Contract analysis

From: Patrick Gallagher <pgallagher@calderwoodharkness.com> To: Tobias Wren <twren@stonefieldlogistics.com> Cc: Samuel Eklund <seklund@calderwoodharkness.com> Date: Tue, 23 Jan 2024 10:47:00 -0000 Subject: Vantor v. Stonefield (22-cv-07841) — Order to Show Cause Issued by Judge Calloway

I am writing to inform you of a favorable development in *Vantor Holdings Corp. v. Stonefield Logistics Group Inc.*, Case No. 22-cv-07841 (S.D.N.Y.). Yesterday, January 22, 2024, Judge Margaret T. Calloway issued an Order to Show Cause directed at Vantor Holdings Corp., requiring Vantor to show cause why its claims should not be dismissed for failure to prosecute. This follows the letter we filed on January 8, 2024,

For ease of reference, here is a brief recap of the relevant timeline:

- **October 3, 2023:** Caldwell Royce & Shapiro ("CRS") filed its motion to withdraw as counsel for Vantor, citing irreconcilable differences with the client. - **October 18, 2023:** The Court granted CRS's withdrawal and ordered Vantor to retain new counsel within 60 days — i.e., by December 17, 2023. - **December 17, 2023:** The deadline passed with no appearance of substitute counsel and no communication from Vant

As you may recall, Vantor Holdings Corp. is a New York corporation and therefore cannot appear pro se in federal court — it must be represented by licensed counsel. Its failure to secure representation effectively leaves it unable to participate in this litigation.

The OSC sets a return date of **February 12, 2024**. By that date, Vantor (or a representative on its behalf) must appear before Judge Calloway and demonstrate why the case should not be dismissed under Federal Rule of Civil Procedure 41(b) for failure to prosecute. Rule 41(b) provides that a court may dismiss an action where the plaintiff fails to prosecute or comply with court orders. Importantly, a dismissal under

There are three realistic scenarios coming out of the February 12 hearing:

1. **Dismissal with prejudice.** If Vantor fails to appear or fails to provide a satisfactory explanation, the Court could dismiss the case with prejudice. This would permanently extinguish Vantor's claims (totaling $95.4 million as pled) and bar any attempt to refile. This is the most favorable outcome for Stonefield.

2. **Dismissal without prejudice.** The Court could, in its discretion, dismiss without prejudice, which would permit Vantor to refile the action (subject to any applicable statute of limitations defenses). This outcome is less common under Rule 41(b) but remains within the Court's discretion.

3. **Extension of time.** The Court could grant Vantor additional time to retain counsel, particularly if someone appears on Vantor's behalf and offers a credible explanation for the delay. Courts in the Southern District of New York generally prefer to resolve cases on the merits and may afford some latitude before ordering dismissal.

Regardless of which path the Court takes on the OSC, the overall case posture remains strongly favorable to Stonefield. The discovery record we have developed — including the Milescu email regarding the 85-tractor redeployment, the deposition admissions, and Dr. Rosser's rebuttal report capping maximum alternative damages at $8.2 million — would put us in a commanding position even if the case were to proceed.

No affirmative action is required from Stonefield at this time. We will monitor the docket closely and attend the February 12 return date on Stonefield's behalf. We have a draft motion to dismiss for failure to prosecute prepared and ready to file if needed, depending on how the hearing unfolds.

If Vantor does somehow retain new counsel who enters an appearance before February 12, we will promptly reassess strategy and reach out to you. That said, given the fee dispute that precipitated CRS's withdrawal — approximately $870,000 in unpaid invoices — securing replacement counsel may prove difficult for Vantor.

Sam and I will keep you informed of any docket activity as it occurs.

One housekeeping item: this development should be reflected in the next quarterly litigation update to Lakeshore National Bank (Catherine Devereaux) per the notification requirements under the Credit Agreement. The Q4 2023 update we sent on January 5, 2024 did not yet capture this order. I would recommend either a brief supplemental update to Ms. Devereaux or inclusion in the next scheduled report — please let me kno

Please do not hesitate to call if you have any questions. Sam is available as well.

**Patrick Gallagher** Calderwood & Harkness LLP 200 Park Avenue, 38th Floor New York, NY 10166 Tel: (212) 504-6200 Email: pgallagher@calderwoodharkness.com

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