Austin Investment Fund, LLC v. United States

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
AUSTIN INVESTMENT FUND, LLC, by and
through BRUCE ELIEFF,
Plaintiffs,
Civil Action No. 11-2300 (CKK)
v.
UNITED STATES OF AMERICA,
Defendant.
MEMORANDUM OPINION
(May 8, 2014)
Presently before the Court is Plaintiff’s [75] Motion to Set Aside Order of Dismissal.
Upon consideration of the pleadings 1, the relevant legal authorities, and the record as a whole,
the Court GRANTS Plaintiff’s Motion. Accordingly, this action is REINSTATED. The parties
shall adhere to the schedule set out in the accompanying Memorandum Opinion.
I. BACKGROUND
On May 16, 2011, Austin Investment Fund, by and through individuals Bruce Elieff and
Kathy Abrahamson, filed a [1] Petition for Review of Final Partnership Administrative
Adjustments in the United States District Court for the Central District of California. On
December 29, 2011, the case was transferred to this Court. See Minute Order (Dec. 30, 2011).
Soon after the case was transferred to this Court, Abrahamson’s then-counsel filed a [39] Motion
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Pl.’s Mot. to Set Aside Order of Dismissal, ECF No. [75] (“Pl.’s Mot.”); Mem. in Supp.
of Mot. to Set Aside Order of Dismissal, ECF No. [75-1] (“Pl.’s Mem.”); Def.’s Resp. in Opp’n
to Bruce Elieff’s Mot. to Set Aside Order of Dismissal, ECF No. [76] (“Def.’s Opp’n”); Reply to
Def.’s Obj. to Elieff’s Mot. to Set Aside Order of Dismissal, ECF No. [79] (“Pl.’s Reply”). In an
exercise of its discretion, the Court finds that holding oral argument would not be of assistance in
rendering a decision. See LCvR 7(f).
to Withdraw. This motion listed Abrahamson’s current mailing address as 26 Pelican Point
Drive, Newport Beach, CA 92657 (the “Newport Beach address”). Rather than respond to this
motion, Abrahamson then entered a [41] Notice of Appearance Pro Se in which she indicated
that she should be served at the Newport Beach address. However, after Abrahamson failed to
appear at the Initial Scheduling Conference on April 13, 2012, the Court dismissed her claims
without prejudice. See Order, ECF No. [51].
With Abrahamson’s claims dismissed, the case proceeded to discovery. On April 13,
2012, the Court issued a [52] Scheduling and Procedures Order setting out deadlines for
discovery, which was set to conclude on March 29, 2013. However, quickly after discovery
began, Elieff’s counsel, Edward O.C. Ord, moved to stay proceedings in this case due to his
diagnosis with oral cancer. See Bruce Elieff’s Mot. to Extend All Court Set Deadlines for Six
Months and to Put a Stay on All Proceeding in this Matter for that Same Period, ECF No. [57].
The Court granted this stay, see Minute Order (July 9, 2012), which continued through August
2013 when Mr. Ord filed a [68] Motion to Withdraw as Legal Counsel. Mr. Ord represented that
he was withdrawing both because of his health and because “[a] conflict has arisen which the
plaintiff has not been able to resolve which precludes counsel from continuing as counsel in this
case.” On August 6, 2013, the Court granted Mr. Ord’s motion, see Order, ECF No. [70]. On
the same day, the Court issued a Minute Order stating “Plaintiffs shall secure new counsel and
have that attorney enter an appearance by no later than September 20, 2013. If Plaintiffs are
unable to secure counsel by that date, they shall file a report on that date explaining their
efforts.” Minute Order (Aug. 6, 2013). Because Elieff purported to represent the interests of
Austin Investment Fund, a corporation, the Court presumed that he could not proceed pro se in
this matter. See Rowland v. Cal. Men’s Colony, 506 U.S. 194, 201-02 (1993) (“It has been the
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law for the better part of two centuries . . . that a corporation may appear in the federal courts
only through licensed counsel.”). Having no address on file for Plaintiff other than the Newport
Beach address, the Clerk of the Court mailed a copy of the Minute Order to this address.
On September 19, 2013, apparently having received the Court’s Minute Order, Elieff
filed a [71] Status Report which stated: “I request that I be given an additional 30 days to arrange
for and have counsel appear.” Elieff did not provide any additional information regarding his
efforts to obtain counsel. He signed the Status Report and listed the following address below his
signature: 2392 Morse Avenue, Irvine, CA 92614 (the “Irvine address”). Elieff, however, did
not file a notice of change of address, as required by the Local Civil Rules. See LCvR 5.1(c)(1)
(“Unless changed by notice filed with the Clerk, the address and telephone number of a party or
an attorney noted on the first filing shall be conclusively taken as the last known address and
telephone number of the party or attorney.”). On September 23, 2013, the Court issued another
Minute Order granting Elieff until October 21, 2013 to either arrange for counsel to appear, or
file a detailed explanation of his efforts to obtain counsel. Minute Order (Sept. 23, 2013). The
Clerk of the Court, unaware that the Irvine address was a possible address of record for Plaintiff,
mailed this Minute Order to the Newport Beach address, which was listed on the docket as the
address of record for Plaintiff.
