriate sanctions,” the Eighth Circuit will “not substitute our own judgment for that
of the district court even though we may have chosen a different sanction had we been
standing in the shoes of the trial court.”). “Default judgment is appropriate where the
party against whom the judgment is sought has engaged in ‘willful violations of court
rules, contumacious conduct, or intentional delays.’” Forsythe v. Hales, 255 F.3d 487,
490 (8th Cir. 2001) (quoting Ackra Direct Mktg., 86 F.3d at 856).
The DuraSeal Defendants disregarded numerous deadlines in the Court’s
Scheduling and Trial Order. Docs. #38, 120, 138, 174, 432. Although they knew
pretrial filings were due beginning in August 2019, the DuraSeal Defendants did not file
any pretrial filings. Although required by the Scheduling and Trial Order, they did not
file witness lists or exhibit lists. Also, they did not file motions in limine or deposition
designations. And the DuraSeal Defendants did not collaborate with the other parties in
preparing and filing joint pretrial filings required by the Scheduling and Trial Order – i.e.,
stipulations of fact and stipulations as to foundation and admissibility of exhibits.
The DuraSeal Defendants’ blatant disregard of the Court’s Scheduling and Trial
Order justifies entry of default judgment. See Comiskey v. JFTJ Corp., 989 F.2d 1007,
1009-10 (8th Cir. 1993) (affirming the district court’s entry of default against a party that
failed to comply with court orders and discovery requests); Marriott Homes, Inc. v.
Hanson, 50 F.R.D. 396, 400 (E.D. Mo. 1970) (entering default against the defendant
because, among other things, he failed to comply with the court’s orders, including the

6

filing of witness and exhibits list). Because the corporate entities did not file exhibit lists
or witness lists, they “made it impossible to ascertain whether the allegations in [their]
answer…have any factual merit.” Marriott Homes, 50 F.R.D. at 400; Life Ins. Co. of N.
Am. v. Eufracio, No. 13-CV-3023-DEO, 2014 WL 6775559, at *2-3 (N.D. Iowa Dec. 2,
2014) (entering default against the defendant because, among other things, he did not
file his exhibit and witness lists). Furthermore, by failing to abide by the Court’s
Scheduling and Trial Order, the corporate entities violated the Federal Rules of Civil
Procedure, which allow this Court to sanction a party for failing “to obey a scheduling or
other pretrial order.” Fed. R. Civ. P. 16(a), 16(b), 16(c), 16(d), 16(e), 16(f)(C).
In addition, the DuraSeal Defendants did not appear at the Court’s pretrial
conference. The Court forewarned the DuraSeal Defendants that their failure to appear
at the pretrial conference would likely result in entry of judgment against them. Knowing
full well the consequences of their decision, DuraSeal Defendants chose not to attend
the pretrial conference. In purposely deciding not to attend the pretrial conference, the
DuraSeal Defendants violated the Court’s Orders directing them to participate in the
pretrial conference.4 The DuraSeal Defendants’ failure to appear at the pretrial
conference also violated the Federal Rules of Civil Procedure, which permit the Court to
sanction a party who “fails to appear at a…pretrial conference.” Fed. R. Civ. P.
16(f)(1)(A). These willful violations also justify entry of default judgment against the
DuraSeal Defendants. See Ackra Direct Mktg., 86 F.3d at 856 (finding a company’s
failure to respond to orders, comply with pretrial requirements, and attend the pretrial
hearing were grounds for default judgment); Armagost v. United States, No. 07-CV3240, 2010 WL 829178, at *1-2 (D. Neb. Mar. 4, 2010 (citations omitted); Wood Re New
Franchise Corp. v. Gibson, No. 06-CV-3312-GAF, 2008 WL 11338458, at *1 (W.D. Mo.
June 17, 2008) (citations omitted).
For all the foregoing reasons and pursuant to Rule 16(f) of the Federal Rules of
Civil Procedure, the Court grants Plaintiff’s motion for entry of default judgment against
4

