American Family Insurance Company v. Almassud et al

Filing 260

ORDER : AmFams Motion to Amend the Complaint 117 is GRANTED. The Clerk is DIRECTED to docket the Amended Complaint [117-1]. Cruzs Motion to Amend Answer and Affirmative Defenses 167 is GRANTED. All Defendants are ORDERED to file responsive pleadi ngs to AmFams Amended Complaint no later than 14 days after the entry of this Order. AmFams Emergency Motion for Sanctions Against Almassud 188 and Motion for Leave to File a Supplemental Brief in Support of that Motion 235 are DENIED, without pr ejudice. Cruzs Emergency Motion for Sanctions Against AmFam 189 is likewise DENIED, without prejudice. Cruzs Emergency Motion for Reconsideration 208 is GRANTED, and the portion of the Courts February 16, 2018 Order requiring Cruz to produce the documents responsive to AmFams first discovery requests which were submitted to the Court for an in camera review (Order, Dkt. 202 at Part I.C) is hereby VACATED.Almassuds Partial Motion for Summary Judgment 216 is DENIED, without prejudice becau se AmFams original Complaint is no longer the operative pleading. AmFams Emergency Motion for an Order Holding in Abeyance Almassuds Partial Motion for Summary Judgment 230 is GRANTED. As described above, the Court hereby STAYS discovery in this ca se until such time as the parties have briefed and the Court has considered any potentially dispositive arguments supported by the current record or until a final resolution of the underlying case. For that reason, AmFams Motion for Reconsideration of Rulings Staying the Case 254 is GRANTED. All other pending Motions are resolved as set out in Part II of this Order. Signed by Judge Richard W. Story on 09/13/2018. (dgr)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
AMERICAN FAMILY
INSURANCE COMPANY,
Plaintiff,
v.
ABDULMOHSEN ALMASSUD
and LUISA CRUZ MEZQUITAL,
Defendants.

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CIVIL ACTION NO.
1:16-CV-4023-RWS

ORDER
This case comes before the Court on Plaintiff American Family
Insurance Company’s Motion for Reconsideration of Rulings Staying the Case
[254] and nine other motions: AmFam’s Motion to Amend the Complaint
[117]; Defendant Luisa Cruz Mezquital’s Motion to Amend Answer and
Affirmative Defenses [167]; AmFam’s Emergency Motion for Sanctions
Against Defendant Abdulmohsen Almassud [188] and AmFam’s Motion for
Leave to File a Supplemental Brief in Support of that Motion [235]; Cruz’s
Emergency Motion for Sanctions Against AmFam [189]; Cruz’s Emergency
Motion for Reconsideration [208]; Almassud’s Partial Motion for Summary

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Judgment [216]; and AmFam’s Emergency Motion for an Order Holding in
Abeyance Almassud’s Partial Motion for Summary Judgment [230]. After
reviewing the record, the Court enters the following Order.
I.

AmFam’s Motion for Reconsideration [254]
After a motor vehicle accident Cruz filed a personal injury suit against

Almassud in the State Court of Fulton County (the “underlying case” or “state
court action”). The underlying case went to trial and resulted in a jury verdict
against Almassud and in favor of Cruz in the amount of $30,485,646.29.
After judgment was entered in Cruz’s favor, Almassud’s counsel filed a
motion for new trial. The trial court heard argument on that motion on
December 21, 2016 and denied it. As a result, Almassud appealed the verdict.
Meanwhile, AmFam brought this declaratory judgment action seeking a
determination of its obligation to provide coverage to its insured, Almassud, for
the underlying case. AmFam alleges that Almassud’s coverage is void due to
his failure to cooperate with AmFam in the defense of the underlying case and
for providing AmFam with false and incomplete information. Cruz and
Almassud each filed counterclaims against AmFam asserting claims for bad
faith failure to settle, among other things. On March 15, 2017, the Court
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entered an Order [53] dismissing, without prejudice, Almassud’s failure to
settle claim as premature lacking a final and non-appealable excess judgment. 1
On March 15, 2018, the Court of Appeals of Georgia issued an opinion
in the underlying case finding that “the trial court erred in failing to instruct the
jury on a substantial and vital issue presented by the pleadings and the
evidence . . . .” Almassud v. Mezquital, 811 S.E.2d 110, 111 (Ga. Ct. App.
2018), reconsideration denied (Mar. 28, 2018). The underlying case is now
with the state’s Supreme Court. The parties have briefed the threshold issue of
certiorari, but the Supreme Court of Georgia is yet to grant or deny the petition.
In light of these developments in the state case–as well as a flood of
motions crimping discovery and impeding forward progress–the Court ordered
the parties (along with their clients) to appear for a status conference. The
status conference was held on June 7, 2018, and during those proceedings, the
Court indicated that it intended to dispose of all pending motions and stay this
matter, sua sponte, until the underlying case is resolved. In its Motion for

