Telogy, Inc. v. Shanghai Tailaiji electronic Equipment Co.

UNITED
STATES
BANKRUPTCY
COURT
NORTHERN DISTRICT OF CALIFORNIA
1300 Clay Street (2d fl.)
Oakland, CA. 94612
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Memorandum re: Motion to Vacate Order of Dismissal
UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
In re 	No. 05-49371-J
TELOGY, INC., 	(Jointly administered with
Case No. 05-49372-J)
Debtor. 	/
TELOGY, INC., 	Adv. No. 06-4237 AJ
Plaintiff,
vs.
SHANGHAI TAILAIJI ELECTRONIC
EQUIPMENT CO.,
Defendant. /
MEMORANDUM RE MOTION TO VACATE ORDER OF DISMISSAL
Plaintiff failed to appear at the status conference set for
May 21, 2007. 	As a consequence, the court ruled that this adversary
proceeding would be dismissed for lack of prosecution. 	On May 22,
2007, plaintiff filed a motion for relief from that ruling.
At the hearing thereon, the court expressed doubts for various
reasons as to whether plaintiff could prevail on the merits, and
Signed: June 08, 2007

EDWARD D. JELLEN
U.S. Bankruptcy Judge

Entered on Docket
June 08, 2007
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
Entered on Docket
June 08, 2007
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
Case: 06-04237 Doc# 34 Filed: 06/08/07 Entered: 06/08/07 16:46:27 Page 1 of 4

UNITED
STATES
BANKRUPTCY
COURT
NORTHERN DISTRICT OF CALIFORNIA
1300 Clay Street (2d fl.)
Oakland, CA. 94612
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1Fed. R. Civ. Pro. 41(b) applies in bankruptcy cases
pursuant to Fed. R. Bankr. Pro. 7041.
2With reference to sanctions, plaintiff’s counsel has
offered to compensate defendant for any out-of-pocket loss it
incurred as the proximate result of the non-appearance.
Memorandum re: Motion to Vacate Order of Dismissal
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questioned whether reinstatement was appropriate in view thereof.
See In re Hammer, 940 F.2d 524 (9th Cir. 1991) (holding that a trial
court has discretion to deny a defendant’s motion for relief from a
final judgment pursuant to Fed. R. Civ. Pro. 60(b) if the defendant
fails to show that he or she has a meritorious defense).
However, plaintiff argues, persuasively, that the foregoing
rule does not apply in a situation where the court has ordered a
case dismissed for lack of prosecution pursuant to Fed. R. Civ. P.
41(b) 1 merely because of a plaintiff’s failure to appear at a status
conference. 	In addition, the case is relatively new and a less
drastic sanction is available. 	See Tolbert v. Leighton, 623 F.2d
585 (9th Cir. 1980). 	Here, all of the foregoing circumstances are
present. 2 	Moreover, plaintiff acted promptly to seek reinstatement,
and counsel’s failure to appear was inadvertent rather than an
intentional disregard of counsel’s responsibilities.
Under these circumstances, reinstatement of the action is
appropriate.
Defendant argues that the contract at issue, which plaintiff
seeks to avoid pursuant to Bankruptcy Code § 549(a) (unauthorized
postpetition transfer), contains an arbitration clause. 	Therefore,
Case: 06-04237 Doc# 34 Filed: 06/08/07 Entered: 06/08/07 16:46:27 Page 2 of 4

UNITED
STATES
BANKRUPTCY
COURT
NORTHERN DISTRICT OF CALIFORNIA
1300 Clay Street (2d fl.)
Oakland, CA. 94612
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3Even so, the court will take the liberty of noting that
although defendant is correct when it asserts that there is a
federal policy favoring arbitration, See Shearson/American
Express v. McMahon, 482 U.S. 220 (1987), such policy is
inapplicable to core proceedings under 28 U.S.C. § 157(b)(2).
Hays and Co. v. Merrill Lynch, 885 F.2d 1149, 1152-56 (3rd Cir.
1989); In re Gandy, 299 F.3d 489, 495 (5th Cir. 2002). 	See also
In re Gurga, 176 B.R. 196, 198-200 (9th Cir. BAP 1994).
Memorandum re: Motion to Vacate Order of Dismissal
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argues defendant, the court should decline to reinstate the case,
but allow plaintiff to submit its claims to arbitration.
The court rejects this argument. 	The issue of reinstatement is
separate from the issue of the appropriate forum: if the bankruptcy
court is the appropriate forum, it remains such notwithstanding
plaintiff’s failure to appear at the status conference.
Moreover, no motion to compel arbitration is pending. 3
For the foregoing reasons, the court will issue its order
vacating the order of dismissal.
END OF ORDER
Case: 06-04237 Doc# 34 Filed: 06/08/07 Entered: 06/08/07 16:46:27 Page 3 of 4

UNITED
STATES
BANKRUPTCY
COURT
NORTHERN DISTRICT OF CALIFORNIA
1300 Clay Street (2d fl.)
Oakland, CA. 94612
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Memorandum re: Motion to Vacate Order of Dismissal
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COURT SERVICE LIST
James K. T. Hunter, Esq.
Pachulski Stang Ziehl Young
Jones & Weintraub LLP
150 California Street, 15 th Floor
San Francisco, CA 94111-4500
James Cai, Esq.
Schein & Cai LLP
100 Century Center Court, Suite 315
San Jose, CA 95112
Robert L. Eisenbach III, Esq.
Cooley Godward Kronish LLP
101 California Street, 5 th Floor
San Francisco, CA 94111-5800
Case: 06-04237 Doc# 34 Filed: 06/08/07 Entered: 06/08/07 16:46:27 Page 4 of 4