Furthermore, alleged “financial hardship” does not excuse a corporate entity from
being represented by counsel. See Hanesbrand, Inc. v. Seduzione Leggs, LLC, No. 11CV-569-BCW, 2014 WL 12605457, at *2 (W.D. Mo. July 21, 2014) (citation omitted). A
corporate entity “cannot accept the business form but ignore the associated burdens,”
including the requirement that it be represented by counsel. Id.
7

DuraSeal Pipe, DuraSeal Holdings, and HDI on Count VII; against DuraSeal Pipe on
Count XI; and against DuraSeal Pipe on Count XII.5 The Court defers its determination
of damages and likewise entry of judgment at this time. As explained infra, section III,
the Court requests the parties’ input on the damages to be assessed against the
DuraSeal Defendants.
B. Motion for Default Judgment Against Tristram Jensvold (Doc. #639)
On November 16, 2017, Jensvold was served with Plaintiff’s Complaint but did
not respond. Doc. #122.6 On December 14, 2017, the Court issued an Order stating,
“the Record reflects Defendant Jensvold is in default.” Doc. #130. The Court directed
Jensvold to show cause why a judgment in default should not be entered against him.
Id. Jensvold was forewarned that his failure to comply with the Order may result in an
entry of judgment against him without further notice. Id. Jensvold has never responded
to the Court’s Order or Plaintiff’s Complaint.
As set forth supra, section I, the Court denied Plaintiff’s previous request to enter
default judgment against Jensvold in September 2019 but “expressly reserve[d] the right
to enter default at a later time on the claims against Jensvold.” Id. at 4. Pursuant to
Rules 16 and 55 of the Federal Rules of Civil Procedure Plaintiff now asks the Court to
enter default judgment against Jensvold on Count VII (breach of fiduciary duty).7 Doc.
#639. No party has opposed Plaintiff’s motion, and the time for doing so has passed.
Once Jensvold was served, all Orders were mailed to him. Yet, Jensvold
disregarded those Orders and never defended himself in this matter. By failing to abide
5

Because the Court finds entry of default judgment is justified under Rule 16(f), it is
unnecessary to consider Plaintiff’s alternative basis for its motion for default judgment.
Nonetheless, the Court notes the Eighth Circuit has found “[d]efault judgment for failure
to defend is appropriate when the party’s conduct includes willful violations of court
rules, contumacious conduct, or intentional delays.” Ackra Direct Mktg., 86 F.3d at 856
(citation and internal quotations omitted). As shown above, the DuraSeal Defendants
engaged in contumacious conduct by willfully violating several of the Court’s Orders and
intentionally disobeying the Federal Rules of Civil Procedure.
6
Plaintiff amended his Complaint in August 2018, asserting one additional claim against
Jensvold. But the Amended Complaint was not served on Jensvold. Doc. #244.
7
Similar to the last motion for default judgment against Jensvold, the Court considers
Plaintiff’s Complaint (not his Amended Complaint, which was never served on Jensvold)
when examining the motion for default against Jensvold. Doc. #609, at 3 n.1
8

by any of the deadlines in the Court’s Scheduling and Trial Order, Jensvold violated the
Federal Rules of Civil Procedure, which allow this Court to sanction him failing “to obey
a scheduling or other pretrial order.” Fed. R. Civ. P. 16(a), 16(b), 16(c), 16(d), 16(e),
16(f)(C). Moreover, although he was informed of the Court’s pretrial conference and the
trial setting, Jensvold did not appear at either the pretrial conference or trial. In doing
so, he disregarded the Court’s Orders and the Federal Rules of Civil Procedure. Fed.
R. Civ. P. 16(f)(1)(A).
For more than two years, Jensvold knowingly chose to violate the Court’s Orders
and the Federal Rules of Civil Procedure. Based on its discussion above as to Rule
16(f), the Court finds entry of a default judgment against Jensvold is justified and
appropriate. See supra, section II(A)(2). Accordingly, the Court grants Plaintiff’s motion
for default judgment against Jensvold on Count VII. The Court defers its determination
of damages and entry of judgment at this time. As explained infra, section III, the Court
requests the parties’ input on the damages to be assessed against Jensvold.
C. Motion to Voluntarily Dismiss Certain Claims (Doc. #640)
To “streamline the remaining issues before the Court in order to enable it to enter
a final judgment without the necessity of further proceedings,” Plaintiff seeks voluntary
dismissal of certain claims not tried to the jury. Doc. #640, at 1. Specifically, Plaintiff
seeks to dismiss following claims against the identified parties without prejudice:
● Counts I, II, and III – breach of contract – DuraSeal Pipe and DuraSeal Holdings
● Count VI – civil conspiracy – DuraSeal Defendants and Jensvold
● Counts IX and X – fraudulent transfers – DuraSeal Pipe and DuraSeal Holdings
● Count XI – objection to bankruptcy claim – Johnston
● Count XII – equitable subordination – Johnston and DuraSeal Holdings
● Counts XIII and XIV – declaratory judgment – all Defendants
Doc. #640.8

