TIX Corp. v. Live It Live, Inc.

212 F.Supp.3d 858

TIX CORPORATION, Plaintiff

v.LIVE IT LIVE, INC., and John Does 1–50, Defendants

Live It Live, Inc., Counterclaimant

v.Tix Corporation, Counterclaim-defendant

Case No. LA CV 11–00221–VBF

United States District Court, C.D. California.

Filed March 16, 2015

Joseph Sedlacek, Mazis & Park, Irvine, CA, Peter E. Ferraro, The Ferraro Law Firm, Austin, TX, for Plaintiff.

Christopher M. Ferraro, Pro Hac Vice, Peter E. Ferraro, Pro Hac Vice, The Ferraro Law Firm, Austin, TX, J. Patrick Fleming, Case Knowlson LLP, Los Angeles, CA, for Defendant.

PROCEEDINGS (IN CHAMBERS): ORDER Directing Defendant Live It Live, Inc., to Show Cause in Writing, No Later than April 24, 2015, Why It Should Not be Sanctioned for Allegedly Failing to Comply with Court's Sept. 7, 2011 Arbitration Order (Doc 84) and With Purported Arbitration Agreement; Directing Plaintiff to Respond No Later Than Friday, May 22, 2015; Permitting Defendant Live It Live, Inc., to Reply No Later Than Friday, June 12, 2015

HONORABLE VALERIE BAKER FAIRBANK, U.S. DISTRICT JUDGE

The Pleadings in this Diversity Contract & Fraud Action. Plaintiff Tix Corporation ("Tix") initiated this action against Live It Live, Inc. ("Live It Live"), Andrew Worthington ("Worthington"), and John Does 1–50, by filing a complaint in Los Angeles County Superior Court in November 2010 ("Comp"), and defendants removed the case to this Court pursuant to 28 U.S.C. § 1441(b) (diversity jurisdiction) in January 2011. See Case Management/Electronic Case Filing System Document ("Doc") 1. Tix asserts five state-law claims against Live It Live: breach of contract (Comp ¶¶ 11–17), fraud by intentional misrepresentation (id. ¶¶ 18–25), fraud by making a promise without the intention to perform (Comp ¶¶ 26–34), fraud by negligent misrepresentation (id. ¶¶ 35–42), and open-book account (id. ¶¶ 43–45). Tix seeks compensatory damages "in excess of $995,000" plus consequential and incidental damages on count one, general damages "according to proof at trial" plus "special damages in excess of $995,000" and "exemplary and punitive damages according to proof at trial" on each of counts 2–4. On count five, Tix seeks $995,000 plus interest thereon from April 2010 onward. Tix also seeks attorneys' fees and costs of suit. See Doc 1 at 14–16 (Prayer for Relief).

Defendant Live It Live filed its amended answer to the complaint in June 2011, asserting eight affirmative defenses (failure to state a claim, no damages, failure to perform, failure of condition precedent, performance, repudiation, misrepresentation, and failure to mitigate damages). See Doc 74 ("Am Ans") at 7–8 ¶¶ 69–76. Simultaneously, Live It Live filed five counterclaims against Tix: breach of contract (Doc 75 at 2–3 ¶¶ 1–4); conversion (Doc 75 at 3 ¶ 5); fraud (Doc 75 at 3–4 ¶¶ 6–8); breach of the implied covenant of good faith and fair dealing (Doc 75 at 4 ¶¶ 9–10); and Misappropriation of Funds (Doc 75 at 4–5 ¶ 11). On the counterclaims, defendant Live It Live demands a jury trial and seeks "[r]easonable expenses in reliance of [sic] Counterdefendant Tix Corporation's performance of the contract", actual damages, "damages for loss of use of the money during the deprived period", exemplary damages, prejudgment and postjudgment interest, court costs, loss of net profits, and attorneys' fees. See Doc 75 at 5. Finally, Tix filed an answer to the counterclaims in July 2011, asserting many affirmative defenses. See Doc 76 at 2–6 ¶¶ 13–38.

On September 7, 2011, the Court stayed the case while the parties submitted to arbitration and ordered the parties to submit periodic reports. The Order stated as follows:

Pursuant to the parties' stipulation, the parties are ordered to arbitration. The Court orders this action removed from its active caseload and administratively closed until further application by the parties or order of this Court. The parties shall file a Status Report within two weeks of the completion of arbitration. If the arbitration is not completed by March 6, 2012, the parties shall file a Status Report beginning on that date and continuing every other month until the arbitration is completed. Failure to file a required status report or to complete the arbitration may result in imposition of sanctions, including dismissal of this action.

Doc 84 (emphasis added).

In May 2012, Tix filed a status report (Doc 93) stating that the arbitrator had granted the defendants' motion to postpone the arbitration to September 2012.

