Titan Atlas Manufacturing, Inc. v. Sisk
Filing
350
OPINION AND ORDER granting in part and denying in part 341 MOTION to Reopen Case as to Claims; to Dismiss Titan's Claim for Declaratory Relief. Signed by Judge James P. Jones on 6/28/2013. (lml)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF VIRGINIA
ABINGDON DIVISION
TITAN ATLAS MANUFACTURING
INC. and STRATA MINE SERVICES,
LLC,
Plaintiffs,
v.
FRANK A. SISK and PRECISION MINE
MINE REPAIR, INC.,
Defendants.
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FRANK A. SISK and PRECISION MINE )
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REPAIR, INC.,
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Plaintiffs,
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v.
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TITAN ATLAS MANUFACTURING
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INC. and STRATA MINE SERVICES,
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INC.,
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Defendants.
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Case No. 1:11CV00012
Case No. 1:11CV00068
OPINION AND ORDER
Mark D. Loftis, Woods Rogers PLC, Roanoke, Virginia, and James A. Gale
and Javier Sobrado, Feldman Gale, P.A., Miami, Florida, for Frank Sisk and
Precision Mine Repair, Inc.; Angela H. France and Malik K. Cutlar, PCT Law
Group, PLLC, Alexandria, Virginia, for Titan Atlas Manufacturing, Inc.
In these consolidated commercial actions involving allegations of patent
infringement and breach of contract, following my entry of a Consent Judgment
and Order of Dismissal, Frank Sisk and Precision Mine Repair, Inc. (“PMR”)
(collectively, “PMR Parties”) filed a motion requesting that I reopen the cases, find
Titan Atlas Manufacturing, Inc. (“Titan”) in default, and dismiss Titan’s claims
with prejudice for want of prosecution. The PMR Parties assert that closure of the
cases was a clerical error, and the entry of default judgment against Titan and
dismissal of Titan’s claims is warranted because the settlement that formed the
basis of the Consent Judgment was an agreement solely between the PMR Parties
and Strata Mine Services, LLC (“Strata”). Thus, the PMR Parties assert that the
matter has not yet been resolved as to Titan. For the reasons set forth below, I will
grant the PMR Parties’ motion in part and will schedule an evidentiary hearing for
the purpose of determining the amount of damages and the availability of other
remedies.
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I
These consolidated cases involve a product used in the ventilation of
underground coal mines.1 The litigation has a lengthy and complex procedural
history, of which only the pertinent portions will be recited here. The PMR
Parties’ Third Amended Complaint asserts claims against Titan and Strata for
patent infringement, inducement to infringe, breach of a distributorship agreement,
and unfair competition. Titan and Strata brought declaratory judgment claims
against the PMR Parties, seeking findings that Titan and Strata did not infringe the
patent in question or induce infringement, and that the patent is unenforceable
based on inequitable conduct and improper inventorship. Titan and Strata also
asserted claims against the PMR Parties for unjust enrichment and fraud based on
monopolization and attempted monopolization, and claimed that PMR breached
the distributorship agreement prior to any breach by Titan or Strata. Several of the
claims and defenses were dismissed without prejudice by entry of a Consent Order,
which provided that the parties could still conduct discovery related to the
dismissed claims and could later reassert those claims. (ECF No. 178.) Initial
counsel for Titan moved to withdraw on November 23, 2011, and that motion was
granted on December 5, 2011. Titan obtained new counsel, whose appearance was
1
See Titan Atlas Mfg. Inc. v. Sisk, Nos. 1:11CV00012, 1:11CV00068, 2011 WL
5041322 (W.D. Va. Oct. 22, 2011), for additional details regarding the underlying factual
allegations.
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entered on January 13, 2012. Titan’s new counsel filed briefs related to claim
construction on March 23, 2012 and April 6, 2012, which merely incorporated all
of the arguments made in Strata’s briefs, and filed a Joint Stipulation and Consent
Order of Dismissal of Inequitable Conduct and Unjust Enrichment Claims Without
Prejudice on June 20, 2012. Titan’s second set of attorneys filed an emergency
motion to withdraw on October 12, 2012, which I granted on October 22, 2012.
After that date, Titan was not represented by counsel until June 12, 2013, when
Titan’s present counsel entered his appearance in this matter. Other than the
second set of counsel’s motion to withdraw, Titan made no filings in the case
between April 6, 2012 and June 12, 2013.
In the meantime, the other parties in the case filed and responded to
numerous motions, conducted discovery, made required disclosures, and ultimately
negotiated a settlement agreement.