8

The Court refers to these claims as the “identified claims.” Although Plaintiff also
moves to dismiss “any other claims on which the jury did not render verdicts or which
the Trustee is not seeking default in his contemporaneously-filed motions,” it appears
that all remaining claims were identified by Plaintiff. Doc. #640, at 6.
9

(1) Standard
Rule 41(a)(2) authorizes voluntary dismissal of claims “on terms that the court
considers proper.” Fed. R. Civ. P. 41(a)(2). The rule’s primary purpose is “to prevent
voluntary dismissals which unfairly affect the other side. Courts generally will grant
dismissals where the only prejudice the defendant will suffer is that resulting from a
subsequent lawsuit.” Paulucci v. City of Duluth, 826 F.2d 780, 782-83 (8th Cir. 1987).
(2) The Parties’ Arguments
Plaintiff maintains his motion should be granted because “there has been very
limited to no additional expense incurred by defendants related to the vast majority of
the [identified] claims.” Id. at 3. Plaintiff argues there was no “separate discovery,
briefing, or proceeding” related to Counts IX through XIV. Id. In the alternative and if
the Court is inclined to dismiss any claims with prejudice, Plaintiff asks the Court to first
provide him “with an opportunity to seek bankruptcy court approval of any dismissal with
prejudice, out of an abundance of caution.” Id. at 4. But he concedes there is no case
law establishing a Rule 41(a)(2) dismissal with prejudice of a bankruptcy trustee’s
claims requires the Bankruptcy Court’s approval. Id.
Kraus, now represented by counsel, contends Plaintiff’s argument that
Defendants have had no or limited expense related to the identified claims is
unsupported. Doc. #651, at 1-2. He also argues Plaintiff’s alternative request for
Bankruptcy Court approval of this Court’s dismissal of claims with prejudice is
unfounded. Id. If the Court is inclined to dismiss Counts XIII and XIV without prejudice,
Kraus suggests, in the alternative, the Court’s Order of Dismissal include a condition –
i.e., if Plaintiff refiles those claims, Kraus should be entitled to recover the costs and
fees he incurred in this matter. Id. at 2-3.
To the extent Jose Di Mase’s filing on behalf of the DuraSeal Defendants could
be construed as his individual opposition to Plaintiff’s motion to voluntarily dismiss, he
argues the motion should be denied. He contends the basis for the motion – to ensure
consistency with the jury verdicts – is flawed because the verdict was “vacated.” Doc.
#655, at 1. To be clear, the jury’s verdicts were not vacated. The remainder of Jose Di
Mase’s filing largely reiterates Kraus’s arguments. Id. at 3-5.