Elieff never responded to the September 23, 2013 Minute Order, and after the October
21, 2013 deadline came and went, the Court issued another Minute Order on November 18, 2013
stating that if the report regarding efforts to obtain counsel was not received by December 6,
2013, “this Court [would] dismiss Plaintiffs’ claims without prejudice for want of prosecution.”
See Minute Order (Nov. 18, 2013). Again, the Clerk of the Court mailed this Minute Order to
the Newport Beach address.
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Receiving no response to the November 18, 2013 Minute Order, the Court issued another
[72] Order on December 20, 2013. The Order first stated that Abrahamson’s claims, which had
already been dismissed without prejudice (as discussed), were dismissed without prejudice for
her failure to respond to the Court’s orders. 2 More importantly, the Order also recognized that
the Court’s previous Minute Orders regarding reports as to obtaining counsel and potential
dismissal for want of prosecution had only been sent to the Newport Beach address, and thus
may not have reached Elieff. On this point, the Order explained:
The Court also notes that copies of these Minute Orders were not sent to Plaintiff
Bruce Elieff, who did not supply an address of record on the docket. The Court is
aware that in the past, Plaintiff Elieff has responded to notices that the Clerk’s
Office has only mailed to Plaintiff Abrahamson, suggesting that he too has
received notice of the Court’s most recent orders. See Plaintiff Bruce Elieff’s
Status Report, ECF No. [71]. However, out of an abundance of caution, because
it is unclear whether Plaintiff Elieff has received actual notice of the Court’s
Minute Orders of September 23, 2013 and November 18, 2013, the Court will
provide Plaintiff Elieff one final opportunity to respond to these orders. If, by
January 15, 2014, new counsel does not enter an appearance in this action or
Plaintiff Elieff does not file a report explaining in detail his efforts to obtain new
counsel, the Court will dismiss this entire action without prejudice for want of
prosecution. The Clerk of the Court shall mail of the copy of this Order to
Plaintiff Elieff at the address indicated in previous filings with the Court. See
Plaintiff Bruce Elieff’s Status Report, ECF No. [71].
See Order, ECF No. [72] at 1-2. At the Court’s instruction, the Clerk of the Court mailed a copy
of this Order to the Irvine address.
The Court received no response from Elieff by the January 15, 2014 deadline and on
January 23, 2014, it issued another [73] Order which dismissed this case without prejudice for
want of prosecution. At the Court’s instruction, the Clerk of the Court mailed a copy of this
Order to the Irvine address.
2
This re-dismissal of Abrahamson’s claims was redundancy on the part of the Court,
although without prejudice to any party and irrelevant to the present dispute.
4
On February 14, 2014, Mr. Ord entered an appearance as counsel for Elieff. See Notice
of Appearance, ECF No. [74]. The following day, Elieff, through counsel, filed the present [75]
Motion to Set Aside Order of Dismissal. In this motion and the supporting documents, Elieff
states that he did not receive the Court’s December 20, 2013 Order, nor was he aware of its
existence from any source in December 2013 or January 2014. Pl.’s Mem. at 2. As support for
this statement, Elieff provides his own declaration as well as the declaration of his assistant,
Angela Vinci. Pl.’s Mem., Ex. A (Decl. of Bruce Elieff) ¶ 3; Id., Ex. B (Decl. of Angela Vinci)
¶¶ 5, 10. Elieff states in his declaration that Abrahamson, his ex-wife, did not inform him of the
December 20, 2013 Order. Id., Ex. A ¶ 8. Elieff does not address whether he received notice of
the Court’s earlier Minute Orders sent to Abrahamson’s Newport Beach address. In addition, in
response to the Court’s prior requests that he explain his efforts to obtain counsel, Elieff states
that he lacked the monetary resources to afford counsel due to his financial struggles since the
2008 bankruptcy of Lehman Brothers, which he states was the principal source of funding for his
company. Id. at 4-5, Ex. A ¶ 6. Elieff further states that the continued dismissal of the case
would result in liability of $10 million for him. Id. at 7-8.
