Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_15-cv-01257/USCOURTS-casd-3_15-cv-01257-1/pdf.json

Nature of Suit Code: 893
Nature of Suit: Environmental Matters
Cause of Action: 42:9607 Real Property Tort to Land - Liability

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

LAWRENCE "CHIP" CRANDALL

AND ALICIA BERRY AS

COTRUSTEES OF THE

REVOCABLE INTERVIVOS TRUST

OF MARJORIE M. CRANDALL

DATED FEBRUARY 28, 1991 AS

RESTATED IN FULL ON APRIL 7,

2011,

Plaintiff,

CASE NO. 15cv1257-GPC(NLS)

ORDER GRANTING IN PART AND

DENYING IN PART SEMILLON

AND MULLINS’ EX PARTE

APPLICATION FOR JUDGMENT

AGAINST FAIRLANE CLEANERS,

INC. AND DISMISSAL OF

FAIRLANE CLEANERS’

COUNTERCLAIM

[Dkt. No. 59.]

vs.

SEMILLON INC. dba FAIRLANE

CLEANERS, a California corporation;

FAIRLANE CLEANERS, INC., a

California corporation; and THOMAS

E. MULLINS, an individual;

ALEXANDER G. SHAW, an

individual; and CINDY L.

CASSELMAN, an individual; and

DOES 1 through 100, inclusive,,

Defendants.

Before the Court is Defendants Semillon, Inc., dba Fairlane Cleaners, and

Thomas Mullins’ ex parte application for judgment against Fairlane Cleaners, Inc. and

dismissal of Fairlane’s entire action including pleadings and counterclaims for failing

to obtain counsel. (Dkt. No. 59.) Defendant Fairlane Cleaners, Inc. did not file an

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opposition. 

1

Background

On June 4, 2015, Plaintiff Lawrence “Chip” Crandall and Alicia Berry as

co-trustees of the Revocable Intervivos Trust of Marjorie M. Crandall dated February

28, 1991 asrestated in full on April 7, 2011 filed a complaint under the Comprehensive

Environmental Response, Compensation, and Liability Act of 1980 (“CERCLA”) and

other federal and state law causes of action for recovery of costs incurred by Plaintiff

for the release and threatened release of hazardous substances onto real property owned

by Plaintiff against Defendants Semillon Inc., dba Fairlane Cleaners (“Semillon”);

Fairlane Cleaners, Inc. (“Fairlane”); Thomas Mullins (“Mullins”); Alexander Shaw

(“Shaw”); and Cindy Casselman. (Dkt. No. 1, Compl. ¶ 1.) Defendants leased the

property from Plaintiff from 1988 to the present for purposes of operating a dry

cleaning facility. (Id. ¶ 2.) 

Fairlane appeared through counsel on June 29, 2015. (Dkt. No. 3.) On the same

day, Semillion and Mullins’ filed a counterclaim against Fairlane. (Dkt. No. 5.) 

Fairlane filed an answer to Semillon and Mullins’ counterclaim on July 23, 2015, and

a counterclaim against Semillon and Mullins. (Dkt. Nos. 12, 13.) Semillon and

Mullins filed an answer to the counterclaim on August 13, 2015. (Dkt. No. 17.) 

On March 3, 2016, the Court granted defense counsel’s motion to withdraw as

Fairlane and Shaw’s attorney. (Dkt. No. 43.) In that order, the Court directed Fairlane

to obtain substitute counsel by April 18, 2016. (Id. at 3.) On April 18, 2016, Fairlane,

through its representative Shaw, filed a request for extension of time to obtain new

counsel. (Dkt. No. 49.) The Court granted Fairlane’s request to obtain new counsel

by May 20, 2016. (Dkt. No. 52.) On May 20, 2016, certain parties filed a joint motion

On August 6, 2016, the Court received an email from Alexander Shaw, 1

president of Fairlane Cleaners, Inc., responding to the ex parte application. (Dkt. No.