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(3) Relevant Factors
When faced with a Rule 41(a)(2) motion, the Court considers, among other
things, (1) expenses and costs related to the lawsuit; (2) the defendant’s efforts and
expenses involved in preparing for trial; (3) “whether a dismissal would result in a waste
of judicial time and effort”; (4) “whether a dismissal will prejudice the defendants”; (5)
“the absence of a justification for the proposed dismissal”; and (6) whether the
defendants had filed a motion for summary judgment. Mullen v. Heinkel Filtering Sys.,
Inc., 770 F.3d 724, 728 (8th Cir. 2014) (citation omitted); Paulucci, 826 F.2d at 783
(citations omitted); Thatcher v. Hanover Ins. Grp., Inc., 659 F.3d 1212, 1213-14 (8th Cir.
2011) (citations omitted); Hamlin Grp., LLC v. Third Generation Inv., 613 F. Supp. 2d
1062, 1065 (N.D. Iowa 2009) (citations omitted).
First, the expenses and costs related to the lawsuit have been substantial.
Numerous motions were filed, including but not limited to eleven motions for summary
judgment,9 two motions to dismiss, two motions to strike experts, four motions to compel
discovery, four motions for protective orders, a motion to strike, and a motion to
disqualify counsel. Docs. #20, 25, 97, 104, 109, 142, 144, 208, 213, 299, 334, 347,
348, 350, 356, 358-63, 365-67. Regarding the eleven summary judgment motions
alone, more than 170 exhibits were submitted in support and more than 200 exhibits
were submitted in opposition. This matter was time and document-intensive, and the
attorneys’ fees and expenses have been significant.
Second, Defendants, apart from Jensvold, incurred a great deal of time and costs
preparing and defending themselves at trial. While the remaining Defendants,
excluding Jensvold, were pro se at trial, they prepared pretrial filings, participated in the
pretrial conference, collaborated with Plaintiff on pretrial filings, organized exhibits, and
arranged for witnesses to testify at trial. Presumably, they likely prepared notes or
outlines for their examination and cross-examination of witnesses.
Third, during the last three years, this matter occupied more judicial time than
any other matter assigned to the undersigned. This matter had far more filings,
discovery disputes, and motions than any other matter. The judicial time was spent on
9

One factor to be considered is whether Defendants filed a motion for summary
judgment. Here, Defendants filed ten motions for summary judgment.
11

claims other than the civil conspiracy and breach of fiduciary duty claims, which were
tried to the jury. By way of example, Plaintiff’s breach of contract claims (Counts I, II,
and III), which Plaintiff now seeks to dismiss without prejudice, consumed a great deal
of the Court’s time.
Fourth, if Plaintiff is granted the relief he seeks, nothing (of which the Court is
aware) prevents him from refiling the identified claims. If these claims are refiled and
relitigated, Defendants will have to engage in what will likely be duplicative discovery
and motion practice. And Defendants would be forced to defend themselves once more
on the same actions (or inactions) that were tried to a jury in this matter. Accordingly,
Defendants will be prejudiced if the identified claims are dismissed without prejudice.
Fifth, Plaintiff’s alleged justification for dismissal without prejudice is lacking.
Plaintiff’s sole basis for moving to dismiss Counts I, II, and III without prejudice is “to
avoid potentially duplicative awards.” Doc. #640, at 2. But Plaintiff does not explain
why Counts I, II, and III should be dismissed without prejudice. It seems more logical to
dismiss those claims with prejudice so that those claims cannot be refiled and
duplicative awards obtained. Similarly, other than indicating default judgment may be
entered on the breach of fiduciary duty claims, Plaintiff does not justify why Count VI, for
civil conspiracy against the DuraSeal Defendants and Jensvold, should be dismissed
without prejudice. Significantly, Plaintiff ignores the likely prejudice to Defendants,
including but not limited to having to defend themselves again if the claims are refiled, if
the Court dismisses these claims without prejudice.
Regarding Counts IX, X, XI, XII, XIII, and XIV, Plaintiff contends minimal expense
incurred by Defendants in defending these claims. Plaintiff’s argument presumes fees
and expenses can be apportioned among the different claims. While there may not
have been motions, separate or otherwise, addressing most of these claims, Counts IX
through XIV are not wholly unrelated to other claims.
For example, Counts XIII and XIV seek declarations as to the validity and
enforceability of two contracts that were allegedly breached, as alleged in Counts I, II,
and III. Further, the alleged breach of those contracts support, in part, Counts VI and
VII, which were tried to the jury. Likewise, Counts IX and X are based on Defendants’
actions related to the 2014 Amendment, which also support, in part, Count VII. And

