PAN AM SYSTEMS INC et al v. HARDENBERGH et al

Filing 43

ORDER granting 33 Motion to Stay By JUDGE NANCY TORRESEN. (dfr)

UNITED STATES DISTRICT COURT
DISTRICT OF MAINE
PAN AM SYSTEMS, INC.,
SPRINGFIELD TERMINAL
RAILWAY COMPANY,
and
DAVID ANDREW FINK
Plaintiffs,
v.
CHALMERS HARDENBERGH,
And
ATLANTIC NORTHEAST RAILS &
PORTS,
Defendants.

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) Civil No. 2:11-cv-00339-NT
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ORDER ON MOTION TO STAY
Defendant Chalmers Hardenbergh has moved to stay this case pending the
resolution of his insurer Patrons Oxford Insurance Company’s (“Patrons”) appeal of
the Cumberland County Superior Court’s decision that Patrons has a duty to defend
the Defendant in this case. For the reasons that follow, the Court GRANTS the
motion.
BACKGROUND
After the Court dismissed without prejudice the Plaintiffs’ first Complaint
against Atlantic Northeast Rails & Ports and its owner, principal, publisher, and

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editor Chalmers Hardenbergh, the Plaintiffs filed an amended three-count
Complaint against Atlantic Northeast Rails & Ports and Hardenbergh, alleging
defamation and false light and seeking punitive damages. Order on Defs.’ Mot.
Dismiss (Doc. 20); Pls.’ Am. Compl. (Doc. 25).
Hardenbergh brought a duty to defend action against Patrons in Cumberland
County Superior Court, and on July 17, 2012, the Cumberland County Superior
Court issued an order directing Patrons to defend Hardenbergh in this action and
ordering Patrons to reimburse Hardenbergh for attorney’s fees and costs already
incurred in both this action and in Hardenbergh’s suit against Patrons. Def.’s Mot.
Stay Ex. 1 (Doc. 33-1). Patrons appealed the order to the Law Court, docket number
CUM-12-387. Def’s Mot. Stay Ex. 2 (Doc. 33-2). The Superior Court’s ruling is
stayed pending resolution of Patrons’s appeal.
DISCUSSION
“The power to stay proceedings 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 itself, for counsel, and for litigants.” Landis v. N. Am. Co., 299 U.S. 248,
254 (1936); see Microfinancial, Inc. v. Premier Holidays Intern., Inc., 385 F.3d 72, 77
(1st Cir. 2004) (“It is apodictic that federal courts possess the inherent power to stay
proceedings for prudential reasons.”). “Of course, stays cannot be cavalierly
dispensed: there must be good cause for their issuance; they must be reasonable in
duration; and the court must ensure that competing equities are weighed and
balanced.” Marquis v. F.D.I.C., 965 F.2d 1148, 1155 (1st Cir. 1992).

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The Defendant claims that a stay is needed to allow him to complete
Patrons’s appeal of his favorable “duty to defend” judgment that was handed down
by the Superior Court in July. The Defendant avers that the discrepancy in the
resources of the parties is such that he can only mount an adequate defense if his
insurance company funds the litigation. The Defendant also points to the chilling
effect on First Amendment rights which comes from the burdensome costs
associated with defending a lawsuit.
The Plaintiffs argue that the Defendant’s financial resources are an
inadequate reason to support a stay particularly where the Defendant has already
drawn out the length and heightened the expense of the lawsuit by filing a motion
to dismiss. “The expense created by Defendants’ strategic litigation does not
constitute a proper basis to stay this proceeding.” Plaintiff’s Opposition to
Defendant’s Motion to Stay 3. Plaintiffs seem to miss the point that their initial
Complaint failed to state a claim upon which relief could be granted. It was hardly
strategic gamesmanship for the Defendants to move to dismiss.
The Plaintiffs also point to Cardelli v. DAE Aviation Enters. Corp., Civil No.
2:11-cv-217, 2102 WL 983584 (D. Me. March 22, 2012), a wrongful death case in
which this Court denied a motion to stay pending the completion of litigation in
New Hampshire to ascertain the extent of an insurer’s liability. Cardelli is
distinguishable from this case. There was no issue in Cardelli of whether the
defendant could afford to mount an adequate defense without coverage by an
insurer. The New Hampshire litigation involved an insurer’s duty to indemnify

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rather than a duty to defend, and there were no First Amendment interests at
issue. On a renewed motion to stay, and after the Court received assurances that
the New Hampshire litigation would be resolved within months rather than years,
the Court decided that the stay was appropriate because it would “substantially
affect” the prospects for settlement. Report of Pre-Filing Conference 2, Cardelli v.
DAE Enters. Corp., Civil No. 2:11-cv-00217-NT (D. Me. June 21, 2012) (Doc. 63).
The Defendant contends that his defense in this suit, which is now entering
discovery, will be significantly affected by whether his fees and costs will be covered
by Patrons or come out of his own pocket. The Court is sensitive to the potential
chilling effect on the press — particularly in a case where the Defendants are an
individual and a small publication — caused by the prospect of having to defend
prolonged and expensive litigation. See Guilford Transp. Indus., Inc. v. Wilner, 760
A.2d 580, 592, 592 n.10 (D.C. Cir. 2000) (summary proceedings are essential in
First Amendment cases particularly where plaintiffs1 sue “an individual who might
be expected to have limited resources”).
While the Court recognizes and appreciates the Plaintiffs’ interest in
pursuing their claims against the Defendants without delay, the Court sees
minimal hardship to the Plaintiffs in staying this proceeding pending resolution of
Patrons’s duty to defend the Defendant. The Defendant has already received a
judgment in his favor by the Superior Court, and he has represented to the Court
that he will file a motion with the Law Court for a shortened briefing schedule and

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It appears that one of the plaintiffs in the Guilford case is a Plaintiff in this action.

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expedited argument and “take all appropriate steps to ensure that the stay he
requests is as short as possible.” Def.’s Reply 1 (Doc. 40).
CONCLUSION
The Court finds that the equities involved in this request for a stay favor the
Defendant. Defendant’s Motion to Stay this action pending the Law Court’s
resolution of Patrons’s duty to defend the Defendant is hereby GRANTED.
SO ORDERED.
/s/ Nancy Torresen
United States District Judge
Dated this 12th day of October, 2012.

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