Robert W. Thomas and Anne McDonald Thomas Revocable Trust, The v. Inland Pacific Colorado, LLC et al
ORDER. ORDERED that Defendants' Motion to Stay Discovery with Respect to Fraudulent Transfer Claim 64 is DENIED. ORDERED that Plaintiff's Motion to Compel Production of Documents 68 is DENIED WITHOUT PREJUDICE. ORDERED that the Stip ulated Motion to Extend Discovery and Vacate and Reschedule Pretrial Conference 77 is GRANTED. ORDERED that the Final Pretrial Conference set for October 16, 2012, is VACATED and RESET to January 15, 2013, at 10:30 a.m. ORDERED that the proposed pretrial order shall be submitted on or before January 10, 2013 by Magistrate Judge Kristen L. Mix on 08/14/12.(jjhsl, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 11-cv-03333-WYD-KLM
THE ROBERT W. THOMAS AND ANNE MCDONALD THOMAS REVOCABLE TRUST,
trust domiciled in the State of Washington,
Plaintiff and Counter Defendant,
FIRST WESTERN TRUST BANK, a Colorado company, and
INLAND PACIFIC COLORADO, LLC, a Nevada limited liability company, and
WESTMINSTER PROMENADE DEVELOPMENT COMPANY II, LLC, a Nevada limited
Defendants and Counterclaimants.
ENTERED BY MAGISTRATE JUDGE KRISTEN L. MIX
This matter is before the Court on Defendants’ Motion to Stay Discovery with
Respect to Fraudulent Transfer Claim [Docket No. 64; Filed June 18, 2012]; Plaintiff’s
Motion to Compel Production of Documents [Docket No. 68; Filed June 29, 2012]; and
the Stipulated Motion to Extend Discovery and Vacate and Reschedule Pretrial
Conference [Docket No. 77; Filed August 3, 2012] (collectively, the “Motions”). The
Motions are referred to this Court for resolution [## 67, 70, 78]. For the reasons stated
below, the Court DENIES Defendants’ Motion to Stay [#64], DENIES WITHOUT
PREJUDICE Plaintiff’s Motion to Compel [#68], and GRANTS the Stipulated Motion to
Extend Discovery [#77].
Plaintiff initiated this action on December 20, 2011, pursuant to the Court’s diversity
The operative pleading is the First Amended Complaint for
Reformation of Deed of Trust and Enforcement and Collection of Promissory Note, filed
March 26, 2012 [#40].
Plaintiff brings seven claims, as follows: 1) breach of note
obligations; 2) unjust enrichment (as an alternative to the first claim); 3) reformation of the
deed of trust; 4) violation of Colorado’s Uniform Fraudulent Transfer Act (“CUFTA”); 5)
negligent misrepresentation; 6) promissory estoppel; and 7) tortious interference with
contract. See id.
Plaintiff filed a Motion for Summary Judgment on January 11, 2012 [#12], which was
not mooted by the First Amended Complaint and remains pending before the District
Also pending before the District Judge are Defendant Timothy
O’Byrne’s Partial Motion to Dismiss Pursuant to F.R.C.P. [sic] 12(b)(6) [#56] and Defendant
Inland Pacific Colorado, LLC’s (“IPC”) Motion for Partial Judgment on the Pleadings [#58].
Defendant O’Byrne asks the Court to dismiss Plaintiff’s claims alleging a violation of
CUFTA (concerning the alleged fraudulent transfer), negligent misrepresentation, and
promissory estoppel. See [#56] at 1. Defendant O’Byrne contends that Plaintiff failed to
meet the pleading requirement of Fed. R. Civ. P. 9(b).1 Id. at 2. Similarly, Defendant IPC
asks the Court for judgment in its favor as to the fraudulent transfer claim brought pursuant
to CUFTA, and also argues that Plaintiff failed to meet Rule 9(b)'s pleading requirements.
See [#48] at 1-2.
Rule 9(b) requires that “in alleging fraud or mistake, a party must state with particularity
the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions
of a person's mind may be alleged generally.”
Defendants additionally submitted Answers to the First Amended Complaint. See
[#47] (IPC and WPDC), [#57] (O’Byrne). With their Answer, Defendants IPC and WPDC
bring eight counterclaims against Plaintiff: 1) for a declaratory judgment regarding a joint
venture agreement; 2) breach of oral contract; 3) intentional interference with contractual
relations; 4) breach of duty of good faith and fair dealing; [misnumbered]; 6) breach of
forbearance agreement; 7) promissory estoppel; 8) fraud in the inducement; and 9) for a
declaratory judgment regarding a spurious lien. See [#47]; see also [#20]. Plaintiff filed an
Answer to the counterclaims [#38].