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Count XII seeks equitable relief based on Defendants’ alleged wrongdoing and
inequitable conduct – presumably, the wrongdoing and conduct alleged in Counts I, II,
III, VI, and VII.
Counts IX through XIV are interconnected with claims for which extensive
discovery and briefing were conducted. These claims are also related to claims tried to
the jury. Consequently, it is difficult to discern how expenses and fees could be
allocated among the claims. Thus, the Court is not persuaded by Plaintiff’s argument
that there was little to no expense incurred by Defendants on Counts IX through XIV.
When justifying his request to voluntarily dismiss the identified claims, Plaintiff
neglects to address the possible (if not likely) prejudice to Defendants if the Court
dismisses these claims without prejudice. Based on the foregoing reasons, the Court
finds Plaintiff failed to provide a sufficient explanation for his request to dismiss the
identified claims without prejudice.
As demonstrated by the Court’s analysis of the relevant factors, if the identified
claims were dismissed without prejudice, Defendants will be prejudiced. Pursuant to
the Eighth Circuit’s declaration that “[v]oluntary dismissal under Rule 41(a)(2) should not
be granted if a party will be prejudiced by the dismissal” and the Court’s analysis of the
relevant factors, the Court finds Plaintiff’s dismissal should be with prejudice. Adams v.
USAA Cas. Ins. Co., 863 F.3d 1069, 1079 (8th Cir. 2017) (citation omitted).
Because the Court intends to dismiss the identified claims with prejudice, the
Court “must give the plaintiff notice of its intention and a chance to withdraw the request
and proceed with litigation.” Jaramillo v. Burkhart, 59 F.3d 78, 79 (8th Cir. 1995).
Plaintiff, however, chose not to submit the claims he wishes to voluntarily dismiss
without prejudice to the jury or the Court. Thus, it is unclear how Plaintiff could proceed
with litigating those claims. Nevertheless, Plaintiff may refuse the Court’s decision to
dismiss the identified claims with prejudice and withdraw his Rule 41(a)(2) motion.
Plaintiff must seek to withdraw his motion within seven calendar days of the entry of this
Order. If Plaintiff does not move to withdraw his motion within that time, the Court will
deem the absence of a motion to be Plaintiff’s election to accept the Court’s decision to
dismiss the identified claims with prejudice.

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(4) Alternative Request for Bankruptcy Court’s Approval
If the Court is inclined to dismiss claims with prejudice, Plaintiff asks that the
Court provide the Trustee with an opportunity to seek the Bankruptcy Court’s approval.
Doc. #640, at 4. In support, Plaintiff cites Rule 9019 of the Federal Rules of Bankruptcy
Procedure, which states, in relevant part, the following: “On motion by the trustee and
after notice and a hearing, the court may approve a compromise or settlement.” Fed. R.
Bankr. P. 9019(a). But Plaintiff concedes: “there is an absence of case law to
definitively confirm that a dismissal with prejudice does not require bankruptcy court
approval.” Doc. #640, at 4.
The lack of any authority for Plaintiff’s request warrants denial of the relief he
seeks. The Court is unaware of any case or rule that would require this Court to refer a
portion of this matter to the Bankruptcy Court for the sole purpose of deciding whether
Plaintiff’s motion for voluntary dismissal should be with or without prejudice.
Setting aside the Court’s decision not to send Plaintiff’s request to the
Bankruptcy Court, the same decision, in all likelihood, would be rendered. Identical to
this Court, the Bankruptcy Court would have to apply Rule 41 and consider the same
factors. This is because Rule 41 of the Federal Rules of Civil Procedure “applies in
adversary proceedings…” Fed. R. Bankr. P. 7041. For this additional reason, the Court
will not grant Plaintiff’s alternative request.
III.

