KCA Penland Holdings Corp v. Great Lakes Directional Drilling, Inc.

Filing 22

ORDER that Counts One, Three, Four, and Five of GLDD's 3 Counterclaim are DISMISSED WITHOUT PREJUDICE; and the 10 Pretrial Order and Case Management Plan is AMENDED to permit KCA Penland to file a motion for default judgment, ( Motion due by 2/7/2017.) Signed by District Judge Richard Voorhees on 1/24/17. (Pro se litigant served by US Mail.) (ejb)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
STATESVILLE DIVISION
CASE NO. 5:14-CV-00175-RLV-DCK
KCA PENLAND HOLDINGS CORP.,

)
)
Plaintiff
)
Counter Defendant, )
)
v.
)
)
)
GREAT LAKES DIRECTIONAL
)
DRILLING, INC.,
)
)
Defendant
)
Counter Claimant. )
)
)

ORDER

THIS MATTER IS BEFORE THE COURT on the Court’s sua sponte review of Great
Lakes Directional Drilling, Inc.’s (“GLDD”) ability to proceed in this matter. For the ensuing
reasons, the Court DISMISSES GLDD’s counterclaim and AMENDS the motions deadline in the
Pretrial Order and Case Management Plan (Doc. 10) to permit KCA Penland Holdings Corp.
(“KCA Penland”) to file a motion for default judgment against GLDD on KCA Penland’s claims.
I.

PROCEDURAL HISTORY
KCA Penland commenced this action on September 18, 2014 by filing a complaint in the

Iredell County Superior Court. (See Doc. 1-1). GLDD removed the action to this Court and timely
filed an Answer, which included a five-count counterclaim. (See Doc. 3). KCA Penland filed a
motion to dismiss Count Two of GLDD’s counterclaim. (Doc. 5). Following GLDD’s response
not opposing KCA Penland’s motion, this Court issued an order dismissing Count Two of GLDD’s
counterclaim. (Docs. 7, 8).
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In September of 2015, the parties submitted a certification of initial attorney conference
and discovery plan. (Doc. 9). Shortly thereafter, Magistrate Judge David C. Keesler issued the
Pretrial Order and Case Management Plan, setting a discovery deadline of June 15, 2016, a motions
and alternative dispute resolution (“ADR”) deadline of August 31, 2016, and a trial date of January
9, 2017. (Doc. 10 at 2-4). The deadline for motions and ADR passed without the filing of any
motions or the filing of a report on the results of ADR. On September 19, 2016, GLDD changed
counsel. (See Docs. 12, 13). Approximately two-and-a-half months later, new counsel for GLDD
moved to withdraw, citing GLDD’s failure to pay for services as the basis for withdrawal. (Doc.
14). Noting that GLDD’s status as a corporation prevented it from proceeding pro se, Magistrate
Judge Keesler issued an order requiring a response indicating whether GLDD consented or
opposed the motion to withdraw. (Doc. 15). The order further amended the deadline for the parties
to file their ADR report and advised the parties that they could seek a continuance of the trial date
but that “[t]he Court will not extend the trial date beyond March 2017.” Id. at 2.
The parties filed a consent motion to amend several deadlines in the Pretrial Order and
Case Management Plan, specifically seeking to reset the trial for March 31, 2017, to extend the
once-extended ADR deadline, and to extend the already elapsed deadlines for discovery and
dispositive motions.1 (Docs. 16, 16-1). Noting that this Court’s March trial term commences on
March 6, 2017, and that counsel failed to explain why the original deadlines elapsed without any
action by the parties, Magistrate Judge Keesler granted the consent motion with modification.
(Doc. 17). The order set a new ADR deadline of January 31, 2017, a new discovery deadline of

The parties’ proposed amended pretrial order and case management plan sought an ADR deadline of January 31,
2017, a discovery deadline of February 28, 2017, and a motions deadline of March 15, 2017. (Doc. 16-1 at 2-4). The
Court notes the impractical nature of the requested March 15, 2017, motions deadline in light of the time permitted
for response and reply briefs (see Local Rule 7.1(E)) and the proposed trial date of March 31, 2017.
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February 24, 2017, and a new trial date of March 6, 2017. Id. at 2. The order amending the pretrial
order and case management plan did not enlarge the deadline to file motions. See id.
Subsequent to the order amending the pretrial order and case management plan, counsel
for GLDD filed a response indicating that GLDD consented to the withdrawal of counsel.2 (Doc.
18). Upon receipt of GLDD’s consent to the motion to withdraw, Magistrate Judge Keesler
promptly, on December 20, 2016, issued an order granting the motion to withdraw, giving GLDD
until January 3, 2017 to have new counsel file a notice of appearance, and advising GLDD that
“important deadlines [in the case] are imminent, and unlikely to be extended.” (Doc. 19). Certified
mail records establish that GLDD received the Court’s December 20, 2016 order. (See Doc. 20
(noting delivery/receipt date of December 24, 2016)). January 3, 2017, came and went without an
attorney filing an appearance on behalf of GLDD and without GLDD contacting the Court or
moving for an extension to have new counsel file a notice of appearance. On January 4, 2017, the
Court sua sponte granted GLDD an extension until January 11, 2017, to have new counsel file a
notice of appearance. (Doc. 21). The order reminded GLDD “that the Court is unlikely to grant
any further extensions of this, or any other deadlines in this case” and further advised GLDD that
its “failure to comply with this Court’s Orders will likely result in sanctions, which may include
default judgment and/or dismissal of Defendant’s remaining counterclaim.” (Doc. 21). As of the
date of this order, new counsel has not filed an appearance on behalf of GLDD and GLDD has not
filed any pleading in response to this Court’s orders.