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The Court also dismissed Almassud’s fraud claim for failing to comply with
Federal Rule of Civil Procedure 9(b).
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Reconsideration, AmFam asks the Court to reconsider this position.2 The
Court lays out the relevant legal standards before considering AmFam’s
Motion on the merits.
A.

Legal Standard–Motions to Reconsider

Under the Local Rules of this Court, “[m]otions for reconsideration shall
not be filed as a matter of routine practice[,]” but rather, only when “absolutely
necessary.” LR 7.2(E), N.D. Ga. Such absolute necessity arises where there is
“(1) newly discovered evidence; (2) an intervening development or change in
controlling law; or (3) a need to correct a clear error of law or fact.” Bryan v.
Murphy, 246 F. Supp. 2d 1256, 1258–59 (N.D. Ga. 2003).
B.

The Court’s Discretion to Stay

A district court has the discretion to stay proceedings otherwise before it;
this authority 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

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During the June 7 status conference, the Court also stated that it intended to
enter a written Order consistent with its oral representations. But, prior to the entry of
such an Order, AmFam preemptively filed the present Motion for Reconsideration,
citing the minute sheet from those proceedings [252]. The Court, recognizing the
dearth of opportunities given to the parties to raise arguments about the stay, directed
the parties to submit additional briefing on the matter (Dkt. [256]). They did, and the
Court has read those briefs and considered the arguments set forth therein.
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itself, for counsel, and for litigants.” Landis v. N. Am. Co., 299 U.S. 248, 254
(1936); see also Clinton v. Jones, 520 U.S. 681, 706 (1997) (discussing district
court’s “broad discretion to stay proceedings as an incident to its power to
control its own docket”). For that reason, a district court may, as a general
matter, “stay a case pending the resolution of related proceedings in another
forum.” Ortega Trujillo v. Conover & Co. Commc’ns, Inc., 221 F.3d 1262,
1264 (11th Cir. 2000).
A variety of factors may be considered when deciding whether to stay a
case in favor of related litigation, such as issues of docket control and
principles of abstention. Id. Ultimately, the best outcome is reached when the
court “weigh[s] competing interests and maintain[s] an even balance.” Landis,
299 U.S. at 254.
C.