61-1.) TheCourt rejected the document because “Corporations, partnerships and other

legal entities, may appear in court only through an attorney permitted to practice

pursuant to Civil Local Rule 83.3; Ex Parte Communication Civil Local Rule 83.9.”

(Id.)

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to modify dates due to a pending settlement and because Fairlane had not yet obtained

new counsel. (Dkt. No. 55.) The joint motion was granted by the Magistrate Judge on

May 23, 2016. (Dkt. No. 56.) To date, Fairlane has not obtained substitute counsel. 

Semillon and Mullins’ counsel states that prior to stipulating to the joint motion to

modify dates, Shaw, the President of Fairlane, indicated he could not afford counsel

and did not intend to retain new counsel. (Dkt. No. 59 at 5, Reaves Decl. ¶ 5.) As

such, on August 5, 2016, Semillon and Mullins filed the instant ex parte application for

motion for judgment against Fairlane, and dismissal of Fairlane’s counterclaimagainst

Semillon and Mullins. (Dkt. No. 59.) 

Discussion

A corporation, may not proceed in federal court without counsel. Rowland v.

California Men’s Colony, Unit II Men’s Advisory Council, 506 U.S. 194, 201-02

(1993); see also United States v. High Country Broadcasting Co. Inc., 3 F.3d 1244,

1245 (9th Cir. 1993); C.E. Pope Equity Trust v. United States, 818 F.2d 696, 697-98

(9th Cir. 1987). In the Southern District of California, “all other parties, including

corporation, partnerships and other legal entities may appear in court only through an

attorney permitted to practice pursuant to Civil Local Rule 83.3.” Civ. Local R. 83.3j.

“It is a longstanding rule that ‘[c]orporations and other unincorporated associations

must appear in court through an attorney.’” D-Beam Ltd. Partnership v. Roller Derby

Skates, Inc., 366 F.3d 972, 973-74 (9th Cir. 2004) (citing Licht v. Am. W. Airlines (In

re Am. W. Airlines), 40 F.3d 1058, 1059 (9th Cir. 1994)). 

In United States v. High Country Broadcasting Co., the Ninth Circuit held that

a default judgment was appropriate when the defaulting corporation failed to comply

with the district court’s order to retain licensed counsel. 3 F.3d 1244, 1245 (9th Cir.

1993). The sole shareholder and president of the corporation, who was not an attorney,

attempted to represent the corporation “by filing an answer and cross-complaint” on

behalf of it. Id. After discovering that the shareholder was not an attorney, the district

court ordered the corporation to retain licensed counsel. Id. After the corporation

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failed to retain counsel, the district court entered default judgment against it. Id.

When a corporation fails to retain counsel to represent it in an action, its answer

may be stricken and a default judgment entered against it. Employee Painters’ Trust

v. Ethan Enterprises, Inc., 480 F.3d 993 (9th Cir. 2007). Procedurally, courts have

stricken the answers of corporate defendants who have failed to defend themselves,

directed entry of default, and then allowed the plaintiff to move for default judgment. 

See Rojas v. Hawgs Seafood Bar, Inc., No. C08–03819 JF (PVT), 2009 WL 1255538,

at *1 (N.D. Cal. May 5, 2009) (“When a corporation fails to retain counsel to represent

it in an action, its answer may be stricken and a default judgment entered against it.”);

Oracle America, Inc. v. Serv. Key, LLC, No. C12-790SBA, 2013 WL 1195620, at *2-3

(N.D. Cal. Mar. 22, 2013) (ordering that if substitute counsel is not found, the court

will strike answer and direct entry of default, and then plaintiff may file a motion for

default judgment).

The facts in Schenker are akin to the facts in this case. Schenker, Inc. v.

PredatoryMogulwear Inc., No. C 07-1795 WHA, 2007 WL 4556915 (N.D. Cal. 2007). 

