GILMAN et al v. WALTERS et al

Filing 72

ORDER granting 17 Motion to Stay; adopting Report and Recommendations re 68 Report and Recommendations, however we will reconsider this ruling if, following completion of the procedures detailed below in the following paragraph of this order, t he Court determines that the Plaintiffs have failed to establish the jurisdictional requirements underlying their claims and Defendants' Motion to Dismiss is granted. The Objection 69 to the Magistrate Judge's Report and Recommendation is hereby OVERRULED, for the reason that the recommendations set out therein are neither clearly erroneous nor contrary to law. Signed by Judge Sarah Evans Barker on 3/29/2013. (NMT)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
EVANSVILLE DIVISION

LARRY GILMAN, et. al,
Plaintiffs,
vs.
MANNON L. WATERS, et. al,
Defendants.

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3:12-cv-114- SEB-WGH

ORDER OVERRULING DEFENDANTS’ OBJECTION TO MAGISTRATE JUDGE’S
REPORT AND RECOMMENDATION ISSUED ON JANUARY 31, 2013
AND
ORDER REFERRING DEFENDANTS’ MOTION
TO DISMISS TO MAGISTRATE JUDGE

Defendants, by counsel, have filed their objection to the Magistrate Judge’s Report and
Recommendation on Motion to Stay Federal Proceedings and Compel Arbitration. The undersigned
judge referred the Plaintiffs’ Motion to Stay Federal Proceedings and Compel Arbitration on
December 28, 2012, and the Magistrate Judge’s Report and Recommendation, issued on January 31,
2013, prompted the filing of Defendants’ objection on February 11, 2013. We address the
Magistrate Judge’s Report/Recommendation as well as Defendants’ objection here and order a
second referral , namely, to the Magistrate Judge to consider and report back on Defendants’
pending Motion to Dismiss.
The Magistrate Judge, after a thorough, cogent and entirely correct analysis of the issues
submitted to him on referral by the Court relating to Plaintiffs’ Motion to Stay, recommended that
the motion be granted in part and denied in part, to wit, recommending that so long as the arbitration
proceedings remain pending before the AAA (as they were at the time the Magistrate Judge reached
his conclusions), the Motion to Compel Arbitration should be denied (presumably as moot), and so
long as the arbitration remains pending, the Motion to Stay the trial of these proceedings until
completion of arbitration should be granted.
Defendants’ objections, fairly summarized, are two: first, their motion to dismiss this cause
of action for lack of subject matter jurisdiction pursuant to Rules 12(b)(1) and 12(b)(6) remains
unresolved by the Court and until jurisdiction is properly established, the Court lacks power to enter

any orders or exercise any power over the parties in this litigation, including granting the Motion
to Stay; second, any stay that might be imposed, if it is only directed towards staying the trial itself,
will result in wasteful redundancies and expenditures of resources by the parties as they are required
to litigate simultaneously in both the judicial and arbitral fora. Requiring such excessive
investments would be plainly unjust.
The stay of the trial, as the Magistrate Judge ruled, reflects the clear wording of the statute
indicating that when arbitration is underway the Court should stay the trial to allow the arbitration
to be completed. 9 U.S.C. § 3. (Paras. 8 and 9, MJ R&R) With regard to the duplications of effort
and costs that might result if both cases are to be litigated simultaneously, the Court has the inherent
power to organize the schedule and the course of litigation activities to prevent or at least to
ameliorate those costly consequences.
Therefore, the Objection to the Magistrate Judge’s Report and Recommendation is hereby
OVERRULED, for the reason that the recommendations set out therein are neither clearly
erroneous nor contrary to law. See Title 28, United States Code, Section 636(b)(1)(A).
Accordingly, we hereby ADOPT the recommendations contained in the Magistrate Judge’s Report.
However, we will reconsider this ruling if, following completion of the procedures detailed below
in the following paragraph of this order, the Court determines that the Plaintiffs have failed to
establish the jurisdictional requirements underlying their claims and Defendants’ Motion to
Dismiss is granted.
Accordingly, pursuant to 28 U.S.C. § 636(b)(1)(B) and Fed. R. Civ. P. 72(b), the Court
hereby REFERS the Defendants’ Motion to Dismiss Plaintiff’s First Amended Verified Complaint
for a report and recommendation as to the appropriate disposition of those contentions.
The Docket reflects that a hearing is currently set for April 3, 2013, before the Magistrate
Judge on the Motion to Stay Federal Proceedings and Compel Arbitration and to address issues
relating to the appointment of a receiver. The undersigned judge requests that the scope of that
hearing be expanded to allow the Magistrate Judge to address with counsel matters raised in
Defendants’ Motion to Dismiss to expedite a ruling on that motion. Having subjected the pending
motion to dismiss to careful review, it is clear to this judge that many factual and legal issues remain
vaguely asserted and/or unresolved, which matters bear directly on our jurisdiction over this
litigation. Counsel should be prepared to supply such additional information in response to the
questions raised by the Magistrate Judge at the upcoming hearing.
IT IS SO ORDERED.
Date: 03/29/2013
_______________________________
SARAH EVANS BARKER, JUDGE
United States District Court
Southern District of Indiana

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Copies to:
Jean Marie Blanton
ZIEMER STAYMAN WEITZEL & SHOULDERS LLP
[e-mail]
Robert L. Burkart
ZIEMER STAYMAN WEITZEL & SHOULDERS
[e-mail]
Thomas K. Caldwell
MADDOX HARGETT & CARUSO, PC
[e-mail]
Clay W. Havill
ZIEMER STAYMAN WEITZEL & SHOULDERS LLP
[e-mail]
Timothy John Kirk
MADDOX HARGETT & CARUSO, PC
[e-mail]
Mark E. Maddox
MADDOX HARGETT & CARUSO, PC
[e-mail]
Patrick A. Shoulders
ZIEMER STAYMAN WEITZEL & SHOULDERS
[e-mail]
Edwin L. Sisam
SISAM & ASSOCIATES, LLP
[e-mail]
Joshua H. Sisam
SISAM & ASSOCIATES, LLP
[e-mail]

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