In the instant Motion, Defendants IPC, O’Byrne, and Westminster Promenade
Development Company II, LLC (“WPDC”) (collectively, “Defendants”) ask the Court to stay
their obligation to respond to certain discovery requests propounded by Plaintiff which
relate to the fraudulent transfer claim, pending resolution of the motion to dismiss and
motion for judgment on the pleadings. [#64] at 3. Specifically, Defendants request a stay
as to Plaintiff’s Requests for Production Nos. 1, 2, 3, 4, 5, 8, 9, and 10. See [#64-1].
Defendants believe that these Requests reflect a fishing expedition by Plaintiff, and that
Plaintiff is abusing the discovery process to bolster its allegedly inadequate pleading. [#64]
at 3. Defendants assert that Plaintiff is using the discovery process “to uncover some
alleged unknown wrong,” which is not permitted by Rule 9(b). Id. at 4. In the alternative,
Defendants suggest that a stay of discovery as to the fraudulent transfer claim is
appropriate on the basis of their two pending dispositive motions. Id. at 5.
Plaintiff objects to the relief requested.
Plaintiff asserts that the
discovery requested is also relevant to the claim for tortious interference, which is not at
issue in Defendants’ two pending dispositive motions. Id. at 5, 7. Further, Plaintiff
contends that the Requests for Production are relevant to Defendants’ counterclaims. Id.
Plaintiff believes that the requested financial records will demonstrate that
Defendants IPC and O’Byrne indeed believed that payment on the Note in dispute was due;
Plaintiff suggests that the financial records will show the actual financial activity of
Defendants, which Plaintiff expects will indicate that IPC and O’Byrne were moving funds
out of IPC, and that no Defendant believed that the Note was negated by a prior oral joint
venture agreement. Id. at 8.
II. Defendants’ Motion to Stay
Courts in this District have long noted that the Federal Rules of Civil Procedure do
not explicitly provide for a stay of proceedings in a lawsuit. String Cheese Incident, LLC v.
Stylus Shows, Inc., No. 02-cv-01934-LTB-PAC, 2006 WL 894955 (D. Colo. Mar. 30, 2006).
However, the Court has construed Fed. R. Civ. P. 26(c) to permit a stay of discovery “for
good cause, to protect a party from undue burden or expense,” especially when dispositive
motions are pending. Id. The party who seeks a stay of discovery has the burden of
demonstrating good cause, and “cannot sustain that burden by offering simply conclusory
statements.” Tr. of Springs Transit Co. Emp.’s Ret. & Disability Plan v. City of Colorado
Springs, No. 09-cv-02842-WYD-CBS, 2010 WL 1904509, at *4 (D. Colo. May 11, 2010).
Generally, the Court requires a “particular and specific demonstration of fact” in support of
a request for a stay. Id.; see also Christou v. Beatport, LLC, No. 10-cv-02912-CMA-KMT,
2011 WL 650377, at *1 (D. Colo. Feb. 10, 2011).
In the context of ruling on a motion to stay, the Tenth Circuit Court of Appeals stated
almost thirty years ago that “the right to proceed in court should not be denied except under
the most extreme circumstances.”
Commodity Futures Trading Comm’n v. Chilcott
Portfolio Mgmt., Inc., 713 F.2d 1477, 1484 (10th Cir. 1983). Hence, it has long been
recognized that stays are generally disfavored in this district, although the decision to grant
or deny them invokes the discretion of the Court under the circumstances at issue. See,
Precedent amply demonstrates that the Court has broad discretion to stay an action
when a dispositive motion is pending. String Cheese Incident, LLC, 2006 WL 894955 at
*2 (finding that a thirty-day stay of discovery was appropriate when a motion to dismiss for
lack of personal jurisdiction was pending). Indeed, “a court may decide that in a particular
case it would be wise to stay discovery on the merits until [certain challenges] have been
resolved.” 8 Charles Allen Wright et al., Federal Practice and Procedure § 2040, at 521-22
(2d ed. 1994) (“[W]hen one issue may be determinative of a case, the court has discretion
to stay discovery on other issues until the critical issue has been decided.”); see also Vivid
Techs., Inc. v. Am. Sci. & Eng’g, Inc., 200 F.3d 795, 804 (Fed. Cir. 1999) (“When a
particular issue may be dispositive, the court may stay discovery concerning other issues
until the critical issue is resolved.”); Nankivil v. Lockheed Martin Corp., 216 F.R.D. 689, 692
(M.D. Fla. 2003) (holding that a stay is appropriate if “resolution of a preliminary motion
may dispose of the entire action”).