Defendant initially retained counsel and filed an answer and a counterclaim, but due

to its failure to pay its attorney’s fees the district court allowed counsel to withdraw as

defense counsel. Id. at *1. The court warned the defendant that if it failed to appear

with new counsel at the next conference, the court would hear a motion for default

judgment and dismiss its counterclaim with prejudice. Id. When defendant failed to

retain new counsel and did not appear at the conference, the plaintiff filed a motion for

default judgment and a motion for dismissal of the defendant’s counterclaim with

prejudice. Id. The Court conducted an analysis of default judgment under Federal

Rule of Civil Procedure (“Rule”) 55(b) considering the requisite Eitel factors and

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granted the plaintiff’s motion for default judgment. Id. at *2. 

Here, Semillon and Mullins improperly move for judgment on the pleadings

pursuant to Rules 12(b)(6) and 12(c), or alternatively Rule 56, and do not allege any

Eitel v. McCool, 782 F.2d 1470 (9th Cir. 1986). 

2

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damages sought. (Dkt. No. 59 at 2.) Instead, Semillon and Mullins should move for

default judgment once the answer has been struck and default entered pursuant to Rule

55(b) and address the Eitel factors. Once in default, while factual allegations in the

complaint are taken as true, those related to the amount of damages must be proven. 

See Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977). Here, Semillon and

Mullins have not asserted that they seek or do not seek damages. Accordingly, the

Court DENIES without prejudice Semillon and Mullins’ ex parte motion for judgment

on the pleadings pursuant to Rule 12(b)(6), (c), or alternatively Rule 56. 

Semillon and Mullins also seek dismissal of Fairlane’s counterclaims and its

answer for failing to comply with the Rules. Under Rule 41(b), a district court may

dismiss an action, including a counterclaim, based upon the failure to prosecute, the

failure to obey a court order, and the failure to comply with the Rules. Fed. R. Civ. P.

41(b)&(c). In the attorney withdrawal order, the Court warned Fairlane “that if it fails

to obtain new counsel and have counsel file a notice of appearance, it may be subject

to default proceedings.” (Dkt. No. 43 at 3.) Because Fairlane has failed to comply

with the Court’s order and failed to prosecute the action, the Court finds it appropriate

to dismiss Fairlane’s counterclaim against Semillon and Mullins and also strike

Fairlane’s Answer and direct entry of default against Fairlane. See Schenker, Inc.,

2007 WL 4556915 at *3 (dismissal of counterclaim with prejudice for failing to obtain

substitute counsel and “a refusal to obtain counsel constitutes a failure to appear in this

action, including a failure to file an answer to plaintiff’s complaint”); Employee

Painters’ Trust, 480 F.3d at 998 (defendant in default for failing to retain substitute

counsel for corporation and not for failing to answer); Solaria Corp. V. T.S. Energie

e Risorse, S.R.I., Case No. 13cv5201-SC, 2014 WL 7205114, at *4 (N.D. Cal. Dec. 17.

2014) (dismissing counterclaimwith prejudice for the defendant’s failure to retain new

counsel). 

Conclusion

Based on the above, the Court GRANTS in part and DENIES in part Semillon

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and Mullin’s ex parte motion for judgment on the pleadings and dismissal of Fairlane’s

entire action.

Specifically, the Court DENIES Semillon and Mullin’s ex parte motion for

judgment on their counterclaim, (Dkt. No. 5). In addition, the Court GRANTS

Semillon and Mullin’s ex parte motion for dismissal of Fairlane’s counterclaimagainst

Semillion and Mullin, (Dkt. No. 13), and GRANTS their motion to strike Fairlane’s

answer to Semillon and Mullin’s counterclaim filed on July 23, 2015, (Dkt. No. 12). 

The Court also directs the Clerk of Court to enter default against Fairlane. 

Semillon and Mullin’s may file a motion for default judgment with the

appropriate legal authority and analysis, and supporting evidence for any claimed

damages within 30 days of this order. 

IT IS SO ORDERED. 

DATED: August 25, 2016

HON. GONZALO P. CURIEL

United States District Judge

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