On July 16, 2012, defendant Live It Live filed a report stating that it had filed a petition for Chapter 7 protection in U.S. Bankruptcy Court for the Western District of Texas and accurately noting that further proceedings in this court involving Live It Live were therefore stayed per 11 U.S.C. §§ 363, 1201, and 1301.

Nothing in the record suggested, however, that Worthington had filed a petition for bankruptcy protection, so only the stay pending arbitration in effect in this case pertains to Worthington. On January 11, 2013, this Court issued an Order (Doc 95) directing the parties to file a joint status report no later than March 29, 2013. Plaintiff Tix alone filed a status report on March 28, 2013 stating as follows:

The parties entered into a binding arbitration agreement on December 8, 2011. * * * The arbitrator ... continued the arbitration to September 12–14, 2012 in Las Vegas, Nevada ....

On July 16, 2012, Plaintiff received a notice of stay due to Live It Live, Inc.'s Chapter 7 bankruptcy filing. Thereafter, Plaintiff was contacted by JAMS and was told that "JAMS was unable to proceed with the arbitration until and unless we are served with a written Order from the bankruptcy court authorizing such."

Plaintiff's counsel responded to JAMS and indicated that the stay was applicable as to Defendant Live It Live, Inc., only and not [to] Defendant Worthington. JAMS indicated that defense counsel indicated they would not go forward without court order.

Plaintiff is considering pursuing Defendant Worthington in Texas and including a cause of action for breach of contract.

Doc 96 at 2 (some paragraph breaks added). Accordingly, in March 2014, this Court issued an Order which directed the parties to file a report apprising the Court of:

(1) the status of defendant Live It Live, Inc.'s bankruptcy proceedings;

(2) the status of arbitration proceedings between plaintiff and defendant Live It Live, Inc.;

(3) the status of arbitration proceedings between plaintiff and defendant Andrew Worthington;

(4) the existence and status of any other relevant proceedings in federal or state court involving one or more of the parties.

Doc 97 at 2. Instead of both parties ("the parties") filing a status report, only plaintiff did so. Plaintiff's April 11, 2014 status report stated in its entirety as follows:

1. Procedural History : Plaintiff filed its Complaint in Los Angeles [County] Superior Court on November 19, 2010. Defendants subsequently removed the action on January 7, 2011 to United States District Court, Central District of California. Pursuant to a stipulation of the parties to enter into binding arbitration, the Court stayed the action by order of September 7, 2011.

2. Arbitration Status : The parties entered into a Binding Arbitration Agreement on December 8, 2011. The arbitration hearing was scheduled to occur on July 11 and 12, 2012, at JAMS in Las Vegas, Nevada in front of the Honorable Stewart L. Bell (Ret.). The defendants recently made a motion to continue the arbitration date. Plaintiff opposed. Nevertheless, the arbitrator granted the motion and continued the arbitration to September 12–14, 2012, at JAMS in Las Vegas, Nevada ....

On July 16, 2012, Plaintiff received a notice of stay due to Defendant Live It Live, Inc.'s Chapter 7 bankruptcy filing. Thereafter, Plaintiff was contacted by JAMS and was told that "JAMS was unable to proceed with the Arbitration until and unless we are served with a written Order from the bankruptcy court authorizing such." Plaintiff's counsel responded to JAMS and indicated that the stay was applicable as to Defendant, Live It Live, Inc., only, and not [to] Defendant Worthington. JAMS indicated that defense counsel stated they would not go forward as to Worthington until after the resolution of Live It Live, Inc.'s Chapter 7 and therefore, JAMS could not go forward without court order.

Plaintiff is still considering pursuing Defendant Worthington in Texas and including a cause of action for breach of contract.

3. Defendant Live It Live, Inc.'s bankruptcy status : Plaintiff's counsel attempted to contact defense counsel, Peter Ferraro, several times to find out the status of defendant's bankruptcy. Defense counsel left a voicemail on April 10, 2014, stating [that] he was getting on a plane, but did not leave a number where he could be reached.

On April 11, 2014, Plaintiff's counsel spoke with defense counsel's assistant who stated that they had received the Trustee's report of no distribution dated October 18, 2013 from Defendant's bankruptcy attorney, but was unable to verify final discharge.

Doc 97 at 1–2 (some ¶ breaks added). Thus, by Order issued September 22, 2014 (Doc 99), the Court admonished the parties that any future status report must provide a more conclusive and detailed update as to defendant Live It Live's bankruptcy proceedings. That Order afforded the parties ample time for counsel to speak with each other and provide the Court with definite, conclusive information, unlike the previous status report's assertions regarding the bankruptcy, requiring them to file a joint report by October 31, 2014.

On October 31, 2014, the parties filed a response stating "The parties are in the process of settlement and dismissal of the entire action. Upon execution of the settlement agreement by the parties a Stipulation of Dismissal will be filed with the Court." Doc 100 at 2 ¶ 2. But the parties never filed any stipulation of dismissal of this action pursuant to a settlement or otherwise.

Instead, on ...