Finally, the factors to be applied by the Court in determining the propriety of a stay
are: (1) Plaintiffs’ interests in proceeding expeditiously with the action and the potential
prejudice to Plaintiffs resulting from a delay; (2) the burden on the Defendants; (3) the
convenience to the Court; (4) the interests of persons not parties to the litigation; and (5)
the public interest. String Cheese Incident, LLC, 2006 WL 894955 at *2.
Here, both sides contend that the String Cheese factors weigh in favor of their
respective positions, and both sides present ample arguments about the merits of the
claims and counterclaims. The Court declines to speculate as to the merits of the case in
making the instant determination, however. For the reasons stated below, the Court finds
that the String Cheese factors weigh in favor of denying Defendants’ request for a stay of
discovery as to certain of Plaintiff’s Requests for Production.
1. Plaintiff’s Interests
Defendants contend that Plaintiff would not suffer prejudice from a delay in
discovery, as the “case has been proceeding expeditiously.” [#64] at 6. Further, if Plaintiff
prevails on its breach of promissory note claim, Defendants suggest that Plaintiff could
recover interest, costs, and attorneys’ fees, thus a delay would be beneficial. Id.; see also
[#75] at 6. Defendants aver that “[a]ny alleged delay or extension of the discovery cut-off
is a result of the Plaintiff’s decision to add additional claims and parties.” [#75] at 6.
Plaintiff asserts prejudice arising from the delay that has allegedly resulted from
Defendants’ withholding of responsive discovery. [#73] at 9. Plaintiff further contends that
the imposition of a stay as to the fraudulent transfer claim could result in the duplication of
depositions, should the two pending dispositive motions be denied. Id. at 10. Plaintiff
reiterates its position that the requested discovery is relevant to the other claims and
counterclaims that remain pending in this case. Id.
This litigation does not differ substantially from other civil litigation. Plaintiff’s
interests in proceeding with the lawsuit are manifest, as are Defendants’ interests in
avoiding or delaying it. Here, staying discovery would further delay the resolution of
Plaintiff’s claims and Defendants’ counterclaims in an already-aging case. In any event,
the dispositive motions are not fully dispositive of the matter, and the imposition of a stay
could result in a disjointed and duplicative discovery process. This factor weighs against
the imposition of a stay.
2. Defendants’ Burden
This issue concerns whether Defendants will be unfairly burdened if discovery as to
the identified Requests for Production propounded by Plaintiff proceeds before rulings are
issued on the pending dispositive motions. See, e.g., String Cheese Incident, LLC, 2006
WL 894955 at *2 (“defendants, however, also would undoubtedly be prejudiced if they were
forced to engage in discovery if the court eventually granted their motion to dismiss”). The
Court is not inclined to prejudge the merits of the pending dispositive motions. If the
pending dispositive motions could fully resolve the case, the Court might agree with
Defendants that proceeding with discovery could be wasteful, should the motions be
granted. However, as described above, the pending dispositive motions only affect the
case in part, and Plaintiff’s argument that the requested discovery is also relevant to the
other claims and counterclaims remaining at issue is persuasive. Thus, this factor weighs
against the imposition of a stay.
3. Convenience to the Court
Entry of a stay may cause significant delay of the resolution of this matter, which in
turn makes the Court’s docket less predictable and less manageable. Again, a partial stay
of discovery during the pendency of dispositive motions that, if granted, would only partially
resolve the matter would likely result in a disjointed and duplicative discovery process. This
factor weighs against the entry of a stay.
4. Interest of Non-Parties
The Court finds that this factor does not weigh in favor of or against imposition of
a stay, as it is impossible to predict the effect of a stay on any non-parties at this time.
5. The Public Interest
The public interest at stake here is the same interest underlying all lawsuits: that
they be resolved as fairly and quickly as possible. In light of the issues outlined above, the
Court finds that considerations of fairness and timeliness will not be advanced by imposition
of a stay. Hence, this factor weighs against entry of a stay.
The strong presumption against stays, as well as application of the String Cheese
factors, results in the conclusion that an imposition of a stay of discovery is not justified in
this case. Accordingly,
IT IS HEREBY ORDERED that Defendants’ Motion to Stay Discovery with
Respect to Fraudulent Transfer Claim [#64] is DENIED.
