United States District Court, D. Colorado
WINTHROP INTELLIGENCE LLC, and ROBERT SCOTT BROOKS. Plaintiffs,
v.
HARVARD CIDER COMPANY, LLC, CHASE BROOKS, and MARK FINNEGAN, JR., Defendants. SAMUEL C. COPELAND, Intervenor.
ORDER GRANTING INTERVENOR'S MOTION FOR
STAY
CHRISTINE M. ARGUELLO UNITED STATES DISTRICT JUDGE.
This
matter is before the Court upon Intervenor Samuel C.
Copeland's Motion for Stay, Including Resetting of
Current Deadlines, and Notice of Bankruptcy Filing for
Harvard Cider Company, LLC (the “Motion for
Stay”). (Doc. # 76.)
Plaintiffs
Winthrop Intelligence LLC (“Plaintiff Winthrop”)
and Robert Scott Brooks assert claims for breach of fiduciary
duty; negligent misrepresentation; fraud; and breach of
contract against Defendants Harvard Cider Company, LLC
(“Defendant Harvard”), Chase Brooks, and Mark
Finnegan, Jr. (Doc. # 27.) Defendants Brooks and Finnegan
were two of the co-founders of Defendant Harvard, and were,
at the time this litigation was initiated, the sole members
of Defendant Harvard. (Id. at 10.) Defendants admit
all of the allegations in Plaintiffs' Second Amended
Complaint but place all blame on another co-founder of
Defendant Harvard, Samuel C. Copeland. (Doc. ## 29-31.) The
Court has permitted Copeland to intervene pursuant to Federal
Rule of Civil Procedure 24 and the parties' stipulation
(Doc. # 51). (Doc. # 52.)
On
April 24, 2019, Intervenor Copeland filed a Motion to Dismiss
for Lack of Subject Matter Jurisdiction, or, Alternatively,
to Abstain Based on the Colorado River Doctrine (Doc. # 56)
and a Motion to Stay Discovery (Doc. # 58). United States
Magistrate Judge Scott T. Varholak is scheduled to preside
over a hearing on Intervenor Copeland's Motion to Stay
Discovery on June 26, 2019. See (Doc. # 69.)
On June
10, 2019, Plaintiffs filed a purported Stipulation of
Dismissal with Prejudice as to Defendant Harvard. (Doc. #
74.) Plaintiffs inform the Court therein that Plaintiff
Winthrop filed an involuntary bankruptcy case against
Defendant Harvard in the United States Bankruptcy Court for
the District of Colorado on June 4, 2019.[1] (Id. at
1); see (Doc. # 76-1). Plaintiffs also inform the
Court that they and Defendant Harvard have stipulated that,
“pursuant to [Rule] 41(a)(1), all of the claims as
specifically alleged by Plaintiff[s] in th[is] Action against
[Defendant] Harvard be and hereby are dismissed with
prejudice.” (Id. at 2.) Plaintiffs does not
indicate the other parties' positions on the Stipulation
of Dismissal, in violation of D.C.COLO.LCivR 7.1(a). See
generally (id.)
The
following day, June 11, 2019, Intervenor Copeland filed a
Motion to Strike Plaintiffs' Stipulation of Dismissal
(Doc. # 75) and the Motion for Stay presently before the
Court (Doc. # 76.) In the Motion for Stay, Intervenor
Copeland asserts that pursuant to Section 362(a) of the
Bankruptcy Code, 11 U.S.C. § 362(a)(1), Plaintiffs'
filing of an involuntary petition against Defendant Harvard
in the Bankruptcy Court on June 4, 2019, automatically stayed
all judicial proceedings as to Defendant Harvard-including
this action. The Court agrees. The Court therefore will not
honor Plaintiffs' Stipulation of Dismissal (Doc. # 74).
As
Intervenor Copeland argues (Doc. # 76 at 2-3), this entire
action-not just Plaintiffs' claims against Defendant
Harvard-should be stayed pending resolution of the bankruptcy
proceedings against Defendant Harvard. Though the automatic
stay required by Section 362(a)(1) stays only the claims
against Defendant Harvard and does not extend to other
Defendants and Intervenor Copeland, see Okla. Federated
Gold & Numismatics, Inc. v. Blodgett, 24 F.3d 136,
141 (10th Cir. 1994), “the 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,
” Landis v. N. Am. Co., 299 U.S. 248, 254-55
(1936). In this case, the Court finds that in the interests
of efficiency and economy, this entire action should be
stayed until Defendant Harvard can participate in the
litigation. See Rodriguez v. Xtreme Mfg., No.
11-cv-0626 MCA/LAM, 2012 WL 12819336, *2 (D.N.M. March 20,
2016) (staying the entire action where bankruptcy proceedings
automatically stayed the action as against one defendant).
For the reasons Intervenor Copeland outlines in his Motion
for Stay, Plaintiffs' claims against Defendant Harvard
cannot be disentangled from Plaintiffs' claims against
other Defendants. See (Doc. # 76 at 2-3).
Accordingly,
Intervenor Copeland's Motion for Stay (Doc. # 76) is
GRANTED. It is
FURTHER
ORDERED that the above-captioned case be STAYED. It is
FURTHER
ORDERED that, beginning on September 3, 2019, Plaintiffs
shall file a report regarding the status of the bankruptcy
case on a quarterly basis, keeping the Court so informed. It
is
FURTHER
ORDERED that Intervenor Copeland's Motion to Dismiss
(Doc. # 56), Motion to Stay Discovery (Doc. # 58), and Motion
to Strike Plaintiffs' Stipulation of Dismissal (Doc. #
75) are DENIED AS MOOT.
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Notes:
[1] In violation of D.C.COLO.LCivR 3.2(a),
Plaintiffs did not separate file a notice with the Court to
inform it of ...