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XO Development, LLC v. Raines

United States District Court, D. Colorado

February 26, 2015

XO DEVELOPMENT, LLC, a Colorado corporation, ATHEROCOR, Inc., a Colorado corporation, Plaintiffs,
DR. JEFFERY RAINES, and MATT KAHN, and Defendants.


KATHLEEN M. TAFOYA, Magistrate Judge.

This case comes before the court sua sponte on the status of legal representation of the plaintiffs, their ability to participate in case activities, and their failure to respond to this court's Order to Show Cause and to prosecute its case.

On January 9, 2015, this court granted Plaintiffs' counsel's "Motion to Withdraw" (Doc. No. 42, filed December 15, 2014). (Doc. No. 55.) Under D.C.Colo.LAttyR 5, a corporation, such as the plaintiffs, may not appear in this court acting pro se. See also Rowland v. California Men's Colony, Unit II Men's Advisory Council, 506 U.S. 194, 201-202 (1993) ("It has been the law for the better part of two centuries, for example, that a corporation may appear in the federal courts only through licensed counsel.") In its Minute Order granting the motion to withdraw, the court ordered Plaintiffs to obtain counsel and file an entry of appearance for counsel on or before January 30, 2015. ( Id. ) The court also advised Plaintiffs if they did not obtain substitute counsel, pleadings and papers may be stricken, and sanctions may be imposed against Plaintiffs in accordance with D.C.Colo.LAttyR 5(b). ( Id. ) Plaintiffs failed to obtain counsel.

The Tenth Circuit has recognized that "[a] district court undoubtedly has discretion to sanction a party for failing to prosecute or defend a case, or for failing to comply with local or federal procedural rules." Reed v. Bennett, 312 F.3d 1190, 1195 (10th Cir. 2002). However, dismissal is a more severe sanction, and generally requires the district court to consider certain criteria. AdvantEdge Bus. Group v. Thomas E. Mestmaker & Assoc., Inc., 552 F.3d 1233, 1235 (10th Cir.2009). In Ehrenhaus v. Reynolds, 965 F.2d 916 (10th Cir.1992), the Tenth Circuit set forth a non-exhaustive list of factors to be considered when evaluating grounds for dismissal of an action with prejudice. The factors are: "(1) the degree of actual prejudice to the defendant; (2) the amount of interference with the judicial process;... (3) the culpability of the litigant; (4) whether the court warned the party in advance that dismissal of the action would be a likely sanction for noncompliance; and (5) the efficacy of lesser sanctions." Id. at 921 (internal quotations and citations omitted); see also Gates Rubber Co. v. Bando Chems. Indus., 167 F.R.D. 90, 101 (D. Colo.1996). "[D]ismissal is warranted when the aggravating factors outweigh the judicial system's strong predisposition to resolve cases on their merits.'" Ecclesiastes 9:10-11-12, Inc. v. LMC Holding Co., 497 F.3d 1135, 1144 (10th Cir. 2007) (quoting Ehrenhaus, 965 F.2d at 921).

On February 2, 2015, this court ordered Plaintiffs to show cause in writing by February 17, 2015, by and through legal counsel, whose appearance for Plaintiffs has been entered properly in this case, why this case should not be dismissed with prejudice as permitted by D.C.COLO.LCivR 41.1 and Ehrenhaus. Plaintiffs failed to respond to this court's Order to Show Cause, failed to obtain counsel, and failed to prosecute this case.

With regard to the first Ehrenhaus factor, Plaintifs' failure to obtain counsel and failure to comply with court orders has adversely impacted Defendants. Defendants have expended considerable time and resources filing motions and other documents to advance this litigation. Plaintiffs' apparent abandonment of this action has also impeded Defendants from fully and promptly resolving the claims asserted against them in this lawsuit. On the whole, the court finds that Defendants have been significantly prejudiced by Plaintiffs' failure to prosecute this action with due diligence.

With regard to the second Ehrenhaus factor, Plaintiffs' failures in this regard have required the court to review several filings documenting its delinquency and issue an Order to Show Cause. In this way, Plaintiffs have increased the workload of the court and interfered with the administration of justice. Plaintiffs' noncompliance with the judicial process by failing to comply with the court's orders flouts the court's authority in satisfaction of the second factor, similar to the Tenth Circuit's determination in Ehrenhaus.

In evaluating the third Ehrenhaus factor, the court expressly ordered Plaintiffs to comply with their obligations under the Federal Rules of Civil Procedure and this Court's local rules and to respond to the Order to Show Cause. Plaintiffs' failure to respond to each of the court's orders leads the court to believe Plaintiffs are culpable under these circumstances.

With respect to the fourth Ehrenhaus factor, Plaintiffs have received ample warning from the court regarding the potential for dismissal as a consequence for its dilatory prosecution of this case and their failure to obtain counsel. Thus, the fourth factor is satisfied.

In consideration of the fifth Ehrenhaus factor regarding efficacy of lesser sanctions, the court recommends dismissal with prejudice. Plaintiffs have failed to prosecute this case with due diligence by their failure to comply with the court orders instructing them to obtain counsel and their failure to respond to this court's Order to Show Cause. For these reasons, dismissal with prejudice of this action is warranted.

Having considered the totality of relevant circumstances, this court concludes that the Ehrenhaus factors outweigh the usual predisposition to resolve cases on the merits and weigh heavily in favor of dismissal with prejudice.

WHEREFORE, for the foregoing reasons, this court respectfully

RECOMMENDS that this case be dismissed in its entirety, with ...

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