Halliday et al v. Spjute et al

Filing 158

ORDER Re: 148 Motion for Stay, signed by District Judge Anthony W. Ishii on 4/29/13. (Gonzalez, R)

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IN THE UNITED STATES DISTRICT COURT FOR THE

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EASTERN DISTRICT OF CALIFORNIA

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GLEN HALLIDAY, MICHAEL S.
IOANE, SR., SHELLY IAONE,
ASHLEY M. IOANE, MICHAEL S.
IOANE, JR.,

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Plaintiffs,
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v.
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KENT R. SPJUTE, JEAN NOLE, JEFF )
HODGES, BRIAN APPLEGATE,
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MICHELLE M. CASAREZ, UNKNOWN)
DOES 1-20, AND THE UNITED STATES)
OF AMERICA,
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Defendants.
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____________________________________)

CIV F-07-0620 AWI GSA
ORDER RE: MOTION FOR STAY

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I. History
Plaintiffs Michael Ioane Sr., Shelly Ioane, Ashley Ioane, and Michael Ioane Jr. live at

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1521 Fruitland Ave., Atwater, CA. Plaintiffs are involved in tax disputes with Defendant United

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States (“United States”). Additional Defendants Kent Spjute, Jean Nole, Jeff Hodges, Brian

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Applegate, and Michelle Casarez are Internal Revenue Service agents (“Federal Agents”). Based

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on the affidavit of Kent Spjute, the United States was able to obtain a search warrant for

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Plaintiffs’ residence. The search was carried out by the Federal Agents on June 8, 2006. The

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precise relationship of Plaintiff Glen Halliday to this case is unclear. The United States was

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investigating Michael Ioane Sr. (“Michael Ioane”) for violating federal tax laws.

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Plaintiffs filed suit on April 20, 2007. In the operative amended complaint, Plaintiffs

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allege violations of their First, Fourth, and Fifth Amendment against all Defendants. Plaintiffs

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allege the Federal Agents were under the supervision of Defendant Does who failed to

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adequately instruct, control, and/or discipline Federal Agents for their conduct. They also allege

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the United States disclosed tax information about the Plaintiffs to third parties in violation of 26

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U.S.C. §6103. This case was stayed pending related criminal proceedings. On April 9, 2009, a

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grand jury in Sacramento indicted Vincent Steven and Louise Q. Booth (the “Booths”) and

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Michael Ioane on various criminal charges related to tax evasion (Criminal Case No. 09-0142).

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The Booths reached a plea bargain with the United States: Vincent Booth plead guilty to one

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count of conspiracy to defraud the United States, all other charges against him and Louise Booth

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were dismissed. The Booths cooperated with the United States’s criminal prosecution of

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Michael Ioane; Vincent Booth testified against Michael Ioane at his trial. On October 3, 2011, a

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jury found Ioane guilty of conspiracy to defraud the United States and presenting fictitious

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obligations intended to defraud. Ioane has appealed the conviction. The Ninth Circuit has yet to

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make its ruling on the appeal. Meanwhile, the stay in this case was lifted on August 31, 2012.

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Doc. 107. This suit is only one of several civil suits dealing with events surrounding the Booths’

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and Michael Ioane’s alleged tax evasion and alleged attempts to shield certain real property from

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the United States’s reach. Civ. Case Nos. 07-1129, 09-1689, and 12-0171.

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Plaintiffs made a first motion for stay, citing Michael Ioane’s continuing criminal appeal.

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Doc. 129. Magistrate Judge Austin denied the motion. Doc. 138. Plaintiffs have now made a

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second motion for stay. Doc. 148. The motion was opposed and taken under submission without

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oral argument.

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II. Legal Standards

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Fed. Rule Civ. Proc. 72(a) allows a party to serve and file objections to a Magistrate

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Judge’s nondispositive order, to be decided by the District Judge. In the Eastern District of

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California, this type of objection is treated as a motion for reconsideration by the assigned

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District Court Judge. See Local Rule 303.

