Chiriapa v. Matsul Inc

Background

Miguel A. Chiriapa brought this action against Matsul Inc.; Achla Shawrma Factory Inc., doing business as Achla!; Mor Melamed; and Shoshana Melamed. The clerk entered certificates of default—a formal docket entry reflecting a defendant’s failure to respond—against all four defendants. Chiriapa then moved for a default judgment, which is a judgment requested because a defendant has not defended the case.

The court ordered the defendants to explain why the case should be stayed. Achla, Mor Melamed, and Shoshana Melamed relied on a bankruptcy notice stating that Zuriel Melamed, through counsel, was asserting an automatic stay under federal bankruptcy law. The order states that Zuriel Melamed was not a party to this case. Those defendants did not explain why the case should be stayed in part or in its entirety. Matsul and Achla had not otherwise appeared in the case.

Rulings

The court ordered that the case would not be stayed. It adjourned the scheduled August 6, 2020, default-judgment hearing indefinitely.

The court set aside the certificates of default entered against Mor Melamed and Shoshana Melamed under Federal Rule of Civil Procedure 55(c). The order does not set aside the certificates of default against Matsul or Achla.

Mor Melamed and Shoshana Melamed also sought $10,000 in sanctions against Chiriapa’s counsel. The court denied that request without prejudice because the defendants had not followed Rule 11(c)(2), which requires a sanctions motion to be separate from other motions, to identify the specific conduct allegedly violating the rule, and to be served before filing so the challenged material may potentially be withdrawn or corrected.

Pending Motion and Required Filings

The court did not decide Mor Melamed’s and Shoshana Melamed’s motion to dismiss. Instead, it ordered Chiriapa to notify the court by July 31, 2020, whether he intended to file an amended complaint or rely on the existing complaint.

If Chiriapa relied on the existing complaint, the motion to dismiss would proceed under the ordinary federal and local rules, and the court stated it was unlikely to provide another opportunity to amend based on deficiencies identified in the fully briefed motion. If Chiriapa chose to amend, he had to file the amended complaint within 14 days after notifying the court. Mor Melamed and Shoshana Melamed would then have 21 days to answer, move to dismiss the amended complaint, or notify the court that they were relying on their original motion.

The court also ordered Chiriapa’s counsel to mail the order to Achla and Matsul by July 31, 2020, and file proof of service. The order resolved case-management, default, stay, and sanctions issues; it did not decide the underlying claims or the pending motion to dismiss.