Hammer Haag Steel, Inc. v. Peddinghaus Corporation

Filing 32

ORDER denying 24 Motion to stay discovery. Signed by Magistrate Judge Julie S. Sneed on 6/23/2017. (LBL)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
HAMMER HAAG STEEL, INC.,
Plaintiff,
v.

Case No: 8:17-cv-510-T-23JSS

PEDDINGHAUS CORPORATION,
Defendant.
___________________________________/
ORDER ON DEFENDANT’S RENEWED
MOTION TO IMMEDIATELY STAY DISCOVERY
THIS MATTER is before the Court on Defendant’s Renewed Motion to Immediately Stay
Discovery (“Motion”) (Dkt. 24), and Plaintiff’s response in opposition (Dkt. 29). Defendant
requests that the Court stay discovery until the Court rules on Defendant’s motion to dismiss (Dkt.
23). For the reasons that follow, the Motion is denied.
BACKGROUND
Plaintiff purchased a steel cutting machine from Defendant called the “Ring of Fire.” (Dkt.
21 ¶¶ 4–6, 9–16.) Plaintiff alleges that the Ring of Fire did not perform as Defendant advertised
it would. (Id. ¶¶ 17–24.) Therefore, Plaintiff withheld the final $100,000 of its purchase price
from Defendant. (Id. ¶ 18.) Defendant sued Plaintiff in an Illinois state court in December 2015
to recover the $100,000 balance. (Id. ¶ 29.)
Here, Plaintiff sues Defendant for Defendant’s alleged deceptive misrepresentations of the
Ring of Fire’s characteristics and qualities as well as the terms and conditions of Defendant’s sale
of the Ring of Fire, specifically its mandatory arbitration provision. (Id. ¶¶ 34–41.) Further,
Plaintiff seeks declaratory judgment regarding its right to withhold the $100,000 from Defendant.
(Id. ¶¶ 42–44.) Finally, Plaintiff seeks an order of rescission of the Ring of Fire purchase contract

based on Defendant’s alleged misrepresentation and fraud regarding the mandatory arbitration
provision. (Id. ¶¶ 45–53.)
In its pending motion to dismiss, Defendant argues that Plaintiff’s theory regarding
mandatory arbitration was “comprehensively litigated and adjudicated” by the Illinois state court.
(Dkt. 23 ¶ 13.) Further, Plaintiff’s claim of deceptive and unfair trade practices “mimics the theory
[Plaintiff] raised as a defense in the Illinois litigation,” Defendant argues. (Id. ¶ 14.) Defendant
acknowledges that Plaintiff brings two new causes of action in its amended complaint, but urges
the Court to abstain from exercising jurisdiction over this case based on the Colorado River
doctrine, which empowers federal courts to abstain from exercising jurisdiction, under certain
circumstances, in light of duplicative state court actions. (Id.) (citing Colorado River Water
Conservation District v. United States, 424 U.S. 800 (1976)).
ANALYSIS
In the Motion, Defendant seeks a stay of discovery based on its argument that the Court
should abstain from exercising its jurisdiction over this case pursuant to the Colorado River
doctrine. (Dkt. 24.) In response, Plaintiff argues that abstention under the Colorado River doctrine
is unwarranted because Plaintiff’s claims in this case are “not pending in any other forum and are
not mandatory counterclaims in the Illinois state court lawsuit.” (Dkt. 29 at 6.)
Courts maintain great discretion to regulate discovery. Patterson v. U.S. Postal Serv., 901
F.2d 927, 929 (11th Cir. 1990). In exercising this discretion, Federal Rule of Civil Procedure 26(c)
permits a court to stay discovery if the movant demonstrates good cause and reasonableness.
McCabe v. Foley, 233 F.R.D. 683, 685 (M.D. Fla. 2006). However, motions to stay discovery are
not favored because delays in discovery “can create case management problems which impede the
Court’s responsibility to expedite discovery and cause unnecessary litigation expenses and

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problems.” Feldman v. Flood, 176 F.R.D. 651, 652 (M.D. Fla. 1997) (citation omitted); see also
Middle District Discovery (2015) §I(E)(4) (stating that motions for stay are rarely granted unless
unusual circumstances justify such a result based on a “specific showing of prejudice or undue
burden”).
A stay of discovery may be warranted when a pending dispositive motion will dispose of
the entire case and thereby eliminate the need for discovery. Chudasama v. Mazda Motor Corp.,
123 F.3d 1353, 1368 (11th Cir. 1997). Dispositive motions presenting pure legal questions may
appropriately be resolved before discovery begins, but motions that turn on findings of fact “may
require some limited discovery before a meaningful ruling can be made.” Id. at 1367; see In re
Winn Dixie Stores, Inc. Erisa Litig., No. 3:04-CV-194-J-33MCR, 2007 WL 1877887, at *1 (M.D.
Fla. June 28, 2007) (explaining that Chudasama and its progeny “do not establish a broad general
rule that discovery should not proceed while a motion to dismiss is pending,” but “stand for the
much narrower proposition that courts should not delay ruling on a likely meritorious motion to
dismiss while undue discovery costs mount”).
Accordingly, in deciding whether to stay discovery pending the resolution of a dispositive
motion, the Court must take a “preliminary peek” at the motion to determine whether it appears
clearly meritorious and case-dispositive. McCabe, 233 F.R.D. at 685 (citing Feldman, 176 F.R.D.
at 652–53). The Court must then balance the harm produced by a delay in discovery against the
possibility that the motion will be granted and, therefore, eliminate the need for discovery. Id.
Having taken a “preliminary peek” at Defendant’s motion to dismiss (Dkt. 23), the Court
is not convinced that there is an immediate and clear possibility that the motion will be granted.
Although the Court recognizes the interest in avoiding potentially unnecessary and costly
discovery, this case does not present an appropriate opportunity to do so. While Plaintiff’s claim

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for declaratory judgment regarding whether it is entitled to withhold the final $100,000 due to
Defendant under the purchase contract for the Ring of Fire seems intertwined with the resolution
of Defendant’s claim for breach of contract in the Illinois state court, Plaintiff also brings separate
causes of action for deceptive and unfair trade practices and for recession of the purchase contract
based on Defendant’s alleged misrepresentations regarding the Ring of Fire’s characteristics and
terms of purchase. Accordingly, Defendant is unable to meet its burden of showing good cause.
Defendant has also failed to show any specific prejudice or undue burden that would result from
allowing discovery; instead, Defendant argues that a stay of discovery would not prejudice
Plaintiff. (Dkt. 24-1 ¶ 5.) And, as Plaintiff argues, discovery is already underway because
Defendant has responded to Plaintiff’s discovery requests and produced documents. (Dkt. 29 at
1, 7.)
Accordingly, it is ORDERED that Defendant’s Renewed Motion to Immediately Stay
Discovery (Dkt. 24) is DENIED.
DONE and ORDERED in Tampa, Florida, on June 23, 2017.

Copies furnished to:
Counsel of Record

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