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Deatley v. Allard

United States District Court, D. Colorado

March 27, 2014

ALAN E. DEATLEY, an individual, 15 CORPORATIONS, INC., a Washington state corporation, and SOLUTIONS INTERNATIONAL, LLC, an Oregon limited liability company, Plaintiffs,
KERMIT ALLARD, individual, ROBERT KLICK, individual, ALLARD & KLICK, LLC, a Colorado limited liability company, DAVE ZAMZOW, individual, and EHRHARDT KEEFE STEINER & HOTTMAN, a Colorado limited liability limited partnership, Defendants.


KATHLEEN M. TAFOYA, Magistrate Judge.

This matter is before the court on Plaintiff DeAtley's "Motion for Stay." (Doc. No. 28, filed Feb. 21, 2014.) The following responses were filed on March 14, 2014:

The Allard Defendants' Response in Opposition to Plaintiff DeAtley's Motion for Stay (Doc. No. 30 [Allard Defs. Resp.]);
Defendant Zamzow's Response to Plaintiff DeAtley's Motion for Stay (Doc. No. 31 [Zamzow Resp.]); and
Defendant EKS&H, LLLP's Response in Opposition to Plaintiff DeAtley's Motion to Stay (Doc. No. 32 [EKS&H Response]).

Plaintiff DeAtley's Reply to Defendants' Response to Motion for Stay was filed on March 24, 2014. For the following reasons, Plaintiff DeAtley's Motion to Stay is GRANTED in part and DENIED in part.

In this action, Plaintiffs Alan DeAtley, 15 Corporations, Inc., and Solutions International, LLC, assert claims for negligent misrepresentation, professional negligence, fraud, and defamation. These claims arise out of Defendants' provision of accounting and valuation services to Plaintiffs with respect to conservation easement programs in both Yakima County, Washington, and Jackson County, Colorado. ( See Doc. No. 3, First Am. Compl.) The Colorado Department of Revenue ultimately disallowed state tax credits associated with the conversation easements in Jackson County, and Plaintiff DeAtley was indicted by the Denver District Attorney on various criminal counts, including forgery, tax evasion, and double sale of credits.

The criminal charges against Plaintiff DeAtley remain pending. Plaintiff DeAtley maintains that there is no practical way to proceed with this action while his criminal case is pending because "any testimony or utterance" in this civil action "will likely be used to argue that DeAtley has waived Fifth Amendment privilege." (Mot. at 3.) As such, Plaintiff DeAtley seeks a stay of all proceedings in this action until resolution of the criminal case against him.

The Federal Rules of Civil Procedure do not expressly provide for a stay of proceedings. See String Cheese Incident, LLC v. Stylus Shows, Inc., No. 02-cv-01934-LTB-PA, 2006 WL 894955, at *2 (D. Colo. Mar. 30, 2006) (unpublished). Nevertheless,

[t]he power to stay proceedings is incidental to the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants. How this can best be done calls for the exercise of judgment, which must weigh competing interests and maintain an even balance.

Landis v. N. Am. Co., 299 U.S. 248, 254-55 (1936) (citing Kansas City S. Ry. Co. v. United States, 282 U.S. 760, 763 (1931)). Thus, although generally disfavored in this District, see Bustos v. United States, 257 F.R.D. 617, 623 (D. Colo. 2009), a stay of proceedings is an appropriate exercise of the court's discretion.

When considering a stay in a matter involving parallel criminal and civil proceedings, the primary debate centers on the criminal defendant's potential waiver or invocation of his Fifth Amendment rights. "The Constitution [] does not ordinarily require a stay of civil proceedings pending the outcome of criminal proceedings." SEC v. Dresser Industries Inc., 628 F.2d 1368, 1375 (D.C. Cir. 1980) (citing Baxter v. Palmigiano, 425 U.S. 308, 317-19 (1976)). Nevertheless, "a court may decide in its discretion to stay civil proceedings, postpone civil discovery, or impose protective orders and conditions when the interests of justice seem to require such action." Id. at 1375 (internal quotation omitted). See also United States v. Kordel, 397 U.S. 1, 11-12 (1970) (parallel civil and criminal actions might, in "special circumstances, " raise constitutional problems and a defendant might be able to argue that his due process and self-incrimination rights require the stay of proceedings in the civil action).

In Cruz v. County of Dupage, No. 96 C 7170, 1997 WL 370194, at *1 (N.D. Ill. June 27, 1997), the court aptly observed the "ultimate question... is whether the court should exercise its discretion in order to avoid placing the defendants in the position of having to choose between risking a loss in their civil cases by invoking their Fifth Amendment rights, or risking conviction in their criminal cases by waiving their Fifth Amendment rights and testifying in the civil proceedings." In the view of the Cruz court, the "severe burden" defendants would face in fighting both proceedings simultaneously outweighed the potential prejudice to the private plaintiffs arising from a stay. Id .; see also Brumfield v. Shelton, 727 F.Supp. 282, 284 (E.D. La. 1989) ("In a case where there is a real and appreciable risk of self-incrimination, an appropriate remedy would be a protective order postponing civil discovery until termination of the criminal action."); Brock v. Tolkow, 109 F.R.D. 116, 120 (E.D.N.Y. 1985) ("A stay of civil discovery until after criminal proceedings are complete will enable [defendants] to defend the civil case vigorously without fear of subsequent prosecution").

At the outset, the court acknowledges that this case is not on all fours with the cases cited above because, here, it is the plaintiff, rather than the defendant, who seeks a stay of proceedings. Generally speaking, "a civil plaintiff has no absolute right to both his silence and his lawsuit." Wehling v. Columbia Broadcasting Sys., 608 F.2d 1084, 1088 (5th Cir. 1979); see also Jones v. B.C. ("While it may be true that an individual should suffer no penalty for the assertion of a constitutional right, neither should third parties sued by that individual who have no apparent interest in the criminal prosecution, be placed at a disadvantage thereby."). However, in accord with the cases cited above, courts have recognized that a stay may be appropriate to avoid requiring a plaintiff "to choose between his silence and his lawsuit, " so long ...

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