Maximum Technology v. Superior Court

Opinion

MERRILL, J.

Petitioner Maximum Technology, plaintiff in an action seeking damages arising out of a failed commercial transaction, challenges a ruling striking its at-issue memorandum and removing the case from the civil active list. The court’s action was taken because one of several defen

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dants was under the jurisdiction of a federal bankruptcy court. We conclude that the court erred in striking the at-issue memorandum on that ground.

Petitioner purchased highly reflective silver film manufactured by Minnesota Mining and Manufacturing Company (3M) and distributed by Litrex Corporation. According to petitioner, the film was defective. Unused film was returned to 3M, who accepted the return and sent a refund to petitioner through Litrex. According to petitioner, Litrex “converted” the refund check.

Petitioner has sued 3M, Litrex, and Robert A. D. Schwartz (as alter ego of Litrex). Before petitioner was able to levy an attachment on Litrex’s assets, Litrex filed for chapter II reorganization (Bankruptcy Act, 11 U.S.C. § 1101 et seq.). The other defendants answered the complaint (3M and Schwartz each cross-complained against other parties) and petitioner filed an at-issue memorandum. Schwartz then moved to strike the at-issue memorandum, asserting that the case was not “at issue” as to him because of the bankruptcy of defendant Litrex. He argued that Litrex was an indispensible party to the proceedings, and noted that all litigation against defendant Litrex was stayed pursuant to the Bankruptcy Code. The court ordered the at-issue memorandum stricken and the action removed from the civil active list. This petition followed.

Rule 209, California Rules of Court, provides that “[n]o civil case shall be placed on the civil active list or be set for a trial until it is at issue and a party has served and filed an at-issue memorandum____” It then lists the contents of an at-issue memorandum, which include a statement “(3) that all essential parties have been served with process or appeared and that the case is at issue as to those parties____” Rule 223, California Rules of Court, provides that “[a] case shall not be removed from the civil active list except by order of court on stipulation of the parties or by order of court on the court’s motion or on a party’s notice motion. A case may be restored to the civil active list only by filing a new at-issue memorandum or by order of court.”