Analysis

AmFam argues the Court should reconsider its oral rulings at the June 7
status conference and subsequent minute entry staying this matter because the
stay is immoderate and the interests of all those involved are best served by
allowing the case to proceed.
In arguing the stay is immoderate–or, essentially, unlimited in
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duration–AmFam relies predominately on the Eleventh Circuit’s decision in
Ortega Trujillo v. Conover & Co. Commc’ns. There, the district court entered
a stay, sua sponte, pending resolution of a related case in the Bahamas.
Trujillo, 221 F.3d at 1263–64. The Bahamian case involved the Ortegas’
alleged misappropriation of funds from a bank, and the domestic one the
bank’s allegedly defamatory press release about the Ortegas’ purported fraud
scheme. Id. at 1263. The district judge, then, reasoned that since “the issues
addressed by the Bahamian Litigation directly relate to those raised [in this
case],” the court should stay the “matter until such time as the Bahamian Courts
conclude their review.” Id. at 1264. On appeal, the Eleventh Circuit vacated
the stay, however, finding it to be “indefinite in scope” (or, immoderate) as it
“appear[ed] to expire only after a trial of the Bahamian case and the exhaustion
of appeals in that case.” Id.; see also Landis, 299 U.S. at 257 (A “stay is
immoderate and hence unlawful unless so framed in its inception that its force
will be spent within reasonable limits, so far at least as they are susceptible of
prevision and description.” )
A conspicuous difference separates Trujillo from this case, though. And
that is that AmFam filed this case pursuant to the Declaratory Judgment Act.
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“In the declaratory judgment context, the normal principle that federal courts
should adjudicate claims within their jurisdiction yields to considerations of
practicality and wise judgment.” Wilton v. Seven Falls Co., 515 U.S. 277, 288
(1995). This is because the Declaratory Judgment Act is “an enabling Act,
which confers a discretion on courts rather than an absolute right upon the
litigant.” Id. at 287 (citations omitted); Brillhart v. Excess Ins. Co. of Am., 316
U.S. 491, 494 (1942) (explaining that the Declaratory Judgment Act gives
federal courts the ability to make a declaration of rights, but it does not impose
a duty to do so).
Because of the broad discretion the Declaratory Judgment Act endows,
the Court finds AmFam’s arguments about the indefiniteness of the stay to be
misplaced. Indeed, courts in this Circuit have stayed declaratory judgment
actions until the resolution of underlying state court proceedings on many
occasions, see, e.g., Great Lakes Reinsurance (UK) PLC v. TLU Ltd., 298 F.
App’x 813 (11th Cir. 2008); and, on others, dismissed the declaratory judgment
case outright, see, e.g., Ameritas Variable Life Ins. Co. v. Roach, 411 F.3d
1328, 1332 (11th Cir. 2005). See also Wilton, 515 U.S. at 286 (explaining
courts’ “substantial latitude in deciding whether to stay or dismiss a declaratory
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judgment suit in light of pending state proceedings”).3
Still, the Court recognizes that its discretion to stay “must not be
exercised lightly.” Hartford Underwriters Ins. Co. v. Spizzirri, No.
1:09-CV-1277-BBM, 2009 WL 10669603, at *2 (N.D. Ga. Dec. 11, 2009)
(quoting Home Ins. Co. v. Coastal Lumber Co., 575 F. Supp. 1081, 1083 (N.D.
Ga. 1983)). And after evaluating the interests of the litigants, considering
relevant factors, and reviewing the ample precedent in this Circuit, the Court

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The Court recognizes that, in this Circuit, it remains uncertain whether the
abstention principles described in Brillhart/Wilton and attenuate factors articulated by
the Eleventh Circuit in Ameritas apply only when there is parallel state litigation, or if
they extend to circumstances where a federal declaratory judgment case is merely
related (but not parallel) to a state court action. For the purposes of this Order, the
Court need not resolve that issue. The Court notes, however, that in an unpublished
opinion, the Eleventh Circuit provided the following guidance:
Although in Ameritas, we reviewed the district court's discretionary
dismissal of a federal declaratory judgment action in the face of a
parallel state proceeding—one involving substantially the same parties
and substantially the same issues—we have never held that the Ameritas
factors apply only when reviewing parallel actions. Indeed, nothing in
the Declaratory Judgment Act suggests that a district court’s
discretionary authority exists only when a pending state proceeding
shares substantially the same parties and issues. Rather, the district court
must weigh all relevant factors in this case, even though the state and
federal actions were not parallel.
First Mercury Ins. Co. v. Excellent Computing Distributors, Inc., 648 F. App’x 861,
866 (11th Cir. 2016) (footnote and internal citation omitted).
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finds it would be inappropriate, at this stage, to stay the case entirely pending
resolution of the underlying matter.
However, some narrowing in scope is necessary given the present
posture of the state court action. Specifically, the Court finds that discovery
should be stayed until such time as the parties have briefed and the Court has
considered certain arguments raised in Almassud’s Partial Motion for Summary
Judgment [216]–which could significantly narrow the issues before the
Court–or the underlying case has been resolved, whichever is sooner.
“Matters pertaining to discovery are committed to the sound discretion
of the district court . . . .” Patterson v. U.S. Postal Serv., 901 F.2d 927, 929 (11
Cir. 1990). And so a court has broad discretion to stay discovery. See
Scroggins v. Air Cargo, Inc., 534 F.2d 1124, 1133 (5th Cir. 1976); Earwood v.
Essex Ins. Co., No. 1:15-CV-4433-SCJ, 2016 WL 9000041, at *2 (N.D. Ga.
Oct. 12, 2016) (staying discovery sua sponte in consolidated case until dueling
motions for summary judgment could be resolved).
Weighing the competing interests, the Court finds there is good cause to
stay discovery here. Indeed, many of the issues that have stymied discovery
and the progression of this matter stem from the potential for a new trial in the
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underlying case. Those disputes have arisen from Cruz’s fear of disclosing
information not sought or not discoverable in the underlying case. To be sure,
the brunt of discovery in this case concerns, as it must, the underlying matter.
But AmFam has gone further and specifically targeted communications and
evidence regarding trial strategy that, although likely discoverable in this
action, (see Order, Dkt. [202] at Part I.C), is certainly privileged in the
underlying case. For that reason, continuing discovery, here, will inevitably
interfere with the underlying case, should it be retried. In the present posture
where a retrial has been ordered by the Georgia Court of Appeals, this would
be, in the Court’s opinion, impermissibly prejudicial to the parties involved,
not to mention the judge retrying the case. The Court does not want to detract
from the state court’s ability to conduct fair and impartial proceedings.
Further, the Court recognizes that a great deal of discovery has already
been accomplished, and as a result, potentially dispositive issues appear ripe
for adjudication–at a minimum, the estoppel argument raised in Almassud’s
Partial Motion for Summary Judgment. These arguments, if successful, might
render additional discovery unnecessary and avoid potential frustration of the
state court proceedings. Thus, the Court finds it is in the interest of comity and
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most equitable to all those involved to stay discovery until the Court has had an
opportunity to consider any potentially dispositive arguments supported by the
current record or until a final resolution of the underlying case.
II.