The United States subsequently filed a Response in Opposition to Bruce Elieff’s Motion
to Set Aside Order of Dismissal. See Def.’s Opp’n. The United States argues that Plaintiff’s
motion should be denied because Elieff failed to communicate with the Court even before the
December 20, 2013 Order. Id. at 3. The United States argues that Elieff’s complete failure to
follow up with the Court between September 2013 and February 2014 justifies this action’s
continued dismissal. Id. at 2. In addition, Defendant takes issue with Elieff’s assessment of his
potential liability if this case is dismissed, arguing that $10 million is a grossly exaggerated
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estimate. Id. at 4-6. Plaintiff then filed a reply in support of the motion, which primarily
responds to Defendant’s arguments regarding Elieff’s potential liability. Pl.’s Reply at 4-6.
II. LEGAL STANDARD
Pursuant to Rule 60(b) of the Federal Rules of Civil Procedure a district court is
permitted to “relieve a party or its legal representative from a final judgment, order, or
proceeding” on one of six enumerated grounds. Fed. R. Civ. P. 60(b). Previous cases have
analyzed the claimed loss of documents in the mail or errors in mailing under Rule 60(b). See
Trupei v. United States, 274 F.R.D. 38, 39 (D.D.C. 2011); Brandon v. Chicago Bd. of Educ., 143
F.3d 293, 295-96 (7th Cir. 1998). Here, Plaintiffs’ counsel relies upon Rule 60(b)(1) and Rule
60(b)(6). Rule 60(b)(1) permits a court to relieve a party from an order based on “mistake,
inadvertence, surprise, or excusable neglect.” Fed. R. Civ. P. 60(b)(1). Rule 60(b)(6) represents
a catch-all provision, permitting a court to relieve a party from an order for “any other reason
that justifies relief” besides Rule 60(b)(1)-(5). Fed. R. Civ. P. 60(b)(6). The party seeking relief
under Rule 60(b) bears the burden of showing that he or she is entitled to the relief. Norris v.
Salazar, 277 F.R.D. 22, 25 (D.D.C. 2011).
III. DISCUSSION
In support of the Rule 60(b) motion, Elieff argues that his failure to receive the December
20, 2013 Order constitutes the “excusable neglect” sufficient under Rule 60(b)(1) to forgive his
failure to respond by January 15, 2014. Pl.’s Mem. at 8-12. The Supreme Court has set out four
factors for determining what constitutes “excusable neglect.” Pioneer Inv. Servs. Co. v.
Brunswick Assoc. Inc., 507 U.S. 380, 395 (1993). These factors are: “(1) the danger of prejudice
to the [opposing party], (2) the length of delay and its potential impact on judicial proceedings,
(3) the reason for the delay, including whether it was within the reasonable control of the
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movant, and (4) whether the movant acted in good faith.” In re Vitamins Antitrust Class Actions,
327 F.3d 1207, 1209 (D.C. Cir. 2003) (citing Pioneer, 507 U.S. at 395). The inquiry into
whether a party’s action constitutes excusable neglect “is at bottom an equitable one, taking
account of all relevant circumstances surrounding the party’s omission.” Pioneer, 507 U.S. at
395.
Here, on balance, these factors favor reinstating this case pursuant to Rule 60(b)(1). As
to the first factor, the United States has not alleged any prejudice from granting Plaintiff’s
motion and reinstating this case. 3 With respect to the second factor, Elieff’s six-month failure to
respond to the Court’s orders did not clearly delay proceedings in this case. Prior to its
dismissal, this case had been stayed since July 2012 due to the illness and withdrawal of
Plaintiff’s current counsel. Consequently, Elieff’s actions hardly stopped a swiftly moving case
in its tracks. In addition, Elieff states that even if he had timely responded to the Court’s orders
and provided a description of his efforts to obtain counsel, he would have explained that he
lacked funds to obtain counsel and required a further extension. Pl.’s Reply at 4. If Elieff had
supplied this evidence and the Court had granted these extension requests, the case then would
have remained in a holding pattern until February 2014, when Mr. Ord returned as counsel.
Accordingly, Elieff’s failure to follow the Court’s deadlines has not significantly impacted these
proceedings.
3
Indeed, the only prejudice discussed by the parties is prejudice to Elieff from the
continued dismissal of this case. Elieff argues that if this case remains dismissed, he will be
exposed to liability of approximately $10 million. Pl.’s Mem. at 7-8. Defendant disputes this
calculation, arguing that a far lower amount is at stake in this litigation. Def.’s Opp’n at 4-6.
Although this dispute is irrelevant to the resolution of Plaintiff’s motion, the Court notes that the
amount at stake in this litigation does not equal the level of prejudice to Elieff. Because
Plaintiff’s case was dismissed without prejudice, and neither party argues that the statute of
limitations has expired on Plaintiff’s claim, the only prejudice to Elieff from continued dismissal
would be the filing fee associated with initiating a new action.