Titan did not comply with the pretrial
deadlines set forth in my Revised Scheduling Order, dated February 12, 2012, or
my Order dated June 25, 2012.2 It did not notice or attend any depositions,
propound any written discovery requests, make any expert disclosures, submit
2
The initial deadline for all fact discovery was August 31, 2012. (ECF No. 132.)
The close of discovery was postponed to September 14, 2012, at the request of the
parties. (ECF No. 180.) Expert reports were due on July 27, 2012. (Id.) Pretrial
disclosures of witnesses and exhibits were required to be filed no later than September
28, 2012. (ECF No. 132.) The deadline for proposed jury instructions was October 12,
2012. (ECF No. 132.)
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proposed jury instructions, or respond to the PMR Parties’ Motion for Summary
Judgment. The trial, which was originally scheduled for November 5-9, 2012, was
postponed due to discovery issues not involving Titan.
Before the trial was
rescheduled, the case was dismissed on April 24, 2013 by entry of a Consent
Judgment and Order of Dismissal. (ECF No. 340.)
On May 14, 2013, the PMR Parties moved to reopen the case to correct a
clerical error, noting that while the settlement agreement was between the PMR
Parties and Strata, the case a whole had been closed without final resolution of the
claims by or against Titan. The PMR Parties sought dismissal with prejudice of
Titan’s claims and the entry of default judgment against Titan. I reopened the case
on May 15, 2013, and ordered Titan to respond to PMR’s motion. On June 12,
2013, Titan filed a response in which it argued that I should not reopen the case
and should instead allow the Consent Judgment and Order of Dismissal to stand.
The PMR Parties argue that Titan’s failure to participate in the litigation for
more than a year is inexcusable and warrants the entry of default judgment against
Titan, particularly in light of the fact that Titan has offered no excuse for its
lengthy silence. According to the PMR Parties, the Joint Motion filed by the PMR
Parties and Strata clearly indicated that the case had been resolved only with
respect to the PMR Parties and Strata; thus, closure of the case as a whole was
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simply a clerical error, and the case should be reopened for entry of default and
dismissal of Titan’s claims with prejudice.
Titan contends that the Consent Judgment and Order of Dismissal contained
no clerical error and that the court did exactly what the PMR Parties and Strata
asked it to do. Moreover, Titan argues that because no trial is currently pending,
its inaction up to this point has not prejudiced the other parties in the case, and
entry of default is therefore an unwarranted sanction.
As I explain more fully below, I agree with the PMR Parties that Titan’s
complete failure to participate in the litigation for more than a year, including its
failure to submit required pretrial disclosures, warrants dismissal of Titan’s claims
with prejudice and entry of default against Titan.
II
Rule 60(a) of the Federal Rules of Civil Procedure allows a court to “correct
a clerical mistake or a mistake arising from oversight or omission whenever one is
found in a judgment, order, or other part of the record.” Fed. R. Civ. P. 60(a). The
court’s closing of these cases was the kind of mistake contemplated by Rule 60(a),
because the motion for consent judgment filed by the PMR Parties and Strata made
clear that the settlement agreement was only between the PMR Parties and Strata.
The Joint Motion for Entry of Consent Judgment and Order of Dismissal did not
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ask the court to close the cases, and they should not have been closed when the
claims by and against Titan had not been resolved. Therefore, the cases are
properly reopened to allow for proper resolution of the remaining claims.
Rule 41(b) allows for involuntary dismissal of claims where “the plaintiff
fails to prosecute or to comply with these rules or a court order.” Fed. R. Civ. P.
41(b).
In determining whether involuntary dismissal is appropriate, I must
consider four factors: “(1) the degree of personal responsibility on the part of the
plaintiff; (2) the amount of prejudice to the defendant caused by the delay; (3)
whether the record indicates a history of deliberately proceeding in a dilatory
fashion; and (4) whether there are sanctions less drastic than dismissal.” Parks v.
Huff, No. 91-1065, 1992 WL 21363, at *2 (4th Cir. Feb. 10, 1992) (unpublished).
Here, Titan was personally responsible for failing to prosecute its claims, as
it did not retain counsel after its second set of attorneys withdrew. The record
reflects that its counsel moved to withdraw because Titan did not pay its attorneys’
fees as required by its agreement with counsel. Titan can blame no one but itself
for its failure to participate in discovery and its noncompliance with pretrial
disclosure deadlines. Indeed, Titan’s failure to obtain counsel prevented it from
participating in the litigation, because a corporation is not permitted to proceed pro
se. See Rowland v. Cal. Men’s Colony, Unit 2 Men’s Advisory Council, 506 U.S.