Remaining Matters
In light of the stay, the Court resolves all other outstanding Motions as

follows:
•

AmFam’s Motion to Amend the Complaint [117] is GRANTED.
The Clerk is DIRECTED to docket the Amended Complaint
[117-1].

•

Cruz’s Motion to Amend Answer and Affirmative Defenses [167]
is GRANTED. All Defendants are ORDERED to file responsive
pleadings to AmFam’s Amended Complaint no later than 14 days
after the entry of this Order.

•

AmFam’s Emergency Motion for Sanctions Against Almassud
[188] and Motion for Leave to File a Supplemental Brief in
Support of that Motion [235] are DENIED, without prejudice.
Cruz’s Emergency Motion for Sanctions Against AmFam [189] is
likewise DENIED, without prejudice.
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•

Cruz’s Emergency Motion for Reconsideration [208] is
GRANTED, and the portion of the Court’s February 16, 2018
Order requiring Cruz to produce the documents responsive to
AmFam’s first discovery requests which were submitted to the
Court for an in camera review (Order, Dkt. [202] at Part I.C) is
hereby VACATED.4

•

Almassud’s Partial Motion for Summary Judgment [216] is
DENIED, without prejudice because AmFam’s original
Complaint is no longer the operative pleading.

•

AmFam’s Emergency Motion for an Order Holding in Abeyance
Almassud’s Partial Motion for Summary Judgment [230] is
GRANTED.

Any party that filed a motion denied without prejudice shall have the
right to refile that motion, if the party chooses to do so. As mentioned above,
some of the arguments in these motions appear to be supported by the present

4

The Court notes that if the underlying case is resolved, the majority of Cruz’s
concerns over the production of these materials will lose viability. At that time, then,
should Cruz maintain her present objections, AmFam may file another motion to
compel, and the Court will enter an Order, as appropriate.
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record. At the same time, the Court recognizes that since these Motions were
filed, a lot has transpired in this case that might affect their merits. Should they
feel the contentions raised in these Motions are adequately supported by the
present record, the parties may refile them, verbatim or revised, and the Court
will decide the Motions. If not, the parties may refile their Motions once
discovery has resumed and a sufficient record been developed.
Conclusion
As described above, the Court hereby STAYS discovery in this case
until such time as the parties have briefed and the Court has considered any
potentially dispositive arguments supported by the current record or until a
final resolution of the underlying case. For that reason, AmFam’s Motion for
Reconsideration of Rulings Staying the Case [254] is GRANTED. All other
pending Motions are resolved as set out in Part II of this Order.
SO ORDERED, this 13th day of September, 2018.

________________________________
RICHARD W. STORY
United States District Judge

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