DAMAGES

The Court harbors concerns about Plaintiff’s, or more accurately, Xurex’s actual
damages. Before determining the amount of damages to be entered against the
defaulted parties, the Court seeks guidance from the parties.
The jury awarded damages based on the testimony and report of Plaintiff’s
expert, Robert Reilly. Reilly provided opinions about Xurex’s damages resulting from
the 2010 Agreements10 and the 2012 Amendment.11 Doc. #644, at 98-99. Reilly
testified that one analysis of damages was “one state of damages” and his other
10

“2010 Agreements” refers to the January 13, 2010 Exclusive License, Marketing and
Distribution Agreement, and the December 31, 2010 Agreement.
11
“2012 Agreement” refers to the January 11, 2012 Amended and Restated Exclusive
License, Marketing and Distribution Agreement.”
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analysis was “another state of damages.” Doc. #644, at 99-100. He explained the
analyses were “alternatives.” Id. at 100, 106. Despite his explanation, Reilly’s opinions
on the two different “states of damages” were not treated as such. In fact, Plaintiff
asked the jury to award him both sums of damages. Doc. #648, at 32-33. And the jury
awarded Plaintiff both sums. Doc. #630.
Regarding the 2010 Agreements, Reilly testified he assumed the following when
rendering his opinion as to damages: the December 2010 Agreement stayed in place,
the parties “honor[ed] the contract…for a 10-or-12-year year period and then renew it
annually thereafter,” and “there was not a 2012 analysis.” Doc. #644, at 106-07. Per
his trial testimony and expert report, Reilly’s opinion as to Xurex’s damages based on
the December 2010 Agreement included lost profits and lost royalty income from 2010
through 2018. Id. at 102-07; Doc. #356-1, at 42, 67-68.12 His opinion as to loss of
business value included figures for 2016 through 2018. Doc. #644, at 104-07; Doc.
#356-1, at 42, 67, 69-70.
Reilly’s opinion as to damages from the 2012 Agreement assumed the 2012
Agreement “was a valid agreement,” it stay[ed] in place,” both parties would honor the
agreement, the agreement “would go forward for 10 or 11 years,” the agreement would
be “renew[ed] annually thereafter,” and there was no 2014 agreement. Doc. #644, at
107. For the 2012 Agreement, Reilly provided opinions as to Xurex’s lost royalty
income, lost profits, and lost fees from 2011 through 2022; and lost revenue during
2020, 2021, and 2022. Doc. #365-1, at 42, 82-89.
The Court is puzzled as to how both agreements can be considered valid,
particularly when the 2010 Agreements were amended by the 2012 Amendment. It is
perplexing how Xurex could be damaged under both contracts. And perhaps more
confusing, how Xurex could be damaged – i.e., lost profits, royalties, fees, etc. – under
both contracts during the same years. For these reasons, the Court asks the parties to
provide input on these issues.

12

Unfortunately, the Court was not provided with the exhibits to Reilly’s Amended
Expert Report, and the Court has been unable to locate the exhibits on the docket. So,
the Court refers to Reilly’s initial Expert Report. Although the figures are slightly
different, Reilly utilized the same methods in arriving at his opinions on damages.
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Within fourteen days of the date of this Order, the parties may, but is not required
to, file a brief, no more than ten pages in length, providing input on the damages issues
outlined by the Court. When filing their briefs, the parties should use the “Response to
Order” ECF event. It will be unnecessary for any party to respond to the briefs filed by
the other parties.
IV.

CONCLUSION

For the foregoing reasons, the Court grants Plaintiff’s motions for default
judgment against the DuraSeal Defendants and Jensvold. Regarding Plaintiff’s motion
to voluntarily dismiss certain claims, the Court intends to dismiss those claims with
prejudice. Within seven days of the date of this Order, Plaintiff may seek to withdraw
his motion, or, if no motion is filed, accept the Court’s decision to dismiss the claims with
prejudice. Finally, the Court requests input from the parties on the issue of damages.
IT IS SO ORDERED.

DATE: February 28, 2020

/s/ Ortrie D. Smith
ORTRIE D. SMITH, SENIOR JUDGE
UNITED STATES DISTRICT COURT

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