Greenlight Systems, LLC v. Breckenfelder
- Edward Chen
- 3:19-cv-06658
- U.S. District Court · Northern District of California
- 9
Greenlight Systems v. Breckenfelder: Judge Chen denied relief from dismissal and a trial continuance after plaintiffs repeatedly violated discovery orders.
Greenlight Systems, LLC, Orbital Asset Holdings, Inc., Andrew D.B. Rowen, and Erik Breckenfelder; the court denied the plaintiffs’ and counter-defendants’ motion, while leaving Breckenfelder’s request for default and additional sanctions for further proceedings.
What happened
In Greenlight Systems, LLC v. Breckenfelder, Greenlight Systems and Orbital Asset Holdings sued Erik Breckenfelder for fraud and breach of contract involving an agreement to sell their service software to automotive dealers. Breckenfelder brought contract and employment counterclaims.
The court had dismissed the plaintiffs’ complaint after they repeatedly failed to provide required information, documents, and other discovery, and had awarded Breckenfelder attorneys’ fees. The plaintiffs and counter-defendants asked the court to undo that dismissal and extend the case deadlines and trial by at least 90 days. They blamed their attorney, Paul E. Manasian, and cited personal difficulties, but they still had not provided any discovery after learning about the court’s orders.
Judge Edward M. Chen denied the motion. He ruled that the plaintiffs had not shown a legally acceptable reason for missing the discovery obligations and that the counter-defendants had not shown the required good cause for changing the schedule. The court separately ordered them to explain why default should not be entered on Breckenfelder’s counterclaims and why additional attorney-fee sanctions should not be imposed; it did not enter that default in this order.
The detailed version
- Greenlight Systems, LLC v. Breckenfelder · No. 3:19-cv-06658
- Edward Chen
- Oct. 6, 2020
Background
Greenlight Systems, LLC and Orbital Asset Holdings, Inc. sued Erik Breckenfelder for fraud and breach of contract concerning an agreement under which Breckenfelder would sell the plaintiffs’ service software to automotive dealers. Breckenfelder asserted several contract and employment counterclaims against the plaintiffs and their president, Andrew D.B. Rowen.
The plaintiffs repeatedly failed to comply with discovery obligations and court orders. Discovery is the process through which parties exchange information and documents relevant to a lawsuit. The plaintiffs did not timely provide initial disclosures, respond to written discovery, provide a detailed damages calculation, or appear at a scheduled settlement conference. After additional warnings, the court ordered them to provide specified discovery by May 18, 2020, and expressly warned that noncompliance could result in dismissal under Federal Rule of Civil Procedure 37. The plaintiffs did not comply, and the court dismissed their complaint on May 28, 2020, awarded Breckenfelder attorney’s fees, and later retained jurisdiction over his counterclaims.
The court later ordered the counter-defendants to comply fully with their discovery obligations by August 23, 2020, or risk default on the counterclaims. After they again failed to comply, the court ordered them to show why default should not be entered. The counter-defendants requested additional time and filed the motion addressed in this order, seeking relief from the dismissal and a continuance of the trial and other case deadlines.
Motion for relief from dismissal
The plaintiffs invoked Rule 37, but the court explained that Rule 37 does not provide relief from a dismissal order or an attorney-fee award. The court therefore treated the request as one under Rule 60(b), which permits relief from a final judgment or order for specified reasons, including excusable neglect or another reason justifying relief.
The court rejected the plaintiffs’ claim that their attorney’s conduct justified relief. It relied on the principle that clients generally are responsible for their attorneys’ acts and omissions. The court also concluded that the record did not show excusable neglect. Among other things, the court noted that communications indicated Rowen knew about the obligation to provide initial disclosures; the plaintiffs waited nearly a month after learning of the alleged attorney misconduct before filing the motion; they did not promptly replace Manasian or provide the required discovery; and the record showed that Rowen and the plaintiffs were sophisticated and experienced litigants.
The court further ruled that the plaintiffs’ unanswered emails to Manasian did not satisfy their responsibility to remain informed about the case. Most importantly, they did not explain why they continued failing to comply with discovery orders even after learning of the dismissal and the alleged misconduct. The court also found no extraordinary circumstances beyond the plaintiffs’ control that would justify relief under Rule 60(b)(6).
The court therefore denied the plaintiffs’ motion for relief from the dismissal order.
Motion to modify the case schedule
The counter-defendants also sought to extend all case-management deadlines and the trial date by at least 90 days. Under Rule 16(b)(4), a scheduling order may be modified only for good cause. The court explained that good cause primarily depends on the diligence of the party seeking the extension.
The court found that the counter-defendants offered no reason for the requested extension and no evidence that they had diligently pursued their rights in the case. It therefore denied the motion to extend all case deadlines by 90 days.
Default and additional sanctions
Breckenfelder had twice asked the court to enter default against the counter-defendants on his counterclaims because of their failure to participate in discovery. The order did not enter default. Instead, it instructed the counter-defendants to show cause within ten days why default should not be entered and why additional sanctions for Breckenfelder’s attorney’s fees should not be imposed. Breckenfelder was given seven days to reply.
Disposition
The court denied the counter-defendants’ motion for relief from dismissal and to continue the trial docket on Breckenfelder’s counterclaims. The order disposed of Docket No. 55.
Read the full 9-page opinion on CourtListener, the free public archive maintained by the Free Law Project.