Northstar Services, Ltd. v. MJM Investment Properties, LLC

Filing 26

MEMORANDUM AND ORDER granting 11 Motion to Stay; denying as moot 15 Motion to Dismiss defendant's counterclaim. Signed by Judge Marvin J. Garbis on 4/3/2017. (hmls, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
NORTHSTAR SERVICES, LTD.

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Plaintiff

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vs.

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MJM INVESTMENT PROPERTIES, LLC
Defendant
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CIVIL ACTION NO. MJG-16-4017

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MEMORANDUM AND ORDER STAYING CASE
The Court has before it Defendant MJM Investment
Properties, LLC’s (“MJM’s”) Motion to Stay Proceedings [ECF No.
11],1 and the materials submitted relating thereto.

The Court

finds a hearing unnecessary.
I.

INTRODUCTION
As discussed in detail herein, the instant case and a case

pending in a New Jersey state court are related.
As pertinent hereto, in the New Jersey case,2 Martin Marano
(“Marano”) and Northstar Services, Ltd. (“Northstar”) are asking
the court to decide whether Marano or Northstar owns the right

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Plaintiff Northstar Services, Ltd.’s Motion to Dismiss
Defendant’s Counterclaim [ECF No. 15] shall be denied as moot
because, by virtue of the stay being granted, MJM dismisses its
counterclaims.
2
Marano v. Glancey, et al., No. CAM-L-686-15 (N.J. Super.
Ct. Law Div.).

to collect $784,908.00 from MJM Investment Properties, LLC
(“MJM”).
In the instant case, Northstar seeks to have this Court
enforce against MJM certain rights that are in dispute in the
New Jersey case.

The Court can enforce these rights as

Northstar wishes only if Northstar is determined to own the
rights at issue.
By the instant motion, MJM seeks to have the Court stay the
instant case pending resolution in the New Jersey case of the
ownership of the rights at issue.

II.

DISCUSSION
A. Background
At all times pertinent hereto, Marano and his wife3 have

owned all the membership interests in MJM, an entity engaged in
certain commercial operations not here relevant.
In 2012, Marano was the sole owner of the stock of
Northstar, a Delaware corporation with its principal place of
business in New Jersey, engaged in the trucking business.

On

August 12, 2012, Northstar and MJM entered into an agreement
whereby MJM agreed to pay Northstar $784,908.00 for certain
services and advances. The agreement, made between an entity

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Janet Tancredi
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owned by Marano and an entity owned jointly by Marano and his
wife, is referred to as the “Loan Agreement.”
On December 30, 2013, Marano entered into an agreement,
entitled “Stock Purchase Agreement (“the SPA”) whereby four
individuals4 (“the Buyers”) bought all of the shares of
Northstar, but certain assets of Northstar were effectively
excluded from the transaction.

Hence, on the closing date,

January 31, 2014, the Buyers owned all shares of Northstar, but
Northstar did not thereafter continue to own certain assets.

As

pertinent hereto, the parties dispute whether after January 31,
2014, Northstar continued to own the right to enforce the Loan
Agreement against MJM.
On January 12, 2016, Marano filed an Amended Complaint in
the New Jersey case seeking, among other things, a declaratory
judgment establishing that Northstar did not own the right to
enforce the Loan Agreement against MJM5 but that he personally
owned that right.

Essentially, the question presented was

whether, by virtue of the SPA, Northstar ceased to own the right
to enforce the Loan Agreement and it was then owned by Marano.
The New Jersey litigation remains pending, and the New Jersey
court is proceeding to answer the question.

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Christopher Glancey, Joseph Ragusa, Alfred Iannelli, and
John Cirone
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MJM is not a party to the New Jersey case.
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On December 16, 2016, Northstar filed the instant law suit
seeking, among other things, to enforce the Loan Agreement and
require MJM to pay the $784,908.00 allegedly due.6

B. Pertinent Principles
It is within the Court’s discretion and inherent authority
to issue a stay of a matter pending on its docket. See Landis v.
N. Am. Co., 299 U.S. 248, 254 (1936)(“[T]he 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.”).
When deciding a motion to stay, courts weigh the following
three factors:
(1) the interests of judicial economy;
(2) hardship and equity to the moving party if the
action is not stayed; and
(3)

potential prejudice to the non-moving party.