194, 201-02 (1993) (“It has been the law for the better part of two centuries . . .
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that a corporation may appear in the federal courts only through licensed
counsel.”). Titan’s abandonment of its claims and counterclaims prejudiced the
PMR Parties because they were required to act as though a live controversy
existed, which caused them to incur unnecessary attorneys’ fees and costs in
preparing and filing motions that would have been unnecessary had Titan fully
participated in the litigation.
The record in this matter indicates that Titan had a history of proceeding in a
dilatory fashion. Indeed, two sets of counsel had to withdraw because Titan did
not pay them as required. Prior to filing its brief opposing the instant motion, Titan
had not meaningfully participated in the litigation for more than a year and a half,
since October 2011. This is not a case where a party simply inadvertently missed a
deadline or failed to respond to one discovery request. Titan essentially ignored
the litigation altogether for an extended period of time, apparently hoping it would
simply go away. Therefore, no less drastic sanction would be effective in this
case; involuntary dismissal is the only appropriate resolution of Titan’s claims and
counterclaims.
It should be noted that dismissal of Titan’s claims reaches the same result
that would have occurred had the trial gone forward in November 2012 as
originally scheduled. Because Titan failed to make any of the required pretrial
disclosures, it would not have been permitted to present any evidence in support of
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its claims. Indeed, because a corporation cannot appear pro se, Titan would not
have been able to participate in the trial at all. In its brief opposing the PMR
Parties’ motion, Titan takes the position that the cases should remain closed, and
thus appears to indicate that it has no intention of pursuing any of its claims.
Under these circumstances, involuntary dismissal of Titan’s claims is appropriate.
Rule 16(f) permits the imposition of sanctions for failure to obey a
scheduling or other pretrial order. Fed. R. Civ. P. 16(f). To determine whether
entry of default is an appropriate sanction, I must apply a four-part test: “(1)
whether the noncomplying party acted in bad faith; (2) the amount of prejudice his
noncompliance caused his adversary[]; (3) the need for deterrence of the particular
sort of noncompliance; and (4) the effectiveness of less drastic sanctions.” Young
Again Prods., Inc. v. Acord, 459 F. App'x 294, 301 (4th Cir. 2011) (unpublished)
(internal quotation marks and citations omitted), cert. denied, 133 S. Ct. 140
(2012).
The record suggests that Titan acted in bad faith by failing to pay its prior
counsel, ignoring the litigation entirely, and then reappearing with new counsel
after many months simply to contest the PMR Parties’ instant motion, while
offering no explanation for its failure to comply with my pretrial orders. As noted
above, the PMR Parties were prejudiced by Titan’s inaction because they were
forced to prepare for trial as though they were engaged in a live controversy with
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Titan, despite the fact that Titan apparently had no intention of pursuing its claims
or defenses.
Thus, Titan’s silence led the PMR Parties to incur substantial
unnecessary expenses. The court has a strong interest in deterring this type of
conduct. Finally, as indicated above, less drastic sanctions would be ineffective
here, considering that Titan completely ignored prior orders of this court. Titan
should not now be permitted to appear, after an extended absence from the
litigation, and defend against the PMR Parties’ claims.
Again, had the trial taken place in November 2012 as scheduled, Titan
would not have been able to present any evidence in its defense and would not
have been permitted to participate without counsel.
It could not have cross
examined any witnesses. The entry of default against Titan likely achieves the
same result that would have been expected following a trial at which Titan
remained completely silent. For these reasons, I will find Titan in default as to all
of the claims pending against it, and Titan will be deemed liable on those counts.
In their motion, the PMR Parties ask me to enter default judgment against
Titan. While the entry of default is appropriate, I find it necessary to hold an
evidentiary hearing to determine the appropriate measure of damages and other
remedies to which the PMR Parties are entitled.
judgment until after the evidentiary hearing.
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I will reserve the entry of
III
For the foregoing reasons, it is ORDERED that the Motion to Reopen Cases
as to Claims Between Defendants/Plaintiffs and Plaintiff/Defendant Titan Atlas
Manufacturing (“Titan”), To Dismiss Titan’s Claim for Declaratory Relief, and for
Entry of Default Judgment Against Titan (ECF No. 341) is GRANTED IN PART
AND DENIED IN PART.
These cases are reopened, all pending claims by Titan are dismissed with
prejudice, and Titan is declared in default as to all claims pending against it. The
clerk will schedule an evidentiary hearing to consider appropriate remedies.
ENTER: June 28, 2013
/s/ James P. Jones
United States District Judge
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