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When filing a motion for reconsideration, Local Rule 230(j) requires a party to show
“what new or different facts or circumstances are claimed to exist which did not exist or were not

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shown upon such prior motion, or what other grounds exist for the motion.” The court reviews a

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motion to reconsider a Magistrate Judge’s ruling under the “clearly erroneous or contrary to law”

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standard set forth in 28 U.S.C. § 636(b)(1)(A). See also Fed. Rule Civ. Proc. 72(a). “A finding is

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‘clearly erroneous’ when although there is evidence to support it, the reviewing court, after

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reviewing the entire evidence, is left with the definite and firm conviction that a mistake has been

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committed.” United States v. U.S. Gypsum Co., 333 U.S. 364, 395 (1948); see also Anderson v.

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Equifax Info. Services LLC, 2007 WL 2412249, *1 (D. Or. 2007) (“Though Section

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636(b)(1)(A) has been interpreted to permit de novo review of the legal findings of a magistrate

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judge, magistrate judges are given broad discretion on discovery matters and should not be

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overruled absent a showing of clear abuse of discretion”). Motions to reconsider are committed

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to the discretion of the trial court. Rodgers v. Watt, 722 F.2d 456, 460 (9th Cir. 1983).

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III. Discussion
Plaintiffs have filed parallel motions for stay in each of the four related civil cases. In this

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case, Plaintiffs made a first motion for stay, to be heard before the undersigned. Doc. 129. The

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matter was reset before Judge Austin by minute order. Doc. 130. Judge Austin denied the motion

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on December 17, 2012. Doc. 138. Plaintiffs then made a second motion for stay, to be heard by

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the undersigned on January 17, 2013. Doc. 148. The second motion for a stay relied upon the

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same argument as the first motion, namely that Michael Ioane was involved in a criminal appeal

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that shared the same subject matter as the civil suits. Indeed the briefing for the two motions

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shared large chunks of completely identical text, including the majority of the legal

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argumentation. See Doc. 129, Part 2, 3:11-6:10 and Doc. 148, 5:8-8:5. The second motion

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should properly be considered a motion for reconsideration. To be clear, Plaintiffs filed four

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parallel motions for stay which were all denied by Judge Austin on December 17, 2012 and then

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filed four parallel second motions for stay on January 17, 2013.

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Fed. Rule Civ. Proc. 72(a) states “When a pretrial matter not dispositive of a party’s

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claim or defense is referred to a magistrate judge to hear and decide, the magistrate judge must

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promptly conduct the required proceedings and, when appropriate, issue a written order stating

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the decision. A party may serve and file objections to the order within 14 days after being served

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with a copy. A party may not assign as error a defect in the order not timely objected to. The

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district judge in the case must consider timely objections and modify or set aside any part of the

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order that is clearly erroneous or is contrary to law.” Plaintiffs received electronic service of

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Judge Austin’s order on December 17, 2012. Plaintiffs did not file their second motion until well

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after the fourteen day deadline had passed. The second motion did not raise any new

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circumstance, changed facts, or new case law to justify the delay. Plaintiffs’ motion is untimely

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and on that basis, deserves to be denied.

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Further, Judge Austin’s order is sound on the merits. The main thrust of Plaintiffs’

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argument is that Michael Ioane’s Fifth Amendment right against self-incrimination is in jeopardy

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as both the criminal and civil cases deal with the same operative facts. However, Judge Austin

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points out that in his criminal trial, Michael Ioane took the stand in his own defense; there is no

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indication that Michael Ioane has ever asserted his Fifth Amendment right against self-

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incrimination in any of the many instances he has been questioned/deposed. Doc. 138, 4:3-7.

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Plaintiffs argue that “If in fact Mr. Ioane’s appeal is granted he may have to stand trial again and

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the government will have the advantage of discovery and testimony that they would not have but

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for this civil action.” Doc. 148, 4:15-19. The court does not find this to be a strong argument

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given the fact of his prior testimony in the criminal trial.

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IV. Order
Plaintiffs’ motion for stay is DENIED.
IT IS SO ORDERED.

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Dated:
0m8i78

April 29, 2013
SENIOR DISTRICT JUDGE

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