Davis v. Biomet Orthopedics, LLC, No. CIV. 12-3738-JKB, 2013 WL
682906, at *1 (D. Md. Feb. 22, 2013)(quoting Johnson v. DuPuy
Orthopaedics, Inc., No. 12 Civ. 2274(JFA), 2012 WL 4538642, *2
(D.S.C. Oct. 1, 2012)). “The party seeking a stay must justify
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In its Answer, MJM included a counterclaim seeking a
declaration that Northstar did not own the right to enforce the
Loan Agreement.
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it by clear and convincing circumstances outweighing potential
harm to the party against whom it is operative.” Williford v.
Armstrong World Indus., Inc., 715 F.2d 124, 127 (4th Cir.
1983).

C. Resolution
The Court concludes that it should grant a stay of the
instant case pending the New Jersey court’s determination of
whether or not Northstar owns the right that it seeks to assert.
Unless the Court finds that Northstar owns the right to
enforce the Loan Agreement by virtue of the SPA, this Court
would not reach issues regarding interpretation and application
of the terms of the Loan Agreement.
Thus, the instant case presents the threshold question of
the effect of the SPA on the right to enforce the Loan
Agreement.

This issue is before the New Jersey state court and

is being litigated actively therein.

No benefit would be served

by having this Court essentially duplicate the efforts of the
New Jersey Court.

Moreover, (1) a decision against Northstar in

the New Jersey case, a party to that case, could be binding on
Northstar and (2) a decision for Northstar by the New Jersey

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court applying New Jersey law7 - even if not binding on MJM – may
well be considered persuasive by this Court.
Northstar may, to an extent, possibly suffer detriment by
virtue of a delay in recovering funds allegedly owed by MJM.
Northstar would, however, be able to seek prejudgment interest.8
In any event, the possible detriment of a collection delay is
greatly outweighed by the likely detriment to all concerned
caused by unnecessary, duplicative judicial proceedings.
Finally, the Court notes that it could, in the
circumstances here presented, properly abstain from determining
the ownership of the rights at issue.

The New Jersey case

presents the same issue that is critical to the instant case
litigated by effectively the same parties.

It is, in relevant

part, a parallel proceeding. See Ackerman v. ExxonMobil Corp.,
734 F.3d 237, 249 (4th Cir. 2013)(quoting Chase Brexton Health
Servs., Inc. v. Maryland, 411 F.3d 457, 464 (4th Cir. 2005)).
Here, “[w]ise judicial administration, giving regard to
conservation of judicial resources and comprehensive disposition
of litigation’ clearly favors abstention.” Chase Brexton, 411

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The SPA provides that it “shall be governed by the laws of
the State of New Jersey, as to all matters including matters of
validity, construction, effect, performance and liability”. SPA
§ 11.9 [ECF No. 11, Ex. A] at 38.
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There may be an issue as to whether the amount due by
virtue of the Loan Agreement bears interest.
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F.3d at 463 (quoting Colorado River Water Conservation Dist. v.
United States, 424 U.S. 800, 817 (1976)).
The bottom line is that this Court shall stay proceedings
herein to await relevant action in the New Jersey case.

IV. CONCLUSION
For the foregoing reasons:
1. The Motion to Stay Proceedings [ECF No. 11] is GRANTED.
2. The Court shall issue an Order staying the case.
3. Defendant’s Counterclaims are dismissed.
4. Plaintiff Northstar Services, Ltd.’s Motion to Dismiss
Defendant’s Counterclaim [ECF No. 15] is DENIED AS MOOT.

SO ORDERED, this Monday, April 3, 2017.

/s/__________
Marvin J. Garbis
United States District Judge

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