Attached to the response was correspondence between counsel and GLDD regarding GLDD’s consent to the motion
to withdraw. (Doc. 18-1). The correspondence demonstrates that GLDD was provided a copy of the order requiring
GLDD to respond to the motion to withdraw, which also noted the need for GLDD to retain new counsel if current
counsel was permitted to withdraw. See id. at 4.
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II.

DISCUSSION
“Whether a corporate party may proceed pro se is a procedural inquiry governed by federal

law and the rules of the court.” Gilley v. Shoffner, 345 F. Supp.2d 563, 566 (M.D.N.C. Nov. 18,
2004). “It has been the law for the better part of two centuries . . . that a corporation may appear
in federal courts only through licensed counsel.” Rowland v. Cal. Men’s Colony, Unit II Men’s
Advisory Council, 506 U.S. 194, 201-02 (1993) (citing Osborn v. President of Bank of United
States, 9 Wheat. 738 (1824) (other citations omitted)). Based on this limitation on a corporation’s
ability to appear in federal court, a court may, after warning the corporate party of the
consequences of not obtaining counsel and permitting the corporate party reasonable time to obtain
counsel, dismiss the unrepresented corporation’s claims or enter judgment against the
unrepresented corporation. See Barr v. Prince George’s Cty., Md., 115 F. App’x 609, 610-11 (4th
Cir. 2004) (dismissing appeal by corporate party after original counsel withdrew and corporate
party failed to obtain new counsel despite being “admonished” of consequences of failing to obtain
counsel); Dove Air, Inc. v. Joda, LLC, 2011 WL 4712316, at *1 (W.D.N.C. Oct. 6, 2011)
(dismissing corporate party’s suit for failure to have new counsel file an appearance after motion
granted permitting original counsel to withdraw); Gilley, 345 F. Supp.2d at 566-67 (dismissing
corporate party from action where corporate party was on notice of need to have counsel make an
appearance but did not do so or otherwise seek an extension to obtain counsel); Microsoft Corp. v.
Comput. Serv. & Repair, Inc., 312 F. Supp.2d 779, 783 (E.D.N.C. 2004) (entry of default judgment
against corporate defendant for no appearance of counsel).
This Court has placed GLDD on notice four times that a corporation cannot proceed pro se
and that GLDD needed to obtain new counsel and have new counsel file an appearance. (See
Docs. 15, 17, 19, 21). Of particular note, the Court advised GLDD of the need to employ new

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counsel before GLDD consented to the withdrawal of its most recent counsel. (Doc. 15). Although
the record affirmatively establishes that GLDD received several of the Court’s orders providing
notice and setting deadlines for new counsel to file an appearance, new counsel has not filed an
appearance on GLDD’s behalf and GLDD has not otherwise responded to the Court’s orders.
Accordingly, the Court finds it appropriate to dismiss, without prejudice, the four counts of
GLDD’s counterclaim that survived this Court’s order granting KCA Penland’s motion to
dismiss.3 (See Doc. 8 (dismissing Count Two of counterclaim but permitting Counts One, Three,
Four, and Five to proceed)).
The Court is further inclined to enter a default judgment against GLDD as to the claims
raised in KCA Penland’s complaint. The Court, however, recognizes that the entry of a default
judgment constitutes a stiff sanction, that the dismissal of GLDD’s counterclaim is the first
sanction imposed against GLDD, that GLDD timely participated in this litigation at early stages
in the proceeding, and that KCA Penland has contributed to some of the missed deadlines.
Accordingly, instead of granting a default judgment sua sponte, the Court amends the motions
deadline in the Pretrial Order and Case Management Plan to permit KCA Penland to file a motion
for default judgment by February 7, 2017.4
III.

DECRETAL
IT IS, THEREFORE, ORDERED THAT:
(1)

Counts One, Three, Four, and Five of GLDD’s counterclaim are DISMISSED

WITHOUT PREJUDICE; and

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In so concluding, the Court notes the numerous deadlines missed during the course of this litigation and the likelihood
that GLDD’s consent to the withdrawal of its most recent counsel followed by its failure to obtain new counsel will
cause further delay in the resolution of this nearly two-and-a-half year old case.
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The Court again advises GLDD of the need to obtain counsel and have new counsel file a notice of appearance so
that it may properly respond to any motion for a default judgment filed by KCA Penland.

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(2)

The Pretrial Order and Case Management Plan (Doc. 10) is AMENDED to permit

KCA Penland to file a motion for default judgment by February 7, 2017.

Signed: January 24, 2017

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