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As to the remaining two factors – the reason for the delay and the absence of bad faith –
Elieff offers the explanation that he did not receive the Court’s December 20, 2013 Order
advising him that this case would be dismissed without prejudice if he failed to respond.
Although previous orders were not sent to the Irvine address, the December 20, 2013 Order was,
and “[p]roof that mail matter is properly addressed, stamped and deposited in an appropriate
receptacle has long been accepted as evidence of delivery to the addressee.” Legille v. Dann,
544 F.2d 1, 4-5 (D.C. Cir. 1976). Nevertheless, this “presumption is rebuttable.” Id. at 5-6 (“If
the opponent does offer some evidence to the contrary (sufficient to satisfy the judge’s
requirement of some evidence), the presumption disappears as a rule of law, and the case is in
the (factfinder’s) hands free from any rule.”). In past cases, affidavits that a party never received
a piece of mail have provided sufficient evidence to rebut the presumption of delivery. See
Canales v. A.H.R.E., Inc., 254 F.R.D. 1, 5 (D.D.C. 2008). Here, Elieff offers his own declaration
as well as the declaration of his assistant that the Court’s December 20, 2013 Order was never
received at the Irvine address. Elieff’s declaration further states that he had no notice of the
December 20, 2013 Order in December 2013 or January 2014. Pl.’s Mem., Ex. A ¶ 3. Both
declarations are made under penalty of perjury. Since the Court presumes that Elieff and his
assistant are not engaging in perjury, it has no reason to question these declarations.
In addition, since the Court’s previous orders were sent to the Newport Beach address,
the Court cannot fault Elieff for failing to respond to mail sent to the address of another. To be
sure, the Court has some doubts that Elieff did not receive any of the orders prior to December
20, 2013, as he did respond to the Court’s August 6, 2013 Minute Order which was only sent to
the Newport Beach address. Elieff provides no explanation for how this Minute Order reached
him. Nevertheless, the Court will not infer bad faith from this silence alone, as it is possible that
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Elieff could have been advised of the order by Mr. Ord, who withdrew as Plaintiff’s counsel the
same day the Minute Order was issued.
Although the Court does not find bad faith, it notes that Elieff was certainly derelict in his
duty to keep track of his case. See Breen v. LaHood, 597 F. Supp. 2d 84, 88 (D.D.C. 2009)
(“Plaintiffs are expected to use reasonable diligence in participating in litigation, and plaintiffs
are expected to maintain communication with their counsel.”); Ake v. Mini Vacations, Inc., 174
F.R.D. 110, 112 (M.D. Fla. 1997) (noting that plaintiff “had a duty to monitor the progress of the
case, communicate with her attorney, and to inquire of the Court as to the status of her case in
the event she is unable to contact her attorney.”). Here, Elieff failed to provide the Court with an
address at which he could be reached, leading the Clerk of the Court to mail correspondence to
the only address on record, Abrahamson’s Newport Beach address. Although his September 19,
2013 Status Report included the Irvine address in a signature block, Elieff never indicated that
this was the address at which the Clerk of the Court should send him materials. See LCvR
5.1(c)(1) (“Unless changed by notice filed with the Clerk, the address and telephone number of a
party or an attorney noted on the first filing shall be conclusively taken as the last known address
and telephone number of the party or attorney.”). Furthermore, after submitting his Status
Report on September 19, 2013, Elieff completely failed to inquire into the status of his case until
February 2014. If he had, he would have seen that his case was in danger of being dismissed.
Nevertheless, because Elieff was effectively functioning as a pro se litigant once Mr. Ord
withdrew in August 2013, and because the Court has no clear evidence of bad faith on Elieff’s
part, the Court will grant Plaintiff’s motion and reinstate this case. 4
4
Because the Court grants Plaintiff’s motion pursuant to Rule 60(b)(1), Rule 60(b)(6)
relief is inappropriate here, as claims under Rule 60(b)(6) must not be “premised on one of the
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IV. CONCLUSION
For the reasons stated herein, Plaintiff’s [75] Motion to Set Aside Order of Dismissal is
GRANTED. This action is therefore REINSTATED. Furthermore, in light of the appearance of
Plaintiff’s counsel, the stay imposed by the Court’s July 9, 2012 Minute Order is LIFTED. An
appropriate order accompanies this Memorandum Opinion. The parties shall adhere to the
schedule for further proceedings set out in this Order.
_____/s/______________________
COLLEEN KOLLAR-KOTELLY
United States District Judge
grounds for relief enumerated in clauses (b)(1) through (b)(5).” Liljeberg v. Health Servs.
Acquisition Corp., 486 U.S. 847, 863 (1988).
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