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Medrad, Inc v. Sprite Development

April 30, 2012

MEDRAD, INC., PLAINTIFF/COUNTERDEFENDANT,
v.
SPRITE DEVELOPMENT, LLC; SPRITE SOLUTIONS, LLC; HANS MICHE, LLC; ROBERT BECK, LLC; HANS MICHE; AND ROBERT BECK, DEFENDANTS/COUNTERCLAIMANTS.



The opinion of the court was delivered by: Judge Joan H. Lefkow

OPINION AND ORDER

Medrad, Inc. ("Medrad") brought suit against Sprite Development, LLC; Sprite Solutions, LLC; Hans Mische, LLC; Robert Beck, LLC; and Hans Mische and Robert Beck. After Sprite Solutions was dismissed from the case, the remaining defendants filed a counterclaim against Medrad for fraudulent inducement, violation of the Sherman Act, conversion, and breach of contract. The court granted Medrad's motion to dismiss the counterclaims on September 6, 2011, giving defendants until September 23, 2011 to file an amended counterclaim. (Dkt. #79, 80.) When defendants failed to file an amended counterclaim and failed to appear at the next status hearing, the court dismissed the counterclaims with prejudice pursuant to Federal Rule of Civil Procedure 41. (Dkt. #82.) Before the court is defendants' amended motion to vacate the dismissal order. (Dkt. #91.) For the reasons that follow, the motion is denied.

BACKGROUND

Medrad filed its complaint on September 5, 2008, seeking a declaration that it properly terminated a Joint Development Agreement and Consulting Agreements entered into with defendants. Up until approximately November 7, 2011, defendants were represented by local counsel and by Paul Egtvedt, a Minnesota attorney.

Throughout these proceedings, Egtvedt repeatedly missed and then requested extensions for filing deadlines ordered by the court. On July 31, 2009, Egtvedt missed the deadline for filing defendants' reply brief in support of their motion to dismiss Medrad's second amended complaint. Egtvedt filed the brief on August 5, 2009, accompanied by an agreed stipulation to extend time to reply. (See Dkt. #52, 53.) The stipulation states that extra time was needed because "counsel for Plaintiff [sic] has had a computer malfunction which will prevent him from being able to timely file Defendants' Reply to Plaintiff's Response to Defendants' Motion to Dismiss." (Dkt. #52.)

After the court denied the motion to dismiss, Egtvedt failed to file an answer by September 21, 2010 as ordered by the court. (See Dkt. #60, 62.) Seven days after the deadline passed, Egtvedt requested an additional two weeks to file an answer. (See Dkt. #62.) The court granted the motion requesting additional time, but Egtvedt then missed that deadline as well. Two days late, on October 14, 2010, Egtvedt filed defendants' answer and counterclaims without motion, explanation, or leave of court. (See Dkt. #63.)

Medrad timely moved to dismiss the counterclaims, and the court set a briefing schedule that ordered defendants to respond by December 30, 2010. (Dkt. #65.) Egtvedt did not file anything until January 19, 2011, when he asked for another six days to file defendants' response.

(Dkt. #68.) The reason given for the request was that defendants needed additional time to "properly respond to the arguments raised by Plaintiff." (Id.) Although the court never ruled on the request, Egtvedt filed defendants' response on January 25, 2011. (Dkt. #71.) Egtvedt also filed an amended answer and counterclaim, which the court struck because it was filed without leave of court. (Dkt. #76.)

On September 6, 2011, the court dismissed defendants' counterclaims without prejudice to re-filing amended counterclaims by September 23, 2011. (Dkt. #79, 80.) Egtvedt failed to file amended counterclaims, and the court scheduled a status hearing on October 4, 2011. Defendants did not appear. The court then granted Medrad's oral motion to dismiss the counterclaims with prejudice pursuant to Rule 41. (Dkt. #82.)

On November 7, 2011, defendants, represented by new counsel, filed a motion to vacate the court's October 4 dismissal order. (Dkt. #85.) The court denied the motion to vacate but subsequently gave defendants leave to file an amended motion to vacate or, in the alternative, to extend the date to file an amended counterclaim. (Dkt. #92.)

Defendants filed their amended motion to vacate on November 21, 2011. (Dkt. #91.) The motion is supported by affidavits from Hans Mische, Robert Beck, and their local counsel, Michael Johnson. According to the affidavits of Mische and Beck, Egtvedt failed to notify them of the court's September 6 and October 4 orders and failed to respond to Mische and Beck's calls and emails during the month of September. Egtvedt also failed to respond to Johnson's calls and emails regarding the court's September 6 order and the October 4 status hearing. Mische and Beck first learned of the order dismissing their counterclaims on October 5, 2011, from Johnson. Subsequently, on October 10, 2011, Johnson learned that Egtvedt was not authorized to practice law in Minnesota. Johnson immediately notified Mische and Beck, who dismissed Egtvedt as their attorney on October 14, 2011.

On its own initiative, the court made an inquiry of the Minnesota Lawyers Registration Board and was advised that there was no record that Egtvedt had ever been unauthorized to practice law in Minnesota. The court ordered defendants to submit admissible evidence regarding Egtvedt's status. (Dkt. #94.) On December 5, 2011, defendants supplemented their motion with new correspondence from the Minnesota Supreme Court Lawyer Registration Office and the Minnesota Office of Lawyers Professional Responsibility. According to the Minnesota Supreme Court Lawyer Registration Office, Egtvedt's Minnesota lawyer license was transferred to inactive status, or "Not-Authorized to Practice in Minnesota," on May 24, 2011, for failure to comply with his CLE requirements. He was transferred back to active status by court order on October 18, 2011. The Minnesota Office of Lawyers Professional Responsibility represents that Egtvedt failed to pay his annual attorney registration fee on January 1, 2011, and that pursuant to the Minnesota Rules of the Supreme Court his right to practice law would have been automatically suspended until he paid his dues on April 6, 2011.

DISCUSSION

I. Applicable Legal ...


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