On June 26, 2009, this case was stayed pending resolution of defendants' bankruptcy petition, case number 09-31871, filed June 10, 2009, in the United States Bankruptcy Court for the Eastern District of California. Dckt. No. 65 at 2 (citing 11 U.S.C. § 362). The June 26, 2009 order directed the parties to "notify the court within ten (10) days of the resolution of the bankruptcy proceedings." Id. at 3. According to the June 26, 2009 order, "[t]he matters that remain unresolved in this action are: (a) the failure of defendants to respond to the court's [June 11, 2009] order to show cause, (2) the failure of defendants to file an answer and status report, (3) appropriate sanctions to be levied against defendants, including whether to require reimbursement for the expenses associated with the travel and appearance of plaintiffs' counsel at the [June 10, 2009 status conference] given defendants failure to inform the court or plaintiffs of the bankruptcy filing, and [whether to recommend entry of] default judgment. These matters shall be addressed upon termination of defendants' bankruptcy proceeding or an order granting relief from the automatic stay." Id. at 2-3; see also Dckt. No. 64 at 3.
On September 23, 2010, plaintiffs filed a notice of the dismissal of the related bankruptcy proceeding. Dckt. No. 66. The notice states that "on June 8, 2010, the United States Bankruptcy Court, Eastern District of California, dismissed the Debtor Mis Amigos Meat Market, Inc.'s Chapter 11 case, Case No. 09-31871-C-7," and that "on July 23, 2010, said was closed." Id. Therefore, on October 7, 2010, the stay entered by this court on June 26, 2009 was lifted. Dckt. No. 68 (citing 11 U.S.C. § 362(c)(2)). However, because none of the parties complied with the June 26 order requiring them to "notify the court within ten (10) days of the resolution of the bankruptcy proceedings," the parties were ordered to show cause why they should not be sanctioned for that failure, including dismissal of this case and/or the entry of default judgment against defendants. Id. The parties were further directed to meet and confer and to file a joint status report indicating the status of this action now that the stay has been lifted and any outstanding issues that must be resolved by the court. Id.
On October 25, 2010, plaintiffs filed a status report, as required by the October 7, 2010 order, and a response to the order to show cause. Dckt. Nos. 69, 70. In the response to the order to show cause, plaintiffs explain that although they filed a claim in the bankruptcy proceeding, they otherwise were not substantially involved in the case, and therefore did not closely monitor the bankruptcy case once it was converted from a Chapter 11 bankruptcy to a Chapter 7 bankruptcy. Dckt. No. 70 at 2. They apologize to the court for their inadvertence and state that they will "correct [their] approach for future bankruptcy proceedings . . . ." Id. at 2, 3. Therefore, the October 7, 2010 order to plaintiffs to show cause will be discharged.
Plaintiffs' October 25 status report indicates that plaintiffs have been unable to locate defendants; notes that the clerk entered default against both defendants on June 1, 2009; and requests that this court enter default judgment against both defendants. Dckt. No. 69 at 2. Plaintiffs request that the court "schedule a prove up hearing for computation of damages, fees, costs and penalties" and they state that they could conduct the prove up hearing promptly. Id. at 2, 3. Although it appears that defendants are in default, if plaintiffs seek default judgment against defendants, they shall notice a motion for default judgment in accordance with Local Rule 230.
Accordingly, IT IS HEREBY ORDERED that:
1. The October 7, 2010 order to plaintiffs to show cause is discharged.
2. If plaintiffs seek default judgment against defendants, they shall notice a motion for default judgment in accordance with Local Rule 230.
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