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Days Inns Worldwide, Inc., A Delaware Corporation v. 5 Star

November 17, 2011

DAYS INNS WORLDWIDE, INC., A DELAWARE CORPORATION, PLAINTIFF,
v.
5 STAR, INC., AN IDAHO CORPORATION; JASWINDER LAL; GURDEEP KAUR; AND JHON BANGA, DEFENDANTS.



The opinion of the court was delivered by: Honorable Madeline Cox Arleo

REPORT AND RECOMMENDATION

BACKGROUND

On March 6, 2009, plaintiff, Days Inns Worldwide, Inc. ("plaintiff"), filed the Complaint. On August 17, 2009, attorney Jay McDaniel entered an appearance on behalf of defendants 5 Star, Inc. ("5 Star"), Jaswinder Lal ("Lal"), Gurdeep Kaur ("Kaur"), and Jhon Banga ("Banga"), improperly pled as "John Banaa," (sometimes collectively "defendants"). On August 18, 2009, the Court entered a Letter Order, scheduling an initial conference for November 23, 2009. The August 18th Letter Order directed the parties to exchange Fed. R. Civ. P. 26 disclosures. Additionally, the Order emphasized that failure to comply with the terms therein may result in the imposition of sanctions. Defendants filed an Answer with affirmative defenses and asserted Counterclaims against plaintiff on August 24, 2009. On September 10, 2009, plaintiff filed an Answer to defendants' Counterclaim.

On November 23, 2009, counsel for both plaintiff and defendants appeared at the conference. On December 10, 2009, the Court entered a Pretrial Scheduling Order, which set forth, among other things, deadlines for discovery and amendments to the pleadings. The Order also scheduled a telephone status/settlement conference for March 24, 2010 and directed each party to submit a confidential settlement position paper. The Order further emphasized that failure to comply with the Order would result in sanctions pursuant to Fed. R. Civ. P. 16(f) and 37.

On March 24, 2010, both parties appeared for the telephone status/settlement conference. On April 1, 2010, the Court issued a Scheduling Order, resetting the deadlines for discovery, among other things. The Order also directed the parties to again submit a settlement position paper for the scheduled telephone status/settlement conference on September 21, 2010.

On May 26, 2010, plaintiff's counsel wrote to the Court, requesting an extension for completing discovery because defendants had neither provided dates for their depositions, nor corrected deficiencies in their written discovery responses. As such, plaintiff's counsel further sought a court order setting forth deposition dates and deadlines for correcting deficient discovery responses.

In response, by letter dated June 1, 2010, defense counsel, Jay McDaniel, Esq., advised the Court of his intent to file a motion to withdraw as counsel. The basis for the motion was defense counsel's inability to contact defendants for more than two months. In light of his anticipated motion, defense counsel did not oppose plaintiff's request for a discovery extension. On June 11, 2010, Mr. McDaniel filed his motion to withdraw, the basis of which was defendants' failure to respond or otherwise cooperate with preparing a defense to this litigation, failure to appear at agreed upon deposition dates, and their failure to pay Mr. McDaniel's outstanding legal fees.

On June 14, 2010, the Court issued an Order, noting that a new discovery schedule would be set, following the Court's decision on the pending motion to withdraw. On August 3, 2010, the Court granted Mr. McDaniel's motion and directed him to provide defendants with copies of the Order. Defendants Lal, Kaur, and Banga were directed to have new counsel enter an appearance on their behalf within 30 days of the August 3rd Order, or by September 2, 2010. If new counsel was not secured by that date, these defendants would be deemed to be proceeding on a pro se basis and require them to attend all court appearances.

As to corporate defendant 5 Star, the Court directed the company to have new counsel enter an appearance on its behalf within 30 days of the August 3rd Order, or by September 2, 2010, as a corporate entity cannot represent itself under applicable law. The Order also provided that if new counsel failed to enter an appearance on behalf of 5 Star by September 2, 2010, the Court would ask the District Judge to strike its Answer and to enter default against it. The Order further directed all parties to submit a proposed joint discovery schedule to the Court within 60 days of the Order.

On September 21, 2010, the Court adjourned the September 21 status conference until November 5, 2010.*fn1 On October 25, 2010, plaintiff requested a clerk's entry of default against 5 Star for its failure to plead or otherwise defend in this action. The clerk entered default as to 5 Star on October 27, 2010. On January 13, 2011, plaintiff filed a motion for entry of default judgment against 5 Star pursuant to Fed. R. Civ. P. 55(b). On March 29, 2011, District Judge Walls issued an Order granting plaintiff's motion and scheduled a hearing for damages for April 12, 2011.

On March 18, 2011, when the motion for default judgment had still been pending, plaintiff's counsel wrote to the Court, requesting a status conference to address the failure of pro se defendants Lal, Kaur, and Banga to communicate with plaintiff's counsel following the withdrawal of Mr. McDaniel from the case, and their failure to respond to plaintiff's proposed joint discovery plan. On March 24, 2011, the Court entered a Scheduling Order setting forth new deadlines for, among other things, completing discovery and filing dispositive motions. The March 24th Scheduling Order reminded the parties to advise the Court of any change in address, phone number, or email address pursuant to L. Civ. R. 10.1(a), and that failure to do so may result in the imposition of sanctions. The Court provided all pro se defendants with copies of the Order by regular and certified mail.*fn2 On March 29, 2011, the Court received executed return receipt cards from Lal and Kaur. On April 6, 2011, the Court received an unexecuted return receipt card for Banga.

On April 12, 2011, only plaintiff's counsel appeared at the hearing for damages against 5 Star. No party or counsel appeared on behalf of 5 Star. On April 19, 2011, Judge Walls entered a final judgment by default in the sum of $243,369.62 in favor of plaintiff and against 5 Star.

On April 28, 2011, plaintiff's counsel wrote to the Court seeking leave to move to strike the Answer of Lal, Kaur, and Banga based on their failure to defend this action since the withdrawal of their attorney from the case on August 3, 2010. By letter dated July 21, 2011, plaintiff's counsel renewed plaintiff's request that defendants' Answer be stricken for their failure to participate in discovery or otherwise defend this action since August 3, 2010.*fn3

On July 26, 2011, this Court issued an Order scheduling an in person status conference for August 17, 2011 at 12:00 noon. The July 26th Letter Order highlighted that failure to attend the conference would result in sanctions, up to and including dismissal of the Complaint.*fn4 This Court sent copies of the Order to defendants at their addresses as reflected on the official docket by regular and ...

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