III. Plaintiff’s Motion to Compel
Plaintiff’s Motion to Compel concerns the Requests for Production that Defendants
referred to in their Motion to Stay; namely, Requests for Production Nos. 2-6 directed to
Defendants IPC and WPDC, and Requests for Production Nos. 2-3, 6-7, and 15 directed
to Defendant O’Byrne. [#68] at 4 n.5. Plaintiff correctly states that counsel for the parties
contacted the Court regarding the Motion to Stay, and the Court’s clerk conveyed to the
parties that absent a Court order, the proceedings were not stayed. Id. at 3. However,
Plaintiff’s counsel incorrectly assumes that the call, which solely concerned the request for
a stay, also satisfied counsel’s obligations to comply with the undersigned’s discovery
procedure as to the content of the Motion to Compel. Accordingly,
IT IS FURTHER ORDERED that Plaintiff’s Motion to Compel Production of
Documents [#68] is DENIED WITHOUT PREJUDICE.
IT IS FURTHER ORDERED that no party may file a contested discovery motion until
after complying with the steps for following the undersigned’s discovery dispute procedure,
as memorialized in the Scheduling Order [#33], and as stated below:
Step 1: Counsel meaningfully confer regarding one or more discovery disputes
pursuant to Local Rule 7.1A. Counsel may choose to confer about only one dispute
at a time or several disputes at once. This decision is up to counsel, not the Court.
Step 2: If discovery disputes are not resolved, counsel then agree on a mutually
convenient time to call the Court at (303) 335-2770 for a discovery hearing
regarding all disputes about which they have fully conferred but failed to reach
No attorney can insist on contacting the Court for a discovery hearing at a time
when another attorney is not available. If an attorney is not available for a
conference call to the Court for a discovery hearing when contacted by opposing
counsel, s/he must provide opposing counsel with alternate dates and times to
contact the Court. This eliminates the possibility that one party will have an unfair
advantage over another in preparation for a discovery hearing.
The Court is not responsible for assuring that multiple counsel for the same party
are on the line for a telephone hearing. The Court requires only one attorney of
record on the line for each party involved in the dispute. If counsel for a party want
co-counsel for the same party to participate in the telephone hearing, they are
responsible for ensuring that co-counsel are available to participate on the date and
time chosen by them for the hearing.
The Court will not continue hearings based on the sudden unavailability of
co-counsel for a party. As long as each party involved in the dispute is represented
by at least one attorney of record, the hearing will proceed.
Step 3: When counsel call the Court for the discovery hearing, the judge’s law clerks
will ask counsel questions relating to the nature of the dispute. The law clerks will
consult with the judge as necessary. If the judge determines that any documents are
required for review prior to the hearing, counsel will be instructed to email such
documents to the Court’s chambers, and the hearing will be set at a mutually
convenient date and time in the future.
Step 4: If no documents are necessary for review and the judge is immediately
available, the call will be transferred to the courtroom and the hearing will be
conducted. If the judge determines that the matter is complex and briefing is
required, the judge will set a briefing schedule. If the judge is not immediately
available, the hearing will be set at a mutually convenient date and time in the future.
IV. The Stipulated Motion to Extend
IT IS FURTHER ORDERED that the Stipulated Motion to Extend Discovery and
Vacate and Reschedule Pretrial Conference [#77] is GRANTED. The Scheduling Order
entered March 1, 2012 [#33] and amended on May 21, 2012 [#55] is further modified as
Deadline to serve written discovery
Affirmative expert witness disclosures
Rebuttal expert witness disclosures
Dispositive motion deadline
September 24, 2012
August 31, 2012
September 14, 2012
October 31, 2012
October 31, 2012
IT IS FURTHER ORDERED that the Final Pretrial Conference set for October 16,
2012, is VACATED and RESET to January 15, 2013, at 10:30 a.m. in Courtroom C-204,
Second Floor, Byron G. Rogers United States Courthouse, 1929 Stout Street, Denver,
IT IS FURTHER ORDERED that the proposed pretrial order shall be submitted on
or before January 10, 2013. The proposed pretrial order to be submitted to the Magistrate
Judge under the ECF Procedures may be submitted in WordPerfect or pdf format and shall
be emailed to the Magistrate Judge at Mix_Chambers@cod.uscourts.gov.
Attorneys and/or pro se parties not participating in ECF shall submit their proposed
pretrial order on paper to the Clerk’s Office. However, if any party in this case is
participating in ECF, it is the responsibility of that party to submit the proposed pretrial order
pursuant to the District of Colorado ECF Procedures. The parties shall prepare the
proposed pretrial order in accordance with the form which may be downloaded from the
Forms section of the court’s website at http://www.cod.uscourts.gov/Home.aspx.
Dated: August 14, 2012