Judge: Stephen I. Goorvitch, Case: 19STCV33482, Date: 2023-03-20 Tentative Ruling
Case Number: 19STCV33482 Hearing Date: March 20, 2023 Dept: 39
Crossline
US Apparel, Inc. v. Forever 21, Inc., Case No. 19STCV33482
Plaintiff
Crossline US Apparel, Inc. (“Plaintiff” or “Crossline”) filed this action
against Defendant Forever 21, Inc. (“Defendant” or “Forever 21”). On
October 21, 2019, Defendant’s counsel filed a notice informing the Court and
Plaintiff’s counsel that Defendant and certain of its subsidiaries and affiliates
filed voluntary petitions for relief under Title 11 of the United States Code
in the U.S. Bankruptcy Court for the District of Delaware. This case has
been stayed since that date. This Court has held routine status
conferences concerning the bankruptcy. On October 30, 2020, the Court
(Feffer, J.) held a status conference. Plaintiff’s counsel did not
appear. On February 23, 2021, this Court held a status conference.
Plaintiff’s counsel did not appear. On August 26, 2021, the Court held a
status conference. Plaintiff’s counsel did not appear. On December
20, 2021, the Court held a status conference. Plaintiff’s counsel did not
appear. At that hearing, Defendant’s counsel reported that the bankruptcy
case was resolving, and distributions would occur shortly. (See Court’s
Minute Order, dated December 20, 2021.) Therefore, the Court issued an
Order to Show Cause why this case should not be dismissed with prejudice.
(Ibid.) The Court provided notice: “[I]f Plaintiff’s counsel does not
appear absent good cause, the Court will assume Plaintiff’s claims have been
resolved by the bankruptcy and will dismiss the case with prejudice.”
(Ibid.) The Court’s clerk provided notice.
The
Court held an OSC hearing on March 18, 2022, at which Plaintiff’s counsel
appeared. Defendant’s counsel represented that distributions were in
progress and discharge may occur this summer. Therefore, the Court
continued the OSC hearing. On September 9, 2022, the Court continued the
OSC hearing to March 7, 2023, based upon Defendant’s status report. On
March 1, 2023, Defendant’s counsel filed a status report with an order from the
U.S. Bankruptcy Court dismissing the remaining Chapter 11 case and authorizing
the dissolution of the debtor. The order states that the debtor Forever
21, Inc. “is permitted to file a certificate of dissolution, cancellation, or
other applicable notice . . .” and may “execute and file any and all notices or
documents necessary and proper to memorialize, effectuate, or consummate its
dissolution.” Defendant’s counsel represented that “Plaintiff submitted a
claim in bankruptcy, and the Bankruptcy Court resolved all outstanding
claims.” (See Court’s Minute Order, dated March 7, 2023.)
Plaintiff’s counsel was scheduled to appear remotely but did not connect and
did not call the Court’s clerk until after calendar to report technical
issues. Therefore, the Court dismissed the case with prejudice.
Now,
Plaintiff seeks to set aside that order, stating that “due to a technical
glitch on LACourtConnect website, counsel for Crossline was not appear to
appear remotely at the hearing . . . .” Of course, the Court would grant
such an ex parte application if a technical issue prevented counsel from
appearing. However, Plaintiff’s counsel provides no basis to set aside
the dismissal of Defendant Forever 21, Inc. The Bankruptcy Court ordered
the corporate entity that was the defendant in this case—Forever 21, Inc.—to be
dissolved. All claims were resolved in the bankruptcy case. Simply,
Plaintiff’s counsel provides no good cause to reinstate Forever 21, Inc. as a
defendant in this action. Plaintiff’s counsel represents that Plaintiff
is exploring alter ego and agency theories, representing that Doe 1 through Doe
20 are “mostly Forever 21 alter egos.” Therefore, the Court will grant
the ex parte application to the extent it seeks to set aside the dismissal of
Doe 1 through Doe 20.
Based
upon the foregoing, the Court orders as follows:
1.
Plaintiff’s ex parte application is granted in part and denied in part.
2.
Plaintiff’s ex parte application is denied to the extent it seeks to set aside
the dismissal with prejudice of Defendant Forever 21, Inc. The entity
that was Forever 21, Inc. has been ordered dissolved, and all pending claims
were resolved in the bankruptcy case.
3.
Plaintiff’s ex parte application is granted to the extent it seeks to set aside
the dismissal of Doe 1 through Doe 20, in the event Plaintiff wishes to pursue
additional defendants.
4.
The Court sets an Order to Show Cause why Doe 1 through Doe 20 should not be
dismissed for lack of prosecution under Code of Civil Procedure sections 581
and 583. The OSC hearing shall be held on July 17, 2023, at 8:30 a.m. at
the following location:
Stanley
Mosk Courthouse
111
North Hill Street
Department
#39 (Goorvitch, J.)
Los
Angeles, California 90012
Plaintiff’s
counsel may appear remotely or in-person. The Court orders Plaintiff’s
counsel to file a status report concerning Plaintiff’s efforts to identify and
serve any alter egos on or before July 10, 2023. The Court provides
notice: If Plaintiff’s counsel does not provide some basis to conclude that
there are alter ego defendants and that Plaintiff has made efforts to identify
and serve them, absent good cause, the Court will dismiss this case without
prejudice. The Court provides notice: If Plaintiff’s counsel does not
appear at the hearing, absent good cause, the Court will dismiss this case
without prejudice. The Court orders Plaintiff’s counsel to contact the
Court’s clerk via telephone if there are technical issues in the future.
5.
Plaintiff’s counsel shall provide notice and file proof of such with the
Court.